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Blockchain Services Network, an internet of interoperable blockchains that includes Ethereum, Hyperledger and EOS, will connect 128 cities in China to seven countries.
As we reported in January, China’s long-awaited Blockchain Services Network, aka ChinaChain, was finally unveiled and opened to commercial use yesterday. After 6 months of internal testing, the BSN project was shown off at a virtual press conference Saturday in Beijing. (“Virtual,” because large gatherings are banned due to a possible coronavirus rebound.)
Your correspondent gleefully tuned in from her own quarantine, in Boston. For this week’s da bing, I was searching for clues as to whether, as Coindesk recently speculated, ChinaChain would fulfill its promise to be a blockchain-enabled infrastructure that will “change the world.” I was deeply skeptical
An Internet of blockchains
Watching the festivities late Friday night (Saturday morning in Beijing) I agree with what other observers have said—that the the most fitting way to describe the launch was “国家队” which literally means “national team” in Chinese. The term implies that the effort is top-down, and practically mandated by the central government.
As we had reported, the network is financed and built by a consortium of China’s biggest telcos and banks, with nodes connecting 128 cities across the country. The network will also have nodes in 7 places outside China: Paris, Sydney, San Paulo, Singapore, Tokyo, Johannesburg and California (no city was specified.) Presumably, people wanting to do business in China can use the local onramps, assuming they follow local as well as BSN’s rules.
ChinaChain is not simply blockchain infrastructure, the speakers were quick to point out. During the teleconference, Zhiguang Shan, Chairman of BSN’s Development Association, described it as “an ecosystem play” and “an internet environment” that aspires to weave together a variety of different blockchain platforms, including Hyperledger Fabric, Ethereum, EOS, WeBank’s FISCO BCOS, Baidu’s Xuperchain, and ChainSQL.
The word “cross 跨” appeared the most frequently during Shan’s presentation. According to its official white paper, BSN is designed to be “a cross-cloud, cross-portal, cross-framework global infrastructure network used to deploy and operate all types of blockchain applications.”
In other words, BSN strives to be agnostic to users’ selection of cloud providers, border/country they operate and blockchain protocol. It will host all and create an environment where information flows freely between different infrastructures. And just like internet hosting websites, BSN will host thousands of applications on its network.
And just like the Internet, this blockchain of blockchains will be open to anyone who wants to tap into it, including small and medium-sized businesses.
Interoperability is easier said than done
Yet achieving such a level of interoperability is no small feat. Many blockchain projects, from PolkaDot to Cosmo, have been tackling the same issue, and few successes have been achieved thus far. Though Red Date, the tech provider powering BSN, claimed it’s been working with cross-chain solutions such as Cosmo, no evidence was provided to prove that the tech will function smoothly.
Yet somehow, the lack of technical feasibility has not concerned many Chinese blockchain entrepreneurs. As Honggang Chen, VP of PeerSafe, a blockchain startup based in Beijing, told me, the fact that BSN is simply willing to accept all blockchain protocols, from Ethereum, to Hyperledger, to ChainSQL ( which is their own blockchain infrastructure) is an exciting breakthrough.
“I’m glad that BSN is tackling interoperability and I believe if they put their mind to tackle it, it will be solved,” Chen told me. “We at PeerSafe are actively exploring ways to deploy our products on BSN.”
A smorgasbord for cloud providers
Deploying a blockchain network requires hosting infrastructure. As Decrypt previously reported, around 60 percent of Ethereum nodes run on centralized cloud-based servers, with Amazon Web Services championing the list.
BSN will be no different. The press conference was filled with representatives from BSN’s cloud partners. Not only did domestic cloud providers, such as China Mobile and Baidu Cloud, share in the congratulatory speeches, AWS’s China Cloud team even graced the conference (virtually) and showed its support.
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Stablecoins issuance is not artificially inflating the prices in the cryptocurrency market, despite some controversial beliefs, suggested new research on the matter.
At the same time, the paper acknowledged their vital role in the digital asset field and predicted that it’s only prone to grow in time.
By evaluating this “more precise measure of Tether inflow to the secondary market,” the total supply, and the shock effects on Bitcoin’s price, the authors found “no systematic evidence that stablecoins issuance affects cryptocurrency prices.”
Safe-Haven Role
By referring to the events in mid-March when the cryptocurrency market plunged by up to 50% in 24 hours, the research said that “stablecoins consistently perform a safe-haven role in the digital economy.” As they are especially attractive to traders in times of intense volatility, the market capitalization of most stablecoins surged at that point, while Bitcoin and altcoins took a sharp dive.
Back in Q4 of 2017, before the massive price pumps, the total market cap of all stablecoins equaled at approximately $1.25B, per data from CoinMetrics. At the time of this writing, it’s exceeding $9 billion – meaning a 620% surge in just over two years.
As such, it’s no surprise that their role in the market continues growing. For instance, ERC-20 stablecoins are responsible for 80% of the daily adjusted transferred value on the Ethereum blockchain. Thus, the whole network recently came into full parity with Bitcoin.
Tether Do Not Inflate The Crypto Market
Last year, two academics updated a study and claimed that the most widely used stablecoin – Tether (USDT) – was behind the 2017/2018 parabolic price increase in which Bitcoin reached its ATH of $20,000. Almost immediately, Tether responded by refuting all allegations, saying that USDT has never been involved in any price manipulation.
While this argument is left without a conclusive answer, recent research supported Tether’s position.
The authors of the report were Ganesh Viswanath-Natraj – assistant professor of finance in Warwick Business School, and Richard Lyons – chief innovation and entrepreneurship officer at UC Berkeley.
They referred to one significant change in the Tether issuance process. Prior to 2018, all coins “created via grants were immediately distributed to Bitfinex and on to the other exchanges for trading in the secondary market.”
However, ever since 2018, Tether Treasury retains a fraction of all USDT in circulation. The Treasury can use these reserve holdings to sell them for dollars in case the Tether price in the secondary market is above parity
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Bitcoin is reducing its correlation with the stock market, and is transitioning towards gold’s performance, a recent Bloomberg report claimed. Amid the current COVID-19 crisis, both assets will outperform equities and emerge as the most substantial gainers.
Bitcoin To Join Gold
The unexpected outbreak of the COVID-19 pandemic jolted world economies and financial markets. The cryptocurrency space was not exempt from adverse price developments. However, a recent Bloomberg document outlined that the primary digital asset is declining in terms of volatility and is preparing to become a more stable asset amid the coronavirus crisis:
“This year will confirm Bitcoin’s transition from a risk-on speculative asset to the crypto market’s version of gold, in our view. From a volatility perspective, declines in Bitcoin’s reading and the rise for the stock market’s shifts performance favor toward the crypto asset.”
Per the paper, the most recent stock market movements are pushing Bitcoin to “divorce” its correlation with equities and, instead, to join gold. Evaluation in the report “depicts the 52-week correlation of Bitcoin to gold jumping to the highest in our database since 2010.” It also added that BTC’s relationship with gold “is about twice that of equities.”
Therefore, the benchmark cryptocurrency’s maturation processes toward a store-of-value mechanism akin to gold should continue, the report concluded.
Bitcoin And Gold To Emerge The Strongest From COVID-19
In attempts to fight the economic aftermath prompted by the coronavirus, world central banks and governments began printing excessive amounts of money and rushed them into the markets. The report also touched upon these drastic measures and predicted that BTC and gold are prone to gain the most out of the situation:
Making a compelling prediction regarding gold’s price by the end of the year, the paper determined that it will break the previous all-time high and breach $1,900. In a Bank of America report on gold’s performance, the giant institution stated that the precious metal could even reach $3,000 next year.
Bitcoin, on the other hand, utilized the current COVID-19 situation to distinct itself from other cryptocurrencies, the report reasoned. According to the Bloomberg Galaxy Crypto Index, which measures the performance of digital assets by combining various indicators, BTC’s ratio is recovering from a dip below its “upward-sloping 52-week moving average”, while other coins are declining
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Bitcoin futures contracts allow traders to speculate on the price of Bitcoin without necessarily have to own it. They are a derivative product that gained serious popularity in the past years.
Traders are always looking for information that would give them an edge in the market. Arguably, the most valuable data is that which offers an insight into what other traders are doing.
Open Interest (OI) could provide some of this information with appropriate interpretation. Understanding it and its impact on the Bitcoin’s price could help traders make better decisions.
Open Interest And Trading Volume
The overall trading volume and open interest are somewhat related concepts. While the volume accounts for all of the contracts that have been traded in a given period, open interest only considers the total number of open positions by market participants at any given time.
Open interest is calculated by summing up all the opened positions, regardless of whether they are long or short, and subtracting those that have been closed.
Evidently, the open interest increased from 1 to 13 as traders place new positions. However, as Alicia closed a position of 3 BTC, the open interest declined. This above example shows how open interest changes depending on the number of open contracts.
Why Does Open Interest Matter In Bitcoin Trading?
In legacy markets, traders monitor the changes in open interest closely. Analysts typically use it as an indicator to pinpoint the strength behind price trends and market sentiment.
Open interest is indicative of the capital flowing in and out of the market. If more capital flows to Bitcoin futures, the open interest will increase. However, if the capital flows out, the open interest will decline.
Hence, increasing open interest is indicative of a bull market, whereas if it decreases, this signals a bear market.
Usually, analysts monitor the correlation between the asset’s price, volume, and open interest to analyze the current market sentiment. The following table shows the interpretation of market behavior based on the changes in the above factors.
Open Interest And Its Correlation To BTC Price
Looking at the historical performance of Bitcoin’s price regarding its open interest, there is an evident positive correlation. Data from the widespread monitoring resource Skew tracks the open interest for Bitcoin futures since the beginning of the year. Below is a chart that reveals how it relates to the price.
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Ethereum third-party wallet app MyEtherWallet (MEW) has inked a partnership deal with Unstoppable Domains — a blockchain domain platform — to become a reseller of .crypto domains.
MEW to Roll-out .crypto Domain to 1M Monthly Users
According to a press release issued on Thursday (April 23, 2020), the partnership sees Unstoppable Domains integrating with MEW. As part of the collaboration, MEW can now offer .crypto domains to its over one million monthly active users.
The .crypto domain registry allows for easy connection of cryptocurrency addresses to the .crypto domain and has been hailed by the likes of billionaire VC Tim Draper as being the future of virtual currency payments, replacing wallet addresses.
Copying and pasting crypto wallet text strings apart from being cumbersome and creating room for costly mistakes and is also an attack vector for clipboard attacks. Rogue actors have introduced malware that can corrupt clipboards, replacing the wallet addresses of users with their target addresses.
With .crypto domains, human-readable cryptocurrency addresses can become possible which opens up possibilities for mainstream adoption of virtual currencies. The perceived technical nature of crypto transactions continues to be cited as a major stumbling block for more broad-based utilization of cryptocurrencies in everyday life.
Commenting on the importance of the partnership, MEW COO, Brian Norton remarked:
“MyEtherWallet has long served as a portal to the world of DeFi through DApps like MakerDAO and Aave. As an Unstoppable Domains .crypto registrar, we are also giving users an easy option for engaging with the decentralized web.”
For Brad Kam, co-founder of Unstoppable Domains, the partnership with MEW opens up the way for wallets to become more than crypto storage apps. According to Kam, .crypto domains can enable wallets to become channels via which cryptocurrency users can access products and services in the broader blockchain technology space.
Increasing Focus on Censorship-resistant Crypto Industry
The potential roll-out of .crypto domains to one million monthly active MEW users could also be a positive development for the move towards ensuring robust censorship-resistance. Websites hosted on blockchain domains like .crypto cannot be stored or seized by the authorities and requires no pre-approval from organizations like the Internet Corporation for Assigned Names and Numbers (ICANN).
With the crypto and blockchain industry becoming increasingly under scrutiny, decentralization of the internet might be the way for the burgeoning market to blossom without undue interference from centralized authorities.
