Category Archives: Crypto

ETH Fails to Live up to Expectations (Hype?)

Source: TrustNodes, Aug 2019

Kyle Samani, co-founder of a crypto hedge fund Multicoin Capital, has stated the reason why eth has performed so poorly against bitcoin is because it “failed to live up to its expectations.”

ETH-BTC’s biggest problem over the last 6 months – and in my opinion likely over the next 12-24 at least – is that it’s failed to live up to its expectations: scaling to be the world computer.

Even the reduced vision – the DeFi chain – is clearly not going to work on Ethereum 1.0. There just isn’t enough throughput for more than maybe 5x the current user base.

Reasonable observers are looking at ETH, seeing lots of broken hopes (raiden, plasma, sharding, no interest in tokenized securities, etc) and just allocating to BTC instead.

There is a real irony to this – and the ETH bulls are vocal about it. There is no way in hell BTC in its current form can scale. This is pretty clear to all ETH bulls.

Why then is BTC not suffering like ETH? Because the market’s expectations are orders of magnitude lower.

The idea of BTC as a settlement layer separate from payments layer resonates because that’s how the world already works, even though this vision is clearly stupid and assumes that technology stops moving forward.

And so, for now, the BTC story in tact, despite its long term fundamental problems and the ETH story is pretty weak. There is not much evidence to support DeFi today is more than altcoin traders trading against themselves.

People are tired of waiting. ETH is not unique in having this problem. Basically all 2015-2017 era alts are going through the same problem, and they are all likely to continue to contract against BTC through this cycle, until they can demonstrate product/market fit and value capture.”

He further said there is no evidence so far that any second layer solution works and/or is usable after someone mentioned zk-snarks scaling.

“Teams have never operated at such high velocity, with teams working in person now for client interop, multiclient testnet coming out, and then mainnet. Confidence in this has never been higher, as we now actually, tangibly, see the light at the end of the tunnel.”

Samani said in reply that there is “still no clarity on how cross-shard SCs will actually work in practice, or the second-order effects.”



China Considers Crypto

Source: Bloomberg, Aug 2019

The People’s Bank of China is “close” to issuing its own cryptocurrency, according to a senior official.

The bank’s researchers have been working intensively since last year to develop systems, and the cryptocurrency is “close to being out,” Mu Changchun, deputy director of the PBOC’s payments department, said at an event held by China Finance 40 Forum over the weekend in Yichun, Heilongjiang.

Mu repeated the PBOC’s intention that the digital currency would replace M0, or cash in circulation, rather than M2, which would generate credit and impact monetary policy. The digital currency would also support the yuan’s circulation and internationalization, he said.

he remarks signal the PBOC is inching toward formally introducing a digital currency of its own after five years of research. Facebook Inc.’s push to create cryptocurrency Libra has caused concerns among global central banks, including the PBOC, which said the digital asset must be put under central bank oversight to prevent potential foreign exchange risks and protect the authority of monetary policy.

“Libra must be seen as a foreign currency and be put under China’s framework of forex management,” Sun Tianqi, an official from China’s State Administration of Foreign Exchange, said at the forum.

Unlike decentralized blockchain-based offerings, the PBOC’s currency is intended to give Beijing more control over its financial system.

According to patents registered by the central bank, consumers and businesses would download a mobile wallet and swap their yuan for the digital money, which they could use to make and receive payments. Crucially, the PBOC could also track every time money changes hands.

The central bank will “expedite the research of China’s legal digital tender” and monitor the trends of virtual currency development at overseas and at home, the PBOC said in a statement listing its work plan for the second half of 2019 released in early August.

Bitcoin Forks

Source :BitCoinMagazine, date indeterminate

Unknown Coin Consumes 60% of ETH Network

Source: TrustNodes, Jun 2019

A token no one has heard of is eating 60% of ethereum’s capacity through an airdrop to countless of accounts.

More Gold Coin, which doesn’t even have a website that we can find, is currently consuming close to 59% of all ethereum’s gas (capacity unit).

See the top line @ 58.81%

Proving with an Interactive App

Source: RJ Lipton website, May 2019
<see the app here:>

an app with animation conveying the essence of a mathematical proof? This means more than “proofs in pictures” or “proofs without words”—the animation and interactivity are crucial.

a novel, I think, proof that uses an app. Stein has written the app and it is here. He explains how to use it. I strongly suggest that you try this yourself.

To get a feel for all this, drag the {a_{0}} coefficient to {-1} and the {a_{1}} coefficient to {1/2}. You should have two real roots in root space (one at {\approx -1.28}, the other at {\approx 0.78}). Let’s call {r_{1}} the negative root, and {r_{2}} the positive root. Now move the coefficient {a_{0}}around in a small loop (i.e. move it around a little bit, and then return it to {-1} where it started). Note that the roots move continuously, and then return to their original positions. Next, move {a_{0}} in a big loop (big enough that it orbits around {r_{2}}). Something funny happens: the roots {r_{1}} and {r_{2}} switch places. 

Crypto-DEXes infested by Malicious Bots

Source: FT, May 2019
<see for study’s source data>

Their research set out to determine whether trading in cryptocurrencies is fair when it takes place on decentralised exchanges (DEXes), where individual traders cut deals directly with each other in a relatively transparent way, without a central authority.

Before the study, it might have been expected — or hoped — that these venues were indeed pretty fair. After all, the whole point of cryptocurrencies is that they enable “miners” to create “money” and for it to be priced in a peer-to-peer manner with a permanent digital record. Central banks, governments and other institutions are not involved: call it digital people power.

when the researchers started tracking the DEXes (six of them, over 18 months) they had a nasty surprise: they found that the networks have become infested by computer bots, operating alongside the libertarian humans who are meant to populate them.

More specifically, some unscrupulous miners and traders have apparently created these bots to anticipate and gain from others’ everyday trades by gaining advantages in the platforms’ information flows, enabling them to siphon off millions — or even billions — of dollars a year in profits.

“Like high-frequency traders on Wall Street, these bots exploit inefficiencies in [DEXes], paying high transaction fees and optimizing network latency to front-run trades,” the research paper declares. “We observe bots competitively bidding up transaction fees in order to obtain priority ordering.” Translated for the lay reader, what this means is that some ruthlessly aggressive traders are finding ways to grab data on the deals that other investors are trying to cut — and then jumping ahead of them to take advantage of the prices.

Front-Running on Crypto-Exchanges

Source: Bloomberg, Apr 2019

“Flash Boys”-like trading manipulation is rampant on certain cryptocurrency exchanges, according to a paper from researchers at Cornell Tech and several other universities.

Special arbitrage bots are anticipating and profiting from ordinary users’ trades on decentralized exchanges, which let them trade more directly, the authors said in a report released last week. The firms that deploy the autonomous trading programs manage to get priority ordering by paying higher fees, and use that advantage for practices such as front running, in which traders can see orders from others and manage to place their own first.

The crypto bots’ use can be so lucrative, it would pay for a miner to execute a so-called 51-percent attack, in which computers take over the network of a particular coin, Juels said in a later phone interview.

The authors of the paper have been tracking a select six decentralized exchanges in real time since October, and also examined historical data. Just on the six exchanges — a fraction of total number of DEXes — they spotted more than 500 bots currently making up to $20,000 a day via such activities, lead author Philip Daian said in a phone interview. Exchanges where activities like front running take place include EtherDelta and Bancor, the researchers said.