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World Gold Council Head: “Nothing to Suggest Gold is Suffering From the Popularity of Crypto”

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%name World Gold Council Head: Nothing to Suggest Gold is Suffering From the Popularity of Crypto



Op-Ed

Neil Hume, Mining and Commodities Editor for Financial Times, was quick to have World Gold Council Head of Market Intelligence, Alistair Hewitt, dismiss bitcoin’s ascendancy as a reason for gold’s third quarter (Q3) performance woes. He paraphrases Mr. Hewitt as having said, “there was nothing to suggest gold was suffering from the popularity of cryptocurrencies such as bitcoin, which have experienced explosive gains this year.” There is reason to be skeptical of that claim.

Also read: Gold Versus Bitcoin, Goldman Sachs Prefers Metal to Crypto

Gold Currents Might Turn Trends

Fortune’s David Meyer writes, “More people are now searching online for how to buy bitcoin than they are searching for how to buy hold,” according to Google Trends. Gold is the classic hedge against stock market volatility, especially during downturns.

That might be changing if Q3 figures are to be extrapolated into a full-fledged movement or current.

It certainly doesn’t help to have a booming stock market at the moment along with a new commodity asset in cryptocurrencies. Leaving out the entirety of the legacy markets, bitcoin alone has appreciated many hundreds of percentages in just 2017.

“Demand for gold slumped to an eight-year low in the third quarter,” Mr. Hume reports, attributing the record fall to “the prospect of higher US interest rates and tighter monetary policy” which  “resulted in less [gold] buying from institutional investors.”

640 gold circuitboard World Gold Council Head: Nothing to Suggest Gold is Suffering From the Popularity of Crypto

Gold demand falls 9% to 915t in Q3 as ETF inflows slow from unprecedented highs in 2016, the latest World Gold Council report of 8 November 2017. It “showed demand for bullion fell to 915 tonnes in three months to September, down 9 per cent from the same period a year ago.”

“The latest figures were hit by ‘significantly’ lower inflows into gold exchange traded funds, which fell to 19 tonnes from 144.3 tonnes, and a softer jewellery market in India,” Mr. Hume detailed. (India is second only to China in gold consumption).

The “world’s biggest consumer of gold after China — dropped 25 per cent year-on-year in the quarter to 114.9 tonnes,” Financial Times notes.  

Quoting Mr. Hewitt, “It was a tough quarter for gold demand,” and, paraphrasing again, “Mr. Hewitt said net inflows had remained weak during October with just three tonnes added to ETFs as investors chased higher returns from assets such as equities and bonds.”

Central Banks are the Health of the State

And here is the a-ha! moment: Mr. Hewitt anticipates gold’s rebound due to “buying from central banks. Led by Russia and Turkey, central banks added 111 tonnes to their gold reserves in third quarter, 25 per cent more than in the same period in 2016,” Mr. Hume claims. Quoting Mr. Hewitt approvingly, “We now have another central bank that is buying 10 tonnes a month,” in reference to Turkey. “That’s a significant development that hasn’t been picked up by people looking at the gold market.”

Things have become so desperate in the gold market, the metal’s heroic past of taming governments, of spiting them, has given way to alms: hands out, begging for central bank acceptance.

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Central banking is contrary to peace. Once such power was consolidated around the world by the early 20th century, even gold standardization of currency fell out of favor, and the rush toward inflation became all the rage. The power for governments to control money supplies is too tempting to trust with gold, but it is a way to stay relevant beyond circuit boards and jewelry. And central bank inflation is often overlooked for its keen martiality, its propensity for war and state expansion generally.

Governments in the inflation age can promise all sorts of goodies to subjects, march them off to war without a financial care (much less lives loss), and generally consolidate while also expanding power. If there is one takeaway from the entire 20th century and our present time, an inverse relationship exists between human freedom and government growth.

Gold no longer offers hope in this regard.

Bitcoin as Hope for Peace

The swirling debate at present is what bitcoin constitutes as a currency and network. It’s clearer to me bitcoin of the BTC variety, segwit bitcoin or whatever you’d like, is going to remain, if it does at all, a store of value and ultimate unit of settlement. Bitcoin cash (or a variant) might very well become the fungible, everyday currency of Satoshi’s digital cash ideal. With well-known transaction fees ever-rising and processing times thudding it along, BTC doesn’t in the near-term figure to be a currency in the easiest sense of that word.

This means there’s a chance bitcoin could replace gold as the future hedge, a way for people to fight inflationary warmongers and chiefdoms.

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With CME’s entrance into the bitcoin foray, and if institutional investors bring whales, along with blockchain dreams, BTC could very well reach price highs pegged by Fundstrat’s Tom Lee of 25,000 USD and beyond.

What do you think of gold’s slide? Is it a trend or just the usual aberration? Tell us in the comments below!


Images courtesy of: Pixabay, ET online magazine. 


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Parity Disable Multi-Sig in the Wake of Bug That Nuked $168 Million Ether

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parity multi sig 1068x771 Parity Disable Multi Sig in the Wake of Bug That Nuked $168 Million Ether



Security

Parity have concluded their report into the bug which enabled an ethereum hobbyist to break their multi-sig wallet. The incident permanently locked up over half a million ether “as well as additional tokens”, worth at least $168 million in current prices. As a consequence, Parity have temporarily disabled multi-sig functionality.

Also read: Ethereum Wallet Parity Hit by Second Critical Vulnerability – $150+ Million Frozen

Picking Through the Pieces

In a detailed blogpost identifying the events leading up to the incident, the Parity team outline exactly what happened and why. The fatal incident occurred on November 6 when parity wallet 300x300 Parity Disable Multi Sig in the Wake of Bug That Nuked $168 Million Etheruser devops199 made themselves the owner of the wallet’s library contract and then destroyed this component, which Parity’s multi-sig wallets were dependant on. As a consequence, 587 wallets containing 513,744 ether plus tokens were permanently locked up.

The Parity team have now completed a full audit of the smart contract code governing their wallet and have identified no further vulnerabilities. In “A Postmortem on the Parity Multi-Sig Library Self-Destruct”, Parity express remorse for those affected, but in their defense note that the code was created and audited by the Ethereum Foundation’s dev team and had “underwent extensive peer review”. They then go on to ponder what could have been done to prevent the incident, stating:

If the contract code had not included the functionality to suicide or kill, even if someone had taken ownership, they would not have been able to do anything. The kill functionality was a remainder of the original audited contract.

I Accidentally Killed It

Shortly after nuking the contents of the multi-sig wallets, the now infamous devops199 confessed “I accidentally killed it” and thus a meme was born. In response to the question “What is Parity Technologies doing to unfreeze the affected funds?”, the team are vague, stating only that “we are working hard on several Ethereum improvement proposals(EIPs)…that have the potential to unblock funds. These improvement proposals will also address general cases of blocked funds.”

accidentally killed it Parity Disable Multi Sig in the Wake of Bug That Nuked $168 Million Ether

Once is a Misfortune, Twice is Carelessness

Embarrassingly, Parity have declared they’re temporarily disabling their own multi-sig wallets, though they will “will continue to support Gnosis, WHG or other multi-sig wallets that are deemed secure”. The remainder of the blogpost details the measures that the London and Berlin-based team are taking to beef up their security including external audits of “all existing sensitive code including secret management, key generation and password management, signing and auto-updating”.

Having suffered two major security breaches this year, causing over $200 million of ether to be locked or stolen, Parity can’t afford to slip up again.

Do you think Parity’s code can be trusted in future? Let us know in the comments section below.


Images courtesy of Shutterstock, and Parity.


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Daniel Krawisz on Governance – ”The Invisible Bitcoin Leaders: Insights of Don Quixote and Tom Bombadil”

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don quixote 2444329 1920 1068x748 Daniel Krawisz on Governance – ”The Invisible Bitcoin Leaders: Insights of Don Quixote and Tom Bombadil”



Op-Ed

Daniel Krawisz is cofounder of Satoshi Nakamoto Institute, a consistently great repository for thoughts on Bitcoin as a network and bitcoin as a currency. Mr. Krawisz is a well-known personality in the ecosystem, routinely sought for his independent voice. This is his first Opinion Editorial for news.bitcoin.com, part of which was delivered at this year’s Texas Bitcoin Conference

Also read: The Satoshi Revolution: A Revolution of Rising Expectations

The Best Leader in Bitcoin is an Investor

What kind of person would make the best leader in Bitcoin? The best leader is the person with the greatest foresight and best imagination. He doesn’t need to know crypto. He is an investor. He is simply the one with the best idea of how Bitcoin will be used in the future. This person is the best leader because he would know best how to use resources today so as to reach the highest value for Bitcoin most easily. He would be someone who bought in early, and who treated his bitcoins as if they were worth a lot more than they were at the time.

However, someone with foresight would have also avoided drawing attention to himself. He would have known that Bitcoin would become an adversarial environment. He would have predicted that other people would do just about anything to get what he got effortlessly. He would want to be unobtrusive.

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The person with the greatest foresight, the one I want as a leader, would have been smart enough not to distinguish himself, and he would know how to act dumb whenever eyes were upon him.

Anyone who really knew how to make Bitcoin more valuable would be smart enough not to tell anybody about it. He knows that secrets are the most valuable thing in the market. He would want to tell no one, and position himself best in anticipation of its discovery by other people. The best leader must put his knowledge to the test without drawing attention to himself or even hinting that he knows anything.

In fact, I would consider someone who distinguished himself by his intelligence or foresight as second-rate at best. I am writing now with hindsight. I have had foresight, but I didn’t think far enough. If I had been really smart, I would never have written a single article because I would have realized everything that I wrote about here.

The Paradox

Thus, the paradox of leadership in Bitcoin is that someone who is a good investor knows not to draw attention to himself or to his ideas. For Bitcoin is an adversarial environment in which all attention that one draws makes him vulnerable. The problem is to get good ideas from leaders who want to stay hidden, and distinguish them from bad ideas.

The way that we know this leader is that he is always in the right place at the right time and he avoids all traps that are set for him, but he never does anything that reveals him to be anything other than a lucky idiot. Someone who avoids a trap, and reveals that he was not fooled by it, has shown that he is intelligent, which means that he is too stupid to be a good leader. Same if he succeeds and shows that he knew what he was doing. The best leader would avoid traps and make successful bets without revealing that he has foresight. The leader must be someone who is either very good or very lucky, and nothing about him definitively establishes the difference.

invisible 13955 640 Daniel Krawisz on Governance – ”The Invisible Bitcoin Leaders: Insights of Don Quixote and Tom Bombadil”

In other words, the leader is invisible. If I can see him, then he is not good enough. If I look at him, I would want to dismiss him as a retarded person and move on without noticing his greatness. A good leader in Bitcoin must convince me that he has Bitcoin’s best interest in mind and that he is not trying to scam me instead. He must also convince me that his plan is actually good. And not just once either. He must convince me again every time he wants me to do anything.

The way he leads is by betting his own bitcoins on Bitcoin’s future. That is how he issues his commands. When he does this, he binds himself to Bitcoin’s success. He does not expect me to bet with him. He takes on the risk himself. He is either a fool who is eliminating himself from the betting pool or a genius who is doing something beyond my understanding. If I can tell the difference, then he is not my leader.

My friends and I had a joke a few years ago after an exchange with someone on reddit who said that the “bitcoin mafia” would never let an altcoin succeed, as if there was really a conspiracy among bitcoiners to suppress altcoins. The joke was that I was the leader of the Bitcoin mafia, and that I didn’t know whether it really existed, and I simply issued my commands to the four winds and was unaware of anyone listening. I did this by explaining that we we would systematically avoid risk by ignoring altcoins; a successful altcoin is therefore an uphill struggle to induce everyone to be more risky than necessary. That is the leader I want.

Tom and Don

I’ll conclude with two of my heroes from literature who I think are kind of like the leader I want for Bitcoin.

My first hero is Tom Bombadil, the nature spirit from Lord of the Rings. His section was removed from the movies because he is a moron who sings nonsensical songs and acts like he’s high all the time. However, the ring of power does not affect him and he does not wish to help destroy it. He appears to be older than anybody else in Middle Earth and, to him, the reign of Sauron would be a short-term kind of thing, and he does not want to risk himself to stop something that he knows he can endure.

Tom Bombadil is my hero because he avoids going along with the crowd and he does not take unnecessary risks when everyone else is. Is he really stupid or is he the true guardian of Middle Earth?

1475496871010149 Daniel Krawisz on Governance – ”The Invisible Bitcoin Leaders: Insights of Don Quixote and Tom Bombadil”

My second hero is Don Quixote, the madman from La Mancha. In book 1, Don Quixote goes mad and believes himself to be a knight and he leaves his job to go questing with his sidekick, Sancho Panza. He has a lot of imaginary adventures and hurts himself again and again. In book 2, Don Quixote goes on more adventures but this time, the people around him have read book 1, and they want to play along and indulge him in his fantasies. It is like his madness has gone out of him and he is now a real leader. Was he stupid or genius? Bitcoin in 2009 was like book 1 of Don Quixote because it was worthless and its future uses were simply the dream of those few involved with it. Bitcoin today is like Don Quixote in book 2.

Don Quixote is my hero because he takes risks on things that make no sense to other people, but which ultimately turn him into a leader. Is he really mad or does he know what he is doing?

My heroes are more like these people. They are nothing like the technocrats who have been attempting to lead Bitcoin recently. They are the ones who truly control Bitcoin’s future. They are the invisible leaders.

He asserts his leadership by showing us that he will lose money if his command is not obeyed. He can do this without revealing who he is. The contract is all I need to see of him because I would know that only a good leader could sustainably risk his money on it. Either he knows what he is talking about and will keep winning money in the future, or he does not and his behavior will be punished over time.

What do you think of Bitcoin leaders? Tell us in the comments below!


Images courtesy of Pixabay, mtgcardsmith


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Zen Protocol Advances Smart Contracts for Financial Services — Bitcoin Magazine

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Shunryū Suzuki, the Sōtō Zen monk and teacher who helped popularize Zen Buddhism in the United States, once remarked that, “In the beginner’s mind there are many possibilities, but in the expert’s there are few.”

In many ways, this aphorism captures the entrepreneurial tenor of today’s emerging world of blockchain technology, as startup companies seek to address critical issues facing the distributed ledger space.  

Many would agree that today’s financial systems are fraught with centralization, complexity and barriers to access. While established businesses and individuals in this market can manage the paperwork and bureaucracy, many still find these barriers to participation too challenging to overcome.  

As a result, potential trades and deals are lost, as these financial participants, trying to get limited access to the system, turn to intermediaries. These participants are, therefore, unable to issue assets or even to trade in some asset classes.  

Zen Protocol, a smart contract company headquartered in Tel Aviv, is on a quest to change this trajectory, by making secure, peer-to-peer finance possible on a customized, public blockchain, removing the need for intermediaries such as banks and brokers.  

Zen’s approach allows anyone, anytime, anywhere to create and trade financial products on a secure platform — a Proof-of-Work blockchain protocol. It’s here where an open marketplace for options, futures, digital currencies and a myriad of other financial instruments are offered to consumers who would otherwise be left without the ability to participate. 

Zen Protocol, in many respects, can be viewed as an alternative to Ethereum, Bitcoin’s main market competitor. Zen’s main value proposition is the creation of a blockchain that mitigates some of the pesky issues that have adversely impacted Ethereum, while simultaneously running parallel to the Bitcoin blockchain. 

By way of example, one problem users on the Ethereum blockchain face is running out of “gas.” This means that transactions on its network often fizzle out, requiring that whatever currency paid to a user be returned to them. In other words, because there wasn’t enough energy to complete their transaction, it was canceled. Unfortunately, the fee for running this transaction still has to be paid.

Zen addresses this issue through proven resource bounds: a protocol for attaching to each contract a proof of how long it takes to run. This completely removes the need to monitor gas.

Key here is that smart contracts won’t allow a transaction to be sent without knowing how much computation it uses. This one feature alone makes Zen a noteworthy alternative to Ethereum and other smart contract platforms.  

With Zen miners now able to check how much computation transactions take to verify, they no longer have to run them in a virtual machine. Unlike competing platforms, Zen simply compiles its smart contracts to machine code, enabling them to run at native speed and greatly increasing transaction throughput.

Zen has implemented a system called “Multi Hash Mining” which distributes mining rewards to several hashing algorithms while giving users — that is, holders of the Zen native token — the power to vote on which hashing algorithms will receive the rewards. The company believes that this approach will result in a fairer and more equal engagement between miners and token holders, with all participants incentivized to cooperate.  

It should also be noted that, rather than being limited to the native Zen token, any asset in Zen can be used to pay transaction fees, including those created by contracts. This reduces complexity for consumers seeking to move around and pay fees in fiat currency. With Zen, all new assets can be utilized by any existing or future contract. 

Zen Protocol’s Push Forward 

The core team at Zen protocol started working together in 2014 in the blockchain space and, after years of research, began development of the Zen Protocol in June 2016. 

“Our driving motivation in creating Zen is the belief that people have a right to own their financial assets, and we feel a responsibility to provide people with the necessary tools to empower themselves,” said CEO Adam Perlow. 

Perlow noted that rather than be exposed to counterparty risk, most individuals use financial institutions as trusted intermediaries. He says that these financial institutions facilitate the majority of economic transactions.  

The model employed by Zen Protocol overcomes the ability of financial institutions to limit people’s freedom to transact, providing an alternative way of accessing financial products and controlling risk.   

Perlow believes that Zen Protocol’s approach follows from some simple premises. 

“These premises are the need for increased security — provided by formal verification and a secure execution context, the need for real utility — provided, for example, by oracles, and the need for better governance [by multi hash mining],” he said. “In the long term, we think Zen provides people with a ‘Swiss bank’ in their pocket, allowing them to make use of cryptographic advancements to create, trade and store conventional financial assets such as stocks, bonds and derivatives over a decentralized network.” 

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Rush to Bitcoin Cash Causes Exodus Wallet to Suspend BTC Trading Pairs

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Technology

Wallet software platform Exodus suspended exchange features for bitcoin trading pairs over the weekend, after a rush to bitcoin cash caused major congestion. In a public letter to its customers, the company explains why the decision was made and the changes going forward. 

Also read: Exodus Integrates Bitcoin Cash Into Their Multi-Asset Wallet

Exodus Suspends Feature for BTC Trading Pairs

Torsten Sandor, Chief Communications Officer (CCO) for Exodus explained, “We believe in 100% openness and transparency. We are posting this statement on Medium, so you can add your thoughts. We are here, we are listening, and we want to make this right.”

In three days time, bitcoin cash went on a tear. Its price skyrocketed, causing many to either sell their existing coins or purchase them anew. In either case, it meant a major headache for Exodus.

“The parabolic rise of Bitcoin Cash had a serious impact on the Bitcoin network,” the company claimed. “Seeing the price surge, many of the miners abandoned the Bitcoin network and started mining Bitcoin Cash. BTC transactions were grinding to a halt. Bitcoin transactions normally take 5–20 minutes to go through, but this weekend we’ve seen transaction times up to 12 hours.”

maxresdefault 1 1024x576 Rush to Bitcoin Cash Causes Exodus Wallet to Suspend BTC Trading Pairs

Many analysts concluded the inverse relationship between bitcoin’s price fall over that period and bitcoin cash’s rise were both due to the pending Bitcoin hard fork being called off.

“Normally about 20% of miners work on Bitcoin Cash and 80% on Bitcoin,” the letter continued, “but this weekend BCH had more than two-thirds of the mining power. At the time of writing this update, there are still 135,000 unconfirmed transactions on the Bitcoin blockchain, about five to ten times the usual. This is the second worst Bitcoin network congestion of 2017,” the letter stressed.

The letter explains, “As the Bitcoin network slowed down dramatically, we started seeing these exchanges fail, and at the height of the congestion, one-third of all exchanges were unsuccessful.”

Suspension of their app’s exchange trading pairs, according to the company, happened at 6:40 UTC on 12 November 2017 due to “exchanges failing at an unacceptable rate.”

The Decision and its Consequences

Exorbitant transaction fees weren’t helping the company’s margins either.

Exodus “received over 1500 support tickets over the weekend, about 2 weeks’ worth.” They were able to recover somewhere around 60 percent of requests with “341 tickets unanswered, and 198 tickets where the solution has not been reached yet,” as of this writing.

At this point, customers wanted to be sure their money wasn’t caught in some kind of blockchain hell, unable to be recovered. Exodus assures that their decision to suspend averted such a disaster.

telephone 1822040 640 Rush to Bitcoin Cash Causes Exodus Wallet to Suspend BTC Trading Pairs

The company pledges to contact each customer impacted within two days. Also, “In the next 24 hours, we will deliberately use transaction boosting services to accelerate your transactions. We cover all related costs,” they wrote.

Going forward, the company plans to hire more engineers, add surge pricing warnings, and offer more exchange options.

“We know many of you feel Exodus has failed you at this crucial moment. We truly apologize.”

What do you think of Exodus’ predicament? Tell us in the comments below!


Images courtesy of: Pixabay, Exodus. 


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