Cryptocurrency Highlights Of The Week

Bitfinex has relaunched, and the ‘Big Four’ accountants are exploring forming their own blockchain consortium. Here are the cryptocurrency highlights of week 32:

  • Last week it was reported that Bitfinex was hacked (losing almost 120,000 BTC) and subsequently looking into the option of “socializing” its losses. This week Bitfinex resumed trading while noting that “upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%”. At the same time Bitfinex issued a new form of IOU’s to its customers, “a new token on the Omni protocol (shortcode “BFX”) equal to the amount of each customer’s discrete loss”. These new tokens “will remain outstanding until repaid in full by Bitfinex or exchanged for shares of iFinex Inc”. It remains to be seen how long the platform can survive after relaunching on such a short notice. The timeframe is too short for Bitfinex to have seriously improved its security protocol, which results in little confidence from its customers as 90,000 BTC has already been withdrawn from the platform after the relaunch. A bankruptcy may even become a self-fulfilling prophecy if this trend continues.

  • Banks have been exploring blockchain technology for some time now in the consortium of 50 banks that teamed up with R3CEV. Now also the ‘Big Four’ accounting firms, Deloitte, Ernst & Young, KPMG and PwC have met with American Institute of Certified Public Accountants, in a meeting hosted by ethereum-focused startup Consensys, to “explore and to determine the value of a joint accounting and blockchain industry consortium”. The main purpose of the meeting was trying to “stay ahead of the curve” and making sure that accountants “won’t be caught off guard if and when blockchain changes the way accounting works”.

  • While the developers at Bitcoin Core are working hard to ready the protocol for the Lightning Network, Ethereum’s own version of Lightning, called Raiden, finished its first proof of concept and is hoping for a lot more by the end of the month. “Raiden is aiming to demonstrate that the system can scale to as much as 100,000 transactions per second”, although Heiko Hees, CEO of brainbot technologies and creator of Raiden, refused to give any guarantees on the exact timing. Hees did take the opportunity to argue that Ethereum is better suited than Bitcoin for Lightning: “In Bitcoin the scripting language is rather limited so it’s way more complicated to set it up. Setting this up on Ethereum is straightforward; any developer can easily understand the smart contract involved. The other difference is that until Bitcoin implements Segregated Witness to fix the transaction malleability issue, they cannot do Lightning.”

  • The World Economic Forum has published a report on blockchain titled “The future of financial infrastructure: An ambitious look at how blockchain can reshape financial services”. The WEF asks “how can this technology really help financial firms?” and lists the following key findings:
    • Distributed ledger technology (blockchain) has the potential to drive simplicity and efficiency by establishing new financial services infrastructure and processes
    • Distributed ledger technology will form the foundation of next generation financial services infrastructure in conjunction with other existing and emerging technologies
    • Similar to technological advances in the past, new financial services infrastructure will transform and question traditional orthodoxies in today’s business models
    • The most impactful distributed ledger technology applications will require deep collaboration between incumbents, innovators, and regulators, adding complexity and delaying implementation

  • The price of Bitcoin experienced little movement this week, with a minimal increase of $2 to $587 per BTC. Ethereum on the other hand started to recover a bit from the recent events with the price of Ether increasing by more than six percent to around $11.50 per ETH. Ethereum Classic lost a lot of its momentum at the same time, seeing the its value decrease by one third to roughly $1.80 per ETC.

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