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"Financial institutions make people feel safe by hiding risk behind layers of complexity. Crypto brings risk front and center and brags about it on the internet.”  ~ Nick Szabo

Market State

We didn't see much market activity in the past week. 😴 Though the cryptocurrency developments are still rolling on. The total market capitalization was between $117 and $124 billion. Bitcoin briefly dropped below $3500 last week and mainly traded around $3600 range. The price of Ether started the week with 9% gain in anticipation of Constantinople Hard Fork. Then quickly dropped back to $120 due to security vulnerability that was discovered in the upcoming update which lead to the delay of the hard fork.  

The first crypto exchange to suffer a hack in 2019 was New Zealand-based Cryptopia.  After the hack the exchange announced emergency maintenance. Hackers stole $3.5 million worth of cryptocurrencies. The fact that hackers are stealing from exchanges show that cryptocurrencies do have values. As long as people keep their cryptos on centralized exchanges hackers will continue to steal funds. Protect your crypto investments by storing them on hardware wallets or mobile wallets where your funds are always in your control.  

Check the latest Bitcoin Price
Quiz of the week

How are Bitcoin transaction fees calculated?

  1. based on a transaction value in Bitcoin
  2. based on a transaction size in bytes
  3. based on both transaction value and size

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

Top stories of the week
Cryptopia got hacked

New Zealand-based cryptocurrency exchange named Cryptopia has experienced a hack that resulted in a loss of over $3.5 million worth of cryptocurrencies. The exchange has started its operation in 2014. Cryptopia is famous for its wide range of small cryptocurrency trading pairs that list over 800 crypto assets. The platform has halted its services until further notice and announced that they had contacted New Zealand Police. The hacker tried to convert the stolen funds through another exchange, Binance. Binance reported that they had frozen some of the stolen funds. Even if you are not affected by this hack remember that centralized exchanges are never safe. The coins you store on exchanges aren’t yours, they can be stolen or frozen anytime.

Ethereum Hard Fork Postponed

Ethereum Constantinople hard fork which had been scheduled for the 16th of January was postponed at the very last minute due to a security issue. A vulnerability was discovered by a smart contract audit firm ChainSecurity on the 15th of January. The issue that caused the delay was discovered in EIP-1283 (Ethereum Improvement Proposal) which makes smart contract interactions cheaper and efficient. Unfortunately the cost reduction had a side effect that would have allowed an attacker to withdraw funds from the same smart contract over and over again and drain funds in it. Ethereum developers held a meeting and decided to delay the upgrade. The new hard fork date is set for the 27th of February 2019 at block number 7,280,000.

Privacy Coin Grin Has Launched

A new privacy coin Grin, that uses the MimbleWimble protocol, has officially launched. Unlike Bitcoin where every transaction that has ever happened is recorded on the Bitcoin blockchain, MimbleWimble blockchains only need the latest transactions in order to validate new transactions. According to the Grin blockchain explorer the first block was mined on the 15th of January. Each Grin block rewards the miner with 60 Grin coins. At launch the price of of Grin was around $250 which instantly dropped by 97% to one digit according to Coingecko data. Grin is completely open source, there was no premine so the only way you can get Grin is by either mining it or buying it. Grin uses a different mining algorithm than Bitcoin which is called Cuckoo Cycle. The first Grin ASIC mining rig has already been announced by Obelisk team.

Bitcoin At Over 20,000 Grocery Stores

United States Bitcoin ATM (BTM) operator Coinme has partnered up with coin-counting machine operator Coinstar to sell Bitcoin at over 20,000 local stores. Coinstar is a coin-counting kiosk that is located in every major US grocery store. It lets users to convert their loose changes into banknote for 10% fee. Now with Coinme’s partnership Coinstar ATMs will offer its users an option buy Bitcoin for cash. Coinme is the largest Bitcoin ATM operator in the United States which was founded in 2014. Their partnership was confirmed via a press release on the 17th of January. The crypto enthusiasts in the US are excited to purchase Bitcoin with their spare change. Coinstar operates 20,000 machines in the US. If all of them start offering Bitcoin it would increase the number of BTMs by more than 5 times.

Binance Expands Into Europe

Hong Kong-based Binance, the world's largest cryptocurrency exchange by trading volume has entered into the European market by launching a new fiat-to-crypto exchange on the island of Jersey, a British self-governing dependency. Binance Jersey allows users to trade popular cryptocurrencies, Bitcoin and Ether for euro and British pound. Within 24 hours after launch the CEO of Binance reported that the Jersey exchange is already overwhelmed by new user registration. Binance Jersey is an independent entity built on the same technology that Binance uses. Binance arrival in Europe brings competition to local fiat-crypto exchanges.

BitPay Processed Over $1 Billion In Transactions

U.S. based crypto payments processor BitPay announced that it had processed over $1 billion worth of transactions again in 2018. BitPay allows merchants to accept cryptocurrency for payment and convert them into fiat as merchants usually avoid dealing with the volatility of cryptocurrency. The CEO Stephen Pair commented on BitPay's latest milestone: “To process over a $1 billion for a second year in a row despite Bitcoin’s large price drop shows that Bitcoin is being used to solve real pain points around the world.” BitPay also have gained notable customers such as the state of Ohio, which uses BitPay to convert tax revenues collected in Bitcoin into dollar.

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

Bitcoin transaction size depends on the transaction inputs and outputs. Output is the transaction amounts you have received from previous transactions. In Bitcoin’s term it’s called Unspent Transaction Output (UTXO). When you spend your Bitcoins your outputs become inputs in the new transaction.  Inputs are the amount you want to transfer which are selected from the UTXO. Outputs are the amount sent to the recipient. The difference between input and output goes back to you as a change, which is called change output. A transaction can have multiple inputs and outputs. The more inputs and outputs there are, the larger the transaction size is thus higher the transaction fee.

Quiz answer

How are Bitcoin transaction fees calculated?

The correct answer is “B”.

Transaction fees are calculated based on the size of the transaction in bytes and not the value of the transaction in Bitcoin.

Thank you for reading :) 

Have a great day!

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