Lack of Diversity in Ethereum Smart Contracts Pose Risks to Whole Ecosystem, Report Says

A lack of diversity of Ethereum (ETH) smart contracts poses a threat to Ethereum blockchain ecosystem, according to research by a group of analysts from Northeastern University and the University of Maryland released on Oct. 31.

The paper, entitled “Analyzing Ethereum’s Contract Topology,” claims that most Ethereum smart contracts are “direct- or near-copies of other contracts,” which represents a potential risk if a copied smart contract contains a vulnerable or a buggy code.

Partially supported by the U.S. National Science Foundation, the study has analyzed Ethereum smart contracts’ bytecodes during its first 5 million blocks, which covers almost a three-year time frame from the cryptocurrency’s inception in 2015. The researchers have also collected and modified data via Ethereum’s virtual machine, dubbed geth, in order to log all interactions between contracts and their users.

To date, Ethereum smart contracts are “three times more likely to be created by other contracts” than by users, the study found. Moreover, over 60 percent of contracts “have never been interacted with,” while less than 10 percent of users-backed contracts are unique. The research stated that there is a significant reuse of code on Ethereum, which can allegedly have a “widespread impact on the Ethereum user population,” despite the fact that it is also likely a “driving force behind Ethereum’s success.”

Considering the low diversity of smart contracts on Ethereum as a potential risk to its whole blockchain ecosystem, the researchers mentioned that Ethereum has become a subject of “high-profile bugs” several times, resulting in over $170 million worth of cryptocurrency being frozen. The research concluded that multiple implementations of “core contract functionality” on Ethereum would eventually provide “greater defense-in-depth to Ethereum.”

Developed by Vitalik Buterin, Ethereum is a public, open-sourced blockchain-based platform that features smart contracts as well as its native cryptocurrency Ether. Launched on July 30, 2015, Ethereum is now the second biggest cryptocurrency by market cap at around $20.6 billion, with its price standing at $200 as of press time.

In mid-October, Cointelegraph reported on a security breach of Ethereum smart contracts that caused a loss of around $38,000 for adult entertainment platform SpankChain and its users.

In April 2018, the now second largest crypto exchange by trade volume OKEX suspended all ERC20 token deposits after detecting a “new smart contract bug,” which reportedly allowed hackers to “generate an extremely large amount of tokens, and deposit them into a normal address.”

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Lack of Transparency to Blame for Tether’s Loss of USD Peg: Novogratz

Five days since losing its U.S. dollar peg, fiat-backed cryptocurrency tether (USDT) continues to trade at a discount to its supposed $1.00 valuation.

Defenders have largely chalked up the markdown to FUD, arguing that supporters of other “stablecoins” are launching a coordinated assault on tether, which has long dominated this market niche. However, billionaire investor and cryptocurrency bull Mike Novogratz says that USDT’s woes are the fault of its issuer’s lack of transparency.

tether price cryptocurrency
USDT/USD | Kraken | Source: TradingView

“I think Tether didn’t do a great job in terms of creating transparency,” said Novogratz on Wednesday at a conference in Frankfurt, according to a Bloomberg report. The former Fortress principal specifically called out Tether Limited, the token’s creator, for operating offshore and remaining cagey about its financial relationships, including with whom it is banking.

As CCN reported, Tether is said to be currently banking at the Nassau-based Deltec Bank, where it opened an account after severing ties with the now-floundering Puerto Rican institution Noble Bank. Neither of these relationships has been confirmed publicly.

Concerned about the firm’s opacity, Novogratz said that he prefers some of the newer stablecoin options, particularly the Gemini Dollar (GUSD), which is issued by the cryptocurrency exchange founded by Cameron and Tyler Winklevoss. Unlike Tether, Gemini’s assets are housed in a U.S. correspondent bank, the Boston-based State Street. The stablecoin issuer, which received approval from the New York Department of Financial Services (NYFDS) to release the token, has also contracted with accounting firm BPM LLP to evaluate Gemini’s monthly attestation reports detailing that the token is always fully-backed by USD.

tether cryptocurrency market cap
Tether’s outstanding supply has shrunk by nearly $700 million in October. | Source: CoinMarketCap

“The concept of stablecoins make sense,” Novogratz said, explaining that they are ideal for transactional exchanges, unlike bitcoin, which he has referred to as “digital gold.”

However, competition within the stablecoin market is growing increasingly stiff. GUSD, along with “regulated” stablecoins Paxos Standard (PAX), TrueUSD (TUSD), and USD Coin (USDC), has been listed on a number of major exchanges in recent weeks. All of these tokens have consistently traded at a premium to tether, suggesting that, at least right now, the market trusts them more than USDT. Moreover, two of them — GUSD and USDC — have been added as settlement options on BitPay, which processed more than $1 billion worth of cryptocurrency payments last year.

In follow-up comments posted on Twitter, Novogratz stressed that he believed USDT is fully-backed by physical dollars and did not want to sow rumors about the token.

“Id like to put context to these quotes as the last thing I want to do is spread FUD. I said I thought tether has a dollar for every tether and that we actively traded it. The fact that almost $700mm has been redeemed in an orderly fashion is important.”

Nevertheless, he said that Tether must work harder to earn back lost trust and prove that its token should trade at its full $1.00 valuation.

Featured Image from BIG Crypto/Ethereal Summit/YouTube

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EU to Discuss Further Crypto Regulation Amid Concerns About Lack of Transparency

Economic and financial affairs ministers from the European Union’s (E.U.) 28 member states will reportedly hold an informal meeting on the challenges posed by digital assets and the possibility of tightening regulations, Bloomberg reported August 29.

According to a draft note seen by Bloomberg, participants will discuss a general lack of transparency and the potential for cryptocurrency to be used for tax evasion, terrorist financing and money laundering at a September 7 meeting in Vienna, Austria.

The European Securities and Markets Authority (ESMA) has previously warned customers about Initial Coin Offerings (ICOs), citing a lack of investor understanding and problems with unregulated financial activities. The ESMA also noted that unregulated exchanges are unprotected due to their existence outside of global financial regulations, which means that customer losses from an event like a cyberattack would not be covered by E.U. law.

Despite previous warnings from E.U. financial watchdogs, the document obtained by Bloomberg says that ICOs “have established an effective and efficient way to raise capital.” The document reportedly also states that ICOs could help integrate capital markets in the E.U.

The E.U. Fifth Anti-Money Laundering Directive came into force on July 9. Measures within the directive set a new legal framework for European financial watchdogs to regulate digital currencies. The new rules enact stricter transparency requirements directed at the use of “anonymous payments through prepaid cards” and  “virtual currency exchange platforms” for the purposes of money laundering or terrorist financing.

In March, the ESMA strengthened requirements for Contracts For Differences (CFDs) in cryptocurrencies. In accordance with the introduced rules, investors must have enough funds to cover at least half of a contract value upon opening, changing the leverage limit of cryptocurrency CFDs to 2:1 from 5:1 at opening.

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Regulatory Uncertainty and Lack of User Trust Inhibit Blockchain Adoption

Regulatory uncertainty and trust are major barriers to blockchain adoption among businesses, according to a study released August 27 by ‘Big Four’ auditing firm PricewaterhouseCoopers (PwC).

A new study entitled “Blockchain is here. What’s your next move?” conducted by PwC examined 600 executives in 15 countries on their development of blockchain and opinions about its potential. The countries participating in the survey included Australia, China, Denmark, France, Germany, Hong Kong, India, Italy, Japan, Netherlands, Singapore, Sweden, the UAE, the U.K., and the U.S.

Respondents ranked regulatory uncertainty, lack of trust among users, and ability to bring a network together as the top three barriers to blockchain adoption. Blockchain leader at PwC, Steve Davies, said:

“Businesses tell us that they don’t want to be left behind by blockchain, even if at this early stage of its development, concerns on trust and regulation remain. Blockchain by its very definition should engender trust. But in reality, companies confront trust issues at nearly every turn.”

According to the study, four in five executives worldwide, which represent 84 percent of respondents, have blockchain initiatives in progress, 25 percent of which have fully live blockchain implementations or launched pilot projects.

46 percent of respondents identified the financial sector as the leader in terms of blockchain development in the next three to five years. Respondents also identified sectors with emerging potential for the same period of time as energy and utilities (14 percent), healthcare (14 percent), and industrial manufacturing (12 percent).

The U.S. and China were identified by respondents as leading markets for blockchain development, polling at 29 percent and 18 percent respectively. Respondents also predicted that within the next three to five years, the center of influence will shift to China (30 percent) from the U.S. (18 percent).

Last month, the scientific research institute under China’s Ministry of Industry and Information Technology in collaboration with Internet service provider Tencent Holdings published a report on blockchain in financial services.

According to the report, blockchain will enhance “the transparency of financial transactions, strengthen the flexibility of system operation, and automate processes, thus affecting the record keeping, accounting and payment settlement methods of financial services.”

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Bitcoin and Ether Lack Momentum as Crypto Market Falls Below $200 Billion

In the past 24 hours, the crypto market has lost $23 billion, dropping from $217 billion to $194 billion, as major cryptocurrencies including Bitcoin showed a lack of momentum.

Crypto market valuation chart, provided by

What Has Happened to the Market?

Without any exception, every major cryptocurrency in the market has plunged in value on August 14. Ether, the native cryptocurrency of Ethereum, reached its lowest point in 2018, breaching the $290 mark for the first time since early November, 2017.

Bitcoin Cash, which has performed relatively well over the last several months in comparison to other digital assets like EOS and Ripple, has fallen by 16 percent, to its all-time low.

EOS, Litecoin, Ethereum Classic, Ripple, and others recorded a drop in the range of 15 to 20 percent, triggered by a massive sell-off across major cryptocurrency exchanges.

Throughout this year, the cryptocurrency market experienced three large drops in its valuation, as Bitcoin tested the $6,000 support level in February, April, and June, in an interval of three months. Every time Bitcoin tested the $6,000 mark, it surged to the region of $9,000 to $11,000, only to fall back to $6,000 a month or two after.

While Bitcoin, the most dominant cryptocurrency in the market, did experience similar drops over the past six months, apart from June, it has not seen extended losses in the $5,000 region. Two months ago, BTC fell below the $5,700 mark, reaching dangerously close to the $5,500 support level. But, apart from that month, BTC has rebounded relatively well in the past.

This week, BTC has struggled to show any sign of recovery and momentum, despite recording a 6 percent decline in value while others have plunged by more than 15 percent.

Even with the dominance index of Bitcoin, which measures the dominance of BTC over the entire cryptocurrency market, surpassing the 50 percent mark, BTC has struggled to initiate a corrective rally and rebound to the $7,000 region.

Yesterday, CCN noted in its market recap that if BTC fails to sustain momentum in the lower end of $6,000, a drop to the mid-$5,500 range is inevitable.

“If BTC can demonstrate resilience and stability in the region of $6,200 and $6,500 throughout this week with strong volume, a recovery to $7,000 is possible in the short-term. However, if BTC falls below the $6,000 level, it is possible that BTC tests the mid-$5,500 level, similar to the prediction of cryptocurrency researcher Willy Woo,” CCN’s report read.

The probability of BTC declining to mid-$5,000 has increased in the past 12 hours, as BTC already tested the $5,800 level and recorded a weak bounce from the higher end of $5,000.

Where Does the Market go Next?

If BTC falls below the $5,800 mark and moves to the mid-$5,000 region, which is highly likely given the overly strong downtrend of the market, other major cryptocurrencies and tokens are expected to suffer significantly intensified movements on the downside.

Featured image from Shutterstock. Charts from TradingView.

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‘Lack Of Stability’ Among Factors Preventing Global Bitcoin Breakout, Says UBS Strategist

Swiss-based investment bank and financial services company the Union Bank of Switzerland (UBS) said that Bitcoin’s (BTC) scalability and volatility are still too high for the cryptocurrency to be used as “money,” CNBC reported August 2.

In a note to clients, UBS strategist Joni Teves claimed that until regulatory support is in place and technical hurdles are overcome, Bitcoin could not become a “legitimate asset class,” underlining,

“Bitcoin is still too unstable and limited to become a viable means of payment or a mainstream asset class. Owing to its lack of price stability, bitcoin falls short of criteria that need to be satisfied to be considered money.”

Bitcoin has enjoyed increasing attention from institutional investment sources as prices staged a comeback in July, with many expecting major steps forward in terms of adoption through the second half of the year.

Approval of a Bitcoin exchange-traded fund (ETF) from U.S. regulators is widely considered potential grounds for a seismic shift in sentiment, while global trading and techfirm Susquehanna this week told CNBC a major investment source interacting with Bitcoin would spark a similar watershed moment.

UBS has traditionally been highly bearish on cryptocurrency, in May opting not to offer any related products or services to clients.

Analyzing Bitcoin’s historical price data, Teves appeared to continue the vote of no confidence, noting that Bitcoin cannot “handle the volume of transactions processed by mechanisms being used in the real world.”

Earlier this week, UBS had claimed in a report that Bitcoin would need to trade at around $213,000 in order to replace the U.S. money supply. Cryptocurrency industry figures have meanwhile calculated a price of around $223,000 to convert the entire world’s fiat money supply to Bitcoin.

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ICOs Pose ‘Serious Risks’ for Retail Investors Due to Lack of Oversight

Nasdaq CEO Adena Friedman recently claimed that initial coin offerings (ICOs) pose “serious risks” for retail investors, CNBC reports June 20.

Speaking at the Future of Fintech conference in New York on Wednesday, Friedman expressed “real concern” about ICO projects, saying that they can seriously defraud retail investors. Friedman said this is mostly the result of insufficient public information, as well as a lack of transparency, regulation, and accountability.

“To make it no rules at all, when companies can just willy-nilly take people’s money and offer no information at all, with no governance, that sounds to me like you’re taking advantage of people.”

Friedman emphasized that ICO scam victims are usually beginner investors that have almost no access to information. According to Friedman, while the U.S. Securities and Exchange Commission (SEC) requires firms to provide retail investors with the same data as banks in Initial Public Offerings (IPOs), the ICO processes have “almost no oversight.”

“In ICO space none of that is available, and it’s all being bought by retail. …I have real concern on lack of transparency, oversight, and accountability that these companies have as they’re going out to raise capital through an ICO.”

Friedman also said that she sympathized with the SEC’s claims that ICOs are securities offerings adding, “ I support the SEC on that.”

Recently, CBOE Global Markets President Chris Concannon claimed that the ICO market could soon face a two-fold regulatory “reckoning,” should the SEC classify ICOs as unregistered securities. The first “wave” would come when a slew of ICO projects would be deemed in violation of existing securities laws and investors’ holdings would be “rendered valueless.” Subsequently, said investors would file class actions lawsuits against the ICO operators.

On June 19, crypto evangelist John McAfee announced that he will stop promoting ICO projects due to supposed threats from the SEC. McAfee, who revealed his second run for president in early June, claimed that he charges $105,000 per tweet to promote cryptocurrency projects and products.

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China Gov’t Will Publish Cryptocurrency Analysis Amid ‘Lack Of Independent Ratings’

The Chinese government announced it will publish a monthly “independent analysis” of cryptocurrencies and blockchain projects at a Beijing conference May 11.

According to two press releases accompanying the announcement, the Chinese Ministry of Industry and Information Technology’s department China Electronic Information Industry Development (CCID) will analyze 28 cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Monero, NEO, QTUM, Ripple, and Zcash, to name a few. The press release states that ranking information for all 28 projects will be published “in the next few days.”

“First-rate domestic experts and scholars” will contribute to the project, which creators have dubbed the ‘Global Public Chain Assessment Index.’ According to the CCID release, the goal of the Index is to “evaluate the technological capability, the usefulness of the application and the innovativeness of the project, [as well as the] development level of the projects to profoundly understand the trend of blockchain technology innovation.

The impetus for the Index’s creation, they say, is a “lack of completely independent assessment/rating” for crypto assets and blockchain projects.

The assessment appears to overlook efforts by international ratings agency Weiss, which this year issued somewhat controversial verdicts on major cryptocurrencies including Bitcoin, Ethereum and Ripple.

As cryptocurrency trading remains banned in China, the initiative also represents an arguably surprising move to generate publicity for crypto assets. Regarding the government’s position, the CCID press release focuses on the technology underlying cryptocurrency:

“This independent analysis of cryptocurrencies and global public blockchain technology demonstrates the confidence of the Chinese Government in the technology, and will act as a guide for government, enterprise and research institute.”

Earlier this week, Beijing also stated it would cement nationwide blockchain standards using a dedicated committee by the end of 2019.

In the private sector, Chinese multinational communications giant Huawei Technologies Co. has announced that mobile phone users will be able to download Bitcoin (BTC) wallets on Huawei device starting today. Holding crypto and using it as a form of payment is still reportedly legal in the country.

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Bitcoin Cash Opposers Scrap Lawsuit Against, Citing Lack Of Cash

The pro-Bitcoin community movement that galvanized last week against has reversed its plans to level a lawsuit against the site, community leader MoneyTrigz announced on the group’s Telegram channel yesterday, May 3.

Members of the movement were outraged that major crypto wallet and media service — run by prominent Bitcoin Cash-proponent Roger Ver — appeared to be intentionally blurring the distinction between Bitcoin (BTC) and Bitcoin Cash (BCH), and misleading buyers into buying the latter.

On April 27, the group launched a website to gather claimants and donations for a promised lawsuit. However, the apparent initiator of the movement, MoneyTrigz, said yesterday they are cancelling the initiative due to the fact that only $3700 in BTC has been raised so far:

The group’s Telegram channel has amassed 1125 members to press time, and MoneyTrigz is now refunding the 33 users who donated to the effort:

Many of the group’s supporters point out that under just the threat of legal action from the movement, has been forced to make significant changes to the content of its site. Litecoin creator and crypto community influencer Charlie Lee noted one of the changes on Twitter this week:

The group’s response to the decision to pull the lawsuit has been largely positive, with one user saying it was “the first time Roger [Ver] scaled back on his fraudulent practices.”

The battle for brand dominance between Bitcoin and Bitcoin Cash, a coin whose advocates argue provides better scalability than the world’s top coin, has continued to rage since Bitcoin Cash hard-forked from the Bitcoin blockchain in August 2017.

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