📰 Crypto Week In Review: Ethereum Classic Lost $1.1 million As a Result Of 51% attack, Ethereum Is Preparing For Big Updates, Jihan Wu May Leave Bitmain and more
Ethereum is preparing for upgrades, while its last hard fork Ethereum Classic lost $1.1 million of users' funds as a result of 51% attack, Bitmain can't deal with crypto market's fall, and lawmakers become a vector of forces putting pressure on cryptocurrency.
Ethereum Hard Fork Is Coming on January 16th
How the network of one of the largest blockchain projects, Ethereum, will develop in the future, we will find out next week. The hard fork of the ETH's network called Constantinople is expected to be activated on Wednesday, January 16th. So far, the developers only expressed cautious optimism and have reported that the risk of a chain split is low.
However, at the moment there is no exact statistics on how many participants supports Constantinople. According to the ethernodes.org data, the number of total Constantinople fork ready clients is 1168 (15.8%), but is worth noting that these statistics are not accurate. Peter Pratscher, the CEO of top ether mining pool Ethermine, said:
"We expect most of the not-updated nodes to be updated by the time the fork block arrives"
Of course, miners are the determining force here. Some of the changes that Constantinople contains, such as the approach to solving the complexity bomb and mining rewards reducing are far from being accepted positively. This and some other changes were postponed to a later date many times, so cutting the ribbon may happen without loud applause.
Ethereum Classic Survived The 51% Attack, Funds Have Been Stolen
Although the Ethereum Classic team at first denied the possibility of 51% attack, the rumors have been confirmed. According to some reports, 2 attacks occurred one by one, and each of them lasted for 7 and 12 hours. As a result of the hacking, an unknown hacker or group of attackers managed to make a profit of more than $1 million.
Curiously, but later, hackers responsible for ETC 51% attack returned $100,000 in tokens. So, on January 10, an anonymous hacker returned $ 100,000 in Ethereum Classic (ETC) to the exchange's account without giving a comment on this matter. Many also thought that this was the action of the so-called white hacker, however, the returned amount of funds is too small compared to the amount actually stolen.
Bitmain Has Suspended Its Mining Activity in Texas
The leading Bitcoin mining equipment manufacturer and owner of several large mining pools, Bitmain has suspended cryptocurrency mining operations in Texas. This Texas project promised to be one of the largest investments of the company, which included several hundred jobs and a leading position in the American mining infrastructure. However, as it turned out, Bitmain cannot implement its plans here. Milam County Judge Steve Young said:
"They have spent millions thus far to renovate the buildings, I’m told there are 7,000 or 8,000 servers out there already"
Rockdale, Texas
Having met another non-positive message from the company, the media began to predict the further exit of Jihan Wu, the founder of Bitmain.
Media Predicted Bitmain's Founder Exit
According to the local news provider South China Morning Post, citing their sources, the founders of Bitmain Jihan Wu and Zhan Ketuan will leave their leadership positions at company, but still will be able to make important strategic decisions. The news has spread rapidly, given that earlier at least 2 or 3 times during the 2nd half of 2018, the Wu's exit has been actively discussed.
According to presented information, which seems to be quite logical, during the crypto market fall executives could not agree on the further development of Bitmain. And, as a result, the company may soon to be leaded by the new CEO, for example, Wang Haichao, who currently holds the position of product engineering director. However, Wu and Zhan have 21% and 37% of the company's shares, so they will be able to participate in solving important business issues.
Bitwise Applied for Bitcoin ETF on NYSE Arca
Bitwise, cryptocurrency index and fund provider, applied Form S1 with the goal to launch the Bitcoin-ETF. The application will be considered by the Securities and Exchange Commission (SEC). According to the statement, the company plans to trade the shares of the new index fund on the NYSE Arca platform. NYSE Arca (previously known as ArcaEx) is stocks/options platform owned by the Intercontinental Exchange (ICE).
This the 2nd time when Bitwise has submitted an application to launch Bitcoin ETF. Now, crypto exchange-traded funds are still a sore subject for the cryptocurrency community and the SEC in particular. Although its not so much time left until the final decision on other Bitcoin ETFs, Bitwise is probably going to take into account the recommendations of the SEC and organize reliable storage of cryptocurrencies under the supervision of the regulator, while the fund itself will be based on the multi-data index.
Japan’s FSA Denied The Approval of a Bitcoin ETF
Earlier, Bloomberg published an opinion that the Japanese financial regulator is on its way to approving Bitcoin ETF. However, at the moment no country has such a precedent, and the Financial Services Agency of Japan (FSA) does not plan to approve a Bitcoin ETF in the near future. In order to confirm this, the agency made an official statement:
"At this moment, we are not exploring an approval of ETFs based on crypto assets"
It is worth noting that Bloomberg in its statement referred to some informed sources, but their information hasn't been confirmed. Of course, “not exploring Bitcoin ETF” and “refuse Bitcoin ETF” are different things, however, the origin and meaning of such an statement in anticipation of the US SEC decision is unknown.
Chinese Government Now Has a Right to Access Blockchain Data And Reveal the Identity of Users
According to local sources, the Government of China approved a policy that would require all users of blockchain services to register their real identification data. Despite the fact that the blockchain and cryptocurrencies have long been considered as a factor of high government risk here, the proposal in that form has been approved only now.
The Regulation for Managing Blockchain Information Services will come into effect on February 15, 2019. According to this policy, both service providers and users of blockchain platforms must register their data with government agencies. Of course, it is clear that not all users and providers will do this, so this will be the official reason for criminal investigations or other measures.
Europe Is One Step Away From Recognizing Crypto As Financial Instrument
Probably, a final regulatory position regarding cryptocurrency assets may soon be taken in the territory of the European Union. At least, the activity of 2 major regulators tells us about it. Firstly, the European Banking Authority (EBA), a regulatory agency of the EU, notes the high risk of cryptocurrency usage and encourages the European Commission to study the need to create uniform rules for controlling digital assets in the European Union. Secondly, the European Securities and Markets Authority (ESMA), can recognize cryptocurrencies as financial instruments.
Despite the measures taken, European organizations still regard the cryptocurrency market as a wild west, as said earlier. Regulators also refer to the recommendations of the Financial Action Task Force on Money Laundering (FATF), which will be published in June 2019. Now we have several vectors of forces aimed at cryptocurrency in Europe at once, and, although there are no concrete proposals yet, it becomes clear that these six months can bring tightening into the cryptocurrency area not only in practice, but also at an officially recognized level.
14 Korean Exchanges Failed Government Security Check
South Korea continues to study the security of cryptocurrency exchanges at the state level. According to the audit, which took place from September to December 2018, and included 85 criteria, not all exchanges coped with the test. Only market giants were able to show their relative safety for users: among them such platforms as Upbit, Bithumb, Huobi Korea, Gopax, Korbit, Coinone, Hanbitco.
At the same time, 14 trading platforms were found to be vulnerable to hacker attacks due to problems with managing network security. What are these exchanges, and what measures will be taken in relation to them, is unknown. Read about the biggest hacker attacks involving South Korean cryptocurrency exchanges in the 2018 review.
NASA Engineer Explained The Benefits of Blockchain Usage
US services are not the first time to note the usefulness of using the blockchain. This time, an engineer at the NASA Research Center was interested in the possibility of using the technology due to the insufficient confidentiality of information about American aircraft. Reisman described the prototype called the Aviation Blockchain Infrastructure (ABI), based on Hyperledger Fabric and smart contracts, which are supposed to provide better protection of confidentiality in the air.
According to Ronald Reisman, the partially centralized blockchain infrastructure would help get rid of the costs of the newly approved ADS-B system. However, at the moment, quite a few projects of this level have been proposed, and it is hard to say how Reisman’s idea will be evaluated.
Bitcoin Whales Are Going to Wake Up as Data Shows
The mysterious movement of big amounts of money and the awakening of previously inactive wallets excite the community. But, the correlations are so unstable that it is difficult to say whether the movement of funds will affect the price of any cryptocurrency or not. However, according to analysts from Flipside Crypto, the noticed activation of whales wallets "[is] definitely a big shift [and] there’s more potential than usual for price swings".
According to the presented data, since October last year, a large number of Bitcoin holders, who have not performed any transactions for a long time (from 6 to 30 months), began to be active, so, from the summer of 2018, the number of active Bitcoin wallets increased by 40%. The core of the researches' argument, of course, is that holders awakening means upcoming serious fluctuations in the prices of cryptocurrencies.
Of course, these are still weak correlations, and some wallets will never be active anymore.
Cryptocurrency Holdings Are Decreasing
According to The Block, exchanges continue to reduce their cryptocurrency balances, so at the moment we have 716k bitcoin (4% of circulation), 7M ether (7% of circulation) and 1.2B tether (64% of circulation) held in the publicly known wallets of crypto exchanges. However, analysts are not trying to say exactly how much Bitcoins were withdrawn by exchanges, because there is no exact information on this issue.
"It’s important to note that:
- the included exchanges could control even more wallets, which are not publicly known
- some major exchanges including Coinbase and BitMEX, which hold significant amounts of cryptocurrencies on behalf of customers, do not have publicly known wallets so they are not included in this summary"
Over the past three months, Bitcoin balances began to decline, with an average of about 6% of funds withdrawn. According to analysts, users' speculative moods may end, while some users still prefer to use personal wallets.
Ex-BitTorrent Specialist Says TRON Can't Tokenize Torrent-Tracker Usage
Last week, the TRON project attracted much attention during its new PR campaign, according to which users of the recently acquired BitTorrent will start to receive tokens based on TRX while just using their torrent client. However, former BitTorrent chief strategy officer Simon Morris says TRON’s BitTorrent Token (BTT) announcement is "basically a marketing machine layered on a very thin veneer of technology".
The TRON's new idea considered as something positive, not only due to monetization, but also as the opportunity to speed up the network. However, Morris argues that the Tron blockchain simply cannot support the amount of transaction required by BitTorrent. We will follow the developments.
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