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BREAKING : Lawsuit Against Ripple Officially Dropped !

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The lawsuit against Ripple that was filed back in May was finally dropped by the US Northern District of California court.

Lawsuit Against Ripple Denied

Ripple Labs Inc. has been a subject of multiple controversies, especially when it comes to its cryptocurrency, also called Ripple. The coin has been accused of centralization, and the company even received a lawsuit that stated that they used illegal and dishonest tactics to trick the investors and control the coin’s price.

While many who support and make these claims have stopped at bashing Ripple on social networks, there were also those who took action against the company. Back in May of this year, an XRP investor by the name of Ryan Coffey filed a lawsuit against Ripple after suffering losses instead of gains on his investment. Coffey led an entire group of displeased investors and has filed a lawsuit against Ripple Labs on May 3rd of this year.

He issued ‘Order Denying Motion to Remand’, which ensured that the case would remain in the lower courts of California, instead of advancing to Federal levels. Due to an apparently bad investment, Coffey suffered losses when Ripple price went down. After that, he demanded compensation for his financial loss, and when he did not receive it, he accused Ripple Labs of manipulating the price of XRP in order to make profits and damage its investors.

According to him, Ripple promoted its crypto through the media, while at the same time, it used the media to make prices go up or down. Simultaneously, he accused XRP of being a security, and Ripple Labs of ignoring the California Corporations Code regarding the securities laws.

Additionally, the lawsuit also accused Brad Garlinghouse, Ripple’s CEO, directly. Garlinghouse was accused of misleading investors and falsely explaining how the products of the company are being used. Coffey finally accused the XRP of not being decentralized and violating federal laws regarding securities.

 

 

 

Bitcoin

The Real Discussion About Ethereum’s Next Hard Fork Is About to Begin

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More than two dozen ethereum improvement proposals (EIPs) have been submitted for review and inclusion in ethereum’s next system-wide upgrade or hard fork, dubbed Istanbul.

The list – with 28 official EIPs and at least one other set to be added – include changes to the $27 billion network that impact its mining algorithm, code execution and pricing, data storage, and much more.

About a dozen of these proposals were discussed at length by ethereum core developers during a bi-weekly call on Friday. However, the majority ended up being tabled for further debate, with only one EIP receiving a tentative approval.

“We’ll talk more on the All Core Devs Gitter channel to wrangle in some of these EIPs that are still stuck in proposed and as quickly as possible decide on which ones are being implemented for Istanbul,” said Ethereum Foundation community relations lead Hudson Jameson before ending today’s call.

As noted by Jameson, the hard deadline for all Istanbul EIP submissions passed last Friday and now developers are working to reach agreement  about which proposed EIPs can be deemed officially “accepted.”

Decisions made

The one EIP to receive a tentative approval Friday was EIP 1108, which proposes a minor change to gas fees on the ethereum network. Developers emphasized that this proposal, while approved, requires benchmarking figures that will be presented at the next core developers meeting.

Alternatively, at least two other proposed EIPs look slated for delay.

Developer Rick Dudley explained that EIP 1559 – which introduces a new transaction fee model to ethereum – is “a pretty complicated change.”

Dudley further highlighted that it would most likely not be ready in time for Istanbul, which is scheduled for mainnet activation possibly as early as mid-October.

“[EIP 1559] we should assume that it’s possible that it will make it in [to Istanbul] but it seems unlikely right now,” said Dudley on the call.

The second EIP with a high potential for delay is EIP 1057. It is a proposed change to ethereum’s proof-of-work (PoW) mining algorithm, which since April of last year has been susceptible to mining by specialized computer devices called ASICs. With an estimated $655 million annual market for ethereum’s mining rewards, ASICs outperform graphics cards, or GPUs, which developers worry may lead to a more centralized mining landscape.

EIP 1057 proposes a revamped PoW algorithm known as “Progressive PoW” or ProgPoW in efforts to better leverage GPU-specific computing capabilities.

While approved twice in the last year by ethereum core developers, ProgPoW according to Jameson may face delay due to various logistical issues in organizing a third-party audit of the proposal.

“We ran into issues starting the ProgPoW audit,” explained Jameson in a Ethereum Magicians post yesterday. “We had a hardware partner who specialized in ASICs who was going to work with Least Authority to perform the hardware parts of the audit. They are no longer participating in the audit so we are looking for other auditors for the hardware portion.”

As such, Jameson proposed today that the EIP be held back from being in the approved category of EIPs until further details about the pending audit are sorted.

Looking ahead

The next official deadline for the Istanbul hard fork is merging accepted EIPs into existing versions of ethereum software called clients.

One EIP author, James Hancock, told CoinDesk that this step is akin to getting your code together so it can be fully tested.

“The suggestion is to have reference implementations in two ‘major’ clients,” said Hancock to CoinDesk. “The definition of major is pretty loose.”

Hancock also noted that he has put together an updated spreadsheet with all of the proposed Istanbul EIPs and their relative “readiness” for mainnet activation.

For now, the upcoming “soft deadline for major client implementations” is sometime in mid-July with an eventual mainnet launch slated for mid-October.

However, the envisioned timeline for Istanbul is a rather new creation that has never been replicated by previous ethereum hard forks. It was proposed by former ethereum developer Afri Schoedon and Ethereum Foundation developer Alex Beregszaszi as a way of breaking down hard fork process into “a fixed 9-month cycle.

As such, Ethereum Foundation grant recipient Alexey Akhunov wrote in the Gitter chatroom that everyone should be thinking and iterating upon the new suggested “deadlines.”

“I myself will be questioning all the deadlines from the point of view of ‘what is the purpose of this deadline?’,” said Akhunov. “Because this is the first time lots of these things are introduced, we are here to make sure that what we do is done for the reason and not because “someone says so”

For now, blockchain protocol engineer at Consensys Danno Ferrin affirms that at the very least, the list of proposed Istanbul EIPs “stops growing” and will in all likelihood begin shrinking.

And down the road, the software upgrade itself must be accepted by the nodes that underpin the ethereum network itself when the hard fork event actually occurs.

Ethereum image via Shutterstock 

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Bitcoin

Crypto Funds, Lending and Market Manipulation

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Noelle Acheson is a veteran of company analysis and a member of CoinDesk’s product team. The opinions expressed in this article are the author’s own.

The following article originally appeared in Institutional Crypto by CoinDesk, a free newsletter for institutional investors interested in cryptoassets, with news and views on crypto infrastructure delivered every Tuesday. Sign up here.


It’s not easy being a crypto fund manager. As well as unruly markets and elusive valuations, there’s the increasing competition and pressure on fees. And performance has been lackluster: Vision Hill’s Q1 report showed that, on average, active funds have underperformed bitcoin so far this year.

The bear market of 2018 triggered the closure of many crypto funds, and a report released last week by PwC and Elwood Asset Management showed that there are far fewer active funds in existence than we had been led to believe.

The report also pointed out that, given a median management fee of 2% and a median fund size of $4 million, operational sustainability is tough: $80,000 recurring income is not enough to cover salaries and other overheads, especially given the likelihood of increasing compliance requirements.

The PwC/Elwood report mentions some steps that funds are taking to boost recurring income, such as market making and advisory roles.

It overlooks one potentially significant source of revenue, however: crypto lending. Funds could lend out the assets they hold, for a fee.

Given the growing demand for crypto lending services, this potential income stream could be enough to give a number of funds a greater chance of survival, as well as inject liquidity and diversity into the sector.

It could also, however, add hidden risk to the market overall.

Heading down

Before we look in more detail at this risk, let’s examine the trend toward lower fees.

According to the PwC/Elwood report, the median (mid-point) fee is 2%. This is in line with typical fees for “traditional” hedge funds. But there are signs that they are coming down. The report states that the average crypto fund fee is 1.72%, which means that many charge significantly less. This is also in line with the traditional sector, where fee pressure is already becoming the subject of headlines.

The pressure is even more acute in mutual and index funds, where fees are moving to zero or even lower. Last year, investment management giant Fidelity offered a mutual fund with no management charge. And earlier this month, the SEC greenlighted a fund from asset manager Salt Financial that promised negative fees.

Meanwhile, demand for crypto lending is growing at an astonishing pace, as the inflow of funds into lending startups and the demand from institutions shows. While there is no concrete data on the extent to which crypto funds lend out their assets, there are signs that this practice is spreading.

This has potential implications for the entire sector, both good and bad.

Heads up

On the positive side, increased lending of crypto assets could increase velocity and, by extension, price discovery as a greater number of transactions makes it easier for a market to express its views.

Furthermore, a growing demand for short selling, facilitated by asset lending, will to some extent enhance liquidity and help to develop a pool of natural buyers – all short sales have to be unwound eventually. This develops a “soft” floor for an asset price.

But “more liquid” does not necessarily mean “liquid,” and here is where the risk of market manipulation could seep in.

Let’s say I manage a crypto fund that has invested in altcoin A, and let’s say that I lend out part of my stake to counterparty A. In traditional finance, most securities loans can be recalled at any time – let’s assume that I can do the same here. I recall the loan of altcoin A, and counterparty A has to scramble to get it back to me. Whether counterparty A used the loan to sell short or lent it on to counterparty B, it will now have to buy the asset back in the market, probably pushing up the price by doing so.

Now, what if I knew that would happen, and used the recall as part of a strategy to boost my fund valuation? True, I probably couldn’t lock in the profit by selling altcoin A without pushing the market back down, but it could serve to fix a higher value on a certain date, which would boost my reported performance, which in turn could encourage more investment in my fund.

Plus, there’s the added benefit of knowing that the short sellers got squeezed, and the glory of my outperformance compared to those with a more negative outlook.

Obviously, if I got a reputation for doing this, no-one would borrow from me. And the drying up of that revenue stream could mean that I may end up having to liquidate my fund – just imagine what my dumping all of my altcoin holdings on the market (after recalling all loans) would do to other funds’ valuations.

Eyes open

One solution could be for investors to insist that the funds they back do not engage in this type of lending activity. But, given the difficulty of covering costs with declining management fees, that could make it less likely that compliant funds survive. And if the returns from lending boost fund performance, am I not obliged to seek the best possible return for my investors? Most investors in crypto hedge funds are themselves institutions, who are also judged by their performance. There is for now little incentive to insist on curbs on lending.

Regulation could come in and establish rules over transparency and oversight, as is happening in traditional finance. But regulators are still getting their heads around the crypto space, and are doing so at a cautious pace.

In the absence of clear rules, it is up to the sector to keep an eye on developments in both crypto fund administration and crypto asset lending. It is, after all, in its own interest to ensure a smooth and robust market.

But self-regulation has its own risks and is hard to execute in as opaque an activity as crypto asset lending. True, blockchain-based transactions are available for all to see – but most crypto asset lending is likely to take place off-chain, as an agreement between two parties.

However, letting the practice spread without some guidance could escalate systemic risk. As the traditional markets saw in 2008, the intertwined web of asset holdings through through opaque lending arrangements left institutions vulnerable and investors grasping at air.

Crypto markets have enough hurdles to overcome to reach mainstream acceptance. We shouldn’t let hidden risks that develop in front of our very noses to be one of them.

Lending image via Shutterstock

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Bitcoin

Bitcoin Cash Miners Undo Attacker’s Transactions With ‘51% Attack’

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Two bitcoin cash (BCH) mining pools recently carried out what is known as a 51 percent attack on the blockchain in an apparent effort to reverse another miner’s transactions.

The move is tied to the bitcoin cash network hard fork that occurred on May 15. The two mining pools — BTC.com and BTC.top — carried out the move in order to stop the unknown miner from taking coins that they weren’t supposed to have access to in the wake of the code change. That day, an attacker took advantage of a bug unrelated to the upgrade (and subsequently patched) that caused the network to split and for miners to mine empty blocks for a brief time.

In the context of cryptocurrencies like bitcoin cash, a 51 percent attack involves an entity or group controlling a majority of the hash rate which thereby allows them to execute several things they aren’t normally allowed to do, such as attempting to rewrite the network’s transaction history.

It’s long been a controversial topic and other cryptocurrencies have suffered similar attacks due to a decline in their hash rates.

At one point BTC.top did alone control more than 50% of the power. But BTC.com and BTC.top they were able to join together to reverse the blocks of transactions. According to stats site Coin.Dance, the two mining pools currently have combined 44% of bitcoin cash hashing power.

The interesting part of this particular attack on bitcoin cash, though, is that it was arguably executed in an attempt to do something ostensibly good for the community, not to reward the attackers or to take the funds for themselves.

But not everyone in the bitcoin cash community agrees. As one bitcoin cash developer, going by the moniker Kiarahpromises, put it in an article from May 17:

“To coordinate a reorg to revert unknown’s transactions. This is a 51% attack. The absolutely worst attack possible. It’s there in the whitepaper. What about (miner and developer) decentralized and uncensorable cash? Only when convenient?”

Anatomy of an attack

The inner details of the mining pools’ attack (as well as the attack that prompted the attack) are complicated.

“Since the original split in 2017, there has been a significant number of coins accidentally sent to ‘anyone can spend’ addresses (due to [transaction] compatibility of sigs, but no #SegWit on #BCH), or possibly they’ve been replayed from #Bitcoin onto the #BCH network,” bitcoin podcast host Guy Swann said, explaining the situation on Twitter.

But once one code change was removed during bitcoin cash’s May 15 hard fork, these coins were suddenly spendable “basically handing the coins to miners,” he added.

The unknown miner attacker decided to try to take the coins. That’s when BTC.top and BTC.com swooped in to reverse those transactions.

“When the unknown miner tried to take the coins themselves, [BTC.top and BTC.com] saw & immediately decided to re-organize and remove these [transactions], in favor of their own [transactions], spending the same P2SH coins, [and] many others,” Swann went on.

But some bitcoin cash users argue this was the right thing to do.

“This is a very unfortunate situation, but it is also what proof of work actually is. The miners in this case did choose to drop prohashes block and from what I heard, it is because they deemed a transaction within it to have been invalid,” responded active bitcoin cash supporter Jonathan Silverblood.

Still, others think that this is a bad sign for bitcoin cash, arguing that the event demonstrates that the cryptocurrency is too centralized.

Yet the thread of a 51 percent attack is a concern shared across proof-of-work crypto networks (and as mentioned above, some blockchains have been left exposed due to falling hash rates). For example, half of bitcoin’s current hashing power is divided among just three mining pools according to stats website Blockchain.

Mining software image via Shutterstock

This article has been updated for clarity.

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