Crypto firms might have to share customer data with each other. View in browser

“Bitcoin is underpinned by math and cryptography. Like gravity, it works, whether you believe in it or not.”  ~ Cameron Winklevoss, co-founder of Gemini

Market State

It was quite an exciting week last week for crypto enthusiasts. Bitcoin has been steadily growing and finally surpassed $10000 for the first time since March 2018. Bitcoin is currently trading at $11365. The overall crypto market capitalization reached over $300 billion. If Bitcoin manages to stay above $10000 long enough there is no resistance and it could easily climb up to $12000 or even $15000. Congratulations to everyone for surviving the long bear market throughout the 2018. 

According to Bitcoin has passed another interesting milestone. There are now over a million daily active Bitcoin addresses for the first time since November, 2017. However this doesn’t mean there are one million active Bitcoin users. The addresses define the number of unique “from” or “to” addresses being used in a single day. 

Last week Facebook’s Libra coin has been in the center of attention immediately after its announcement on the 18th of June. According to crypto community Libra is not a cryptocurrency, instead it is digital currency aiming to solve the problem of the 1.7 billion unbanked people in developing countries. Since Libra will be centralized it is required by law to censor transactions. Therefore Libra is competing with central banks and retail banks. Lawmakers have already expressed their concerns about Libra and want Facebook to halt developments of Libra until regulators examine the issues and take action. Many have also been questioning Libra that whether it is a humanitarian project to bank the unbanked or is it just a fight for survival as Facebook usage starts to drop. Whichever it is once Libra launches it will reach 2.4 billion users of Facebook, Instagram and WhatsApp exposing many people to digital currencies for the first time which according to many industry experts will eventually expand the real cryptocurrency users. 

Check the latest Bitcoin Price
Quiz of the week

What is a genesis block?

  1. The first block of a blockchain
  2. The first block after each block halving
  3. The first block after each network splitting

Scroll down to see the answer at the end of the newsletter.

Top stories of the week
Crypto Firms Might Have To Share Customer Data With Each Other

The Financial Action Task Force (FATF) an intergovernmental organization founded in 1989 and devoted to combating money laundering and terrorism financing has released its draft guidance for regulating Virtual Asset Service Providers (VASPs) on the 21th of June. The guidance (Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers) urges its 37 member countries to regulate VASPs including crypto exchanges, custodial wallets and cryptocurrency mixers and tumblers. FATF wants its member nations to make sure crypto firms can freeze wallets or exchange accounts for blacklisted users. The recommendation also require exchanges to share customer information with one another. The required information includes customer name, account number (the VA wallet), physical address or national identity number, or customer identification number that uniquely identifies the originator, or date and place of birth, beneficiary's name and beneficiary’s account number (the VA wallet). 

This rule is a longstanding requirement for international banks when sending each other money on customers’ behalf, and FATF wants to require it from VASPs as well. But blockchain industry advocates argued it would be onerous if not impossible to put into practice with crypto, harmful to user privacy, and counter-productive to law enforcement goals. FATF’s recommendations for anti-money-laundering policies are not binding; member countries shall decide to adopt them by passing legislation. However, countries that do not comply with FATF standards risk to be put on a blacklist, making them less attractive for foreign investments. FATF stated that it will give its member countries 12 months to adopt its guidelines with a review planned for June 2020. 

Bitcoin Is Now 8th Largest World Currency

According to a chart released by Crypto Voices Bitcoin is now the 8th largest currency in the world in terms of monetary base. The monetary base in a country is the total amount of currency in circulation and commercial bank deposits in the central bank. Thus the chart doesn’t factor in the gold reserves that countries hold. Instead gold and silver have their own places in the chart. Gold is the leading store of value by market capitalization with its $7.7 trillion. If you don’t count gold and silver, Bitcoin is the 8th largest currency along with Russian ruble and South Korean won. Bitcoin was created only a decade ago in 2009 and its already overtaken developed countries such as Canada and Australia. If the growth of Bitcoin continues it could soon take over silver within the next few years.

Ethereum 2.0 is set to launch on 3rd of January 2020

The Ethereum Foundation announced the date for the new version of Ethereum blockchain. Ethereum 2.0, which will allow Ethereum to move away from Proof of Work to Proof of Stake consensus mechanism, will launch on 3rd of January 2020 which will precisely coincide with the 11th anniversary of Bitcoin’s genesis block. The code for the upcoming transition to Ethereum 2.0 will be released on 30th of June. The testnet for Ethereum 2.0 has been running since May 2019. Ethereum 2.0 will come with improvements in security, scalability, and decentralization. There are 9 independent developer teams building Ethereum 2.0. Many believe that Ethereum 2.0 will drive the price of Ether back to $1000 as Ethereum is still the most popular platform for tokenization and smart contracts.

Facebook's New Digital Currency Has Been Targeted by Legislators

Facebook has released the whitepaper of its digital coin, Libra. However, the crypto community quickly discovered that “The Libra Blockchain” is actually not a blockchain, thus Libra is not a cryptocurrency but a digital coin. The Libra blockchain will be governed by the founding members of the Libra Association. Libra Association will eventually have 100 members who comply with certain requirements. Libra, the stablecoin will be fully backed by a basket of low volatility assets which includes bank deposits and short-term government securities. Libra aims to be a new global currency, which is a threat to governments. Several governments and regulators have expressed that they will not be welcoming Libra coin. US congresswoman Maxine Waters requested Facebook to halt all developments of the Libra Network until regulators conduct a review.

Ripple Invests $50 Million in MoneyGram

Ripple Inc. the company behind the XRP cryptocurrency has announced a partnership with MoneyGram, the second-largest money transfer service in the world. Ripple Inc. became the first cryptocurrency company that invested in a major US publicly listed firm. MoneyGram is similar to Western Union and has been in the money transfer business for 79 years. Ripple has agreed to buy $30 million worth of MoneyGram shares at a price of $4.10 each which is 3 times the current price of MoneyGram shares. In the next 2 years, MoneyGram has the option to sell an additional $20 million worth of shares to Ripple Inc. at the same price. The investment condition was that MoneyGram would use Ripple’s XRP cryptocurrency and xRapid protocol that handles XRP transfers. Ripple and MoneyGram anticipate that transaction fees drop from $30 per transaction to less than a cent while transactions times drop from 15-60 minutes to just a few seconds.

QuadrigaCX’s CEO Used User Funds for His Own Trading

New revelations arose last week about now defunct Canadian crypto exchange QuadrigaCX. QuadrigaCX’s CEO Gerald Cotten died last December leaving $190 million worth of customers crypto funds inaccessible as he was the only one who had the private key to access the exchange’s cold wallet. Ernst and Young (EY) became the court appointed trustee for QuadrigaCX’s bankruptcy. A report released by Ernst & Young revealed that the deceased CEO had transferred millions of dollars in user funds to his personal accounts and used them for margin trading and fund his millionaire lifestyle. While conducting his fraudulent trading activities he faced major losses which impacted QuadrigaCX’s reserves. The exchange has $21 million at its disposal to cover $160 million in liabilities, according to the report. EY believes that several properties and luxury vehicles that belonged to Gerald were purchased using Quadriga’s user funds which now will be liquidated.

Tweet of the week
Meme of the week
Crypto word of the week

Consensus mechanism is a way of how decentralized network participants reach agreement. Reaching agreements means everyone agrees on which funds belong to which address. In technical terms consensus is where all nodes have the same set of blocks which they validated locally. Two of the most common consensus algorithms are Proof of Work and Proof of Stake.

Quiz answer

What is a genesis block?

The correct answer is “A”.

Thank you for reading :) 

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