World’s Biggest Stock Exchange Operator is Launching a Bitcoin Market

Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), has announced that will list a physically-settled bitcoin futures contracts and form a new company whose mission is to make bitcoin a mainstream financial asset.

ICE to Launch Physically-Settled Bitcoin Futures

ICE made the groundbreaking announcement on Friday, revealing that the new platform — Bakkt — has been developed in partnership with a variety of blockbuster names, including Microsoft, Starbucks, and BCG.

Bakkt will integrate with the ICE’s U.S. futures market and clearinghouse to list a physically-settled one-day bitcoin futures product, complete with physical warehousing managed in-house by ICE. This product will launch in November, pending regulatory approval.

Because ICE — one of the biggest names in finance — will serve as custodian for all assets stored on the Bakkt platform, institutional investors such as pensions, endowments, and insurance companies may be less hesitant to take a bet on this burgeoning asset class. As CCN reported, analysts and others with knowledge of the institutional investing landscape had consistently fingered a lack of a respected, regulated custodian as the primary reason that institutions were staying away from bitcoin.

“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility,” said Kelly Loeffler, CEO of Bakkt. “We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”

However, far from just a bitcoin futures exchange, Bakkt — whose other investors include Microsoft subsidiary M12, Fortress, Susquehanna, Pantera Capital, and Galaxy Digital — is intended to be a full-fledged platform that helps digital assets evolve into a mainstream financial asset class.

“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets,” said Jeffrey C. Sprecher, founder, chairman, and CEO of Intercontinental Exchange.

Taking Bitcoin Mainstream

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Indeed, Sprecher and Loeffler lay out their ambitious plans for Bakkt in an interview with Fortune, revealing that the platform will feature its own “omnibus ledger” that operates on top of the Bitcoin blockchain, similar to the Lightning Network (LN).

They said that they envision that, with ICE’s help, bitcoin can become a bona fide currency that could become the asset of choice for international payments.

Once a firm’s assets are custodied with ICE, they will be able to conduct frictionless transactions with other institutions and businesses that are connected to the Bakkt ledger.

”Bitcoin would greatly simplify the movement of global money,” Sprecher told the publication. “It has the potential to become the first worldwide currency.”

Toward that end, Bakkt is exploring how to increase bitcoin’s utility as a payment instrument. The announcement states that Starbucks will take an active role in providing consumers with the ability to seamlessly convert their holdings into USD so that they can use them to pay for items at Starbucks locations.

“As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks,” said Maria Smith, Vice President, Partnerships and Payments for Starbucks. “As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”

But while ICE believes it can be the one to take bitcoin mainstream, it also says that that reality likely will not resemble the crypto-anarchist vision harbored by many early cryptocurrency adopters.

“Bitcoin can’t survive as a rogue idea,” Sprecher said in the Fortune profile. “To evolve, the cryptocurrencies need to run on established infrastructure. They need the trust and rules that have been built into our financial system for many years. They need the kind of trust that the Big Board represents.”

The bitcoin price saw moderate bump in the hours following the announcement, rising as high as $7,503 on Bitfinex after dipping as far as $7,282 earlier in the day.

Developing…CCN will continue to update this story, so check back for more information.

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WHEN SMART CONTRACTS ACT STUPID: IS YOUR ICO SMART CONTRACT SAFE & SECURE?

The potential inherent in smart contracts is immense. The nascent technology may be used for identity verification, secure data sharing, and for the management of tokens and raised funds in an initial coin offering/token sale – but just how clever are your smart contracts?

The Ethereum network boasts more than 1500 decentralized applications (dApps), all of which make use of smart contracts to accomplish a wide variety of tasks. The problem with smart contracts, however, is the fact that they are code-based and thus inherently prone to mistakes – some of which can be nothing less than catastrophic.

SMART CONTRACT BASICS

To put it simply, a smart contract is a code that contains a set of rules and executes automatically, without a third party, if the rules of the contract are met. This differs greatly from a paper contract, which is always enforced by a third party.

However, because smart contracts are code based, they are prone to errors, bugs, and weaknesses – which put funds at risk of theft and manipulation.

WHEN SMART CONTRACTS ACT STUPID

One of the most notorious examples of a poorly-coded smart contract came from the Decentralized Autonomous Organization (DAO), which was designed to fund cryptocurrency projects not determined by any one person or group. Essentially, DAO token holders were allowed to vote on the projects which merited funding – which led to a total purchase of $250 million in ether before tragedy struck.

Two sections of the code in question were responsible for the collapse of the much-hyped DAO project, which resulted in a controversial hard fork of the Ethereum blockchain into Ethereum Classic.

The two functions responsible were ‘splitDAO’ and ‘withdrawRewardFor’ — though they were not vulnerable by themselves. Together, however, hackers were able to vacuum up 4 million ether. Consequently, the Ethereum community was more-or-less forced to perform a 51 percent attack on its own blockchain, re-writing it as though the stolen funds were never lost.

Another and more recent bug was discovered in the smart contract used by Parity. The smart contract in question was exploited and resulted in the loss of half a million ether — worth upwards of $169 million. 70 wallets were frozen and access to the money held within was lost.

Parity actually admitted to having been warned about the flaw months before the bug was triggered. However, they did not fix the issue, later stating:

“However, rather than just having more audits, we strongly believe that more extensive and formal procedures and tooling around the deployment, monitoring and testing of contracts will be needed to achieve security. We believe that the entire ecosystem as a whole is in urgent need of such procedures and tooling to prevent similar issues from happening again, in particular, if and when the number and complexity of live contracts grows.”

Parity was hacked again via smart contract vulnerabilities in June 2017, resulting in the theft of 150,000 ether.

What’s Wrong With Ethereum-based Smart Contracts?

WHAT’S WRONG WITH ETHEREUM-BASED SMART CONTRACTS?

Ethereum’s main problem is that it’s largely constructed in Solidity – an advanced coding language. As such, many programmers must learn an entirely new coding language, which increases the chance of human error.

Unfortunately, many new projects lack the experience and/or time to properly audit their smart contracts. This is where solutions like COINAdmin come in – which assist in the completion and subsequent audit of smart contracts and verify that the code is free from vulnerabilities.

COINAdmin has a dedicated team of blockchain developers who specialize in the development of ERC-20 and ERC-223 smart contracts. It also fully supports thorough third-party audits and handles everything on the technical front – affording ICO teams the ability to focus on other aspects of their business ventures.

COINAdmin’s full solution lets projects issue their own ICO tokens while saving time and money. To learn more, check out the official website at coinadmin.com, or email info@coinadmin.com.

What do you think about smart contract vulnerabilities and companies like COINAdmin? Let us know in the comments below!


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Flow and Cryptomkt Enable Crypto Payments at 5000+ Stores

Cryptocurrency exchange Cryptomkt has partnered with Chilean payment platform Flow to allow customers to pay with three cryptocurrencies at over 5,000 stores. The announcement follows two Chilean courts ruling that banks must reopen the accounts of crypto exchanges they previously closed.

5,000+ Stores Accept Cryptocurrencies

Cryptocurrency exchange Cryptomkt announced this week that over 5,000 stores now accept three cryptocurrencies.

Flow and Cryptomkt Enable Crypto Payments at 5000+ Stores

Flow and Cryptomkt Enable Crypto Payments at 5000+ Stores

Chilean payment platform Flow has integrated the exchange’s payment solution, Cryptocompra, into its system. Customers shopping at merchants using Flow can now choose to pay with cryptocurrencies during the checkout process.

Flow claims to currently provide service to over 5,000 stores with over 180,000 monthly transactions and over 20,000 customers.

Available now for businesses in Chile, Argentina, Brazil and Europe, Cryptocompra “allows merchants to accept payments in bitcoin, ethereum and stellar cryptocurrencies quickly and easily,” Cryptomkt detailed, emphasizing:

Chileans today can access various products and services in more than 5,000 stores affiliated to Flow.cl using bitcoin and other cryptocurrencies through Cryptocompra.com … Client pays in cryptocurrencies, trade receives pesos, reales or euros.

Flow and Cryptomkt Enable Crypto Payments at 5000+ StoresOn its website, Flow lists a fee of 0.90% for next-business-day payment with cryptocurrencies. By comparison, paying with credit cards using Webpay Plus or Onepay costs 4.99% to receive payment the next business day.

“You do not need to have contracts with the means of payment, Flow does it for you,” the company wrote. “Each time someone pays you, we will notify you of the payment made: We will indicate the detail of the payment made and the date on which we will transfer your money.”

Battle Between Banks and Crypto Exchanges

Crypto exchanges in Chile have been battling with banks over the closure of their bank accounts. In April, Chile’s Court for the Defense of Free Competition (TDLC – Tribunal de Defensa de la Libre Competencia) ordered three banks to reopen the accounts of crypto exchanges, including Cryptomkt. In May, Banco Estado complied and reopened the account of the exchange.

Earlier this month, the Fourth Chamber of the Court of Appeals of Santiago ruled in favor of cryptocurrency exchange Orionx against Banco Estado for closing its account.

What do you think of Flow integrating crypto payment option? Let us know in the comments section below.


Images courtesy of Shutterstock, Cryptomkt, and Flow.cl.

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Half of ICOs Die Within Four Months After Token Sales Finalized

About 56 percent of crypto startups that raise money through token sales die within four months of their initial coin offerings.

That’s the finding of a Boston College study that analyzed the intensity of tweets from the startups’ Twitter accounts to infer signs of life. The researchers determined that only 44.2 percent of startups survive after 120 days from the end of their ICOs. The researchers, Hugo Benedetti and Leonard Kostovetsky, examined 2,390 ICOs that were completed before May.

Acquiring coins in an ICO and selling them on the first day is the safest investment strategy, Kostovetsky said in a phone interview. But many individual investors can’t participate in ICOs, so this option isn’t open to them. Still, all investors should probably sell their coins within the first six months, the study found.

“What we find is that once you go beyond three months, at most six months, they don’t outperform other cryptocurrencies,” Kostovetsky said. “The strongest return is actually in the first month.”

ICO Funding by Month

In billions of dollars

Source: CoinSchedule

Returns have been declining over time, as startups have become savvier about pricing coin offerings and more have people jumped into ICO investing. Returns of people who sold tokens on the first day they were listed on an exchange have been declining by four percentage points a month, Kostovetsky said.

“They are much lower now, so I wouldn’t expect them to continue to decline at this rate,” he said.

A slew of recent studies have shown just how risky ICO investing is. More than 1,000 tokens have already bitten the dust, according to the website Coinopsy.

 

“People often look at returns and say this is a great deal, but we teach in finance that return is a compensation for risk,” Kostovetsky said. “These are stakes in platforms that have not yet been built, that have no participants yet. There’s a lot of risk. The majority of ICOs do fail.”

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Crypto Trading Platform Releases an Arbitrage Trading Soft for Beginners

Having launched in November 2017, Arbitao, a London-based startup, has introduced its platform for arbitrage trading — the term comes from professional trading and refers to buying and selling the same asset and making profits on differing prices. The platform is already available for experienced users, as well as for novice traders with smaller budgets.

Wide coverage

The company representatives say that the platform has been tried and tested by initial investors since late 2017. “A lot of initial coin offering (ICO) projects don’t have a working product and probably never will have. With Arbitao, it’s different. Our goal was to deliver a working and tested product before the ICO starts. And we succeeded in it,” commented Karel Mirrin, Arbitao’s CTO, in the company’s press release.

The Arbitao team is separated into two operational offices based in London and Moscow, and they also outsource to Shanghai.

According to Arbitao’s press release, currently its arbitrage system compares prices from 19 exchanges and is capable of leveraging all user investments to execute trades and generate profits. Automated trading software makes profits possible to those outside of the ‘closed loop’ of arbitrage.

One of the problems that Arbitao tries to resolve is democratizing arbitrage trading for inexperienced users, allowing them to compete against day traders. “Our audience are crypto kiddies and new arbitrage traders with no resources to scale, so we do that for them through decentralizing the users coins through the arbitrage platform,” said the company’s representatives to Cointelegraph.

Ways of making profits

“Lots of pairs are facing lack of liquidity and the volatility in the market is very high, which leads to price differences between exchanges. By monitoring different exchanges, it can be seen that price spreads of certain pairs are up to 5 percent,” reads the Arbitao white paper.

The Arbitao platform provides several ways for users to earn. A user may profit from arbitrage on a daily basis by trading on numerous cryptocurrency exchanges with daily interest rate 0.5 to 0.75 percent.

Another way is to profit from inviting friends to join Arbitao — the team promises to reward every user with 18 percent of the total of their friends’ investments. “Arbitao is all about the community,” says the website.

A user may also earn up to five percent from staking with Arbitao. “You will be rewarded as staking is important for Arbitao’s sustainable development and provides serious benefits for the Arbitao network, such as increasing decentralization and improving blockchain security,” reads the website.

The team developed its own blockchain coin ATAO — not just a token — and its own internal exchange — TAOx. This results in an opportunity to make some earnings by speculating on ATAO’s price fluctuations.

Arbitao will launch its presale on July 22, 2018, and the project’s planning to reward all early investors with special bonuses. The presale will end on August 7, and everyone who will take part in it will be able to try out the Arbitao system in action.

The main crowdsale campaign will start on August 12 and last until September 9, 2018.

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