Bitfinex sparks another debate on cryptocurrency exchange regulation, and SegWit is to be included in the next Bitcoin version. Here are the cryptocurrency highlights of week 33:
- Within a week after relaunching Bitcoin exchange Bitfinex once again became one of the largest exchanges by US dollar volume, which could be interpreted as a sign of the exchange’s resilience according to market observers. In total Bitfinex managed to grab more than 20% of the market. Others, however, remain sceptical and think that the volumes are largely due to withdrawals. “A lot of the activity is likely related to people withdrawing their holdings out of fear. Withdrawal-driven volume isn’t actually reassuring” according to Cryptocurrency investment firm founder Jacob Eliosoff. Also the socialization of losses is still open to legal challenge according to lawyers, leaving Bitfinex’ future very uncertain for now.
- The Bitfinex hack is sparking another debate on the regulation of cryptocurrency exchanges, or at least it is in California. The state assemblyman Matt Dababneh considers the hack to be evidence of the need for tighter industry controls, just like the bankruptcy of Mt.Gox more than two years ago prompted New York to create the BitLicense. In a statement Dababneh said: “Today, a user of virtual currency has no protection from loss, and businesses that use, transmit or store virtual currency live in an ecosystem of regulatory uncertainty. Potential harm to consumers is not some remote possibility, but has already happened. Just recently a Bitcoin hack led to an estimated loss of $65 million. Virtual currency businesses have a place at the financial services table, but like other financial services, California needs a set of minimum standards and protections”. As a result, California may thus be getting its own BitLicense pretty soon.
- The next version of Bitcoin Core, version 0.13.0, will be the first to feature the code (Segregated Witness) that will potentially fix transaction malleability. It was, however, added that the code will not be activated in the next version, but rather in version 0.13.1 to allow for further testing. One positive expected side effect of Segregated Witness is that it is estimated to eventually reduce transaction size by around 40 percent, thus effectively raising the current block size limit. It is also a major requisite for Lightning Networks to work on the Bitcoin protocol.
- A mysterious hacking group called Shadow Brokers, “one of the most sophisticated cyberattack groups in the world” according to Kaspersky Lab, claims to have stolen powerful cyber weapons and surveillance tools from the National Security Agency (NSA) and is putting them (“the best files” which haven’t been published yet) up for auction. Never-before-published documents provided by the whistle-blower Edward Snowden seem to confirm the authenticity of the stolen data. With the auction the hackers are hoping to raise a whopping 1 million Bitcoins (more than six percent of the total currently available supply).
- The price of Bitcoin again experienced little movement this week, with a slight decrease of $6 to about $581 per BTC. Ethereum suffered a little bigger loss with the price of Ether dropping by more than two percent to roughly $11.20 per ETH. Ethereum Classic even lost a bit more, seeing the its value decrease by more than three percent to $1.74 per ETC.