Ethereum blockchain set for 'monumental' overhaul

PARIS - An army of computer programmers scattered across the globe is set to attempt one of the biggest software upgrades the crypto sector has ever seen this week to reduce its environmentally unfriendly energy consumption.

Developers have spent years working on a more energy-efficient version of the ethereum blockchain, a digital ledger that underpins a multibillion dollar ecosystem of cryptocurrencies, digital tokens (NFTs), games and apps.

Ethereum -- the second most important blockchain after bitcoin -- burns through more power each year than New Zealand.

Experts say the changeover, expected to take place between Tuesday and Thursday, would slash energy consumption by more than 99 percent.

Enthusiasts hope a greener ethereum will spur wider adoption, particularly as a way of enabling banks to automate transactions and other processes.

But so far the technology has been used largely to create speculative financial products.

The ING bank said in a recent note that the switchover might help ethereum gain acceptability among policymakers and regulators. 

"This in turn may provide a boost to traditional financial institutions' willingness to develop ethereum-based services," the bank said.

The switchover, dubbed "the merge", will change the way transactions are logged.

At the moment, so-called crypto miners use energy-guzzling rigs of computers to solve puzzles that reward them with new coins -- a system known as "proof of work".

The new system will get rid of those miners and their computer stacks overnight.

Instead, "validators" will have to put up 32 ether (worth $55,000) -- ethereum's cryptocurrency -- to participate in the new "proof of stake" system where they earn rewards for their work.

But the merge process will be risky.

Blockchain company Consensys called it a "monumental technological milestone" and the biggest update to ethereum since it was launched in 2015.

Critics have questioned whether such an upgrade will pass off without incident, given the sector's history of instability.

Ethereum went offline in May for three hours when a new NFT project sparked a surge in buyers that overwhelmed the network.

Several exchanges and crypto companies said they would halt transactions during the merge process.

The upgrade also faces a possible rebellion from crypto mining companies whose business will be severely damaged.

They can try to hijack the process or create a "fork", basically a smaller blockchain that would continue with the old mechanism.

And even if the "merge" is successful, ethereum will still face major hurdles before it can be more widely adopted.

For example, it is expensive to use and the update will not reduce fees.

And the wider crypto sector is beset by wildly fluctuating prices, security flaws and an array of scams.

Crypto lawyer Charles Kerrigan from the firm CMS told AFP that ethereum was "decentralized and complicated" and had not yet been tested enough for governments and banks to get onboard.

"There have been questions about how easily it could deal with upgrades of the type that traditional software vendors provide to customers," he said. 

"A successful merge will answer those questions."

Agence France-Presse

Meme-based cryptocurrency Dogecoin soars 40 percent to all-time high

LONDON - Meme-based virtual currency Dogecoin soared on Wednesday to an all-time high, extending its 2021 rally to become the fourth-biggest digital coin.

Dogecoin, launched as a satirical critique of 2013's cryptocurrency frenzy, has climbed 41 percent in the last 24 hours to a record $0.68, according to CoinMarketCap.

This year alone it has soared over 14,000 percent, from $0.00468 on Dec. 31, taking it past more widely used cryptocurrencies such as the Tether stablecoin and XRP to become the fourth-largest by market capitalization.

Dogecoin - whose logo features a Shiba Inu dog at the center of the meme - remains little used in commerce or payments. Like other digital coins, it is highly volatile and its price is heavily influenced by social media users.

On Tuesday, the New York crypto exchange Gemini said it would start letting users trade and custody the token.

Some cryptocurrency market players said its volatility was its main draw, with a mixture of retail investors and market makers fuelling its trading volumes.

"The ugly truth is that a lot of crypto valuations are divorced from reality anyway," said Joseph Edwards, head of research at crypto brokerage Enigma Securities.

"Right now, (Dogecoin) is being seen as it's always been seen - an asset with surprising staying power that provides opportunities to take advantage of volatility every year or so."

Dogecoins are now cumulatively worth $88 billion, compared to bitcoin's $1 trillion and ethereum's $391 billion. 

-reuters-

Ethereum breaks past $3,000 to quadruple in value in 2021

SINGAPORE - Cryptocurrency ether broke past $3,000 on Monday to set a new record high in a dazzling rally that has outshone the bigger bitcoin, as investors bet that ether will be of ever greater use in a decentralized future financial system.

Ether, the token transacted on the ethereum blockchain, rose 3% on the Bitstamp exchange to $3,051.99 by lunchtime in Asia. It is up more than 300% for the year so far, easily outpacing a 95% rise in the more popular bitcoin.

In part, the big rally is a catch-up to late 2020 gains in bitcoin, said James Quinn, managing director at Q9 Capital, a Hong Kong cryptocurrency private wealth manager.

It also reflects improvements to the ethereum blockchain, he said, and a growing shift towards "DeFi", or decentralized finance, which refers to transactions outside traditional banking for which the ethereum blockchain is a crucial platform.

"At first, the rally was really led by bitcoin because as a lot of the institutional investors came into the space, that would be their natural first port of call," Quinn said.

"But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on ethereum."

The launch of ether exchange-traded funds in Canada and surging demand for ether wallets to transact non-fungible tokens such as digital art have also pushed up the price.

The ether/bitcoin cross rate has soared more than 100% this year and hit a 2.5-year high on Sunday, pointing to a degree of rotation into the second-biggest cryptocurrency as investors diversify their exposure.

"Surging DeFi volumes continue to push ethereum prices higher as investors gain confidence in crypto and see ethereum as a safe second-place asset," said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital.

Illustrating the momentum for such new transactions, Bloomberg reported last week that the European Investment Bank plans on issuing a digital bond over the Ethereum blockchain, while JP Morgan plans a managed bitcoin fund.

Bitcoin, the world's biggest crypto asset with more than $1 trillion in market capitalization, regained the $50,000 mark last week and hovered around $58,000 on Monday, up about 3% but well below its record high at $64,895.22.

The US dollar was broadly steady.

-reuters-

New York Times digital 'NFT' article sells for $563,000

NEW YORK, United States - A New York Times columnist on Thursday sold one of his articles in digital form for $563,000, the latest example of the craze surrounding "non fungible tokens," which collectors are snapping up.

Keven Roose's article entitled "Buy This Column on the Blockchain" was itself aimed at trying to test the market as to what sort of items would sell in the form of an "NFT."

A non-fungible token (NFT) is a digital object, such as a drawing, piece of music, photo, or video, with a certificate of authenticity created by blockchain technology.

This authentication by a network of computers is considered inviolable. 

The virtual object, which is actually a computer file, can be exchanged or sold with its certificate.

NFTs have become popular in the past 6 months, as wealthy collectors turn to the digital market during the pandemic.

On Monday, the first message ever posted on Twitter sold for $2.9 million when its sender, Twitter co-founder and chief Jack Dorsey, accepted the winning bid at auction.

Earlier this month, a digital collage by American artist Beeple sold for $69.3 million at Christie's, setting a new record for an NFT.

"Why can't a journalist join the NFT party, too?" asked Roose in his column.

At the end of the 24-hour auction, a collector calling himself Farzin won the article with 350 Ethereum, a major cryptocurrency, worth $563,000. 

"Fully just staring at my monitor laughing uncontrollably," Roose, a tech columnist, wrote on Twitter after the sale.

Roose had indicated that the proceeds, after the 15 percent fee deducted by the Foundation platform on which the auction was organized, would go to charities supported by The New York Times. 

Agence France-Presse

Bitcoin climbs towards all-time high after topping $19,000

LONDON - Bitcoin moved to within a whisker of its all-time high on Tuesday, after hitting $19,000 for the first time in nearly three years.

The world's most popular cryptocurrency was last up 4.8 percent at $19,225, just shy of its all-time record of $19,666 hit in December 2017. Bitcoin has gained around 25 percent in the last two weeks alone, and is up around 160 percent this year.

Fuelling its rally has been the demand for riskier assets amid unprecedented stimulus programs to counter the COVID-19 hit; hunger for assets perceived as resistant to inflation; and expectations cryptocurrencies will win wider acceptance as a method of payments.

Bitcoin's 12-year history has been peppered with vertiginous gains and equally sharp drops. Its markets and price discovery is highly opaque compared with traditional assets such as stocks or bonds.

"My base-case scenario is that we will break the 2017 high and hold above it," said Fawad Razaqzada, an analyst at FX brokerage Think Markets. "But if you get an immediate rejection above the all-time, that would raise the possibility of a correction."

Smaller digital currencies such as ethereum and XRP - which often move in tandem with bitcoin - took a breather after gaining sharply in recent days.

Crypto markets have matured since bitcoin's December 2017 peak, attracting a greater number of large investors such as family offices and hedge funds.

Its 2020 gains have prompted some investors to claim the cryptocurrency could more than quintuple in price to as high as $100,000 in a year, drawing eye rolls from sceptics who say it is a purely speculative asset.

Analysts say bitcoin's limited supply of 21 million makes it a good hedge against inflation. Some investors think the value of traditional currencies will fall as governments and central banks unleash massive stimulus packages to support economies hit by COVID-19.

Yet bitcoin's gains have continued even as gold - traditionally a go-to hedge against inflation - has slipped, with a resurgent pandemic making global growth and inflation recovery a more distant prospect.

Gold has shed 3.6 percent this month, versus bitcoin's 40 percent gain.

Bullish investors cited expectations that bitcoin would achieve mass use as a means of payment - something it has so far failed to do - as a reason for the divergence.

Mainstream companies such as PayPal have embraced cryptocurrencies, sparking hopes bitcoin would become widely used and thus more valuable.

"With BTC one is also long a global currency which is now not just a easily accessible store of value but also a convenient payment mechanism," said Michael Hall at Nickel Digital Asset Management, a crypto fund in London.

(Reporting by Saikat Chatterjee; Additional reporting by Tom Wilson; Editing by Thyagaraju Adinarayan and Alex Richardson)

-reuters-

Millions in cryptocurrencies frozen after Canadian founder's death

TORONTO -- About C$180 million ($137.21 million) in cryptocurrencies have been frozen in the user accounts of Canadian digital platform Quadriga after the founder, the only person with the password to gain access, died suddenly in December.

Gerald Cotten died aged 30 from complications with Crohn's disease while volunteering at an orphanage in India, according to the Facebook page of Quadriga CX, which announced his death on Jan. 14.

The platform, which allows the trading of Bitcoin, Litecoin and Ethereum, filed for creditor protection in the Nova Scotia Supreme Court last week.

Quadriga has 363,000 registered users and owes a total of C$250 million to 115,000 affected users, according to an affidavit filed by Cotten's widow Jennifer Robertson on behalf of the company.

Robertson said in the affidavit that Cotten's main computer contained a "cold wallet" of cryptocurrencies, which is only accessible physically and not online, and his death left "in excess of C$180 million of coins in cold storage."

Robertson said she was not involved in Cotten's business while he was alive and did not know the password or recovery key.

"Despite repeated and diligent searches, I have not been able to find them written down anywhere," she said.

Robertson said that she has consulted an expert who has had "limited success in recovering a few coins and some information" from Cotten's other computer and cell phones, but the majority remains untouched on his main computer.

Quadriga's troubles highlight the unique challenges of cryptocurrencies, Dean Skurka, vice president of rival platform Bitbuy.ca, said in an interview with the Canadian Broadcasting Corp.

"This really highlights the need for the government to take action and regulate cryptocurrency exchanges," Skurka said.

Robertson said in her affidavit she has received online threats and "slanderous comments", including questions about the nature of Cotten's death, and whether he is really dead.

source: news.abs-cbn.com

Bitcoin rises 10 pct, recovers from last week's brutal selloff

SINGAPORE/TOKYO - Bitcoin extended its recovery in holiday-thinned trading on Tuesday, rising 10 percent to be up more than a third from last week's lows of below $12,000.

Bitcoin, the world's biggest and best-known cryptocurrency, fell nearly 30 percent at one stage on Friday to $11,159.93 and, despite a late recovery, had its worst week since 2013. At 0445 GMT on Tuesday, it was quoted around $15,049 on the Luxembourg-based Bitstamp exchange.

The digital currency had risen around twentyfold since the start of the year, climbing from less than $1,000 to as high as $19,666 on Dec. 17 on Bitstamp and to over $20,000 on other exchanges. But it has posted heavy declines since.

While bitcoin investors and analysts believe the decline in its value was a natural correction after a heady run-up in prices, there have been further warnings from market regulators and central banks.

"There is no right current price which would reflect the right current valuation," said Andrei Popescu, Singapore-based co-founder of COSS, which describes itself as a platform that encompasses all features of a digital economy based on cryptocurrency.

"Taking profit is right, while buying into a long term projection is also right. You don't have to be right in this market, just less wrong than the rest," Popescu said.

Shmuel Hauser, the chairman of the Israel Securities Authority, said on Monday he will propose regulation to ban companies based on bitcoin and other digital currencies from trading on the Tel Aviv Stock Exchange.

Singapore's central bank last week issued a warning against investment in cryptocurrencies, saying it considers the recent surge in their prices to be driven by speculation and that the risk of a sharp fall in prices is high.

Prices of rival cryptocurrencies, which slid along with bitcoin last week, have also recovered, with Ethereum, the second-biggest cryptocurrency by market size, quoted around $771, up from Sunday's low of $689 but still far from highs around $900 hit last week.

(Editing by Sam Holmes)

source: news.abs-cbn.com

Initial Coin Offerings, the lawless land of cryptocurrency fundraising

BERLIN - From raising $30 million in 30 seconds to being endorsed by Paris Hilton or vanishing into thin air: anything is possible in the risky new world of cryptocurrency fundraising, but regulators are lurking.

Bypassing oversight of any kind, Initial Coin Offerings (ICOs) have sprung from nowhere to become a hugely popular way for start-ups to raise funds online, offering self-created digital "tokens" or coins to any willing buyer.

ICOs herald "the democratization of investment", said Nil Besombes, a French blogger who specializes in digital currencies.

But in the lawless Wild West of ICOs, the risks are legion and Besombes himself admits to losing "the equivalent of 1,800 euros" when he fell for a slick online sales pitch -- only for the company to disappear without a trace.

"It's like gambling," he told AFP.

While the term ICO may suggest a link with conventional Initial Public Offerings (IPOs), there is no flotation on the stock market and the ICO investor typically holds no ownership stake in the company which would entitle them to a slice of profits distributed as dividends.

ICOs are thus essentially a form of crowdfunding where participants are betting that the value of their "tokens" will go up and that they will eventually be able to trade them for established cryptocurrencies like bitcoin and Ethereum, which can in turn be exchanged for traditional currencies.

ICOs have exploded this year with investors pouring $3.6 billion into 228 projects, according to data from Coinschedule. In 2016, that figure stood at just $96 million for 46 ICOs.

By June of this year, the money raised through ICOs surpassed that of early stage venture capital investments, the traditional way for young companies to raise funds from wealthy investors.

The ICO craze has drawn the attention of regulators around the world, who have warned of the risks of fraud, the volatility of virtual currencies and the lack of clarity on what a "token" represents.

"A lot of ICOs see values plummet by 80 or 90 percent but they can rebound strongly once the project begins to deliver results," said Tristan Colombet, head of the French auction platform Domraider, itself funded by an ICO.

The "tokens" offered by his company are currently worth just a third of what they were at the launch, to the dismay of investors.

Colombet says things will pick up "in early 2018" when his system to track auctions online and in the auctioneering room in real time is fully implemented, using the same "blockchain" technology that underpins bitcoin and many of the tech start-ups in the ICO universe.

CELEBS AND 'DIGITAL GOLD'

The gold rush fever surrounding ICOs is partly down to the soaring success of bitcoin, which first hit parity with the US dollar in 2011, two years after it was created.

Since then, the world's best-known virtual currency has enjoyed a meteoric rise, defying predictions of a crash. It has now surpassed $9,500.

Many ICO investors are lured by the possibility of stumbling upon the next "digital gold".

Firms issuing ICOs have raised their visibility by enlisting celebrities like LA socialite Paris Hilton, hip-hop producer DJ Khaled and US boxer Floyd Mayweather to tout their digital tokens on social media.

The endorsements prompted the US Securities and Exchange Commission to warn this month that celebrities "often do not have sufficient expertise" to judge such investments, and that they must disclose if they are receiving compensation for promoting ICOs.

SCRAMBLING TO RESPOND

The proliferation of ICOs has forced regulators around the world to take notice, their responses ranging from a crackdown to a wait-and-see approach.

China and South Korea have banned ICOs outright, while European supervisory bodies have voiced strong concerns.

The UK's financial regulator cautioned against the "very high-risk, speculative investments", while Germany's powerful Bundesbank central bank warned that the ICO trend was "attracting fraudsters".

The European Securities and Markets Authority (ESMA) said investors risked having no legal recourse in case of a dispute, as ICOs tend to fall "outside of the scope of EU laws and regulations".

Canadian and Russian regulators however have chosen another path by creating so-called "regulatory sandboxes", a framework that allows ICO firms to experiment for a certain time without falling foul of securities laws.

"We welcome this type of innovation," said Louis Morisset, president of the Canadian Securities Administrators, while stressing that ICO issuers should "understand what obligations may apply".

source: news.abs-cbn.com