Square Crypto Grants $100K to Bitcoin Dev Simplifying Key Management

The holiday season might have put Square Crypto in a giving mood, as the firm has awarded its fifth Bitcoin developer grant of December alone. This time around, the grant went to Leon Johnson, a London-based developer of Bitcoin-related technology.

Johnson told Decrypt that the grant is for $100,000 and that it will help fuel his work on Bitcoin key management via a project called Photon. “The grant will support me as a developer over the next 12 months whilst I work on making Bitcoin key management easier and simpler, with a particular focus on demonstrating to wallet developers how to implement this new tool,” he said.

Although he first got into Bitcoin in 2013, Johnson said that he really got involved as a developer starting in 2018 after taking Jimmy Song’s Programming Bitcoin course. From there, he established Advancing Bitcoin, a London technical conference for fellow developers.

“I created this because as a new Bitcoin dev in 2018, there were no pure tech Bitcoin conferences,” he told Decrypt, “and we need this to accelerate our learning and build personal connections with other Bitcoin developers.”

Square—which is headed by outspoken Bitcoin fan and Twitter CEO Jack Dorsey—began awarding grants to open-source Bitcoin developers in September 2019 with BTCPay Server, and has steadily rolled out announcements throughout much of 2020.

Square Crypto’s Twitter account, which announced today’s grant, said, “Leon will port some kind of ‘KeyBackup module’ from the ‘react-native library’ to Swift, which is a type of HTML for iPhones. Then he’s gonna connect that module to various iOS APIs to enable iCloud backups.”

“It also says here that he’s going to write documentation to simplify how developers integrate Photon into software. All I can do is take his word here. What else? Well, he’s gonna ‘build a prototype to showcase how Photon works inside apps’ like we all love doing,” it continues. “Finally, Leon will devise a solution that implements Photon within multi-sig solutions like, uh, you know the ones.”

At the start of this month, Square Crypto announced a grant for nonprofit organization Brink to fund a fellowship for Bitcoin Core developer Gloria Zhao, in collaboration with the Human Rights Foundation.

So far in December, Square Crypto has also awarded grants to Bitcoin developers Justin Moon and Patricia Estevão, and awarded a second annual grant to developer ZmnSCPxj, who first received a grant from the company in December 2019.

This month’s five developer grants (thus far) is a significant uptick from previous months; Square Crypto awarded just one grant in November and two grants in October.

Crypto Fans React to Ripple Lawsuit on ‘Unlicensed’ XRP Sales

Brad Garlinghouse, CEO of payments technology firm Ripple, said yesterday that the US Securities and Exchange Commission (SEC) was preparing a lawsuit against the firm’s alleged unlicensed issuance of XRP tokens.

This morning, Garlinghouse said Ripple would “fight back” the lawsuit and the supposed discrimination against the company, stating the proceedings were an attack against the broader “crypto” market in a tweet. But that statement, however, irked many in the cryptocurrency sector.

In a rare instance, the online sentiment among industry participants towards the lawsuit development was largely one-sided—many seemed to agree with the SEC’s view that XRP was an unlicensed security, instead of siding with Ripple.

Bitcoin figureheads chimed in with the criticism as well. Samson Mow, CSO of Bitcoin development firm Blockstream, said there was “nothing crypto or innovative about XRP or Ripple,” while Bitcoin educator and investor Stephan Livera said that “Ripple had nothing to do with Bitcoin,” adding that Garlinghouse’s “attack on crypto” comment was irrelevant.

So far, the SEC has treated Bitcoin and Ethereum as assets instead of as securities, with the latter defined as a regulated financial instrument that represents a stake in a company—like equity shares—instead of being a currency.

But the relationship between Ripple and XRP remains contentious, which has attracted the SEC lawsuit. Ripple says it has nothing to do with XRP, yet holds over 50 billion XRP tokens and is infamous for selling huge volumes of those on the open market. Those at the firm created the token before gifting it to the firm—creating confusion over whether the firm is responsible for it. And Ripple contributes to the XRP Ledger’s code. These have been some of the leading causes of the widespread criticism towards the company in crypto circles.

In addition to that, Garlinghouse and Chris Larsen, co-founder of Ripple, are said to hold a significant stash of XRP, which some in the industry say is a case of centralization of XRP tokens—and a violation of what the SEC considers a fairly-distributed cryptocurrency.

Meanwhile, Jake Chervinsky, lawyer and general counsel at decentralized finance app Compound, said that XRP could see a delisting from several regulated exchanges in the US.

“Right now, the big question is if centralized exchanges delist XRP while the case is pending,” Chervinsy said, adding that the SEC would allege that an actively-traded crypto token was sold to US investors without prior permission or regulation.

The sentiment has carried over to XRP’s price. It fell over -10% to $0.48 in Asian hours as traders reacted to the development and impending lawsuit.

Early Coinbase Investor Discusses Buying Bitcoin in 2011

Liron Shapira, CEO of coaching website Relationship Hero and an early investor in Bitcoin and Coinbase, said that his introduction to the cryptosphere was a combination of luck, opportunity, and his personal investment thesis.

During the latest episode of the Pomp Podcast hosted by Morgan Creek Digital Assets co-founder Anthony Pompliano, Shapira noted that he was “obsessed” with Bitcoin in 2011, calling the crypto a “sleeper hit.”

“I think both YCombinator and Bitcoin were really sleeper hits back in 2011. So where did I get the thesis?…I’m always looking for the 10% probability and back in 2011, Bitcoin, there was like a 90% chance that it was just gonna like fizzle out, right?” said Shapira, adding, “But I just noticed like ok, well, on the 10% chance that it doesn’t fizzle out, couldn’t it just go 10x or 100x or 1000x?”

Speaking about this thesis, Pompliano brought up Shapira’s tweet from 2011, potentially one of the earliest bullish sentiments toward Bitcoin.

“My investment thesis: Buy into a 10% probability of a 100x return. Examples: (1) BitCoin (2) Milner & Conway’s ‘Start Fund’,” Shapira tweeted on June 12, 2011.

Coinbase moves toward an IPO

As for his early investment in Coinbase, Shapira revealed that it was mostly just down to luck since he wasn’t planning on investing in the exchange specifically. “Randomly in 2012,” when he was at the height of his “Bitcoin obsession,” Shapira invested part of his disposable income through a company called Founders Club.

“So just by coincidence, I ended up putting a check into the first Founders Club fund where they had a few options of companies to pick. And I was like ‘oh yeah, Coinbase. I like Bitcoin’,” Shapira explained, adding, “So a lot of luck in Silicon Valley, being in the right place at the right time, happen to like Bitcoin.”

After that, Shapira “forgot” about it for a few years, “and now they’re like the next potential [YCombinator] IPO.”

“My thesis there was just like, look, I think Bitcoin is a big deal, and I think that Coinbase is doing a really good job, and just being like the best Bitcoin company,” he added.

As Decrypt reported, cryptocurrency exchange Coinbase recently announced its plans to become a public company, with experts suggesting that the platform could be valued at around $28 billion as a result. That’s one fortunate early investment indeed.

Bitcoin Active Addresses Doubled in 2020: Coin Metrics

The number of active Bitcoin addresses has shot up by over 105% this year, according to Coin Metrics’ data.

In its latest ‘State of the Network’ report, released today, the crypto data site said that the number of active addresses this year doubled to hit 1.2 million.

Why’s this important? It’s evidence of a healthy market. The healthiest since 2017. More active addresses means that more people are using the cryptocurrency—or at least buying it up.

Coin Metrics put Bitcoin’s success this year down to institutional investors flooding the market, with Square, MicroStrategy and PayPal all getting stuck in.

“Soon after [institutional investors invested] Bitcoin’s price began to rise,” the report said. “In a quickly changing world, Bitcoin is increasingly being endorsed as a hedge against inflation and form of digital gold.”

Coin Metrics also noted that over $300 billion was added to Bitcoin’s market cap this year and the number of addresses holding at least 0.01 BTC grew by over 700,000.

The site added that the biggest cryptocurrency by market cap will continue to grow next year.

“In many respects, bitcoin is in its strongest position yet closing out 2020,” the report said. “As momentum continues to build, bitcoin is on the verge of reaching unprecedented heights in 2021.”

Bring on 2021.

SushiSwap Project Lead 0xMaki Explains DeFi Project’s Future

SushiSwap’s project lead, 0xMaki, today revealed his DeFi plans for 2021.

In an exclusive chat for UniWhales members, the anonymous developer—who didn’t reveal his identity—also said that he is no longer in contact with Chef Nomi, the creator of the decentralized exchange (DEX).

SushiSwap is a clone of decentralized exchange Uniswap. It blew up after its launch in August when the DeFi world went crazy for meme coins and yield farming.

But its creator was accused of an exit scam when he cashed out the DEX’s native tokens, $SUSHI, for $14 million of Ethereum and suddenly disappeared. He then gave it back and now isn’t involved in the project.

“We haven’t talked for a while, I would say he’s not involved anymore,” said 0xMaki in an interview with UniWhales co-founder, Matt Aaron. He said that since leaving SushiSwap, Chef Nomi would previously only review codes.

But despite the drama, SushiSwap is growing—and has since attracted interest from yearn.finance, one of the biggest projects in the space. Its creator, Andre Cronje, this month said the two projects would merge.

0xMaki today said of the partnership: “We share the same goals and the same end-game—or something similar. He’s [Cronje] very good and someone who has a lot of good ideas but pushing the idea to the finish line or maintenance is not his forte and that’s where we can come in and pick up the ball for him.”

“We’re both big proponents of decentralization. At the end of the day the main concern for both of us is the capital efficiency for assets,” he said—meaning that both projects want to maximize users’ returns by using just one protocol.

0xMaki also said that the DEX would be making BentoBox available in 2021—a protocol that allows SushiSwap users to borrow or lend in a less riskier way and lets them long and short any asset. Devs will also be allowed to build on top of the protocol, he added.

Currently, you can’t borrow or lend on the SushiSwap platform.

“I think we are going to see the future of finance in 2021,” he said.

Grayscale Halts Investments in Bitcoin and Ethereum Trusts

Grayscale has temporarily halted investments into six of its trusts, among them its Bitcoin and Ethereum Trusts, just a few days after Bitcoin prices broke $20,000 and surged to new all-time highs.

Investment management firm Grayscale no longer accepts investments in trusts tracking the performance of Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Litecoin, and its Digital Large Cap Fund.

The halts went into place as the six-month lock-up period for selling recently-purchased shares of the Bitcoin fund, traded under the symbol GBTC, comes to an end.

“We’re just at that point in the year where those windows the public window will be closing. And then the private window will be open,” Corey Law, a spokesperson for Grayscale, told Decrypt.

That has implications for GBTC holders, but also for Grayscale’s crypto buying strategy, where buying digital assets at a lower price translates into larger holding—and potential gains—for GBTC investors.

Shares of the Bitcoin Trust under the ticker GBTC consistently trade at a higher price than the underlying Bitcoin, due to buying pressure from institutional investors with few alternative options for buying BTC.

Even at a 30% premium to buying Bitcoin outright, GBTC shares are attractive to traditional investors because they’re available to buy and trade on existing stock exchanges, and can be contributed to IRA accounts and other popular retirement vehicles.

Dealing in GBTC also eliminates the sometimes-steep learning curve that comes with getting familiar with transferring, holding, and managing digital assets in native blockchain-based wallets or smart contracts.

There could be another benefit to Grayscale for halting the acceptance of new GBTC investments; buying Bitcoin at a lower price. Ben Lily of Jarvis Labs noted that the halt coincides with the end of a mandatory six-month lock-up of GBTC shares purchased in June 2020.

Shares bought at that time can now be sold on the open market to non-accredited investors who can’t invest in  Grayscale’s Bitcoin Fund upfront, putting downward pressure on the price of GBTC. And since Grayscale’s Bitcoin holding is so large—now up to more than $11 billion—that downward pressure could carry over into raw Bitcoin prices, too.

If Lily’s scenario plays out, buying Bitcoin for Grayscale’s fund could be notably cheaper than before the selling started, resulting in more Bitcoin purchases for all investors. And since Bitcoin tends to lead the price movements of other assets like ETH, lower BTC prices mean lower Ethereum prices as well.

Grayscale has purchased more than 161,000 Bitcoin since June 2020 and has paused investments in the past when lock-ups were expiring, so it’s unlikely the move represents a change in strategy, or that accredited investors will be boxed out of the Bitcoin Trust for very long. And if price predictions play out, those investors could be buying the dip, thanks to clever investment management from Grayscale.

SEC Plans to Sue Ripple for Securities Violations: Reports

Ripple CEO Brad Garlinghouse told Fortune Magazine today that he expects the SEC to sue the company imminently for selling unlicensed securities. XRP, Ripple’s cryptocurrency, is valued at $23 billion, the third largest cryptocurrency by market cap

Garlinghouse said that he believes the SEC will name him and co-founder Chris Larsen as co-defendants in a lawsuit, which he expects to be brought in the near future.

The price of XRP had dropped more than 13% by late Monday, below 50 cents.

Garlinghouse told the Wall Street Journal that a representative of the Commission told Ripple late Monday that it would be filing its lawsuit in federal district court soon.

In a prepared statement, the CEO said Ripple intended to fight back: “The SEC is fundamentally wrong as a matter of law and fact. XRP is a currency, and does not have to be registered as an investment contract. In fact, the Justice Department and the Treasury’s FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security.”

Ripple issued XRP in 2012. The SEC, apparently, believes that XRP, unlike Bitcoin or Ethereum, is a security and should have been registered with the Commission as such. Ripple holds some 6.4 billion XRP. It periodically sells the cryptocurrency to the public from an escrow account that holds another 48 billion.

The right side of history

The issue of whether XRP is a currency or a security has been argued for years among crypto enthusiasts. “This is an attack on all of crypto. While other countries are embracing the future, the SEC continues to lash out in fear,” tweeted Michael Arrington, founder of Arrington XRP Capital.

Garlinghouse told Fortune that Ripple is preparing to fight the lawsuit. “I think we have to stand up for all of crypto—and not let the SEC bully the entire industry,” he said, adding “We’re going to be on the right side of history.”

A Ripple statement issued after the news broke said in part: “The SEC has permitted XRP to function as a currency for over eight years, and we question the motivation for bringing this action just days before the change in administration. Instead of providing a clear regulatory framework for crypto in the U.S., [SEC Chairman] Jay Clayton inexplicably decided to sue Ripple–leaving the actual legal work to the next Administration.”

“This is an attack on the entire crypto industry and American innovation,” the statement said.

“This complaint is wrong as a matter of law,” said Michael Kellogg,  attorney for Ripple’s counsel, Kellogg, Hansen, Todd, Figel & Frederick. “Other major branches of the U.S. government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency. Transactions in XRP thus fall outside the scope of the federal securities laws. This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again.”

An SEC lawsuit would be yet another parting shot at the crypto industry from the outgoing Trump Administration. Outgoing Treasury Secretary Steve Mnuchin is pushing a proposed rule by FinCEN that would regulate digital currencies. Specifically, the rule would impose onerous restrictions on banks and other “money services business” in relation to so-called “unhosted” crypto wallets.

Bigger Than Netflix? Filecoin Hits 1 Exabyte of Storage

In a fireside chat as part of Decrypt’s Around the Campfire series, Protocol Labs CEO and founder Juan Benet indicated the Filecoin network is exceeding expectations for large-scale storage.

Filecoin, which took in $200 million from a 2017 ICO, launched in October of this year. According to Benet, since then, the decentralized blockchain network for renting out and borrowing computer storage has reached one exabyte of storage capacity—about the size of Dropbox when it filed its IPO in 2018.

“Being able to reach a scale to compete with and contend with the traditional cloud is something that many people said was impossible,” said Benet. “When we first set out to do this, so many people laughed at us and laughed at me directly, saying, ‘You’ll never get a decentralized network to exceed a few petabytes, maybe 10 petabytes.’ And now we’re passing one exabyte.”

For those who lose track of bytes as soon as they get any higher than what’s available on an iPhone, an exabyte is “a hundred times more than what people said was possible,” noted Benet. “And this is just the beginning of the network.”

By comparison, Twitter produces about 4.3 petabytes a year, or 0.0043 exabytes. Data company Zeenea estimated in March 2019 that Netflix stored 60 petabytes of movies and TV shows, or six percent of Filecoin’s current capacity.

So, an exabyte is a lot of storage.

There’s still a lot of excess capacity on the network, however, which relies on miners for storage. According to Filecoin’s storage stats, last checked on November 19, 761 gigabytes of data are currently being stored on the network.

Filling that capacity is what Benet and Protocol Labs have their eye on. The founder pointed out that Ethereum and other blockchain networks aren’t meant for hosting applications end to end: “You cannot store, say, an entire chatroom…on Ethereum.”

Now that capacity is expanding to be able to compete with legacy products, he said, the next step is: “Start moving lots of applications over to this network. Beyond that, we start looking into the frontier of new kinds of use cases and new kinds of applications that people haven’t built before.”

It’s an “if you build it, they will come” moment for Benet and the Protocol Labs team. They’ve built the field. Now they’re waiting for the players.

JP Morgan’s Jamie Dimon: Bitcoin Still ‘Not My Cup of Tea’

JPMorgan Chase CEO Jamie Dimon expressed his continued disinterest in Bitcoin at an event this morning, quipping that “it’s not my cup of tea.”

The event was the New York Times’ Dealbook summit, which is hosted by reporter Andrew Ross Sorkin; in addition to Dimon, today’s guests include Elizabeth Warren, Lebron James, and Ruth Porat, the CFO of Alphabet and Google.

He had more positive things to say about the blockchain itself, though, commenting that “the blockchain itself will be critical to letting people move money around the world cheaper,” and that JPMorgan will “always support blockchain technology.”

Dimon famously called Bitcoin a “fraud” back in 2017, so his comments today aren’t exactly surprising, even if they’re somewhat at odds with JPMorgan’s general ethos surrounding crypto.

Last month, the bank told investors that “the potential long-term upside for Bitcoin is considerable.”

Meanwhile, Bitcoin investors have continued to earn big payoffs this week, as the price hovers around $18,000 per coin.

Mysterious Ethereum Ad Offers Reward for Solving This Puzzle

A viral marketing campaign has sprung up in Warsaw, the capital of Poland. Plastered across metro stations is the message, “SOLVE THE PUZZLE, CLAIM THE REWARD.”

The poster then points commuters to an Ethereum address that contains the reward, 7 ETH, as well as hash tags #0xPOLAND and #0xPOLANDHEIST.

The Twitter account that appears to be behind the campaign, 0xPoland, links to a website that displays a countdown timer, set to expire on Thursday at 9:24am UTC, and code to the smart contract.

To claim the money, according to the smart contract, one must enter the correct solution into the Ethereum smart contract. This involves calling the “reveal” function of the smart contract. Once the correct solution has been entered, the contract will wire the sender 7 ETH—supposedly.

No other information about the puzzle or those behind it has yet surfaced. The Twitter account, which appears to have just been created last week, posts emojis of bunny rabbits and a few GIFs. A couple of people have tweeted about the hash tags, but not much more.

0x is the name of a decentralized exchange based in San Francisco. It has not tweeted about the campaign, nor has anyone mentioned the campaign in its Telegram chat. One member, “Nikita,” told Decrypt that there is “no relation at all.”

There is also a Polish Ethereum development company called 0x. It is based in Warsaw. However, its Discord chat, which has nine members, remained dormant for about a year. Its Telegram chat, which contains six, is also a ghost town.

All may become clear when the clock ticks past 0. Unless Decrypt solves the puzzle first.

Crypto Exchange Huobi Reportedly Wants to Buy Bithumb

Crypto exchange Huobi is reportedly looking to takeover Bithumb, Korea’s largest crypto exchange, as per a report by local news outlet The Bell. The move is said to be a path for Huobi to gain users in Korea without having to obtain the country’s strict licenses for crypto businesses for its main exchange.

If completed, the takeover would mark a silver lining for Bithumb’s otherwise tumultuous year. The exchange had its office raided by authorities in August and is undergoing multiple legal troubles; its founders and investors are locked in a battle over company shares while the exchange faces allegations of manipulating token prices in a separate case.

But Huobi’s interest could be good news for Bithumb’s operators. As per the report, Bithumb Korea, a stakeholder of Bithumb Holdings (which owns the exchange), is reportedly selling its entire holding in the company.

What a Bithumb takeover means for Huobi

Korea’s strict regulation of its local crypto market means that local banks only deal with crypto firms that are fully compliant with internationally-accepted Know-Your-Customer (KYC) policies. So far, only Bithumb, Coinone, UPbit, and Kobit, are regulated and recognized in the country, ahead of bigger players like Binance or Huobi.

Local users, with such so-called “real name” accounts, are thus a way for Huobi to expand in the country without having to gain the legal licenses themselves.

An industry official explained, “Huobi, which is in an urgent need to issue a real-name confirmation deposit and withdrawal account, seems to be trying to solve its concerns through the acquisition of Bithumb.”

But acquiring users is not the only positive for Huobi. Bithumb, despite its ongoing troubles, enjoys an operational margin of 60% as per the report, meaning the business remains highly profitable for potential operators.

Acquisition blocked?

A conflicting report by China-based crypto journalist Colin Wu today said that while Huobi’s interest is well-known among local circles, it faces ongoing legal proceedings in China that can stall the acquisition of Bithumb. Wu claimed that Huobi is similarly interested in a $500 million sale for Japanese crypto exchange Bitflyer, but faces similar issues.

“Due to the sudden investigation in early November, both acquisitions will be suspended until the Chinese government’s investigation end. The founder of Huobi is not allowed to leave China since 2017,” he said.

But Huobi disputes such allegations. It rubbished reports earlier this month that suggested any of its executive team members or founders were arrested or detained in China.

The exchange has not responded to requests for comment by press time. Meanwhile, the focus is on Bitcoin, which touched a price level last seen in January 2018.