Arweave Raises $5M Round Led by a16z, Multicoin Capital, and Union Square Ventures

Arweave is one step closer to its mission of being “new Library of Alexandria” thanks to a successful fundraising round led by a16z, with participating investors such as Multicoin Capital and Union Square Ventures. 

Arweave aims to create a sustainable “permaweb”, which is essentially a decentralized and permanent version of the web where content is immutable and can’t be lost. 

“[Arwave’s mission is] ensuring that humanity’s shared knowledge and history is available to all future generations,” states Sam Williams, Founder of Arweave. “We have achieved exceptional growth in a small period of time.”

Users are able to save a PDF, webpage, or app on the permaweb through a free Arweave browser extension. Whenever users encounter a page they’d like to save forever, they would click the “Archive this Page” function on the extension and pay a single up-front fee.  

Williams envisions a future where Arweave helps prevent any redaction or censorship. 

“We think that we’re closing what Orwell called the memory hole so people can’t change what was said,” says Williams. 

Since the permaweb’s launch in June 2018, over 100 permanent apps have been built on Arweave’s infrastructure. 

The new investors in the company will be joining previous investors such as 1kx and Techstars.  round The company plans to use the funds to hire developer relations team members and support the project as it ramps up its commercialization and marketing endeavors. 

The post Arweave Raises $5M Round Led by a16z, Multicoin Capital, and Union Square Ventures appeared first on CoinCentral.

Source: Coin Central

Is This The Real Reason Behind Bitcoin’s Latest Sell-Off?

Bitcoin has been struggling recently after a period of stability, suddenly moving sharply lower at the end of last month.

The bitcoin price, which is still up more than double from where it began the year, fell from its recent plateau of around $10,000 per bitcoin to just above $8,000 in a move widely put down to the lackluster performance of the hotly-anticipated Bakkt bitcoin and cryptocurrency platform.

Now, new data has suggested the slump in the bitcoin price might be more to do with the “coming of age” of bitcoin and cryptocurrency markets–with exciting new competitors distracting investors from the long-time crypto poster-boy.

Bitcoin, cryptocurrency and financial markets research company Indexica has found that bitcoin’s strongest predictive measure was its “quotability,” it was first reported by Bloomberg, a financial newswire–meaning traders are treating it like any other investment asset and showing bitcoin is most often being talked about in conjunction with more traditional currencies.

“Now that bitcoin is a big kid, anything can make it move, just like anything can make gold or a G-10 currency move,” said Zak Selbert, chief executive of Indexica told Bloomberg, adding bitcoin’s sensitivity to new competitors such as Facebook’s troubled libra project and Mastercard’s partnership with R3 demonstrates the industry’s maturity.

“Bitcoin is part of the financial landscape in a very intertwined and mature way.”

Many bitcoin and cryptocurrency watchers had hoped that bitcoin’s reputation as “digital gold” would mean it began acting as a so-called safe haven asset, with investors buying into bitcoin at times of political and economic uncertainty.

This appeared to happen…

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Innovative Margin Trading Solution To Stimulate Growth At DDEX

The DDEX team recently unveiled its new margin trading facility to the general public. The new margin trading solution has been going through a rigorous beta test over the last few days of volatile cryptocurrency trading.

Tian Li

Tian Li, DDEX Cofounder

Last week, CoinCentral’s Munair Simpson had the occasion to sit down with Tian Li, DDEX cofounder, at his office in Seattle. The interview was focused on the design choices made by Tian and other members of the DDEX team.

Tian spent 45 minutes to reveal the amount of thought put into designing the new platform. The new platform is significant. DDEX dug in deep to innovate in areas where they could uniquely add value.

In conjunction with recent advancements in decentralized finance, or DeFi, the DDEX team was able to innovate in the following ways:

  1. Improving liquidity with a USDT bridge and bootstrapping systemic risk-aware lending pool.
  2. Making liquidation less terrifying with stop/loss orders and Dutch auctions. 
  3. Integrating an insurance scheme.

There are other advancements. However, there just wasn’t sufficient time to uncover them all. The interview below will have to suffice for now.

Would you like to introduce yourself, your background, and how you got into cryptocurrency?

Sure, I’m the founder of DDEX along with Bowen and David, my two co-founders. I’m an engineer. I worked at Microsoft and in the Valley for five years. Then I did two startups in Asia in mobile/Internet and was also an EIR for a few venture capital funds. 

That was my history prior to coming to crypto. I got really interested in Solidity programming while I was an EIR at a fund. I was very bored doing research, so I taught myself how to write basic smart contracts. This was April of 2017. That’s why I first got into it. Just as a programmer, downloading MetaMask, and writing these very simple game contracts. Then, near the end of 2017, I decided that smart contract programming is definitely a new type of technology. 

There are some different things that you can build. As an entrepreneur, that’s really what I look for. That’s when I approached Bowen and David to do this project together. That’s how we jumped in, almost two years ago now.

You’ve known them to from before, correct?

I’d known David for years. David was the best engineer at both of my previous startups. So he was the first person I asked. Bowen was working as an investment analyst in Zhenfund, which is a general VC fund. They invest in a lot of things. Bowen was looking at the crypto space. This was really early. I think May of 2017. This was before the ICO hype. I remember Bowen was one of the few people I met that was interested in assets and projects. 

The first project we looked at together was 0X. This was before their ICO. Which was interesting, because we eventually ended up doing something in the decentralized exchange space.

The first time we really sat down together we were like, oh, what do you think about this project? He’s like, I know this project’s that. What do you think about this project? We went through a bunch of projects, and then eventually, yeah, you know definitely a great, complementary team.

Would you like to describe the product and tell us how it will be launched?

Just to summarize what we did… At the end of 2017, we started with a decentralized exchange called DDEX. At the time, it was very simple. The idea was, can you swap tokens trustlessly? Until the end of 2018, we just worked on a decentralized exchange that was not too painful to use, and a set of smart contracts that are robust, simple and secure.

That took us pretty much a whole year to really understand the space. In 2019, we felt the market was quiet. We thought that this was the best time to make bigger investments. Technically, when there’s not much going on operationally, I think you can really afford to invest six months into a project.

In 2019, under the radar, we looked at, what’s going on with the DeFi space. We realized that step one was trading. Step two, with the rise of Compound and these lending platforms, was lending. We thought that was the second most interesting thing. Financially, if you take trading and lending, and you mix them together, you get margin trading. So we were just fascinated by the possibility to compose. 

Our second project, which you can call a feature addition on the original DDEX, underneath this is brand new territory. It’s a “margin” decentralized exchange. The idea was that we would compose a decentralized betting pool. Borrow some money and trade with the borrowed money. Allow the user to do so. In doing so, you can create leverage long and short positions. It is a sort of a derivative on the top of a spot exchange. So that’s our new project.

We didn’t give it a new name. It’s still called DDEX. When we launch and you open DDEX, you will have margin trading. Margin trading is pretty much an upgrade over spot trading. We will still have all the spot trading functionality, but now, in addition, you can do margin trades. 

We actually tried to make it so that, from the product perspective, the users will still be familiar. We still use all the old trading paradigms of order form, order book, and stuff, but now you are basically able to increase your purchasing power.

What is the URL that they can visit?

Sure. We’re just low key right now. So you could use the main net. Our contracts are audited. You can find the new product at

Yeah, check it out. You will be one of the first users because we haven’t really published this URL. We do have 50 to 100 early-stage users. Using it and giving us feedback. We are iterating. We are planning a public launch in October.

What distinguishes yours from other platforms out there? 

First off, if you look at these lending platforms, one question that really interested us is: Why are people borrowing? These loans are over collateralized loans. In essence, you have to pretty much give them $150 of collateral to take out $100. This is not how you typically think about a loan. 

So the first question that anyone asked is, why are people borrowing? Everyone understands why people are lending, because right now your tokens are just sitting there. Earning zero percent. If you can even earn 1% that is just strictly better. 

We always thinking about motivations. Why do people do this? Particularly from a product perspective. Lenders are easy to understand. But borrowers are not. Why are you paying 15% interest the whole time?

Then we really looked into the data. The analysis, and there’s really only one answer, is that you borrow to create leveraged positions.

To be clear, to performant margin trade, you don’t need a specialized product. I could say margin is more like a way of doing things. I could borrow a Bitcoin from you and then sell it. I’m shorting it. Now I have USD. Someday I have to pay you back.

If Bitcoin goes down, I can buy it back cheaper to repay you. I can barter trade by just borrowing it from a friend. Of course, the whole point of margin trading is to increase the efficiency and decrease the trust dependency at which you can do these things.

I think one innovator in the space, a sort of pioneer of margin exchange, was dYdX. From the very beginning, since we were creating the DDEX, they’ve been thinking about how to do this right. 

We started probably around the same time, late 2017, early 2018. Then we see them go through a few iterations.

I think that the main difference… We want to bring something unique to the table. We weren’t a first DEX. Back then [in development] we were looking at decentralized exchanges. We were like, oh… Here are the three things where we can improve on. We did the same thing with margin trading.

We were looking at margin exchanges in its various forms and I think there are three things that can be drastically improved. One is that we want to be less dependent on Dai liquidity. Dai is amazing. It is like the oasis that bootstrapped all of DeFi. 

Absolutely, that’s the perfect name for it.

When it comes to liquidity, the more the better. So we were thinking, in addition to Dai, we bring additional stable coins. This will increase the liquidity of these markets.

I think one really big, untapped source is centralized USDT, USDC, TUSD. We’re talking about actual fiat-back stable coins.

Very huge… There are a lot of people using them… Very high liquidity when you look at Coin Market Cap.

Yeah, but there’s a technical challenge. I think the reason everyone started on Dai is that Dai is completely on-chain. These completely on-chain DEXes are in theory able to provide a source of, what we call contract-fulfillable liquidity. USDT is not contract-fulfillable liquidity.

There needs to be an adapter. Something that takes USDT and converts it into a form of liquidity that decentralized protocols can use. We basically have to build an adapter. That takes something from the non-totally decentralized world, pass it through this filter, and make it decentralized. It’s not just about liquidity. So that’s the challenge.

I think we’re the first one to do it. It’s not like a trade secret. We’re hoping that when other people see us do this, they will enter the game and do this as well. This is one way to really bridge.

Philosophically, the way we look at it is that something like Dai is really trying to bootstrap liquidity from within the DeFi ecosystem. It is creating liquidity out of nothing. Whereas bringing something like USDT or USDC, you bring from outside of the DeFi ecosystem. We call it bootstrapping liquidity inside and out.

There’s a really good effort on the inside front. We want to try to contribute from the outside. So that’s like the first part. 

The second part of what we do differently is that we actually don’t compose. What we mean is that to build a margin exchange you need two things. You need a spot trading exchange (a DEX) and you need a lending pool. 

There are multiple permutations of how to bring these together. You can actually just take an existing exchange like Kyber, and an existing lending pool like Compound, and then you could just build a very thin layer on top. That is a margin exchange without building either of these two components.

One project that this was called Opyn. It was a very interesting experiment. Unfortunately, they shut down.

They shut down… October 15th is the last day.

I read their post mortem. The reason that their business shutdown was because they were too thin. That is because they’re just composing out of existing components. The unique value offering they have, which is most likely usability, is maybe not enough to justify existence. 

Which does really make sense. When you compose, there are a lot of imperfections on the product level. It’s a leaky abstraction. The users sense the complexity because, underneath you’re still interacting with multiple protocols.

DYDX, the first version, I think they take one step earlier. Like… We’re not going to use an external. We’re going to build our own landing pool. Then we’ll compose it with an external DEX. For example, Eth2Dai. By building one thing externally and then using one thing internally, they can drastically improve the usability. 

We just were looking at the trend and we felt like a natural progression was to just to do both pieces internally.

Yeah, I think it’s been a good decision.

It’s a trade off, right? As an engineer, you never want to reinvent the wheel, right?

How do you bootstrap that liquidity for your lending pool?

Yes, definitely. The third feature is that, because we’re doing this integrated solution, we’re able to really restructure certain things. One thing we focus on is that, although there are two things you can do on such an exchange, which is lending and trading, we really don’t put them in parallel. We still believe, which I’ll explain, and which answers your next question, we think we have to start with margin trading first because there is no shortage of lenders. We have $20 billion worth of Ether sitting there earning essentially zero percent. 

I think if there is a safe, risk free rate, the supply side of it will come. At the end of day someone’s paying interest and someone’s earning interest. Everyone wants to earn interest. You don’t have to do very much to get it. 

Who actually pays interest? It’s the traders, right? If you can make the traders happy, then they are willing to pay interest and this interest will attract lenders. 

It is a chicken egg problem. We bootstrap on this side.

We designed our contract in a way that will bias towards what we believe the borrowers want. I can give you a few examples. For the borrowers, what they want is really stability. 

There’s some innovation in this space. For generalized lending platform, like Compound, I think they’re doing some very interesting things. For us, we actually reduce a few of the advanced features to increase robustness.

One example of this is that, on these innovative lending platforms, they made a choice to allow the collateral to be lent out as well. So what I am saying is, imagine I want to borrow some Dai. I will put up some Ether as collateral. 

It’s like mortgaging your house. Or going to a pawn shop and saying take this valuable watch I have. Then I am going to make some cash, right? 

Now the interesting part is, I don’t think any centralized or CeFi projects do this. They [Compound] allow the collateral to be also lent out. So this Ether, which is somebody’s collateral, also enters of lending pool. That can also be lent out. Which is, sometimes even when you’re borrowing, you could be earning interest on your collateral. It’s a really cool feature.

We’re not judging. Or saying this is bad. But when we look at it from a very practical perspective, from the perspective of a margin trader, we think this is unnecessary.

We think is unnecessary. One you’ll notice that the interest rates are very unbalanced. You’re earning 10% on Dai, but you’re earning 0.1% on Ether. The demand to borrow Ether is just not there. 

This trivial amount of interest is close enough to zero that it does not drastically increase the utility of the lending pool. But what’s the downside? It sounds like there’s no downside. The collateral is there as collateral. Which means if something goes wrong, it supports liquidation. This collateral gets sold, right?

So the question is, what happens if there was a really huge price drop? You’re trying to liquidate Ether, but the Ether is actually not there. It’s lent out. So you have to do cascading liquidation, right? 

You have to liquidate again. Someone has borrowed that Ether, and they’ve put up some other collateral. Now you have to liquidate that collateral too. Just so that you can liquidate the Ether to get Dai, right?

No one knows how it’s going to play out, and it could be this catastrophic event.

It could just be that we are overthinking things, but who knows?

I mean, we actually, we have less pure asset utilization. In some ways, you could say we have an inferior lending pool. But just in case something really bad’s happening, we are a little bit more confident in our liquidation process.

So these are the trade offs that are very hidden. We don’t really tout this as a product competitive advantage. But, it makes us sleep a little bit better at night. We thoroughly went over our liquidation process. 

In line with that, for the counterparty, it’s this notion of insurance, right? When you are lending out on one of these platforms, what you are really worried about is not being able to get your money back. It is the liquidation process that protects users assets. That’s because there’s a trustless system.

At the end of the day, if the liquidation was successfully, users are guaranteed to get their money back. This notion of insurance, to be specific, there are two types of risks for a lending pool. You have the liquidation risk, and you have smart contract / bug risk. 

The second one is hard to insure against, but the first one is completely measurable. That’s because the liquidation process itself is just some logic in the smart contract. We can just add logic and say, if the liquidation fails, because there was not enough incentive for someone to participate in liquidation, then there’s insurance. Which essentially act as one more trader. Except it will do the liquidation at a slight loss. 

So we actually have a full implementation of a trustless liquidation insurance. Which we think is a neat addition to this to this game. One that we’re kind of proud of.

We’re hoping that it doesn’t kick in. Since when it kicks in, something went wrong. Still, it is one more guard against catastrophic situations.

Do you want to disclose how you structured your liquidation penalty?

Sure. There is a liquidation category. Which just means that when the collateral approaches a percentage of the loan debt, the collateral gets put up for liquidation. It could be, 110%. It could be 105%. If you set it too high, then it’s just inefficient. The liquidation is kicked off. It’s just too early, like a false alarm. But if you keep it too close to 100%, you risk falling further and not being able to liquidate. 

It’s part art, part science. We have it set at 110% right now.

For all assets? 

Yes. Right now, we’re mainly just looking into two markets. The Ether to USDT market and the Ether to Dai market. In the contract, every market gets their own parameter. 

Every asset should get their own price. Every asset and every market should have different liquidity depths and risk. Right now, the 110% percent rate is the current rate of the ETH – USDT market. 

When liquidation kicks off at 110%, it doesn’t mean that the borrower gets penalized 110%. It’s not like a 10% penalty. It’s just that the liquidation starts at 110%. 

We actually use the Dutch auction mechanism. There’s two matrices in terms of liquidation design. One is how and when do you kick off the liquidation. Two is how you execute the liquidation. 

There are really two ways to execute a liquidation. One, is to give the smart contract full control. It just takes all the collateral and sells it at market on Kyber. That’s one way to do it. 

Two, is that you will open gradually increasing auctions. Whoever wants to swap, as long as you’re able to help me pay back the loan, then you get the collateral. 

In some ways, because an auction is a price discovery mechanism, the second way is more decentralized. It is actually more fair. You’re more likely to get to market rate. 

There is a drawback. The drawback is that the action takes some time. Maybe, it takes 10 minutes. In that 10 minutes, the price could drastically change in a way that increases risk.

There are always these tradeoffs. At the end of the day, without a doubt, Dutch auction was the better way to go. It’s more elegant. I think it scales better into the future. So we use this.

So basically, when I say Dutch auction, at 110% it starts by auctioning a portion of the collateral. Let’s say there was 100 ETH in there as collateral. You don’t sell all the ETH. You offer 80 ETH for any one to pay back the loan. No takers? Then I’ll offer 81 ETH to pay back the loan. So on a block-by-block basis, it increases the percentage of collateral that you will get. The remainder of the collateral goes back to the borrower. In that way, they don’t lose all of their collateral in the case of the liquidation. 

That’s very good.

It’s a cool mechanism. Even though we’ve been beta testing for weeks, and because Ether has has risen a lot recently, some short positions got liquidated. One of my short positions got liquidated. I was testing. I’m actually very long on Ether.

Same here. So I’ve been in trouble.

It’s pretty cool to see this whole mechanism work out. There’s no tangible difference between liquidation and a stop loss, right? 

At some price, you’ve already lost the money. At some price, you just settle.

What we found in our beta testing was that people have to psychological avoidance. They feel getting liquidated is a very bad thing.

Let’s say your liquidation is at $200 and you get to $195. I’m still okay. It’s not liquidated, but you’ve already lost most of your equity. People just don’t want to get to that final point where their whole position gets liquidated.

A stop loss is really just a partial liquidation. It’s a liquidation of maybe 50% of your margin account. 

I want to design a way that people don’t also don’t feel emotionally bad. I think that part of the product design challenge is also interesting.

What are your thoughts about the HOT token and its utility?

When we designed the token, it’s basically a Costco membership or frequent flyer mileage. It’s a decentralized version of BNB. 

All it means is that.. What is the value of the DEX? It’s actually the place that’s able to aggregate enough buy and sell demand to form a market. In other words, its only asset is its liquidity. Or, the depth on its books. If all DEXes have the same liquidity, then transaction fees will just go down to zero. That’s because like people will trade on the cheaper one. 

If you look at Coinbase, if you look at Binance, the reason that these fees aren’t zero is that they have this competitive advantage. They just have the best liquidity, right? 

The value of this network is its liquidity. If you were to have a token to incentivize it, then you will incentivize the people who create liquidity.

For any token, I think there are two questions. One is who gets the token? Who is doing the work? Two is what utility does this token have, right?

Fundamentally, at some point, the only value a decentralized exchange protocol can offer is a discount on its fees. The token is a marker for people who trade and thus provide liquidity to the network. Thus increasing the value of the network. Therefore the network rewards these contributors, with basically a discount.

We looked at all the token mechanisms. The only ones that really make sense are some sort of medallion. It’s not really in itself some reward, but it’s the right to do work in this case. For the people who hold the tokens, HOT is basically a marker for contributing liquidity to the community.

Historically, when you look at 2017 – 2018, people will make these very fancy, elaborate, or complicated token mechanisms. When it was cool.

The next batch of projects had no tokens. It was so uncool. I think now if you look at it from a rational perspective, a token is just a tool. It’s a tool to achieve the goal, which is to bootstrap a network. Bootstrapping any network is the hardest part. But if you are able to start the network, then that network can have long-lasting value.

In some ways, a token could be like a very elegant solution to the bootstrapping problem. I think it’s never really changed. But it is very hard to do in practice.

In terms of inspiration, look at something like the Maker DAO token. It’s not completely unnecessary. It is like a piece in the liquidation mechanism. 

At the end of the day, in the Maker ecosystem it earns interest. This interest gets paid with the token. Basically, the total holders are just like the interest earners, which is beautiful. 

Compared to the P2P market, where users are earning interest, in the Maker system no one earns interest except for the token holders.

I think that is a valid way to design something to be able to bootstrap the network. Fortunate teams are those that have venture funding or have revenue. They have the ability to wait, over-promising on this grand token. They can slowly iterate.

Not all teams have the opportunity to do that. At the end of the day, everyone has to figure out some revenue model.

When you do the work, it is expensive and exhausting to create smart contracts. In terms of hiring the best engineers and then doing the auditing. Everyone needs to funding from somewhere. There’s always a promise. You take funding from venture investors. For three years, five years, and one day they are going to ask, what is the revenue model of this thing?

That is something that I think dYdX, Compound, they’ll have to figure out. We all have to figure it out. If you figure it out, I think it’s actually not that hard to either create a tokenized system or just use stock equity to pay back the investors.

You guys don’t charge trading fees, is that correct?

We have been charging fees. Since day one, DDEX charged fees. We thought that was a fine thing to do. In some ways it is proving value. I personally believe if it is the only thing you can compete on is just being cheaper, then maybe you’re not that competitive.

I think people mix free with decentralization. I think that they’re two completely separate issues. 

It doesn’t mean that you charge fees that therefore you’re a centralized system. Even in a decentralized system, for example in Ethereum, gas is a fee to users of the system. It is also what keeps this whole machine running.

If you can’t charge fees, then how can you possibly have a working token economy. In the long term, our goal is to create some viable, sustainable business model. That is actually really hard to do. 

If you’re relying on outside investment and funding, then you’re not truly decentralized. Self-sufficiency is one of the key design goals. That said, there’s the trend that everyone is not charging fees. 

One thing that really hurt us is these aggregators who’re comparing dApps and bid-ask spreads. We’ve always had one of the best bid-ask spreads. But… If you add fees into it, the fees effectively increase our spread on the order book. Then we’re no longer ranked number one. It kind of bothered us a little bit. Everyone’s basically undercutting the fees to a point to try to compensate for the lack of liquidity.

So with this new product, we’re just like, let’s just go with free as well. I don’t know what will happen, but it definitely makes us way more competitive. After we dropped fees, now we have the best spread for both margin and spot trading.

I’ll come back to your question about Dai. Dai is our secondary market. We have been focusing on the USDT market more. For the USDT market it is not even close! We have substantially better spread than any other Ether to stable coin market on DeFi systems. Regarding the Dai spread, it is our observation that no one can really do substantially better than anyone else. That’s because Dai is completely onchain liquidity. It is very cheap to marry the liquidity between DeFi projects. In our observation the liquidity, depth, and spread of Dai will probably be similar on the top three to five platforms. That is not something that we can do substantially better than anyone else. It’s also not something that can actually do substantially worse than anyone else. If you knew how liquidity stuff works, everyone probably does achieve parity.

From a competitive strategy perspective, it makes more sense to put our focus on markets that don’t reach parity automatically.

The USDT market is something that we could, if we spend a lot of effort, do much better than everyone else. So that’s our goal. 

Dai is a core component of the DeFi ecosystem and we definitely support them. But we can only support them as well as anyone else, not substantially better.

Is it possible to generate revenue from charging a little more to borrow?

We actually looked at centralized exchanges for how the world used to work. If you look at a lot of centralized margin exchanges, they don’t even have a lending pool. They just supply their own lending. They are the lenders. They charge. People talk about 20% APR being a really high Dai fee. The average, that we’ve seen, is that they charge 0.1% per day, which is 36.5% annually. No one cares.

Like you’re telling us, your mentality is, I’m only going to short this for like, a week. You’ll play 0.1% daily. That’s playing 0.7% weekly. But I’ll be making 50%.

Fundamentally, we actually don’t think the interest rate spread is where the biggest money is. To generalize a generalized lending pool like Compound, one day they will go beyond financial use cases for these loans.

They’re talking about payday loans, and there’s obviously other cool stuff like cDAI. That could potentially open a much bigger market.

If you make the assumption, which is that 100% of the borrowing will occur due to margin trading, then any interest rates spread you can earn is going to be an order of magnitude smaller than transaction fees. Do the simple math. You’re talking about a percentage on top. Compound takes 10% of the interest of spread. That’s 10% on top of 10%. 10% of 10% is only so it’s 1% annually, right?

We’re talking about a one week loan. That’s 1/50th of 1%. The smallest trading fee centralized exchange charge is maybe 0.1%. That’s still 10 times bigger than 0.5% of 10% of 10%. 

Also, I’m not actually sure that Compound is pocketing the difference. They could just be using this for insurance funds. I think that is one good way to supply insurance. This is what BitMex does. You take a percentage of the interest rate spread to cover liquidation failures. That’s a very nice mechanism. We’re not going to mess with that.

One of the more attractive features about DDEX is that the spot facility has no KYC or AML involved, allowing for more privacy than competitors. Are there any plans to change the way this is done for the margin product?

I’m not sure if the KYC is the way to go. Once you do the KYC, you do lose. 

The thing is that a decentralized exchange is never going to be as fast. It’s never going to be as efficient as a centralized exchange.

Fundamentally, if you go through all the effort to implement exchange in a decentralized way, and then you drop KYC on top of it, you lose all the advantages. Then you might as well build a centralized exchange. 

That is the first principle argument of why KYC is not the way to go. I do think that it should be compliance friendly. What I mean is that I think people talk about, the early DEXes as a way to avoid being compliant.

What people forget is that DEXes fundamentally have some properties that are very beneficial in terms of compliance. 

Why are exchanges regulated? There are two fundamental answers. One, is that you want to avoid money laundering. Two, you want to avoid fraud because custodial exchanges take custody. They can run away with everyone’s money. It’s an exit scam.

With decentralized exchanges, because they’re noncustodial, there is no possibility of an exit scam. That’s a very nice property, one. And two, because all the transactions actually happen onchain, it doesn’t break linkability. 

The reason someone will take stolen funds and deposit them into a ShapeShift or a Coinbase is that they can withdraw it and the money will be “washed”. If you perform a transaction on a decentralized exchange, like DDEX or Radar Relay, the likability is not broken. You know exactly where that money came from. You know exactly where it went.

These are two very elegant properties. We should be taking advantage of these properties. To create better products where people cannot do bad things. 

DEXes already have these properties but no-one is really talking about that. Overall, it’s just about how early we are. It’s just the fact that we don’t have any sort of identity system. Even if you implement a KYC system, it’s a very centralized, isolated, KYC system. Only a particular DEX may have some SQL database of a mapping of some addresses to some people’s information. 

Maybe that’s not the solution. That thing could get hacked, or get lost. Maybe it’s not big enough. I am also excited about the identity problem that people are trying to solve. Imagine if we had a decoupled third-party identity system. One that has credit history and other stuff that you also would be able to tap into. I think that is the solution. I don’t think the solution is for any one particular DeFi project to roll his own, effectively siloed identity system. That’s what these KYC system look like to me. 

How are you going to get the word out?

In my previous mobile internet startup, with our my first product, we went from zero to 16 million users in the first year. We did so much growth hacking. I don’t think DeFi is like that.

There are two things. One, you’re talking about even the most successful projects, you’re talking about the very small user base. If you look at the Makers and you look at the Compounds, we’re talking about in the order of thousands of users not millions.

To reach this very, very niche crowd, I am not saying it’s not hard, but it’s more that you just have to have unique value offerings. Then they’ll probably find you. Think about the type of people who will use a decentralized product. These people are incredibly sophisticated. First of all, they have a MetaMask, Ledger, or a D’CENT wallet. That alone takes some expertise. Then they have to understand the financial operations of creating a margin trade and the implications of that and the risks. People talk about “usability is a barrier”. Yes, someday… But we’re not there today.

We’re talking about the intersection of some who’re both engineering savvy and financial savvy. Right now we’re under the radar. Yet we’re surprised how many people actually found us. How did you find us? We didn’t even publish our URL anywhere. We’re not talking about a lot of people. 100 people found us. That’s a non-trivial portion of the potential user base that we could reach at this point.

I think you got to take a step-by-step. All the first-tier teams in Defi our patient. The people who are trying to make moves and try to utilize tokens or viral marketing, they burn themselves out very fast. If you look at the people who are actually writing and shipping, actually getting traction, like the Compounds and the Makers, they took a long time. They’re all on six-month ship cycles and not a lot of growth hacking and PR.

At this stage, of course, we want to grow faster. We want to have exponential growth. But you can’t force it too hard. There’s still a long way to go before anyone will build a DeFi product that is ready for public consumption.

We are very focused on getting the first hundred users, the first thousand users, the first 10,000 users. But 10,000 users actually is very small. Literally, we could talk to our first thousand users one-by-one. We don’t have to skip. To sum up that position and to answer your questions, we’re willing to do things that don’t scale. We don’t need to scale. Then we’ll figure out the hard questions for the scale later.

What are your thoughts about high gas fees and how that impacts financial inclusion?

In some ways we’re talking about scaling now. There’s layer one scaling, maybe changing the consensus model. Or layer two scaling, maybe batching transactions. You could take something like zero knowledge proof, and maybe you could compress, a thousand transactions into one transaction.

These two things we definitely look closely at. At the end of the day, there’s not any one team that can solve all the problems. We are a layer two DeFi product. From our perspective, we want to validate on Ethereum. The most secure, maybe expensive, but secure network. You’re paying for the security.

You really validate your use case here. Then you try to figure out a path where you can take it. Maybe it’s Ethereum 2.0. Or maybe it’s with the aid of level two solution. Maybe a better blockchain. Our job is to evaluate these things and figure out their legitimacy and to build our protocol in a way that it is migrateable.

Fantastic Tian! Thank you so much for taking the time with us today. 

Thank you so much love talking about this stuff. If anyone has questions, reach out.

Final Thoughts

For the time being, the new margin trading platform does nothing for those holding HOT tokens. DDEX is under fire. Competition in the margin DEX space is fierce. The most clear example of this is the upcoming close of the Opyn margin trading service on October 15, 2019.

Hopefully, DDEX’s focus on spread/depth and network security will be of great service to the existing community of sophisticated traders and engineers propelling DeFi forward. This focus should ensure a path forward for DDEX.

Please feel free to reach out to the DDEX team with questions:

Twitter: Tian Li (CEO/Cofounder), Scott Winges (Head of Product)

Telegram: Bowen Wang (COO/Cofounder)

Margin Trading Platform:

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This Cryptocurrency Just Surpassed Bitcoin In One Key Adoption Metric

Throughout the history of cryptocurrencies, altcoins have had a lot of trouble competing with Bitcoin, which is basically the gold standard of the market. In terms of everything from network effects to brand recognition, there is still simply no real threat to Bitcoin’s position at this time.

That said, Ethereum briefly passed Bitcoin in one key area last week: total daily USD-denominated transaction fees. In fact, Ethereum miners collected more in fees than Bitcoin miners on this past Saturday and Sunday too, according to Coin Metrics.

Additionally, while it’s been a rough September for the Bitcoin price, Ether is in the green (just barely) this month, and the cryptocurrency recently enjoyed one of its best 24-hour Bitcoin-denominated price moves ever recorded.

Increased Usage Means Higher Fees

In cryptocurrency networks, transaction throughput is limited in order to preserve decentralization. If the network is processing too many transactions per second, the users’ ability to run their own full nodes and check that no one is cheating will be harmed. Since the whole point of using a public blockchain is to gain properties like censorship resistance and trust minimization, avoiding centralization is key.

Due to the limitations placed on capacity, cryptocurrencies like Bitcoin and Ethereum see higher transaction fees when the networks become congested. This is exactly what has happend with Ethereum over the past month, as total daily USD-denominated transaction fees hit levels not seen in over a year.

So, what has caused the recent spike in Ethereum transaction fees? It appears the blame can be placed on a Ponzi scheme-esque game called FairWin, which also has a critical vulnerability in its associated contract on the Ethereum blockchainAccording to on-chain crypto market analytics firm Glassnode, FairWin has recently been consuming up to half of the gas spent on the Ethereum network at any given time.

The spike in FairWin’s popularity, according to Etherscan, correlates almost perfectly with the increase in total fees seen on the Ethereum network this month, according to Coin Metrics.

What Does This Mean for Ethereum’s Future?

The total value of all the transaction fees paid on a cryptocurrency network every day is a key metric to watch because it illustrates the level of demand for that particular blockchain. If people are willing to pay relatively high fees to use a particular blockchain, they must be getting some sort of utility out of it.

Additionally, fees are intended to eventually replace the creation of new Bitcoin as the incentive for miners to secure the network. Things will likely work differently for Ethereum, as the Ether token is expected to be issued on a perpetual basis, which means a never-ending block subsidy. This is effectively a trade-off of dilution of the current Ether supply in exchange for a higher level of network security.

In terms of their possible effect on the Ether price…

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How Increased Crypto Regulation Will Affect the Industry

Major economies are rushing to rein in the cryptocurrency industry through regulation amidst bullish market conditions which have once again sparked investors’ interest.

Germany and France are among the latest countries to announce a new set of regulatory measures. Most of the rules are related to Anti Money Laundering (AML) and taxes.

Germany has announced that cryptocurrency exchanges and virtual wallet providers will have to obtain a license from the Federal Financial Supervisory Authority (BaFin) to operate within the country. This is as from next year.

France has, on the other hand, said that it is working on a new regulatory framework that will allow regulated crypto companies to gain certain benefits. According to the drafted laws, the Financial Markets Authority (AMF) is slated to provide financial oversight over the industry.

Companies looking to launch Initial Coin Offerings in France will be required to seek approval from the AMF after complying with the sectored statutes. Only enterprises that are registered in France will be allowed to carry out ICOs.

ICO token issuers will have to present detailed information about the company and its offering to the agency as well as demonstrate both AML and Countering Financing of Terrorism (CFT) compliance.

According to the AMF, private fundraising without its approval is still legal but companies that wish to solicit money from the general public will have to get ratified.

The Impact of Crypto Regulation on Digital Coins

Cryptocurrency regulations across the world are incredibly patchy and it’s hard to tell just how much the crypto market as a whole will react when many of the laws finally kick in.

There is, of course, the likelihood of a dystopian plunge but bitcoin has already shown exemplary resilience when it comes to holding value in the long term under varying conditions.

BTC has been able to counter market attrition in the past seven months and spiked in value by more than 100 percent.

Bitcoin’s main strength lies in its decentralization which makes it hard to control. So far, no single nation has been able to completely suppress its use or circulation.

Centralized coins are, altogether, a different story. They are likely to be directly impacted by legislation. Some are highly susceptible. A brief look at altcoin performance in the past 5 months paints a clear picture regarding the situation. Many have been unable to match bitcoin’s growth rate.

Decentralized cryptocurrencies such as BTC already have a sprawling and growing userbase and are in many cases used as a store of value akin to gold. These factors shield them from a lot of the legislation-induced market mayhem.

Inversely, centralized and privately controlled networks such as Facebook’s Libra and Ripple will continue to be at risk of negative government enactments.

Ripple has already written an open letter to Congress asking it not to stifle the blockchain-centric sector because of one potentially irresponsible actor.

(Featured Image via Pixabay)

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The Palestinian Administration Wants to Replace the Israeli Shekel with Crypto

Palestinian premier Mohammad Shtayyeh has announced that the government is looking to replace the Shekel with cryptocurrencies.

According to local news site Al-Monitor, the administration wants to break Israeli hegemony by developing a currency that cannot be controlled by the government. Shtayyeh made the statement during the recent launch of the Palestine Center for Computer Emergency Response which is situated in Ramallah.

The main fiat currencies in use within Palestinian territory are the Israeli New Shekel (ILS) and the Jordanian dinar. The Paris Protocol which was signed in April 1994 by both the Palestinian leadership and Israel bestowed the country’s central bank with regulatory powers.

The institution was, however, barred from creating its own currency notes. This is a major limitation that has caused the country’s economy to become heavily dependent on the Shekel for trade, taxes, and general payments. 

The Palestinian economy is said to have about 25 billion Shekels in circulation, which is approximately $7 million.

Major Hurdles Ahead

There are major hurdles to be overcome before a cryptocurrency-driven economy can be realized in Palestine. Among the main challenges is technical know-how. Cryptocurrencies are still a new innovation and so adoption is bound to be slow.

Palestinian authorities have in the past announced efforts to adopt a national cryptocurrency, but these initiatives have yet to be fulfilled. On why Palestine is looking to adopt cryptocurrencies instead of sovereign fiat currency, Israeli blockades are a huge part of it.

If the Palestinian state was to order printed money from another country, the cargo would have to go through Israeli-controlled checkpoints and simply won’t get authorization.

The other problem is acceptability. The Palestinian Central Bank has yet to gain recognition from the international community as a full-fledged sovereign institution. This restriction prevents it from creating its own currency.

That said, however, the cryptocurrency culture in Palestine is blossoming. Lack of censorship has made it easy for the citizenry to carry out online peer-to-peer transactions.

This benefit has made cryptocurrencies such as bitcoin a preferred medium of exchange for people looking to send money overseas. Moreover, major international remittance companies such as PayPal do not operate within the territory. This has left blockchain-based systems to fill the void.

(Featured Image Credit: Pixabay)

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Will Bitcoin’s Price Rally After Federal Reserve Rate Cut?

Bitcoin is down again, but some observers believe the losses could be reversed after a U.S. interest rate cut expected Wednesday.

The leading cryptocurrency by market value fell to lows below $10,100 yesterday, marking a downside break of the narrowing price range created near $10,300 in the three days to Sept. 15.

As of writing, BTC is changing hands at $10,150 on Bitstamp, representing a 1.4 percent drop on a 24-hour basis.

So, the bears have gained an upper hand in the last 24 hours despite record high miner confidence, and a deeper drop may unfold in the next 24 hours.

The decline, however, could end up trapping sellers on the wrong side of the market, according to some observers, who expect BTC to benefit from an impending 25 basis point U.S. rate cut on Wednesday.

For instance, Nigel Green, founder and CEO of a global financial advisory giant deVere Group, believes the cryptocurrency will pick up a strong bid in response to the Federal Reserve’s rate cut, as the reduction in borrowing costs will lower the yield (return) on the U.S. dollar.

Meanwhile, Anthony Pompliano, founder and partner at Morgan Creek Digital Assets, tweeted in August that BTC could fly high if the Fed rate cuts are followed by a government buying program (quantitative easing).

Former Wall Street Journal trader and journalist Max Keiser also believes the Fed’s continued monetary easing would send bitcoin to $100,000.

Rate cuts are inflationary in nature, meaning they reduce the purchasing power of fiat currencies.

Hence, there is a general consensus in the crypto market that Federal Reserve’s monetary easing will bode well for bitcoin, which is deflationary in nature and is set to undergo a mining reward halving (supply cut) in less than a year.

Bitcoin, however, has seldom taken cues from the Fed’s actions in the past. For instance, the Fed hiked rates by 25 basis points in December 2015. That was the first hike since 2006. The central bank delivered another rate hike in December 2016 and hiked rates four times in 2017.

Even so, BTC broke into a bull market with a convincing move above $300 at the end of October 2015 and went on to hit a record high of $20,000 by December 2017.

As such, the probability of BTC responding positively to tomorrow’s rate cut is debatable.

Also, traditional markets have priced in a 25 basis point rate cut and the FX markets will likely dump the U.S. dollar only if the Fed cuts rates by 50 basis points or signals aggressive easing over the near term. In that case, the anti-dollar sentiment may…

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How Naughty America Plans Use Blockchain to Beat off the Competition

The adult entertainment industry is seemingly always the media early adopter of new technologies, such as faster streaming solutions, virtual and augmented reality, artificial intelligence, and now, blockchain. 

A stark difference from most attention and dollar-starved media companies, adult entertainment sites are thriving.

At an initial glance, one might scoff at the idea of the same companies producing videos ranging from [expletive redacted] to [expletive redacted], and even the occasional [expletive redacted] being viewed as technological leaders, but it’s a reality that shouldn’t be overlooked.

The average consumer of adult media is biologically primed, if not addicted, to consuming a particular site’s content. They’re loyal, repeat customers that would disable their ad-block in a heartbeat to consume content– a dream that makes non-adult media site owners salivate. 

Adult media companies are traffic powerhouses. 

Pornhub ranks #7 on Similarweb’s list of top websites in the United States and gets more traffic than Instagram, Wikipedia, and Reddit. Instagram! How many times have you personally checked Instagram today? Instagram has over a billion users. Pornhub beats it. 

The second and third top-ranking sites take #11 and #13, beating out Netflix, LinkedIn, Pinterest, CNN, ESPN, Foxnews, Yelp– even 

On the international traffic front, the top three adult sites hold three spots in the top 11. 

Top international site traffic. Source: SimilarWeb

Top international site traffic. Source: SimilarWeb

Every user earns the site ad money. Some users purchase premium subscriptions. Some even buy merchandise. Adult sites leverage their massive user bases to invest in creating new content, 

While Wikipedia was begging users for spare change to stay alive, Pornhub was crowdfunding money to send people to have sex in space. The campaign ultimately missed its target for $3.4 million in 60 days but received pledges of $236,086.

Many adult entertainment companies are allocating a significant amount of capital towards exploring new technologies to keep their edge over the cut-throat and often shady competition. From artificial reality holograms (link NSFW) that make porn stars magically pop up in your living room on stripping poles to artificial intelligence “deepfake” porn that seamlessly superimposes non-performer (celebrities, people of interest, maybe even you) faces in sexual scenes, the adult entertainment space appear to be miles ahead of not only other media sites, but of full-on film production companies.

Some companies have even taken to blockchain monetize, protect, and further distribute their content– potentially serving as future excellent case studies for all content production companies struggling to monetize.  

Enter Naughty America CEO Andreas Hronopoulos

We got a chance to interview adult film studio Naughty America’s CEO Andreas Hronopoulos on how the company has been exploring and innovating new technology to make a better overall experience for its customers. Find out the impact blockchain for adult entertainment can have on the overall media industry, and how a leader in the space plans to prove it. 

Why are adult entertainment companies alway on the innovative edge?

It’s in the essence in that adult entertainment fulfills a need, like breathing air. There’s always a demand for [our content]. For people creating products around that need, there’s a fast process of iteration and you can see if there’s an interest in the new product or not. 

It’s very binary. If you work in the adult entertainment space, you know you’re going to be doing cutting edge stuff all the time. Pushing the envelope; how we can help people find their fantasy? Linking tech and sex. There’s the demand, and we want to apply the tech and see if there’s a fit or not. 

Could you walk us through a day in the life of Andreas Hronopoulos? What are the typical daily decisions that need to be made?

Simply just finding new ways with tech and finding how Naughty America can help people in the adult entertainment industry. For us, we’re going in line with where blockchain is. 

This is a great era for our organization because we’ve always looked at how our content can help other companies. How can we take our library of content and help other companies with their business? I bring Naughty America to the table, and how can we help you? It’s about the simple idea of trading. 

The blockchain industry seems to be ripe for partnership with a content-rich company like Naughty America. So many projects are working on solutions that require some volume of users and content. 

My daily to-do list revolves around our brand and our content can help other people grow their companies. We want to bring our assets to your ecosystem. That’s the beauty of Naughty America, it travels. We’ve invested a tremendous amount over 20 years in content, and we’ll continue to invest in it. 

We’ve been very welcomed by everyone in the space to bring our content into their ecosystem. It’s an exciting time, blue ocean, it’s a new day, it’s so different than where we were 12 years ago. We’re [digital media companies] in such a radically different world from just around a decade ago. 

We’ve always seen ourselves as a media company that utilizes technology. The adult entertainment industry has always been ahead of the curve. Being a media company is where we want to be. We don’t want to be a tech company. There are a lot of brilliant engineers out there, and we want our media to be there to support them. 

Could you tell us more about Naughty America’s relationship with blockchain? 

We first started accepting bitcoin as payment in 2014. We had a big uptick of people using it, but then that number declined. We were getting Bitcoin for our content and we just didn’t understand it. I didn’t understand it. To me, it was like someone paying with Apple Shares for a cup of coffee. 

That’s the fun of working with all these blockchain ecosystems now. We have companies hit us up all the time to accept their payment coin, but that’s not really how it works. We provide our content as an ecosystem – as far as payment solutions there’s nothing better than accepting Visa/Mastercard.

 In 2016, we started investing time and energy to go about leveraging the value of our digital asset, our content library. 

The first company we talked to was Decent. The ability to aggregate people’s content they’ve provided to us and provide them a record using blockchain to show that when content is being broadcast helped establish transparency. 

what is decent dct

In an unregulated Internet, having a blockchain record allows us to give our partners their ability to see when we’re aggregating their content for royalties and compensation, helping increase trust. We weren’t looking to accept Decent as a payment solution. This was purely an internal solution for accounting and records. 

The second company in the blockchain space we got involved with was Ara Blocks, to help us in putting our own content out there on a Video On Demand basis. We come in from this in a few ways, one was aggregating content in the premium membership. The second one was to allow content to be individually smart contracted and allow people to pay with Ara. 

Ara blocks

The third company we want to do involves non-fungible tokens (NFTs) for Naughty America and content. We’re going to be utilizing some form of blockchain to track the content. People coming into Naughty America can buy NFTs that are tied to specific pieces of content. 

What are some of the largest technical challenges the adult entertainment industry faces?

For us, it’s always trying to find creativity and how to create a more entertaining and memorable experience with whatever medium we’re using. 

That’s what’s interesting about what we’re doing with these holograms. Our current challenge is finding out how to make the next best hologram out there. Holograms are the new tech for media, along with other advanced forms for entertainment. For example, I’m anticipating Netflix to get into video games. 

An example of the Naughty America holograms.

An example of the Naughty America holograms. Source: Naughty America

You’ll see media companies focused on making better content, then utilizing something like the blockchain to syndicate that content. 

Naughty America hologram in action.

Naughty America hologram in action. Source: Naughty America

Thank you!

Adult entertainment and blockchain make as good a pair as any content site and blockchain. As the conversation about blockchain’s practical uses in any environment heat up, companies like Naughty America are taking the discussion beyond pure theory. Blockchain for adult entertainment may end up being the successful data point that other media sites can leverage to make the most out of their content. 

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Halsey Minor’s VideoCoin is Coming for a $30 Billion Industry

VideoCoin debuted its blockchain-powered video infrastructure platform dubbed the VideoCoin Network this week, along with the listing of the native VID token on KuCoin and Beaxy cryptocurrency exchanges. This launch enables VideoCoin users to live stream video content, as well as be compensated for hosting the streaming services.

We got a chance to interview VideoCoin Founder Halsey Minor on what this announcement means for the video streaming industry, obstacles his team faced in the past few months, and a few subjects off the beaten path such as Facebook Libra. Halsey Minor borrows from an amalgam of unique high-octane entrepreneurial experiences to pioneer yet another industry. Minor started one of the world’s largest media publications (CNET), co-founded one of the most successful cloud-based software companies (Salesforce), founded a cryptocurrency exchange (Uphold), and founded a virtual reality company that created the first live-stream 360-degree virtual reality camera (Live Planet).

“We built the VideoCoin Network from the ground up as a next-generation solution to allow anyone to stream video using our blockchain-powered video infrastructure platform,” said Devadutta Ghat, CTO at Live Planet – strategic services and technology provider to the VideoCoin project – and Principal Architect at VideoCoin Network. “I’m thrilled to officially unveil the VideoCoin Network today, marking a major milestone on our journey to revolutionizing the multi-billion dollar video streaming market.”

This release consists of several important components including:

What stands out about this launch is that this is the first blockchain project to integrate a third party fiat payment processor, underpinned by a consortium of banks. The model is optimized to enhance the utility of the VID as a reputational staking token that powers the network and ensures the most qualified network operators are serving customer needs.

Additionally, prior to the launch, the VideoCoin team burnt 66% of its total token supply to allow them to focus on creating a sustainable token staking mechanism. 


This news comes on the heels of the debut of the Blockchain Virtual Reality (VR) Network (BVRN), the first VR network built specifically for the blockchain industry. The Network will feature in-depth and engaging VR programming from top blockchain industry influencers such as theBad Crypto Podcast, Crypto Trader, Boxmining, BLOCKTV, and us. This partnership boasts a combined global audience of half a million blockchain enthusiasts, all shot with the Live Planet VR System


This first customer use case of the VideoCoin Network is harnessing the power of blockchain to make 4K stereoscopic 3D video cloud processing more efficient, less expensive, and more secure. 


“We are thrilled for the launch of the VideoCoin Network, but more importantly, we’re excited for the future,” said Halsey Minor, CEO of Live Planet. “Video is fundamental to the human experience. It’s the way we connect, the way we learn, the way we express, the way we grow. As such we believe this experience should be in the hands of everyone, and not in the control of a few. Decentralization of video infrastructure through the VideoCoin Network is how this will happen.”

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Security, Privacy, and VPNs: The Importance of VPNs in Cryptocurrency

If you’re experienced in cryptocurrency and the Internet at large, chances are you might be somewhat familiar with the concept of VPNs. 

Many people who have used cryptocurrency exchanges have used a VPN at some point to secure their internet connection. Since there is a lot of money floating around in cryptocurrency markets, organized crime soon follows. 

It comes as no surprise that gaining access to someone’s cryptocurrency account and wallet can be very lucrative for criminals – hackers are very keen on getting their hands on your valuable login details and wallet information. 

Luckily, there are some relatively simple safety measures you can implement to safeguard your digital currency transactions. One of these safety measures is the use of a VPN. In this article we’ll discuss for whom a VPN could be wise and how to compare VPN providers to find one which fits your needs.

Getting a VPN for Cryptocurrency is Paramount for Secure Transactions

A VPN can be a vital piece of technology, particularly when using public Wi-Fi networks. A VPN creates a secure connection between you and the rest of the internet, encrypting all your data traffic in the process. How does it work exactly? By installing a VPN application on your computer, tablet or smartphone, you can connect to special VPN servers.

 Most VPN providers have thousands of servers across the globe. When you connect to such a VPN server, a secure connection is established. The VPN encrypts all your data and internet traffic, sends it to the VPN server, and from there a connection with the rest of the internet is established. 

Public networks are notorious for their security flaws, and experienced hackers generally have no issues intercepting your traffic or breaking in on your device when you’re connected to a public Wi-Fi network. Unless you use a VPN that is, because the encryption of most modern-day VPNs is incredibly robust. 

Even with the fastest supercomputer in the world, a hacker would need thousands of years to crack a VPN’s security, since most VPN providers use 256-bit encryption these days. Where a skilled hacker would normally have no issue accessing your device and intercepting your internet traffic, a VPN makes sure hackers are unable to access your device through the network. If they do manage to intercept any data, the data is rendered useless to them because of the heavy encryption; the data is completely unreadable to them as it is one big encrypted mess. 

This also goes for your internet service provider by the way. Normally they see everything you do online, but when you use a VPN, your internet service provider cannot monitor your online activities anymore due to the encryption. And the good thing is, to you as a VPN user, nothing really changes. 

The VPN software encrypts all traffic you send and receive, but you don’t notice this at all. The VPN simply runs in the background, while your connection is far more secure and you can use the internet as you would normally do.

A VPN offers additional privacy 

A VPN is also a great tool for privacy since it hides your IP address for the outside world. Normally, the rest of the internet recognizes and identifies you based on your personal IP address. 

When you connect to a VPN server, you are appointed the IP address of the VPN server instead of your own IP-address. Governments, hackers, the websites you visit, online marketeers; they will no longer be able to link your activities to you as a person through your IP address. This gives you some privacy and anonymity when browsing, also on crypto exchanges.

A VPN also serves as a tool for internet freedom

The internet is not freely accessible everywhere in the world. Based on your geographic location, various websites, crypto exchanges, streaming services or social media could be inaccessible. 

This phenomenon is called geo-blocking, and it’s a form of online censorship. By connecting to a VPN server in a different country, you can access the internet as if you were physically in that country. 

So, if for example a certain website is blocked in your country, you can connect to a VPN server in a country where that website is in fact accessible. When you subsequently try to access the site, you will no longer be blocked because you are using a foreign IP address which is granted access. 

Choosing a VPN suited to your needs

When you are in the market for a VPN service, or want to objectively compare VPN providers, a bit of research does not hurt. A couple of key aspects to consider when adopting a VPN provider are the following:

Safety and privacy: For starters, you need a VPN provider that offers solid encryption protocols and which doesn’t keep logs (meaning the provider does not store some of your online actions when you are connected to the VPN servers).

Speed: One known problem when using a VPN connection is the loss of speed since your data is encrypted AND travels through an additional external server. Since internet speed can be vital when it comes to flash trading, choosing a VPN with fast servers is a must. 

User-friendliness: The VPN application has to be manageable and simple. Furthermore, the VPN provider has to offer quality technical support when issues arise. 

Server network: The VPN provider you choose should ideally have a large and a diverse network of servers in countries and regions, offering speedy connections without compromising the performance. 

The above article is a sponsored post that meets our editorial guidelines.

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