Close, but no cigar! Here are 2020’s worst Bitcoin price predictions

Close, but no cigar! Here are 2020’s worst Bitcoin price predictions

These off the mark 2020 Bitcoin price predictions prove that forecasting BTC’s value is as futile as picking lottery numbers.

Pundits and crypto analysts love to issue Bitcoin (BTC) price predictions regardless of how volatile the asset class is. 

In 2017, there were calls for BTC’s price to hit $35,000–$50,000, and of course, a few brave souls predicted that the price would top $1 million before correcting.

No one will forget how John McAfee infamously promised to chomp off his genitals if BTC’s price didn’t hit $1 million by 2020.

While some of these lofty estimates are based on fundamentals, others are entirely baseless. Regardless of the analyst’s rationale, a handful of them are so far removed from reality that they have become memes.

Let’s review the most outrageous Bitcoin price predictions of 2020.

“Guesstimation” attracts attention because nobody follows them up

Guessing the future price of cryptocurrencies is so embedded in the community that many analysts don’t even consider evaluating their effectiveness. Keeping up with the endless flow of predictions issued on blogs, podcasts, Twitter and YouTube is almost impossible. Imagine the difficulty and energy it would take for a person to follow up with all these random guesses.

To further complicate matters, some of these predictions come from well-known Bitcoin bashers, such as renowned gold bug Peter Schiff, and New York University Stern School of Business professor Nouriel Roubini. Thus, in some cases, personal credentials sometimes matter less than working analytical models.

A month before the March 12 crash, which saw Bitcoin’s price plummet 50% to $3,750, PlanB, the creator of the stock-to-flow model stated that Bitcoin would not return below $8,200. At the time, no one expected the Dow Jones equities index to face its most significant drop since 1987, neither the WTI oil future contract dropping to negative $40.

Despite the outlandish claim, PlanB won’t be nominated to 2020’s worse predictions because hardly anyone expected the coronavirus pandemic to impact the markets in a way that would cause absolute havoc. Furthermore, famous chartist Peter Brandt also made the same error when he said that BTC would never revisit the sub-$6,000 level in January.

CryptoWhale’s quantum model calls for $24,000 BTC in mid-2022

On June 2, 2020, Twitter analyst CryptoWhale revealed a new “quantum” model that would predict Bitcoin’s price. According to CryptoWhale, the model had “effectively predicted every major move since 2018.”

Bitcoin’s price in USD. Source: TradingView

Things could not have gotten worse as the model predicted both a $2,000 bottom in 2020 and a “proper bull run to $24,000” only in mid-2022. Somehow, the quantum particles, molecules and atoms that were supposed to make it more accurate were, in fact, pure blasphemy.

Two lessons that can be taken away from the “quantum model” are: (1) Having a ton of social network followers doesn’t necessarily translate to better price estimates, and (2) complex models are prone to the same errors as humans. Evaluating a new asset class during a period of desperate central bank monetary easing is far from easy.

Ross Ulbricht predicts nine months of downside after Black Thursday

In April, Ross Ulbricht, the founder of the now-defunct Silk Road darknet market, wrote that Bitcoin’s volatility — particularly the March 12 bloodbath — would most likely lead to a bear market, which could last for three to nine months. At that time, Bitcoin had been hovering around $7,000 and was clearly still affected by the recent 50% intraday correction.

Ross Ulbricht’s chart annotations. Source: Medium

Precisely 17 days after that blog post, BTC soared over 30% to $9,000, thus completely invalidating Ulbricht’s analysis. To further show how far off that analysis was, Ulbricht added that a $14,000 bull run was “very unlikely.”

During Ulbricht’s so-called bear market period, Bitcoin’s price rallied more than 300% from December 2018 to June 2019. Furthermore, calling for such a lengthy correction doesn’t align with Bitcoin’s historical data because even during the darkest period of December 2019, Bitcoin’s price remained more than 100% above the previous year’s lows.

Gavin Smith says Bitcoin will close 2020 at $7,000

During a July 27 interview with Forbes, Panxora CEO Gavin Smith said that he expected a $7,000 Bitcoin price by the end of the year. Gavin further added that “a short term washout this year before the true rally takes hold.”

Panxora’s CEO explained that despite the appreciating tendency caused by inflation hedge, the broader impact of demand shock on the economy would potentially drive BTC lower.

This estimate happened after 80 days of Bitcoin’s price consolidating around $9,500. At the time, despite rising 100% from mid-March lows, there was still some doubt about BTC’s ability to break the $10,000 resistance.

Antoni Trenchev calls for $50,000 Bitcoin price in 2020

On Jan. 3, 2020, Nexo co-founder Antoni Trenchev stated that BTC could easily reach $50,000 in 2020.

Besides an overly optimistic estimate, the rationale behind it doesn’t seem to fit. According to Trenchev, Bitcoin had become “the new gold,” and he pointed to the lack of correlation to traditional markets as a potential catalyst.

Gold, USD/OZ (right) vs. S&P 500 (left). Source: TradingView

As shown above, gold traded in tandem with traditional markets for the larger part of 2020, but it should be noted that these asset classes have different volatility. Thus, oscillations in equities tend to be much stronger. Nevertheless, the overall direction of both markets until November has been very much alike.

This price movement creates the impossible task where BTC is expected to act as “the new gold” while simultaneously presenting a lack of correlation. This estimate went doubly wrong for missing its year-end target by a wide margin and also failing to correctly estimate gold’s correlation to traditional markets.

Now that Bitcoin’s price is a mere 7.4% away from $30,000, it will be even more interesting to see what type of extravagant bullish and bearish price estimates are issued for 2021.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

4 reasons why the top 15 richest Bitcoin wallets still matter in 2021

4 reasons why the top 15 richest Bitcoin wallets still matter in 2021

Bitcoin may have mooned in 2020 but here’s why watching the top-15 richest addresses will matter in 2021.

Transparency is one of the most intriguing aspects of cryptocurrency and it was this openness that drew many early supporters to Bitcoin (BTC). 

Blockchain technology makes all information associated with the network’s operation accessible for anyone interested in taking a look. Every known address, transaction, fee paid and other details relating to multisignature and SegWit usage is out in the open.

The top 15 wealthiest Bitcoin addresses have always been the centerpiece of attention for several reasons. Some crypto researchers habitually sort through the top addresses searching for the footsteps of Bitcoin creator Satoshi Nakamoto. Others study data to track the maneuvers of crypto whales and predict market manipulation that results in volatile price swings in the Bitcoin price.

The top addresses have even caught the eye of government agencies like the United States Internal Revenue Service as well as the Treasury Department.

In fact, entire companies specializing in obtaining additional information on cryptocurrency addresses and their potential associations have been formed. It’s no secret that the U.S. Internal Revenue Service hired Chainalysis and Integra FEC, two crypto analytics firms, to track transactions.

More recently, under Treasury Secretary Steven Mnuchin, the Treasury Department is considering whether or not a rule on self-hosted cryptocurrency wallets is required. If approved, these changes emphasize the importance of privacy for market participants.

Addresses are not the same as entities

Top-15 Bitcoin addresses. Source:

As shown above, the top 15 addresses hold 1.07 million BTC, or 5.7% of the outstanding Bitcoin supply. At the current $26,500 price level, this equals $28.3 billion. While this is a large amount of Bitcoin, it’s also worth noting that BTC’s aggregated volume on spot exchanges surpasses $5 billion per day.

It’s important to note that an address’s initial deposit date does not mean that the entity owning the address first acquired coins on that day. The coins could have been sent from another address belonging to the same entity. Therefore, the dates showing first funds being sent to 11 addresses since only 2018 do not prove that the address holders are new to the sector.

It is also worth noting that none of the top 15 addresses are rumored to be Satoshi’s holdings. Researcher Sergio Lerner has shown that the blocks Nakamoto mined contain unique patterns known as Patoshi patterns. Although that mined BTC has yet to be moved, it was not allocated to a single address.

The top 100 addresses concentrate 15.7% of the total supply, which is rather impressive compared to the level of distribution seen in traditional markets. For example, the top 20 funds owning PayPal shares hold a combined 19.7% of the total share supply.

Five of the 15 most significant addresses are known addresses from exchanges, indicating that the apparent concentration does not exist in a way that can be attributed to crypto whales.

In addition to exchanges holding large sums of Bitcoin in wallets, some custodians also accumulate BTC for numerous clients in wallets spread over multiple addresses with large sums.

The top addresses are recent holders and non-SegWit-compliant

An impressive eight out of the top 15 addresses have never withdrawn a single satoshi. Excluding the five exchange-related addresses, only 20% have ever moved their coins. This indicates a strong prevalence of hardcore holders.

Moreover, 11 of the 15 addresses were first used less than three years ago. Multiple reasons could be behind this oddity, including improved security measures, a change of custodian, or different ownership structures.

Only two out of the top 15 (and three in the top 200) addresses are Bech32 SegWit-compatible, which can significantly reduce transaction fees. This indicates that users are resistant to change despite the clear benefits of cheaper transactions. Even more interesting is that the Bitfinex cold wallet ranked second on the list is the only one that has ever had an outgoing transaction.

A few mysterious addresses keep stacking

The third wealthiest address is something of a mystery, as it contains an untouched 94,506 BTC. The address made headlines back in September 2019 after Glassnode reported that 73,000 of the BTC in the wallet had originated from Huobi.

Many analysts suggested that these coins were connected to the Plustoken Ponzi scheme, but these rumors were proven wrong after the Chinese police seized 194,775 BTC on Nov. 19 from the fraudulent exchange.

Aside from the fourth-largest wallet containing 79,957 BTC since March 2011, 20 of the top 300 addresses are over nine years old. Although no one can prove that these funds have been lost, most assume so.

Those untouched coins amount to 313,013 BTC, and only one address has ever transacted out since origination. Thus, apart from F2Pool’s 9,000 BTC held at address 1J1F3U7gHrCjsEsRimDJ3oYBiV24wA8FuV, there is a very good chance that the funds from the other addresses are effectively lost.

1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ balance. Source:

The fifth-ranked address shown above was created in February of 2019 and, at origination, was listed as the 81st-largest address. Since then, it has been accumulating regularly, adding from as low as 1 BTC in December 2019 to 4,100 in a single transaction in June 2019. Despite being a large accumulator, it has made seven transactions out, ranging from 786 BTC to 3,000 BTC. Maybe even whales have bills to be paid.

There are precisely 100 addresses first used between Nov. 30, 2018 and Dec. 18, 2018 containing around either 8,000 BTC or 12,000 BTC each. These addresses are commonly attributed to Coinbase Custody. Amounting to 881,471 BTC, the addresses’ funds equal to 96% of the exchange’s cold wallet, according to

The new whale local top theory

Every investor has a gut feeling that the arrival of new Bitcoin whales is crucial for a sustained rally, even though there has never been hard evidence of this effect until now.

There is a constant flow of new addresses entering the top 300. For example, 16 of them received their first-ever deposits within the past 30 days. Once again, this is not necessarily a new entity but an address receiving its first-ever BTC.

Although it is uncommon, sometimes gaps of 50 or more days occur without newcomers joining the top 300. Coincidentally, these periods mark the end of rally periods, and a healthy correction usually follows.

BTC/USD price on Coinbase, early 2020. Source: TradingView

Precisely zero of the top 300 addresses were initially used between Nov. 28, 2019 and Feb. 09, 2020, when BTC went up by 35%. Oddly enough, the market plunged 52% over the next 32 days.

BTC/USD price on Coinbase, 2017. Source: TradingView

A similar effect happened between Oct. 18, 2017 and Dec. 11, 2017. During this period BTC rallied 193% while none of the top 300 addresses were newcomers. A 34% price drop occurred over the following 36 days.

Before that, none of the top 300 addresses were initiated between April 20, 2017 and July 07, 2017. Meanwhile, BTC soared 111%, while a 24% crash has also followed this period over the course of nine days.

So far, history has been proving that the new whale theory makes sense: The market rallies during prolonged periods of fewer new addresses making it to the top 300 holders list, as it indicates accumulation by entities that already had position. On the other hand, new whales could be driven by fear of missing out, which usually indicates local tops.

Therefore, it makes sense to monitor the top addresses and on-chain data to gauge potential corrections.

Every time large deposits enter exchanges, this indicates a potential sell order and is deemed bearish by traders. These movements are then compared to BTC price tops and bottoms in an attempt to find some correlation between whale transfers.

Whenever the market is rallying and miners, in turn, reduce selling, analysts expect a price correction once they start moving coins again. To put things in perspective, this is 6,300 Bitcoin per week that needs to be absorbed by the market to avoid price impact.

Now that institutional investors have “arrived,” investors will be itching to see whether their inflow in 2021 will continue to absorb newly minted BTC.

While 2021 is looking pretty bullish for the crypto market, there is always an unexpected price crash that often results from the government threatening regulation.

This means it will still be important for savvy investors to follow the top 15 Bitcoin addresses and the movements of crypto whales in 2021.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Faulty data? Grayscale didn’t liquidate massive amounts of XRP and XLM

Faulty data? Grayscale didn’t liquidate massive amounts of XRP and XLM

A Grayscale spokesperson confirmed to Cointelegraph that the fund manager didn’t dump massive stakes of XRP and XLM.

Bybt data apparently showing a massive liquidation of XRP and Stellar Lumen (XLM) by Grayscale Investments earlier this week is inaccurate, according to the investment company.

On Wednesday, a public Bybt data set suggested that Grayscale Investments reduced its exposure to XRP by roughly 9.19 million units and that the fund also cut its XLM holdings by over 9.74 million units. According to Bybt data, the net change in holdings occurred over 24 hours on Tuesday.

Cointelegraph accessed the data before Grayscale released its daily assets under management report for Tuesday and noted in an article that Grayscale had reportedly sold significant amounts of XRP and XLM.

Efforts to reach Grayscale on Wednesday were unsuccessful. However, on Thursday, a Grayscale spokesperson told Cointelegraph: 

“None of the Grayscale investment products operate a redemption program. The net holdings of our investment products only change as a result of inflows from the private placement, price of the underlying assets and accrued management fee.”
“Statements about large sales of underlying assets by any of our investment products are false and inaccurate. Any perceived large decrease in the USD value of Grayscale XRP Trust would have been a result of a decrease in the USD price of XRP.”

Bybt’s data feed still shows a large outflow of XRP and XLM from Grayscale over the past seven days, both in terms of AUM and actual units of XRP and XLM held. These figures appeared under the “24H Change” column on Wednesday. 

Bybt data still shows a large decline in Grayscale's XRP and XLM holdings

The Grayscale AUM report for Wednesday was released on Thursday. It reads:

Grayscale's official AUM report for Wednesday

Attempts to contact Bybt have not yielded any responses. 

Did Bitcoin prove itself to be a reliable store of value in 2020? Experts answer

Did Bitcoin prove itself to be a reliable store of value in 2020? Experts answer

Experts in blockchain technology and crypto take on the question of Bitcoin’s path throughout the year 2020.

Without any doubt, the year 2020 was unlike any other year in the 21st century: The ongoing COVID-19 pandemic, global governments unstoppably printing money, “lockdowns” and “social distancing” becoming the new normal, protests against racial discrimination and police brutality, and so on and so forth. It even made some claim it to be “the worst year ever.” But as they say: In every storm, each cloud has a silver lining. The most important thing is to learn from what we’ve been through and to improve our world and our future, as there are some problems that we have to solve ourselves.

It’s also true that 2020 was a significant, dramatic year not only for people all over the world but for Bitcoin (BTC) as well: the third halving, increased attention from institutional investors and global regulators, its white paper’s 12th anniversary, etc. Some even called it the “New Testament” of finance, and others suggested using it for the utopian idea of universal basic income. Bitcoin received global attention because of the Twitter hack in mid-July, which required the crypto community to defend Bitcoin’s integrity after the event placed the words “Bitcoin” and “scam” within one headline again. In October, PayPal announced it would offer crypto payments, and later in November, Bitcoin was on the homepage of the Wall Street Journal for its 80% price rally.

Related: Will PayPal’s crypto integration bring crypto to the masses? Experts answer

When 2020 started, it was hard to imagine how the world would change and how fast those changes would be. Despite all the negative impacts of the ongoing COVID-19 crisis, there have been some positive developments, at least within the crypto space. For instance, Bitcoin’s volatility has decreased since its peak in mid-March, and the pandemic has highlighted Bitcoin’s most important value: its decentralized nature. Some even argued that the pandemic has underlined the benefits of cryptocurrencies for the world. And while Europe experienced the shift to a cashless world, the United States remained more conservative and didn’t want to give up its paper money.

Related: How has the COVID-19 pandemic affected the crypto space? Experts answer

One thing became certain due to the effects of COVID-19: There are some serious problems with the currently existing financial system that might be solved by Bitcoin and by the technology behind it. And the similarities between the two recent financial crises — the first back in 2008 and now in 2020 due to the pandemic — revealed the systemic problems of centralized financial systems. While the first crisis gave birth to Bitcoin, the current one has made people turn to decentralized tech and Bitcoin on a massive scale amid the global economic recession. Some even argue that during the next decade, Bitcoin will play a crucial role in the global economy’s transformation, called “The Great Reset,” and that crypto mass adoption will be led by the millennial generation.

Central banks printed an estimated $15 trillion in stimulus by May alone as anti-pandemic measures to save global economies, throwing the U.S. dollar under the bus, as some said. And these measures turned people toward alternative financial tools, making Bitcoin a hedge against inflation and even an alternative to traditional finance entirely. Some even suggested governments make a monetary transition to Bitcoin to solve the national debt problems.

Another important 2020 milestone was the rise of institutional investors’ interest in Bitcoin. Although this trend seemed to be “built on nothing more than hope” earlier this year, 2020 surprised everyone here as well. Forced by the possibility of rising inflation, the hedging abilities of Bitcoin couldn’t go unnoticed by high-profile investors who saw crypto as an important part of a diversified corporate treasury holding, becoming major holders of digital assets this year.

Unsurprisingly, the crypto space has started to consider the rise of Bitcoin mining institutions inevitable. Also, China’s dominance over the world’s Bitcoin mining operations seemed to be challenged. And most importantly, the future of crypto mining will become more sustainable.

With the 2020 shift in public discourse around Bitcoin, it’s becoming more and more important to create a regulatory framework for the crypto space, without which it will have no future. The regulation, some argue, has to be evolutionary rather than revolutionary, and most importantly, it requires dialogue and close collaboration between regulators and crypto businesses.

All in all, it is hard to predict the crypto’s future in the post-COVID-19 world, as the pandemic has not yet come to an end. Meanwhile, it is impossible to neglect the impact it has had on the crypto space this year. The new Bitcoin era, after everything that happened this year, is forming the new financial order. And if fiat money might lose up to 90% in 100 years, Bitcoin’s future seems to be much brighter than it is now, considering that Bitcoin just reached $27,000 for the first time in history and is now targeting $100,000 within the next 12 months and $500,000 within the decade. And with 2020 coming to its end, Cointelegraph reached out to experts in the blockchain and crypto space for their opinions on Bitcoin’s path this year.

Did Bitcoin mature enough this year to become a reliable store of value? Why or why not?

Brian Brooks, acting comptroller of the currency of the U.S. Treasury Department’s Office of the Comptroller of the Currency:

“We hope that our July 2020 letter regarding crypto custody will make Bitcoin safer for institutional and retail holders. Bitcoin was the innovation that opened the door to decentralizing financial services, and the growth of it and other tokens in 2020 shows the beginning of a transformation of cryptocurrencies from an exotic concept to a more familiar and comfortable means of engaging in financial services.”

Da Hongfei, founder of Neo, founder and CEO of Onchain:

“Since its inception, Bitcoin has witnessed and survived various ups and downs, and it now appears that investors, on the whole, are increasingly more confident in its value. More significantly, I believe that this signals how quickly we are moving toward mainstream adoption.

Throughout 2020, the blockchain space experienced an explosion in terms of interest and creativity, and we’re seeing the results now: More and more people are recognizing that blockchain is here, and it is here to say.

Moving forward, I believe we’re on the cusp of mainstream adoption, and I’m very excited for what 2021 will bring.”

Denelle Dixon, CEO and executive director of the Stellar Development Foundation:

“I think that the institutional focus on Bitcoin has created positive momentum for the entire blockchain space. Personally, I think it is a reliable store of value. As is much debated throughout crypto circles and beyond, engagement with the network in the long term may present challenges and affect Bitcoin’s ability to translate to certain business applications and use cases, but I believe that storing value and holding value are irrefutably its strengths.”

Emin Gün Sirer, CEO of AvaLabs, professor at Cornell University, co-director of IC3:

“We’ve seen over time how narratives around cryptocurrencies can shift and evolve to fit market demand or a network’s capabilities. The Bitcoin narrative around store of value and hedge against currency inflation has hardened this year, and I believe it’s now the dominant positioning for BTC, as its most vocal supporters and institutional adopters have rallied around it.

That’s a perfectly fine position for Bitcoin to occupy.

Personally, I’m most excited about currencies that have both a scarce, hard-capped supply like Bitcoin but also push for more sophisticated utility with functionalities like smart contracts, DeFi applications and asset issuance.”

Heath Tarbert, chairman and chief executive of the U.S. Commodity Futures Trading Commission:

“We have definitely seen an increase in digital assets overall. Bitcoin is among that market, but let us not forget about Ether, which I declared a commodity last year. The two of these together represent a large portion of the crypto market. And it has been an interesting year in this market — not just with the halving but also the move to Ethereum 2.0 and both Bitcoin and Ether forking.

Despite this, however, we must still recognize that this market is small compared with other assets we regulate. I think over time, this market will be comparable. Until then, however, there will need to be more regulatory clarity around these digital assets for these markets to grow.”

James Butterfill, investment strategist at CoinShares:

“Bitcoin remains a volatile asset. Many expect a store of value to have much lower volatility, but as gold was developing into an investment store of value in the 1970s, it too had extremely high volatility. As it has matured as a store of value, so too has its volatility declined. We expect the same to happen to Bitcoin, and early evidence alludes to this.

2020 has been crucial for Bitcoin. We see it as the year of legitimization for the broader public and investors, fortuitously aided/accelerated by the COVID-19 crisis and the consequent rapid escalation of quantitative easing and fall in use of cash. Our conversations with institutional clients have changed considerably over the course of 2020. What was typically a desire to speculatively invest has now become one of being fearful of extreme loose monetary policy and negative interest rates, with clients looking for an anchor for their investments. As their understanding of Bitcoin improves, clients have grasped that Bitcoin has a limited supply and fulfills this role as an anchor for their assets while fiat is being debased.

This year, we have seen cumulative flows (stripping out the price effect) into investment products rise from $1.35 billion at the start of the year to $6.1 billion today, with only 24 days of outflows for a total of 241 trading days this year. Investors are buying and holding — a good indicator that it is slowly developing into a store of value.”

Jimmy Song, instructor at Programming Blockchain:

“It’s not that Bitcoin has matured, it’s that we have. The mainstream investors are starting to take notice of Bitcoin’s 12-year history and starting to recognize how valuable it really is in a world of near-infinite quantitative easing. Bitcoin gives us true scarcity, and that’s why it’s useful as a store of value. Literally, nothing like this has existed in human history.”

Joseph Lubin, co-founder of Ethereum, founder of ConsenSys:

“Despite this very difficult year, I think that the broader decentralized protocol ecosystem demonstrated poignantly that we, like our Web 3.0 technology, are anti-fragile and that this technology will prove a worthy evolutionary successor to Web 2.0 systems. We continue to demonstrate that this technology will serve as a new trust foundation for next-generation, increasingly decentralized, financial, economic, social and political systems.”

Michael Terpin, founder of Transform Group and BitAngels:

“Store of value is an interesting concept. It doesn’t mean nonvolatile; after all, both gold and real estate have had their cycles, booms and busts, but to date, they have returned to a reliable mean so that there are very few instances where a 20-year investment in either did not perform as a reliable way of keeping ahead of inflation with very low risk of losing one’s principal.

To skeptics, Bitcoin was seen as the equivalent of investing in a single high-risk stock that could easily crash to zero — and in its early days, this certainly was possible. But no asset in history has ever gone from under one cent, as it was during the first P2P transactions, to this month’s high-water mark of $28,300. As each year has passed, the fluctuations have gotten more manageable — there will be no more 100-times gains in one year, as happened in 2013. This plus the clear signals from the United States, the European Union, China and Japan that they’re happy to cope with both the ongoing COVID-19 pandemic and economic depression through massive money printing means that these currencies will vastly underperform hard assets in the next two to three years as the money supply in these nations expands at annual rates of above 20% instead of the historic 4% to 5%, which is near the true rate of inflation.

Barry Silbert primed the pump with Grayscale, allowing accredited investors an easy way to invest in Bitcoin that then makes its way into a publicly traded vehicle. Paul Tudor Jones, who made a fortune calling the gold boom in the 1980s, awoke the multitrillion-dollar institutional fund world by having his funds invest in Bitcoin, calling it ‘the fastest horse' in the race.

Michael Saylor, CEO and founder of multibillion-dollar public firm MicroStrategy, then lit the fuse on corporate fear and greed by using 80% of its $500 million in cash earlier this year to invest in Bitcoin, which has now more than doubled. More recently, he went even further and issued debt to buy even more Bitcoin.

Bitcoin has never been great at microtransactions — dozens of low-fee, faster-settling cryptos are far better at this — but it needed to go through this use case in its infancy. Its true value now is in sending large transactions instantly and safely, and as a store of value for the next century and beyond.”

Mike Belshe, CEO of BitGo:

“The 2020 bull run of Bitcoin is very different from anything we’ve seen before. Unlike the previous rapid rise of 2017, this year saw the influx of new large institutional players. New entrants like PayPal, Square, JPMorgan and others are bringing a new level of credibility, liquidity and stability to the crypto markets.

Institutions and retail investors are recognizing the importance of the principle of scarcity, which is the basic economic principle of Bitcoin. With governments overprinting money across the globe, Bitcoin is the most reliable store of value at this time and a hedge against inflation. Those who understand this will be in a stronger economic position than those who don’t.

I agree with Paul Tudor Jones’ recommendation that individuals who have investable assets put a small amount, perhaps 2%, into Bitcoin. And I’d go a step further and say that institutions should invest 5% of their corporate treasuries in order to stay competitive. Investing small amounts can produce tremendous upside with minimal downside risk.”

Paul Brody, principal and global innovation leader of blockchain technology at Ernst & Young:

“Bitcoin has reached that mature, stable store-of-value stage, but I fear it will never be without some controversy. While the Ethereum ecosystem is becoming a vibrant economic entity — with DeFi, smart contracts and infrastructure services being built atop the system — Bitcoin remains very focused on taking a role as a store of value. This will make it hard for some people to grasp, in the same way that many people still don’t quite realize that there is no gold or other asset that backs any other modern currency either. ”

Roger Ver, executive chairman of

“Clearly not. Anything that can fluctuate from $4,000 to $20,000 in a single year is anything but a store of value. It is still just a speculative investment at this point.”

Samson Mow, chief strategy officer of Blockstream:

“Bitcoin was always a reliable store of value. The only people that say otherwise are the ones looking at it on very short time horizons. As public market companies like MicroStrategy have recently realized, Bitcoin is the only safe haven to store value — cash will just melt away from inflation and quantitative easing, gold is stagnant, and tech stocks are overextended. Now, we’re seeing giants like Guggenheim Partners and Ruffer pile in as they come to that same realization as well. Hyperbitcoinization is inevitable.”

Serguei Popov, co-founder of the Iota Foundation:

“Bitcoin and other popular cryptocurrencies have been a store of value for many people for quite some time already. The considerable capitalization of the crypto market corroborates this, and it’s likely that quite a few readers of this article are using cryptos in this way already. Whether it is ‘reliable’ or not depends on the definition of reliability. Of course, it is true that Bitcoin’s — let alone other cryptos' — price is quite volatile and will probably remain so, meaning anyone who uses it for a store of value might experience some strong emotions. On the other hand, it is very reliable in the sense that nobody can take your Bitcoin away, as long as you keep your private keys secret and store them safely. This constitutes a unique advantage of cryptocurrencies in the store-of-value context.”

Todd Morakis, co-founder and partner of JST Capital:

“The institutions are here. This year, we’ve seen a number of large traditional firms either announce or begin to explore Bitcoin. While custody is still challenging for institutions, the Paul Tudor Jones announcement earlier in the year as well as the improvement of institutional Bitcoin solutions have led to much broader acceptance of Bitcoin within the traditional financial community. Bitcoin is no longer a bad word on the street.”

Vinny Lingham, CEO of Civic:

“Bitcoin is a speculative investment. Even if we see the price goes up, we have to remember that it’s still speculative. When will it become a reliable store of value? As I’ve been saying for years, Bitcoin may eventually evolve into a reliable store of value, but this growth process will take at least five to 10 years. We’ll know that we’ve reached the goal when Bitcoin becomes far more stable and far less volatile — in a word, boring.”

These quotes have been edited and condensed.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin’s 2020 In Tech

Bitcoin’s 2020 In Tech

Seemingly undisturbed by 2020’s craziness, and largely unfazed by bitcoin’s wild price swings that concluded with new all-time highs in December, Bitcoin’s technical community continues to plow ahead. Bitcoin’s software and the many projects around it were gradually improved throughout the year, as software was optimized, bugs fixed and privacy leaks patched. The bulk of this work, as vital as much of it is, doesn’t attract headlines.

Yet, a bird’s-eye view on Bitcoin’s tech development over the span of a year helps highlight new milestones in Bitcoin’s ongoing technological march forward. In 2020, too, the consistently growing Bitcoin development community introduced a number of useful new features, several particularly important upgrades and some especially notable improvements.

As this volatile year is drawing to a close, these were some of Bitcoin’s most notable technical developments over the past 12 months…

New Privacy Tools With PayJoin And CoinSwap

On Bitcoin’s privacy front, the PayJoin and CoinSwap projects this year represented two promising advancements.

PayJoin, also known as Pay to Endpoint (P2EP), is a trick that lets recipients of a transaction partake in the transaction through a CoinJoin, to basically send funds to themselves while also receiving the actual payment from the real sender. If a snoop, conducting blockchain analysis, were to assume that all coins sent in a transaction belonged to the same person — as they normally would — they’d be wrong. This already benefits the privacy of both sender and receiver, as the snoop would confuse (past) coin ownership between them. Moreover, if enough people use PayJoin, it could render this important heuristic for blockchain analysis useless altogether, in turn benefiting even the privacy of those who didn’t make PayJoin transactions themselves.

Although demo versions of the PayJoin tool had already been implemented for online gambling game Bustabit and the coin mixing software JoinMarket in late 2018, and Samourai Wallet in 2019 released its own — more limited — version under the Cohoots umbrella (with slightly different privacy tradeoffs), PayJoin was this year implemented in several popular Bitcoin projects. This notably included the widely used payment processing software BTCPay in April, allowing BTCPay users to accept PayJoin transactions from compatible wallets. The privacy-focused Wasabi Wallet was the first wallet to offer this compatibility later that same month, while JoinMarket (September), Blue Wallet (October) and Sparrow Wallet (November) followed later in the year.

Meanwhile, Bitcoin developer Chris Belcher set out to realize an implementation of CoinSwap, a privacy technique first proposed in 2013 by Bitcoin Core contributor Gregory Maxwell. CoinSwap leverages Atomic Swaps (the trick that also underpins the Lightning Network) to let users exchange coins without needing to trust one another. Each user would end up with coins that can’t be linked to their own transaction history.

Belcher, one of the world’s foremost experts in Bitcoin privacy, in May published a detailed outline of how the CoinSwap protocol could be implemented to ensure maximum privacy. The proposal would make CoinSwap transactions indistinguishable from other transactions, use splitting techniques to obscure amounts, route payments to frustrate snooping participants and more. A few months later, in June, The Human Rights Foundation announced that its first Bitcoin development grant would go to Belcher and his efforts to realize the project.

Having worked on his implementation for most of the year, Belcher in December announced a “big day for bitcoin privacy and fungibility”: he’d made the first-ever successful CoinSwap transaction on Bitcoin’s test network (testnet).

The Lightning Network Became More Robust With Watchtowers (And More)

The Lightning Network, Bitcoin’s Layer 2 protocol for faster, cheaper and more private payments, continued to improve across the board in 2020. With Lightning implementations LND, Eclair, C-Lightning and — since July — Electrum rolling out a number of new software releases, and a growing number of projects building on top of the protocol, Lightning development was more active than ever. Among the more notable developments, Watchtowers resolved one of the Lightning Network’s remaining weaknesses, resulting in a more robust protocol.

One of the Lightning Network’s tradeoffs is that users need to keep an eye on their payment channels to ensure that payment channel partners aren’t trying to cheat by broadcasting old channel states to claim more funds than attributed to them. Lightning users can step in if a channel partner attempts to cheat, but this does require monitoring of the Bitcoin blockchain, which casual users might not do very regularly.

To decrease the risk that an attempt at cheating is missed, the Lightning protocol allows channel monitoring to be outsourced to impartial observers called Watchtowers. Adding to the first Watchtower software introduced by LND by late 2019, February of this year saw the alpha release of the dedicated Watchtower implementation Eye of Satoshi. Shortly after, the proposed Watchtower protocol specification was updated, while C-Lightning rolled out support for Eye of Satoshi in May. Version 1 of Eye of Satoshi followed in July.

Other notable Lightning developments in 2020 include the continued work on anchor outputs to ensure users can claim funds from a channel unilaterally even when on-chain fees have gone up more than expected since the last payment channel update, Multipath payments which let users make Lightning payments in smaller chunks, the Lightning Network-native messaging application Juggernaut, channel management tool Faraday, the Lightning Loop beta release, but also some newly discovered weaknesses as well as (proposed) solutions, and a lot more more.

After Miniscript, Bitcoin Programming Was Made Easier With Minsc

The code embedded in Bitcoin transactions that specifies what conditions must be met to spend the coins in a next transaction is written in a programming language specifically designed for Bitcoin, called Script. Script can be tricky to work with, however: in programmers jargon, Script is hard to “reason about.” This means that, especially as it becomes a bit more complex, it can be difficult to understand what a piece of script actually allows: a transaction may unintentionally include code that allows the coins to be spent under different conditions than originally intended. This is one reason why many Bitcoin software applications, like wallets, refrain from utilizing Script’s full potential.

Over the past years, (former) Blockstream researchers Andrew Poelstra, Pieter Wuille and Sanket Kanjalkar designed a “stripped down” version of Script, called Miniscript. Miniscript is a selection of “tools” from the “Script toolkit” that are carefully selected to enable practically anything that can be done with Script, but it’s easier to use and easier to verify by programmers. So, while a line of Miniscript is still a valid line of Script, it essentially avoids human error by preventing unexpected, perhaps unintended, outcomes of the code; Miniscript is easier to reason about. In November of this year, Head of Research and Development at Rugged Bytes Dmitry Petukhov published a formal specification of Miniscript.

To make creating Bitcoin transactions even easier, Wuille had also designed a “policy language” for Miniscript, a programming language of its own that could compile (convert) into Miniscript, and thus Script. Building on Wuille’s work, Bitcoin developer Nadav Ivgi this year developed another new programming language called Minsc. First announced in July, and followed up with a major upgrade in November, Minsc is still a work in progress, but is set to greatly simplify the creation of Bitcoin transactions. This could help unlock a range of promising features that take full advantage of Bitcoin’s versatility, like interoperable CoinJoin wallets, smart contract solutions, Layer 2 protocols and more.

Smart Contracts Became Smarter With DLCs

Whenever smart contracts depend on external data — data that doesn’t live on the blockchain — they rely on an external source for that data referred to as an “oracle.” If two users want to bet on the outcome of a sports match, for example, the oracle would have to use the result of the match to settle the bet in favor of whoever made the correct prediction (at least in case of a dispute).

A very basic sports betting setup could consist of a two-of-three multisignature (multisig) address where both players and the oracle all hold one key each, and the oracle is informed of the details of the bet. After the match, the two players could cooperate to send the funds from the multisig to the winner without the oracle’s key. But if the loser refuses to cooperate, the oracle can use its third key to cooperate with the winner to send them the funds from the multisig. This system works, but has two main downsides. One, both players need to trust the oracle not to collude with their opponent. And two, the oracle needs to be informed of the bet and perhaps play an active part in the settlement process: this means players have no privacy from the oracle, while the setup doesn’t scale very well if more than a few players want to bet.

A better solution was in 2017 proposed by MIT Media Lab’s Digital Currency Initiative researcher Thaddeus Dryja: discreet log contracts (DLCs). DLCs use a clever mathematical trick where the oracle publishes a cryptographic signature that corresponds with the outcome of an event. In the example above, the oracle would publish one signature if the first team wins, and a different signature if the other team wins. The trick: the smart contract is designed to let the winning player use the published signature to claim the funds.

In a DLC, the oracle’s involvement with the smart contract is minimized to the publication of a signature; this could, in the sports betting example for instance, be done by an existing news service, as part of its regular broadcast. This also means that the oracle doesn’t need to be informed about the details of the bet, and in fact doesn’t even need to know there was a bet at all. Meanwhile, any number of people can use the signatures to settle their bets with no further involvement from the oracle, greatly benefiting scalability. And while oracle could in theory still collude with someone and broadcast the wrong result, such dishonest behavior would be obvious to anyone and tarnish the oracle’s reputation going forward.

In January of this year, CEO Chris Stewart announced that his company Suredbits, in collaboration with Crypto Garage, had begun work on a specification for DLCs. In February, Suredbits engineer Nadav Kohen followed up with the first working code. And by September, Suredbits and Crypto Garage had developed their software to the point where it could be used: Stewart and Bitcoin developer Nicolas Dorier engaged in Bitcoin’s first-ever DLC to bet on the outcome of the U.S. presidential election. Stewart, who’d bet on Biden, claimed his winnings in December.

Holding Is Getting Safer With Bitcoin Vaults

The long list of exchange hacks and other bitcoin heists are testament to the fact that securely storing private keys continues to be a challenge, especially where many coins are at stake.

But more secure solutions to store coins are in development. Bitcoin vaults — a concept dating back to 2016 — are a type of smart contract that secure coins so that it takes several confirmed transactions and a time delay to really spend them. This gives potential victims the opportunity to revert a heist before it is too late.

2020 saw the release of two types of vault prototypes.

The first vault prototype was announced by Bitcoin Core contributor Bryan Bishop in April. In short, Bishop’s design is based on a pre-signed (and not-yet-broadcast) transaction that spends (some of) the coins from the vault to a user’s regular (“hot”) wallet with a time-lock delay, while an alternative spending option without a timelock can redirect the coins to an alternative address; perhaps a new and even more secure vault. Importantly, the private key used to sign the pre-signed transactions is deleted when the vault is created, so an attacker could only ever steal the pre-signed transaction itself.

The setup makes it exceedingly difficult for an attacker to claim the coins. Even if the pre-signed transaction is stolen, the thief could merely spend the coins to the hot wallet, and if the victim doesn’t trust the security of his hot wallet he can use the baked-in time delay to move the coins to the extra-secure address instead. (To prevent the thief from stealing the coins by simply compromising the hot wallet and waiting patiently until the vault user sends his coins there, Bishop’s design only lets users withdraw from the vault in small chunks at the time.)

A little later in April, Bitcoin developer Antoine Poinsot announced an alternative Vault demo which he designed with Chainsmiths CEO Kevin Loaec, called Revault. Revault resembles Bishop’s Vaults in some ways, like its use of pre-signed transactions, but is specifically designed for multi-user setups, using a multisig address. Revault lets a predetermined subset of a group of users spend coins from the vault to a hot wallet, also with a time-delay. Any vault participant can use this time-delay to return the funds to the vault if they disagree with the spend, however, or they can redirect the funds to an alternative extra secure address if they don’t trust what’s going on at all.

In addition, Revault requires that upon withdrawing from the vault, when the time-lock kicks in, users immediately create a transaction from the hot wallet, which also requires a server to co-sign. The server is programmed to sign any transaction, but never a conflicting transaction, so if an attacker compromised (both the vault and) the hot wallet, they would have to try and claim the coins before anyone else and before the time-lock expires. This should make it obvious if the hot wallet is compromised, alarming the group of Revault users, and allowing them to redirect the funds before time-lock expiry.

Taproot Is Now Good To Go, As Activation Is Under Consideration

Taproot is set to be the first Bitcoin protocol upgrade since Segregated Witness activated in August 2017. First proposed by Bitcoin Core contributor Gregory Maxwell in January 2018, Taproot lets users “hide” smart contracts in regular-looking Bitcoin transactions: complex multisig construction could be indistinguishable from a simple payment.

The Taproot upgrade would also include the Schnorr Signature algorithm. Many cryptographers consider the Schnorr signature scheme to be the best in the field, as its mathematical properties offer a strong level of correctness, it doesn’t suffer from malleability and is relatively fast to verify. Schnorr’s “linear math” would also allow for a range of new possibilities, like more compact types of multisig solutions, nifty smart contract setups and, of course, Taproot itself.

After continued development throughout 2020, Taproot’s code was merged into the Bitcoin Core codebase in October, and will be part of Bitcoin Core 0.21.0, which is set to be released any day now, with release candidates currently available. Bitcoin Core 0.21.0 will not include activation logic for Taproot, however. This will likely be included in an upcoming minor Bitcoin Core release (probably Bitcoin Core 0.21.1).

The activation logic has itself been a topic of discussion throughout much of 2020, however, with a range of potential activation mechanisms under consideration. Most of these would initially leverage hash power coordination, to eventually reach a deadline where the upgrade activates even without hash power support. But as an October poll published by Bitcoin Core contributor AJ Towns made clear, not all Bitcoin Core contributors agree that the deadline should be pre-programmed, or how far out the deadline should be (as well as some other minor disagreements).

But regardless of which activation mechanism is ultimately chosen, it seems increasingly likely that Taproot can be activated smoothly through hash power coordination. In November, major mining pool Poolin launched an initiative encouraging other mining pools to voice their opinion on Taproot and Taproot activation. The response so far is very favorable of Taproot, with over 90 percent of total hash power in support, and no mining pools opposing the proposed upgrade.

For an even more extensive and detailed summary of Bitcoin’s 2020 tech developments, also see the Bitcoin Optech 2020 Year-in-Review Special.

The post Bitcoin’s 2020 In Tech appeared first on Bitcoin Magazine.

Relax, Tether won’t be targeted by SEC, says Bitfinex CTO

Relax, Tether won’t be targeted by SEC, says Bitfinex CTO

Paolo Ardoino says Tether hasn't done anything to warrant any additional investigations from the SEC.

Paolo Ardoino, the outspoken chief technology officer of Bitfinex, took to Twitter this week to dispel concerns that Tether could be the next target of the United States Securities and Exchange Commission. 

In response to a tweet from CryptoQuant CEO Ki Young Ju, Ardoino said Tether adheres to strict Know Yor Customer/Anti-Money Laundering regulations set forth by the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN. In other words, people who say Tether is less regulated are just spreading “FUD”— or fear, uncertainty and doubt.

Ki Young’s original tweet said: “If SEC's next target is Tether, it's going to be very, very bad for this bull run as this market heavily relying on $USDT.”

Ardoino’s response:

While Ardoino isn’t wrong to point out Tether’s KYC/AML adherence, he doesn’t really address Ki Young’s central concern that the stablecoin may have skirted securities laws, especially if its dollar reserves are compromised.

In 2019, the New York attorney general filed a memorandum of law alleging that Tether and its sister company, Bitfinex, ran an unregistered securities offering. The document also alleges that the companies loaned USDT to investors, raising suspicion that the coins are not fully backed by U.S. dollar reserves as is claimed. 

Tether’s USDT, which is allegedly only loosely pegged to the U.S. dollar, has been at the center of controversy for several years. In 2018, finance professor John Griffin and co-author Amin Shams argued in a research paper that USDT was used to manipulate Bitcoin (BTC) price as it surged all the way up to $20,000.

Tether and Bitfinex were subpoenaed by the Commodity Futures Trading Commission in 2018 to seek proof that USDT is backed by equivalent dollar reserves. Despite the allegations, neither company has been accused of any wrongdoing.

Many within the crypto community are waiting for the next domino to fall after the SEC filed a lawsuit against Ripple for allegedly running an unregulated securities offering. Ripple will get the chance to prove its case in court. In the meantime, it's urging market participants to not draw any conclusions from the regulator's accusations.

Enterprise blockchain trends that will drive adoption in 2021

Enterprise blockchain trends that will drive adoption in 2021

Enterprise blockchain matured throughout 2020 and will continue to do so moving forward, here’s how it may become mainstream.

The year 2020 has been monumental for the blockchain sector, especially in regards to financial markets. Yet, while the price of Bitcoin (BTC) reached new all-time highs this year, the enterprise blockchain space also welcomed in public networks, open-source code and a number of other elements not seen in previous years defined by private, closed networks.

Listed below are five enterprise blockchain trends seen in 2020 that can drive mainstream adoption of blockchain moving forward.

Tokenization will drive the internet of value

“The Internet of Value” is a term coined by Don Tapscott, author and founder of The Blockchain Research Institute. In 2016, Tapscott gave a TED Talk in which he predicted that organizations would begin moving digital assets, including money, music, artwork and more, across blockchain networks in the same way as cryptocurrencies are transferred. “Once it’s there, this is immutable. You can’t hack it. This creates the conditions for prosperity for potentially billions of people,” Tapscott explained.

Indeed, innovative enterprises today are moving items of value across blockchain networks. Known as “tokenization,” this process allows financial assets like invoices to be sent across multiple network participants, ensuring that all parties receive the same information at the same time. Everything is recorded on a blockchain ledger, which ensures trust and transparency between parties. For example, Coke One North America is leveraging the Baseline Protocol to send tokenized invoices across multiple supply chain participants.

Digitized invoices are just one example of tokenization, though. Earlier this year, Ernst & Young Canada shared a use case being conducted with the nonprofit organization Canadian Blood Services to tokenize blood donations. Numerous amounts of data is generated when blood donations are taken from donors and moved across the supply chain. In order to track data accordingly, EY Canada is leveraging the private Ethereum blockchain network supported by the EY OpsChain platform to track donation data coming from Canadian Blood Services across seven key points, creating an improved audit trail for blood products.

While these examples are still early use cases of tokenization, this trend will continue to be leveraged by enterprises. In order to ensure the widespread adoption of tokenization, the Interwork Alliance, or IWA, is developing standards for understanding token model concepts. The IWA is specifically focused on sustainability and trade finance use cases. Discovering a global standard for tokenizing carbon credits is also one of the alliance’s current priorities, as the blockchain sector can expect to see more tokenized green initiatives moving forward.

Supply chain transformation

Supply chain management is one of the most practical enterprise blockchain use cases to date. One of the earliest examples of this was demonstrated in 2016 by IBM, when the tech giant announced plans for its Food Trust Network. The network launched in 2018, illustrating how major retailers like Walmart could track and trace food products back to their source by leveraging a private blockchain network powered by Hyperledger Fabric.

Fast forward to 2020, and a number of industries have adopted blockchain for supply chain operations. A new report from PwC in collaboration with OpenNodes, IBM, Ernst & Young and others shows that asset tracking and traceability has become the most important use case for distributed ledger technology.

The COVID-19 pandemic has accelerated the adoption trend. In March this year, The World Health Organization launched a blockchain platform designed to detect COVID-19 carriers and hot spots by tracking and tracing users’ health data. Some of the world’s largest container carriers have also joined IBM and Maersk’s TradeLens blockchain platform to digitally transform their supply chains. These carriers will begin to utilize electronic bills of lading while digitally sharing permissioned shipment information between supply chain entities.

Moreover, Deloitte’s 2020 Blockchain Trends report notes that initiatives utilizing blockchain in clinical trials and pharmaceutical supply chains have been underway this year. While few have reached production, the firm envisions that there will be a wave of solutions that will go live once regulatory concerns gain clarity.

Public blockchains

Over the years, enterprise blockchain developed a reputation as closed, private and expensive networks that could only be leveraged by billion-dollar companies like Walmart. However, 2020 has proven that public blockchains like Ethereum may offer a better choice for some enterprise users.

Ernst & Young was one of the first to demonstrate this, publishing a detailed blog post in Dec. 2019 explaining how public blockchains will make private blockchains obsolete moving forward. Although private blockchains are still very much being leveraged, more companies are using public blockchains to achieve benefits that cannot be provided by private networks.

For example, privacy and security solutions across public blockchain networks like Ethereum have become appealing to many enterprise users. As the space continues to mature, new privacy solutions utilizing zero-knowledge proofs are ensuring that data across public networks are secure, yet transparent when needed.

This has proven to be advantageous to some enterprises that have started leveraging the Ethereum blockchain for business use cases. For example, The Baseline Protocol, a set of techniques using advances in peer-to-peer messaging, zero-knowledge cryptography and blockchain to coordinate complex and confidential workflows, leverages blockchain as a middleware to demonstrate how the Ethereum mainnet can be used as an always-on, tamper-resistant state machine. 

Through the Baseline Protocol, the Ethereum mainnet, or any other blockchain networks for that matter, are used as a common frame of reference for traditional systems of record. One of the use cases of the Baseline Protocol is being demonstrated by Coke One North America for supply chain optimization.

While impressive, the real challenge moving forward will be getting other enterprises to adopt public blockchains. After all, it’s not uncommon for an organization to think of cryptocurrencies like Bitcoin or Ether (ETH) when hearing the words “public blockchain.” In order for adoption to occur, enterprises must be open to utilizing a public network.

The rise of enterprise DeFi

Decentralized finance has grown to become one of the biggest crypto trends of 2020. The sector’s boom has laid the groundwork for “enterprise DeFi,” which is predicted to change financial services operations entirely.

For example, tokenized assets and fiat-backed stable coins will make moving financial items of value easier and less costly. This is already being demonstrated by companies like Coke One North America, which has begun tokenizing invoices. Yet in order for enterprise DeFi to become widely adopted, agreements regarding data sharing must be established to show that invoices and other financial transactions are valid and should be processed for payment.

DeFi protocols have also proven the potential to enable autonomous programmable digital securities in the future. However, regulations and standards must still be established in order for this to move forward.

Open-source blockchain adoption

Open-source code has always been an important part of the blockchain ecosystem, as it embodies the concept of open culture regulation. Interestingly enough, open source has become increasingly important for the development of enterprise blockchain networks.

While the Hyperledger open-source community was one of the first to demonstrate the importance of open-source code for enterprise use, a number of other projects are doing the same. For example, in March of this year, the Baseline Protocol was published to GitHub for public use, allowing developers to contribute to the project. In May 2019, EY made the code for its Nightfall solution open-source, releasing it on GitHub in hopes of speeding up the adoption of public blockchains. In June of this year, crypto exchange Bitfinex uploaded its “Dazaar” protocol to GitHub to allow users to share media across a decentralized network.

These examples show how enterprises have begun embracing open-source code to ensure the maturity of the blockchain space. Meanwhile, standards around open-source code are needed more than ever before. The nonprofit organization OASIS Open is one of those developing standards for open-source code used in blockchain projects, which will enable enterprise open-source protocols to advance .

A crypto New Year’s resolution: Modernize security infrastructure

A crypto New Year’s resolution: Modernize security infrastructure

In 2021 and in the years to come, the digital-asset space must take steps to identify and implement solutions for its security.

It’s safe to say that 2020 has been a banner year for the digital-asset space. Bitcoin (BTC) soared past its previous high, and many other prominent cryptocurrencies reached their highest levels since the heyday of 2017 and early 2018. Across the financial services industry, institutional voices are expressing reinvigorated interest in digital assets. The growth and maturation of this space has been impossible to ignore, engendering plenty of optimism among those who build the platforms and systems on which it runs.

Unfortunately, not all the headlines from the past year have been positive. Several well-known crypto exchanges and other organizations were hacked, which led to significant losses. Events like these are not only damaging to a firm’s reputation and potentially devastating for investors, they also erode hard-won trust in the digital-asset space among institutional investors and the public.

Many of these hacks could have been avoided if the companies in question had taken proactive steps to modernize their technology infrastructure. As we close this whirlwind year for digital assets, one of the industry’s top resolutions for 2021 should be to reexamine its approach to infrastructure and make changes to ensure that investors of all stripes can trade and transact with security, efficiency and peace of mind.

Let’s review three of the most consequential hacking events of 2020 and examine how a more intelligent approach to infrastructure could have led to a different outcome.

KuCoin hack: $275 million in customer funds stolen

On Sept. 25, crypto exchange KuCoin was on the receiving end of a major hack that affected its Bitcoin, Ether (ETH) and ERC-20 hot wallets. While initial analysis suggested the hackers stole around $150 million, estimates began to increase in the ensuing days, ultimately making it one of the largest hacking events in the history of digital assets.

Related: KuCoin hack unpacked: More crypto possibly stolen than first feared

As it turns out, the hack was the result of private keys being stolen. While still prevalent in the digital-asset space, private keys mean there will always be a single point of failure through which bad actors can claim unfettered access to hot wallets. Put simply, they are a business risk.

A better approach would have been to leverage multiparty computation protocols, which eliminate the need for private keys and sign every transaction in a secure, distributed way, coupled with an enforced governance-and-control mechanism.

In the KuCoin case, even if the exchange was successfully breached, the hacker would not be able to execute any transaction not authorized by the institution’s infrastructure-provided policy engine.

OKEx withdrawal freezing

For five weeks in October and November, investors were unable to make withdrawals from cryptocurrency exchange OKEx. In a letter to customers, OKEx revealed that one of its private-key holders was cooperating with a police investigation, which kept them out of touch with the company and prevented its multisignature authorization process from being fulfilled.

For a platform that users leverage to carry out important investment decisions, the idea that a single person becoming compromised could result in a critical functionality being disabled for over a month is clearly untenable.

There is a lesson here: When firms use blockchain features designed for security to implement a policy, the result is overwhelming inflexibility. This is one of the paradoxes of the digital-asset space — blockchain transactions are secure and irreversible, but without the right approach, that same rigidity can spell disaster if things go awry.

To prevent this, firms must ensure their infrastructure includes a policy engine that, while not compromising on security, enables a more flexible policy control for multiple approvers, including the separation of signing on and approval of transactions. With this kind of solution in place, OKEx’s ability to fully operate would not have hinged on the availability of any key person.

Nexus Mutual breach: $8 million stolen

These hacking events were not limited to exchanges, as evidenced by the December breach of Nexus Mutual, a decentralized finance platform that serves as an alternative to insurance. The hacker managed to access the personal device of CEO Hugh Karp and install a compromised version of MetaMask, which led to Karp inadvertently signing a transaction that sent 370,000 NXM, worth $8.2 million, to an attacker-controlled address.

The issue here has to do with locally run wallets. These local wallets are unable to provide an out-of-band policy engine, so there is no way to verify that a contract and counterparty address are whitelisted, that the amount and issuer comply with company policy, or that there are additional approvers for certain transaction parameters.

Enlisting a third party with a more flexible, secure approach to infrastructure is the way to address these risks. This is especially important to reduce counterparty address manipulation, which is a risk in many scenarios. Even in the unlikely event that a provider like this is breached, there are safeguards in place to verify counterparty addresses, giving firms multiple lines of defense.


While digital assets have gained a remarkable amount of momentum in the past several months, many organizations still need to improve their security infrastructure before true adoption of digital assets can start.

This is not meant to chastise these firms, which continue to do important work to serve the industry, but to identify where their focus should be to achieve future growth and bring digital assets to the mainstream.

For all these issues — private-key security, authorization structure, local wallets and more — there are approaches that can lead to more efficient, stress-free transacting and fewer headlines that set off alarm bells for the traditional investors we all want to reach.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Itay Malinger is co-founder and CEO of Curv, a digital-asset security infrastructure firm. He draws on more than 15 years of cybersecurity experience in both the public and private sectors. Formerly, Itay was the director of enterprise security products at Akamai Technologies.