Author: Robert Drage

Robert is a freelance researcher, with a background in information science currently interested in blockchain technology and technical developments in the field.

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Crypto News Ethereum Gas Mining

$1 Million in ETH Burned 3 Hours Following London Hard Fork

The long-awaited Ethereum hard fork has been operational for a few days now and with a massive amount of ETH already burned, the currency could be well on its way to becoming deflationary.

At the time of writing, the total amount of Ethereum (ETH) burned since the London hard fork had already run up to 4300 ETH, about US$11 million worth of the digital currency. The network is burning the digital currency at approximately 3.68 ETH ($10,295) every minute on average.

Ethereum burn statistics. Source: watch the burn.com

The update has integrated a new mechanism that burns a portion of the base fee of a transaction, while the other portion goes to the miner. Shortly after implementation, the price of Ethereum jumped more than 6 percent, adding to its 12-day price gain.

Many other updates were administered in the Ethereum hard fork, and here’s what you need to know.

Change to a Flexible Monetary Policy Aids Deflation

By burning the majority of the base fee of transactions, the mechanism aims to deflate the supply of Ethereum. While a sustained rate of over 2 ETH per block is necessary to see Ethereum’s supply deflate, EIP-1559 is the first step on its road to a deflationary monetary currency.

The much anticipated EIP1559 network upgrade was a huge day for the Ethereum cryptocurrency ecosystem. Now, every transaction, NFT purchase or loan on the Ethereum network will result in ETH being burned out of existence, making ETH a deflationary and inflation-busting asset.

Ross Middleton, chief financial officer, DeversiFi

What Does the Change Mean for Users and Miners?

Looking at user experience, gas fees and Maximal Extractable Value (MEV), topics that usually have a negative connotation when talking about Ethereum are being solved.

Anyone sending a transaction will know the fee in advance; users currently have to submit a bid to miners, which can lead to overpaying or long wait times if the fee is too low. Meanwhile, the block size increase means the queue to get in will be faster during peak congestion […] To avoid being subject to gas price manipulation for gas refunds, smart contracts need access to a decent trustless gas price oracle. That’s another thing EIP-1559 solves.

Justin Drake, Ethereum 2.0 researcher

However, what miners will get from transactions is a fraction of what they used to be. While the current Proof-of-Work consensus mechanism sees Ethereum pay miners more than 12,000 ETH every day, experts believe Proof-of-Stake will reduce that to around 1,000 ETH per day.

When ETH gets burned it becomes more scarce, which benefits all holders. With enough activity on the network, the amount of ETH burned through transactions could surpass the amount issued to validators through Proof-of-Stake. This would make ETH deflationary, or as Drake would say, “ultrasound”.

Categories
Bitcoin Crime Crypto News Litecoin

IRS Seized $1.2 Billion in Crypto and Quietly Auctioned Some Off

In June, GSA Auctions tried to sell off some confiscated crypto with an estimated value of US$377,000, bringing total seizures so far in 2021 to US$1.2 billion.

US General Services Administration (GSA) auctions are just one of the entities that sell off federal property seized by the IRS. The most recent lot, with an estimated value of $21,500, is 4TQSCI21402001, confiscated as part of a tax non-compliance case with combined lots worth about $377,000.

GSA first began auctioning cryptocurrency on behalf of the US government in early 2021. To date, bidders on the GSA Auctions platform have successfully bid for a total of 16.99 bitcoins over three auctions that collected a combined $937,092.

Experienced investors recognise a good opportunity when they see it, which is why our auctions have generated so much enthusiasm among the crypto community […] With the addition of a new type of cryptocurrency, this promises to be one of our most exciting auctions of the year.

Thomas Meiron, regional commissioner, GSA’s Federal Acquisition Service

US Government Has Been Trading in Crypto Since 2013

Since 2013 the US Government has been selling confiscated crypto including Bitcoin, Ethereum, Litecoin and others, with Silk Road being one of the earliest and largest cases of crypto seizure. The Silk Road wallet containing approximately 30,000 BTC was eventually sold to venture capitalist Tim Draper for US$19 million, now worth over US$1.1 billion.

According to Jarod Koopman, director of the IRS cybercrime unit, “In fiscal year 2019, we had about $700,000 worth of crypto seizures. In 2020, it was up to $137 million. And so far in 2021, we’re at $1.2 billion.”

The government has been seizing, stockpiling and selling off cryptocurrencies, alongside the usual assets one would expect to be gleaned from high-profile criminal sting operations.

It could be 10 boats, 12 cars, and then one of the lots is X number of bitcoin being auctioned.

Jarod Koopman,  director, IRS cybercrime unit

Lawbreakers Providing Government With Some Pocket Money

With the increase of cybercrime and crypto scams, the haul of digital tokens will increase along with it. And with the US Treasury setting its sights on tax evaders trying to use crypto to beat the tax man, government crypto safe boxes are expected to swell even further.

Since the Silk Road takedown, the government has successfully established a workflow that remains in place.

“Interviews with current and former federal agents and prosecutors suggest the US has no plans to step back from its side hustle as a crypto broker,” CNBC reported on August 4.

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Bitcoin Cryptocurrencies Google

Crypto Exposure Grows as Google Officially Lifts Advertising Ban

Google’s advertising ban on cryptos has officially been lifted. As of August 3, the tech giant will allow companies in the crypto space to advertise on its search engine and sites that are a part of its platform.

Google had already updated its advertising policy in June, to take effect in August. According to Google, “as of August 3, advertisers offering brokerages and cryptocurrency wallets aimed at the US can advertise these products and services”.

Policy Changes for New Crypto Regulation

With the revocation of the ad ban, Google has prescribed specific requirements that need to be upheld by advertisers. Google told Bloomberg in June that the change was made to comply with new US Financial Crime Enforcement Network (FinCEN) regulations.

The new policy will apply globally to Google Search and its third-party sites including YouTube, Gmail and Blogger. 

Coinbase now appears as the top result when users search for the term “bitcoin” in the US, an exchange entry appearing with the recommendation to “buy and sell bitcoin at Coinbase”.

What Does This Mean for Crypto?

Bitcoin itself does not have a marketing budget, relying instead on the crypto grapevine or companies that provide bitcoin services to do the marketing.

The end of Google’s ban could lead to increased exposure for bitcoin and other cryptocurrencies by allowing companies to re-advertise.

Twitter, Facebook and Google prohibit the advertisement of initial coin offerings but allow exchanges or wallet services provided by a publicly traded crypto company to advertise with them, as long as they comply with local laws.

As Google has relaxed its advertising policy, other major advertisers might follow suit.

The change in Google’s attitude is very positive for the cryptocurrency market, which has faced regulatory uncertainty around the world. Being allowed on the Google ad network will obviously ensure bitcoin reaches a larger number of potential users.

Categories
Bitcoin Crypto Wallets Markets

Bitcoin Dips Below $40,000, Despite 30% Increase in Active Addresses

Data from on-chain analysis firm Glassnode shows there has been a 30 percent increase in active Bitcoin (BTC) addresses. However, BTC has only risen above the US$40,000 mark a handful of times.

Bitcoin Gains Some Driving Power

The Bitcoin network (BTC) has recently seen a notable increase in active addresses per day. According to Glassnode, in one week active addresses increased from 250,000 to 325,000.

This is the biggest surge recorded since the number of active Bitcoin wallets dropped 41 percent from 425,000 in January 2021 to below 245,000 addresses in early July.

Bitcoin flows in/out of exchanges: Glassnode

Alongside a significant turnaround in active Bitcoin users, a one-year record volume of BTC outflows has been hit, comparable to peak outflows seen in November 2020. This is a bullish signal indicating that BTC has been bought on exchanges and is being moved to wallets for safekeeping.

Considering all the BTC that has moved to wallets, it is also important to remember that over 50 percent of bitcoin has not moved in a year.

Bitcoin (BTC) has only touched the US$40,000 mark a handful of times since its $63,000 high in April, and has since been ranging between $32,000 and $38,000. Recent rumours of Amazon accepting bitcoin, along with the positive talks between Jack Dorsey and Elon Musk at the B word Conference, spiked it up to $42,000 but to no avail, as the price dropped back down under $40,000.

Bitcoin Millionaires Hit New High

During this time, bitcoin millionaires have also been accumulating. Bitcoin held on addresses storing 100-to-10,000 BTC hit 9.23 million bitcoin (US$364 billion) as of August 1, which is a new all-time high for this group of investors.

In the last four weeks, these addresses have accumulated approximately 170,000 more BTC. This staggering pace was last matched in late December 2020, right before a massive bull run kicked off in 2021 where prices jumped from $29.0k to $40.8k in the year’s opening week.

Santiment data analytics

According to cryptocurrency data-tracking firm BitInfoCharts, there are now over 80,000 BTC millionaires, up from 25,000 just three months ago.

Categories
Crypto News Gaming Scams

Fake Ronin Wallets Drain Users’ Funds

A number of fake Ronin wallets have been spotted circulating on the Google and Apple app stores. The fake wallets trick users into giving up account information, then drain the funds or collectibles held within.

The uptick in Ronin wallet scams parallels the increase of fake wallets across mobile platforms. According to the legitimate Axie Infinity (ASX) page, the company has only released extensions for browsers and has “no Ronin Mobile Wallet at the moment”.

According to Axie Infinity, the wallet is “your boarding pass to a new digital nation” by allowing an extension that lets users play Axie Infinity (ASX) and other decentralised applications running on Ronin, an Ethereum sidechain built specifically for blockchain games.

Various reddit users and members of the Axie community have cautioned against the fake wallets and fake Ronin/Metamask support circulating on the web and among dedicated Telegram and Discord groups.

Another fake Ronin wallet showed up in the App store. Please go and report it to help save people. 🙏🏼 from AxieInfinity

Some users have taken to Twitter, asking developers to implement more safety and compliance measures to keep users’ Axies safe.

Scams have been a problem in the crypto space and come in various forms. Even the well-known hardware wallet company Ledger has suffered from scams where people selling fake Ledgers could get access to the funds.

Axie a Leader in NFT Gaming

Valued at just under US$5 in June of this year, the AXS token is currently trading in the US$35 to US$45 range, putting the project’s native NFT platform above OpenSea and Dapper Labs’ NBA Top Shot, which have been dominating the market for most of 2021.

With over 250,000 active daily players, much of the success of Axie Infinity is attributed to its community of players who collect, battle and trade digital creatures. Its revenue is earned by charging a fee when players buy and sell Axie NFTs in its marketplace, and by collecting fees for creating and breeding axies.

Categories
Ethereum Gas NFTs

$719,000 Lost in Failed ETH Transactions as Stoner Cats NFT Cartoon Goes Live

The new animated adult show Stoner Cats lost close to its total of 310 Ethereum (US$719,000) from failed minting of associated NFTs. Due to the huge demand, the NFTs sold out in record time, spurring an incident where miners were mostly only able to process high gas fee transactions.

Stoner Cats title page: Let’s Eat Cake

The latest non-fungible token (NFT) craze took place on the Ethereum blockchain this week with the release of Stoner Cats, an animated cartoon series with a few hard hitters on board such as Chris Rock, Mila Kunis, Seth MacFarlane, and even Ethereum (ETH) co-founder Vitalik Buterin.

The first drop on July 27 made a total of 10,420 NFTs available and they were selling for 0.35 ETH each on the Stoner Cats website. (The NFT doubles as exclusive early access to the show before opening to the public, and provides lifetime access to the future episodes.) The high demand for the cartoon drove the network to capacity:

High Network Capacity Leads to High Fees

Selling out in minutes, the volume of purchases drove the gas price off the scale. When transactions are conducted on the Ethereum blockchain, like most blockchains it requires gas (gwei for Ethereum) in order to enable miners to process transactions or mint NFTs.

Users who didn’t set a high enough gas price had transactions that were left uncompleted as miners opted for higher-priced transactions.

In this case the gas limit wasn’t set high enough to cover all steps in the transaction, so the transaction failed. However it’s not failing until it runs out, so ~100% of allocated gas is actually being used even without the transaction succeeding.

Daniel Kuhn, Coindesk

During such situations, competition for transactions to be written into the block increases, incentivising miners to prioritise the highest-priced transactions. The developers are being held responsible for not setting the default gas limit high enough.

Blockchain a New Funding Medium for TV?

Stoner Cats is the first TV show to be funded entirely from the sale of NFTs. The team behind it says this was done to escape TV network censorship and retain creative control. The production team, led by producer Mila Kunis and husband and fellow actor Aston Kutcher, plans to release a further 3,000 NFTs per episode and will continue making the series as long as fundraising goals are met.

The profit realised by the NFT sales indicates the Stoner Cats team must have made more than US$8 million on the 10,000 NFTs.

The upcoming Ethereum documentary Ethereum: The Infinite Garden has also recently had its very successful funding round and is planned to premiere by 2023.

Categories
Bitcoin Crypto News Real Estate

First-Ever Bitcoin-Backed Real Estate Refinance Loan Completed

Glen Oaks Escrow has made its first bitcoin-backed refinance loan for a property in San Diego, US. The Californian company is excited about the future of crypto in the real estate industry with the increase of firms accepting crypto.

Having previously only facilitated transactions where the buyer uses bitcoin as payment, the company is excited about the growing use of cryptocurrency in the real estate industry.

Seeing a lender use cryptocurrency for a refinance shows us that this payment method is continuing to grow in how it’s used and who it’s used by.

Joe Curtis, COO, Glen Oaks Escrow

In Australia, some individuals have used cryptocurrencies to pay off their mortgage or to put down a deposit, and some have even put their houses up for bitcoin.

Bitcoin’s Future in Real Estate

Glen Oaks Escrow began accepting bitcoin as payment in 2018 and since then has facilitated a number of transactions.

Seeing someone other than the homebuyer use bitcoin in a real estate transaction tells us that this technology has the potential to continue becoming more prominent […] We look forward to supporting many more cryptocurrency transactions in the future and are very proud that we’ve pioneered the way to implement the systems and processes that allow us to accept it,

Joe Curtis, COO, Glen Oaks Escrow

A bitcoin-backed loan is similar to any other loan, except you can borrow cryptocurrency and use your existing bitcoin as collateral. For more on how it’s done, Binance also has facilities that allow for crypto loans.

Categories
Banking CBDCs Crypto News Nigeria

Nigeria to Launch Digital Currency “e-naira” in October

The central bank of Nigeria has confirmed it will test the “e-naira”, a Central Bank Digital Currency (CBDC), as early as October.

According to an article by Reuters, Nigeria’s Central Bank (CBN) governor Godwin Emefiele announced on July 27 that it would be launching its own cryptocurrency, called the e-naira.

Emefiele stated that the e-naira would operate as a wallet against which customers could hold existing funds in their bank account. The CBDC aspires to help Africa’s largest economy with financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement, and targeted social intervention.

Nigeria’s Central Bank governor Godwin Emefiele

Before the end of the year, the Central Bank will be making special announcements and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace.

Rakiya Mohammed, information technology specialist, CBN

CBN information technology specialist Rakiya Mohammed added that the bank wants the digital currency to make remittances more accessible for Nigerians working abroad. (Nigeria was ranked in the top 10 remittance receivers globally in 2020.)

Mohammed also stated that the CBN had given due consideration to the architecture, accessibility issues and privacy of the currency, which is being built on the Hyperledger Fabric blockchain.

Crypto Usage Booms in Nigeria

In February, Nigeria’s central bank implemented restrictions on the use of cryptocurrencies, though crypto was on the rise regardless and began to be used for peer-to-peer transactions. A few months down the line it was back in favour due to its 32 percent adoption rate by the population.

According to crypto utility website UsefulTulips, in the first half of 2021 the volumes of two major P2P platforms in Nigeria, Paxful and LocalBitcoins, were the largest in Africa, with transactions totalling over US$200 million. Nigeria is the largest market for Paxful, with around 1.5 million users and over US$1.5 billion in trading volume.

Africa has seen a massive 386.93 percent increase in P2P trading volumes on Binance since January, according to Damilola Odufuwa, Binance’s spokesperson in Africa. The user count across the continent grew 2,228.21 percent in the following four months. Elsewhere on the continent, Tanzania is also in the process of adopting cryptocurrency.

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Binance Crypto Exchange Regulation Trading

Crypto Exchanges Are Reducing Leveraged Trading Amid Regulation Pressure

The CEOs of two major crypto exchanges have announced they will be lowering their maximum leverage limit for futures trades. These moves were made amid an impending regulatory storm.

Both FTX and Binance have lowered their maximum leverage limits for futures trading to 20 times leverage. The announcements follow the duly expected release of a new regulatory framework to be implemented by the US Securities and Exchange Commission (SEC) by July 28.

Binance previously had a maximum leverage and margin on Bitcoin (BTC) against Tether (USDT) contracts to 125 times leverage. At that level, a 100 USDT collateral deposit on Binance Futures will allow users to hold 12,500 USDT in BTC.

Binance’s new rule states that new users with registered futures accounts of less than 30 days will not be allowed to open positions with leverage exceeding 20 times. However, leverage limits for new users will gradually increase after one month from registration.

The harsh reality of leveraged trading is that the majority of people who trade in those markets lose out, especially in volatile markets like cryptocurrencies. So not only do you lose your initial investment, but also any additional collateral you may have posted to keep the position open. For many who are new to the crypto market, leveraged trades could put a big hole in the bank.

Binance also recently stopped support for its stock tokens following a slap on the wrist from the Hong Kong SEC. Exchanges are likely worried about the regulatory screws tightening. Huobi has since also suspended the service to Chinese users.

Is Leverage to Blame for Market Volatility?

A July 23 New York Times article also criticised high-leverage trading in crypto as risky. The article implied impending regulatory moves against high-leverage margin trading, citing Timothy Massad, a former US SEC chairman.

Binance CEO Changpeng Zhao acknowledged that “volatility is amplified by the leverage”, according to the NYT article. But FTX CEO Sam Bankman counters by saying: “Nearly every crypto derivatives exchange allows it, and nearly every one will say the same thing: It’s a tiny fraction of volume and positions […] It’s also not what chiefly contributes to volatility.”

This is business as usual for crypto – a market that is known to be highly volatile and exposed to high levels of product leverage on these exchanges. [It’s] a perfect recipe for liquidations that can cut both ways depending on sharp spot movements to the up or downside.

Ryan Todd, research analyst, The Block

Binance De-Risking Operations Ahead of Regulatory Clampdown?

Binance has implemented various changes and has stayed abreast with regulatory requirements as they come up. With regulation becoming clearer, exchanges are trying to not get caught off guard while providing infrastructure for their clients.

Binance Australia is assisting its customers in one such way by partnering with Australian startup Koinly to assist its Aussie customers with crypto tax reporting.

Categories
Australia Blockchain Mining

BHP to Use Blockchain Traceability in Nickel Deal With Tesla

Australian mining giant BHP Group has entered a nickel supply deal with Tesla for its electric car batteries. The companies will also be collaborating to build blockchain-based supply chain technology for raw material traceability and more.

According to a release from the BHP mining group, it will be partnering with the electric car and sustainable energy company, Tesla. The supply agreement will allow Tesla to source sustainably mined nickel and reduce dependence on Indonesian suppliers who have doubled the carbon footprint.

We are delighted to sign this agreement with Tesla Inc and to collaborate with them on ways to make the battery supply chain more sustainable through our shared focus on technology and innovation.

Vandita Pant, BHP Chief Commercial Officer

Headquartered in Melbourne, Australia, BHP stated that the metal will be supplied from its Nickel West operation in Western Australia.

Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade, in large part to support the world’s rising demand for electric vehicles.

 Vandita Pant

Role of Blockchain in Supply Chains

In addition to the supply agreement, BHP and Tesla will develop blockchain-based solutions to track raw materials from mines to production. By tracing materials, companies can verify the origins and production methods used to remain compliant with responsible mining practices, in turn leading to a more sustainable value chain.

A blockchain implementation also allows proof of responsible sourcing to be shared while protecting confidential or competitive information.

In Australia, blockchain technology has already been used in the food and wine industry to protect supply chains against fraud.

BHP Moving to More Sustainable Mining Practices

The global mining company which extracts and processes minerals, oil and gas has committed to cutting carbon emissions by 30 percent by 2030. BHP’s long-term target is to reach net-zero operational emissions by 2050 and has already invested US$400 million toward climate change efforts in 2019. It is working with customers to lower emissions from the steel-making industry, which is among the world’s heaviest polluters.

BHP Nickel mining facility. Source: BHP.com

BHP will also collaborate with Tesla Inc on energy storage solutions to identify opportunities to lower carbon emissions in their respective operations through increased use of renewable energy paired with battery storage.

BHP produces some of the lowest carbon intensity nickel in the world, and we are on the pathway to net zero at our operations. Sustainable, reliable production of quality nickel will be essential to meeting demand from sustainable energy producers like Tesla Inc […] Our nickel is essential to a decarbonising world and Nickel West has a global advantage in the sustainable production of nickel.

Edgar Basto, President, BHP Minerals Australia