Category: Cryptocurrency Exchange

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IOTA has introduced Qubic software

Categories Technology, Trading, Cryptocurrency Exchange, Tokens, IOTA, Tangle Technology

IOTA has introduced Qubic software

There has been an awful lot of talk around the latest IOTA project. This won’t come as much of a surprise to those that are familiar with IOTA and its native Tangle technology, but this new bit of tech is set to seriously raise the bar. Qubic is already being billed as a world-changing bit of software, but what do we really know about it?

How does Qubic work?

The short answer to this is “no one really knows”. Thus far, the specifics surrounding the project have been shrouded in an air of mystery but more details are scheduled to be released in the coming days.

So far, we have gathered that Qubic will seek to change the way that businesses interact with and use smart contracts. Similar in some ways to other more mature ecosystems, IOTA will provide the smart contract functionality- a great thing in a world where there is no such thing as a one-size-fits-all blockchain solution.

Qubic is expected to place a big emphasis on smart contracts and will provide an oracle system which will be capable of connecting USD/EUR conversions to a smart contract. The exchange rates will be taken in real-time from Bloomberg.com and this means that new trading vehicles that are linked to IOTA can be introduced.

A possibility of facilitating trading options

One possible outcome is that Qubic will facilitate a way for trading options that are related to IOTA. Speculating on any asset can lead to increased volatility and even though those behind IOTA would like to see a bit more stability, a balance is expected to be found. Hedging bets on crypto are increasing in popularity, but until the market truly matures, its volatility means its pretty tough to do so effectively and profitably. Qubic may offer a suitable solution, in this case, assuming of course that this is how the technology is designed to be used.

It also seems that Qubic will also offer a way for existing IOTA trading platforms to tap into the world of decentralising margin trading. This particular accomplishment will be achieved through using IOTA Tangle to offer a low-cost and simple infrastructure. For those who want to convert to and from USD/EUR and IOTA, the future is looking pretty bright.

Let’s wait and see

Scheduled to be officially launched in the near future, everyone is poised to see how this technology will measure up. If IOTA can deliver on their promise and the expectations around Qubic, it will be a big step for them, but until then, let us wait and see.

 

Interested in Learning More about ICOs Legislation in Malta? Contact us directly on +356 20103020 or by mail at [email protected] to find out more.

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Crypto-giants Binance opens a bank account in Malta

Categories Blockchain, Cryptocurrency, Malta, Law, Bank, The Blockchain Island, DLT Regulation, E&S Group, Cryptocurrency Exchange

Crypto-giants Binance opens a bank account in Malta

In May 2018, the world’s largest cryptocurrency exchange, Binance, announced that it would be opening offices in Malta. The reason for their move was due to tighter restrictions on cryptocurrency activity in Japan and the fact that the Maltese government was legislating in favour of the cryptocurrency industry.

 Crypto-Euro trading pairs

In an interview given last week, CEO of Binance, Changpeng Zhao announced that they had successfully opened a bank account in Malta to enable them to conduct business. This also coincided with the news that Binance would soon offer crypto-Euro trading pairs on their exchange. This news reinforces Malta’s position as a leading jurisdiction for cryptocurrency related businesses and it is expected that other service providers will soon follow suit.

Banks have been traditionally wary of businesses that are operating in the cryptocurrency sphere, so Binance’s latest achievement is a big success as well as a significant step forward. It is hoped that this recent development will mark the beginning of a period of understanding and mutually beneficial assistance between local banks and those wishing to engage in the cryptocurrency field.

The bank that Mr Zhao used to open the account and any details on the type of account opened have remained confidential at this stage. However, many believe that other Maltese banks will address their own policies in light of the news.

The Blockchain Island

Malta has been touted as the ‘blockchain island’ and as well as Binance. Other companies such as Okex, BitPay, and DQR have all announced their intentions to call the EU Member State home.

Whilst Malta has announced three new bills that will come into force in due course, setting up a cryptocurrency business on the island still requires a high level of sector and local know-how. At E&S, our team of legal experts, accountants, business consultant, and finance specialists- all with considerable experience in the field- are on hand to guide clients through the process from A-Z.

E&S offers a full portfolio of services such as company incorporation and formation, investment service licenses, company management, and of course, setting up the right bank for you and your businesses needs. We also offer advisory services to ICOs. To find out more, contact us at [email protected] or by calling us on +356 2010 3020.

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The future of decentralised exchanges and off-chain atomic swaps.

Categories Blockchain, Cryptocurrency, ICOs, Cryptocurrency Exchange

The future of decentralised exchanges and off-chain atomic swaps.

Whilst the cryptocurrency economy champions itself as being decentralised in nature, ironically it has usually relied on centralised platforms of exchange. This provides problems as these exchanges will often hold funds in large “honeypot” addresses that are prime pickings for sophisticated hackers. This has resulted in no less than two hacks in the last three months along. On the 12th of February, Bitgrail reported that over $170 in XRB was stolen from their wallets, and Coincheck suffered their largest losses ever with over $400 in NEM being taken.

DEXs

There are however alternative solutions to centralised exchanges and these are called decentralised exchanges (DEXs). These platforms are structured in such a way that users are able to retain the ownership of their coins and their private keys. This solution is much needed and it will prevent cryptocurrencies from being kept in one centralised place, making large-scale hacks a lot less likely.

The demand for these DEXs is increasing and as exchanges trade volume grows, so will their susceptibility to being hacked.

The way that these exchanges work is by individuals setting and taking orders. These orders exist on separate order books that are hosted independently of each other. This means that new orders placed on one book, will not place on another creating an issue around a lack of liquidity and users having to look up several different books to place their orders.

There is, however, a solution. A process called “Network Liquidity” means that different order books can be gathered together in an API to share their orders. This way, orders can flow freely between relayers as well as providing the required liquidity in the network.

Front Running

A particular concept known as Front Running is one where an individual can outbid an order that has been placed on DEX. Many decentralised exchanges that run on Ethereum rely on smart contracts but as the network is public, it means anyone can check the memory pool to see who is planning an order.

Once someone identifies that an order has been placed on DEX, they can easily jump in front of them by placing the same order, but with more gas. This means that the first order that was placed never gets realised and is removed from the book.

One suggested solution from Ivan Bogarty, a former Google software engineer, is to implement a minReturn on trades, which means that the trade is cancelled once the user realises someone is trying to cut in front of them. Another suggested solution is to set a max gas price so that people are unable to bid higher than the limit.

These are just short-term fixes. Adding a minReturn doesn’t stop front running, it just reduces the users losses. Additionally, adding a gas limit isn’t ideal on an already congested network.

Another way of mitigating this issue is through the use of a Commit-Reveal Scheme. This solution was presented by Will Warren, the co-founder of Ox project, an open protocol for decentralised exchanges. This means that the user can secretly commit his funds without executing a transaction and revealing it. Once the transaction has been mined, a second transaction is sent with all the relevant details- therefore placing the order on the DEX. Unfortunately, this method is not perfect either as it doesn’t allow for accidental collisions when two individuals may place the same order at the same time.

Atomic Swaps

Back in March, Lightning Labs announced the release of the first Lightning beta for mainnet on Bitcoin and Litecoin. One of the most anticipated applications on the Lightning Network is Atomic Swaps.

An Atomic Swap pertains to the “all or nothing” exchange of one currency for another e.g. Bitcoin for Litecoin. The use of the Lightning Network makes this process instant, private, and free when it comes to mining. So how does the Lightning Network handle issues of liquidity and front running?

Liquidity

There are two different paths that can be followed to perform an Atomic Swap on the Lightning Network. These are directly from one node to another node, or routing your swap through a third party intermediary.

When it comes to liquidity, one issue the Lightning Network faces is fund and channel availability. The nature of the network means that users have to create their payment channels through multisigs which means you can only get on the Lightning Network if you have funds to spend. The other option is that intermediaries can route your payments if they have access to a sufficient amount of funds.

This issue can be solved in a similar way to DEXs. Just as a DEX order book is able to share information amongst other order books, so too can transactions be shared and routed between nodes that have the funds and channels to do the swap. All that is needed is the ability to extend the number of hops that your swap goes through. This is a challenge as the Lightning Network is still in the early development stage, but as the network grows, it is hoped that this will be less of an issue.

Hash Time Locked Contracts

Atomic Swaps use a type of technique called Hash Time Locked Contracts which submit both currencies into the contracts simultaneously. These HTLCs mean that the amount you are exchanging is ensured and cannot be outbid by another user. There is also no risk of an accidental collision.

If for example, you want to exchange your Bitcoin for Litecoin, you would need to find another user on the Lightning Network who also wants to exchange. You would then commit respective coins to the swap and route them through the other nodes. This way there are no fees and the exchange is guaranteed.

The Lightning Network does face other problems though. Bad actors may try to steal another person’s funds however severe punishing contracts have been created in such a way as to put off anyone who may consider this.

At the moment, DEXs pay an important role in allowing the cryptocurrency ecosystem to trade without relying on centralised exchanges. At the same time, they are pretty much only suited to Ethereum based tokens. Atomic Swaps, however, are yet to be widely implemented as the Lightning Network is still in its infancy but it will also be limited in terms of compatible currencies.

If we consider these facts, it appears that the two forms of exchange will develop independently of each other as they apply to different ecosystems, but this isn’t necessarily the case. There is a chance that these two ecosystems may one day become compatible with each other. A Lightning Network Developer, Alex Bosworth recently stated that one of his aims is to make Atomic Swaps compatible with as many other coins as possible. This would include the exchange of ERC20 tokens and Lightning Network compatible currencies.

E&S Group is a leading law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

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Bitmora, a crypto exchange company is moving to Malta.

Categories Blockchain, Cryptocurrency, Regulatory, Malta, The Blockchain Island, Cryptocurrency Exchange

Bitmora, a crypto exchange company is moving to Malta.

For every company, the launch of a product is an exciting time to be in, however, state governments are bringing many problems for cryptocurrency exchange companies. Bitmora, a crypto exchange company announced its intention to expand their offices to Malta, hence postponing its US official launch.

Recently problems on cryptocurrencies started to arise in the United States. Moreover, the SEC is treating all ICO companies as securities, thus moving away from becoming a crypto friendly country. Bitmora stated that while dealing with US banks, problems with regulations started to arise. Due to problematic encounters, Bitmora is moving away from the US jurisdiction.

Turning problems into success.

Bitmora has announced that it will shift its operations to the small nation-state of Malta. By far two prominent crypto exchange companies, Binance and OKEx have also stated their intentions to move their offices on the island. It is said that Bitmora’s decision to move to Malta was made when US regulations made it impossible for the organisation to function. For Malta, this is important news which can help the growing economy. More work opportunities are set to be created in the blockchain industry thus becoming the now dubbed “blockchain island.”

Since Bitmora is changing their launch date, it is thought that the US rigorous regulations have to blame, however, this is not the case. Developers are set to be working to improve Bitmora’s blockchain, developing a better platform for their customers.

In addition, the platform is set to become finalised and published on May 26th, 2018.

To know more about ICO legislation in Malta please follow this link.

Contact us directly on +356 20103020 or by mail at [email protected] to find out more.

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