Coin News

Bitcoin and ether both surged this week, the former hitting a 28-month high and the latter reaching a key milestone by surpassing $20.

The DAO, a decentralized autonomous organization built on the Ethereum blockchain, has been the subject of a continued hack today that has...

The post The Ethereum Community Debates Soft Fork to Blacklist Funds in Wake of $50M DAO Heist appeared first on Bitcoin Magazine.

Ever heard of Ethereum? It's Bitcoin's experimental younger brother, and its community has just been shaken by a massive hack that stole more than $50 million from one of the biggest organisations in the community, The DAO. Here's what you need to know.

What is Ethereum?

It's a decentralised cryptocurrency.

In plain English, that means it's a digital currency that doesn't have any single central bank. Instead, its users collectively contribute computing power towards maintaining the network — like Bitcoin.

Ethereum differs from bitcoin in that it can run smart contracts — contracts that execute themselves entirely autonomously when certain conditions are met. An auction might automatically transfer deeds of ownership to the highest bidder after a certain time has elapsed, or father's contract might automatically send his son a set amount of money every year on his birthday.

While it's not on the same scale as Bitcoin, it's still pretty huge. It has ballooned in value over the last year, with a market cap of $1.4 billion, and one Ether (or ETH, a unit of the digital currency) is currently worth $16.76.

And what's the DAO?

DAO stands for Decentralised Autonomous Organisation, something anyone can build on top of Ethereum's platforms. They're organisations that operate according to predefined rules, and don't have a board of directors or leadership in the traditional sense.

In this context, we're talking about The DAO — a hugely successful organisation that manages its investors' capital. It has had huge amounts of money pumped into it by 11,000 people in the Ethereum community — more than $150 million. (Its funding was arguably the largest crowdfunding campaign ever.)

Collectively, they will decide how to allocate this capital, like a next-generation Kickstarter, or a crowd-sourced venture capital firm.

So what went wrong?

A vulnerability was discovered earlier this month that lets an attacker, in some circumstances, drain the contents of smart contract wallets storing Ether.

An attacker — we don't yet know who — took advantage of this vulnerability to attack the DAO's holdings early Friday morning, with devastating consequences.

They managed to drain 3.6 million ether from the organisation, while the community went into meltdown. The price of the digital currency plummeted, from record highs of $21.50 to just $14, before recovering somewhat.

The total value of the Ether taken, depending on whether you value it by the pre-hack highs or the mid-hack lows, varies between $50 million and $79 million.

Is the Ether gone for good?

Unlike some previous attacks on digital currency organisations, the attacker has been unable to make a swift getaway and launder their ill-gotten goods to evade being tracked. This is because the exploit moved the funds into a "child" DAO, where they can't be moved for 27 days, according to Ethereum founder Vitalik Buterin.

Meanwhile, the developer community is looking for ways to recover the Ether. Buterin and other developers have proposed a solution that will create a "soft fork" that prevents the attacker from being able to make valid transactions with the stolen Ether, followed by a "hard fork" that recovers the Ether and returns it.

Because Ethereum is decentralised, these changes can't be pushed through voluntarily: They have to be accepted by the network of users running Ethereum's software to take effect. In a soft fork, users running different versions are able to communicate and transact — but following a hard fork, the two versions are total incompatible. This means any decision to hard fork is a serious matter, and is debated heavily.

Does anyone oppose this solution?

There is actually significant opposition to the proposal to fork Ethereum to tackle the issue. It's DAO's fault, dissidents argue, and adjusting the code in response to this incident betrays the sanctity of the blockchain. "The attacker just used the code as it is written," said one community members of DAO's chat channel on Slack. "The people who wrote/audited the code need to be held accountable."

"The contract is law according to The DAO's terms of service, [the attacker] didn't break the rules of that, he used his prescribed access to take the funds he was allowed," argued another.

Ultimately, the decision will be taken by the community. The merits of both options will be debated, and if consensus cannot be reached, then the community may take the nuclear option — and split.

In such an occasion, only one version would ultimately survive — but it could damage the digital currency's credibility in the process.

Join the conversation about this story »

NOW WATCH: Mark Cuban explains why downloading Snapchat is a huge mistake

The bitcoin price fell sharply today but holds above $700 support. Sell-offs will happen and we look for support levels that will provide support for building the next wave of advance. This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a member? Join now and receive a $29 […]

The post Bitcoin Price Slides on Profit Taking appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

The Lightning Network is probably the most highly anticipated technological innovation that will be deployed on top of Bitcoin. The payment...

The post Understanding the Lightning Network, Part 3: Completing the Puzzle and Closing the Channel appeared first on Bitcoin Magazine.

In a revelation on Wednesday, the Bank of Canada – Canada’s central bank – said that it is developing a digital currency called CAD-Coin, in collaboration with Canadian banks and New York-based blockchain startup R3. In a private presentation during the payments industry conference Payments Panorama in Calgary, the Bank of Canada revealed it is […]

The post Canada’s Central Bank Is Working on a Blockchain-Based Digital Dollar appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

This story was delivered to BI Intelligence "Fintech Briefing" subscribers. To learn more and subscribe, please click here.

Some banks view fintech startups as a threat, and some see them as partners. But some are taking a third route: acquisition.

IDC and SAP surveyed 253 banking institutions, and one out of every five respondents said they mainly consider fintechs as potential acquisition targets. This would explain why so many banks are launching fintech acquisition programs.

Banks in different countries, however, view fintechs differently. Iberian banks (those in Spain and Portugal) are the most likely to view fintechs as acquisition targets, with 29% of respondents responding in this way. French banks, meanwhile, were the least likely at 14%.

Italian banks are the most likely to view fintechs as collaborators, as 47% of respondents see these companies as collaborators. The U.K. placed second at 40%, and France places last at 24%.

Furthermore, French banks were the most likely to see fintech companies as a threat, as 43% of respondents answered in this way, compared to just 20% in Italy and the U.K.

This desire for acquisitions in Spain tracks with data on Iberian banks. The country's second-largest bank, BBVA, has made several fintech acquisitions in the last few years. It purchased Holvi, a Finnish banking services provider for small businesses, in March of this year, and it acquired and absorbed U.S. banking startup Simple in 2014.

Spain's largest bank, Santander, is also investing in fintechs through the launch of a $100 million VC fund for fintech investments in July 2014.

Iberian banks' desire to acquire fintechs could lure venture investment to the region because it helps support the case for an exit strategy.

Regardless of which approach the banks take, there is no denying that we’ve entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.

No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages of the new fintech revolution.

The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes:

• Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks provide a valuable service, but online-only banks can offer many of the same services with higher rates and lower fees

• Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing much faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful

• Traditional Asset Managers vs. Robo-Advisors: Robo-advisors like Betterment offer lower fees, lower minimums and solid returns to investors, but the much larger traditional asset managers are creating their own robo-products while providing the kind of handholding that high net worth clients are willing to pay handsomely for.

As you can see, this very fluid environment is creating winners and losers before your eyes…and it’s also creating the potential for new cost savings or growth opportunities for both you and your company.

After months of researching and reporting this important trend, Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has put together an essential report on the fintech ecosystem that explains the new landscape, identifies the ripest areas for disruption, and highlights the some of the most exciting new companies. These new players have the potential to become the next Visa, Paypal or Charles Schwab because they have the potential to transform important areas of the financial services industry like:

• Retail banking

• Lending and Financing

• Payments and Transfers
• 
Wealth and Asset Management

• Markets and Exchanges

• Insurance

• Blockchain Transactions


If you work in any of these sectors, it’s important for you to understand how the fintech revolution will change your business and possibly even your career. And if you’re employed in any part of the digital economy, you’ll want to know how you can exploit these new technologies to make your employer more efficient, flexible and profitable.

Among the big picture insights you'll get from The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry:

• Why financial technology is so disruptive to financial services—it will soon change the nature of almost every financial activity, from banking to payments to wealth management.
• The basic conflict will be between old firms and new—startups are re-imagining financial services processes from top to bottom, while incumbent financial services firms are trying to keep up with new products of their own.
• Both sides face serious obstacles—traditional banks and financial services firms are investing heavily in innovation, but leveraging their investments is difficult with so much invested in legacy systems and profit centers.
• Meanwhile, startups are struggling to navigate a rapidly-changing regulatory landscape and must scale up quickly with limited resources.
• The blockchain is a wild card that could completely overhaul financial services. Both major banks and startups around the world are exploring the technology behind the blockchain, which stores and records Bitcoin transactions. This technology could lower the cost of many financial activities to near-zero and could wipe away many traditional banking activities completely.

This exclusive report also:

• Explains the main growth drivers of the exploding fintech ecosystem.
• Frames the challenges and opportunities faced by incumbents and startups.
• Breaks down global and regional fintech investments, including which regions are the most significant and which are poised for the highest growth.
• Reveals which two financial services are garnering the most investment, and are therefore likely to be transformed first and fastest by fintech
• Explains why blockchain technology is critically important to banks and startups, and assesses which players stand to gain the most from it.
• Explores the financial sectors facing disruption and breaks them down in terms of investments, vulnerabilities and growth opportunities.
• And much more.

The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry is how you get the full story on the fintech revolution.

To get your copy of this invaluable guide to the fintech revolution, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the fast-moving world of financial technology.

Join the conversation about this story »

Virtual currency advocates provided input to a North Carolina legislative committee Tuesday on a proposed rule to improve regulation of digital currency and blockchain related businesses. The Chamber of Digital Commerce, a trade association that promotes digital assets and blockchain technology, joined representatives of IBM and the Perkins Coie law firm in meeting with the […]

The post Bitcoin Advocates Weigh in on North Carolina Regulatory Bill appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

In what some may consider an incredible show of leadership and quick response while others may criticize as a dangerous precedent, Ethereum developers are proposing a soft-fork to be followed by a hard-fork. In a Critical Update regarding the DAO hack posted on Ethereum’s foundation website, Vitalik Buterin, founder of Ethereum, stated: “The development community […]

The post Ethereum to Hardfork, DAO to Be Dismantled appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

The Bank of England is planning to launch a fintech accelerator that "will work with new technology firms to help us harness FinTech innovations for central banking."

The Bank's governor Mark Carney hinted at a big announcement on fintech last month and Andrew Hauser, the Bank's executive director for banking, payments, and financial resilience, told a conference in April that central banks "can't afford to be Uber'd."

Hauser said at the time: "We need at least the technological capacity to run 24/7/365, even if the issue of whether we chose to use it is slightly more finely balanced.

"We need better data and analytics for people using our systems so that they can control their flows better." Hauser said the Bank of England is also looking closely at how it could potentially use blockchain technology in central banking.

Fintech businesses that get involved in the new accelerator will be invited to carry out "proof of concept" trials with the Bank. The BoE will then act as a reference for the firm in future if it is looking to drum up more business.

The BoE says it has "already carried out initial work in the areas of data anonymisation, cyber security and distributed ledger technology" and is now interested in looking at machine learning, data protection, and data analysis, among other things.

The central bank announced the new programme on Friday, saying: "In return, it will offer firms the chance to demonstrate their solutions for real issues facing us as policymakers, together with the valuable ‘first client’ reference that comes with it. With time, the accelerator will build a network of firms working in this space for the benefit of us and them alike."

A fintech 'reformation'

Governor Mark Carney was due to announce the new programme last night at the annual Mansion House dinner for top bankers in London. However, his speech was cancelled as a mark of respect after the killing of MP Jo Cox.

While Carney did not deliver the speech, the text of what he planned to say has been published on the Bank of England's website.

In it, Carney says:

FinTech has the potential to deliver more resilient financial infrastructure, more effective trade and settlement, and new ways to encode, share and analyse data.

For the financial sector, these could offer shorter, speedier transaction chains; greater capital efficiency; and stronger operational resilience. For consumers, they could mean more choice; better-targeted services; and keener pricing. For everyone, FinTech may deliver a more inclusive financial system, domestically and globally; with people better connected, more informed and increasingly empowered.

However, the Bank of England Governor says he does not think there will be a fintech "revolution" that will overthrow the hegemony of the banks but a "reformation." He says: "The balance of these forces may yield a third alternative – a reformation – a more diverse, resilient and effective system for consumers. One where large banks exist alongside new entrants who compete across the value chain."

Carney sets out a 5 point plan to help fintech startups get off the ground:

1. Give startups and fintech firms access to the central bank's payment settlement systems, currently restricted to 48 big firms;
2. Be open to startups looking to use the central bank's payment settlement service for securities and stock transactions;
3. Exploring the use of distributed ledger technology — first developed to underpin bitcoin, and known as blockchain — in its own activities;
4. Launching the fintech accelerator;
5. Taking a reasonable regulatory approach to the new sector: "FinTech should neither be the Wild West nor strangled at birth."

Carney concludes that: "With time, FinTech could mean a more open, more transparent, and more democratic global financial system." You can read the full text of the speech here.

Join the conversation about this story »

NOW WATCH: The most important question you should ask before hiring a financial adviser

Ethereum co-founder Vitalik Buterin has asked digital currency exchanges to “pause” ether and DAO activity following a hack of the DAO smart contract address. The DAO is currently being drained of ethers in a still-ongoing breach (at the time of publishing) to the unknown attacker’s ETH address. The ongoing hack and possible theft, deemed as […]

The post Breaking: “Pause Ether, DAO Trading”, Ethereum Founder Buterin Tells Exchanges appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

The value of digital currency Ethereum is spiralling downwards amid an apparent huge hack targeting an organisation with huge holdings of the currency.

It's now below $15 — down from more than $21 just hours ago.

The core Ethereum codebase does not appear to be compromised.

This is a developing story. Check back for updates or click here to refresh the page. 

What's going on? Ethereum is a decentralised currency, like bitcoin — but it's built in such a way that it also allows for decentralised organisations to be built on top of its blockchain (the public ledger of transactions), and smart contracts that can execute themselves automatically if certain conditions are met.

One of these organisations is the DAO — the Decentralised Autonomous Organisation, that controls tens of millions of dollars-worth of the digital currency. (Bitcoin news site CoinDesk has a good older feature explaining more about how the DAO operates here.) The DAO is currently sitting on 9.2 million ether, according to its web page, worth $134 million.

Early Friday morning, it appears to have been hit with a devastating exploit, with as-yet unidentified attackers draining appearing to drain millions of ether — with a theoretical value in the tens of millions of dollars.

One Ether wallet being shared by community members as a recipient of the apparently stolen funds currently holds almost 3.4 million Ether. At a current exchange rate of around $14/1ETH, that works out at a staggering $47 million.

However, the price is almost certain to continue to fall as the United States wakes up and news of the hack spreads. Community members are also working to see if it can be recovered in some way, although it's not clear whether this effort will be succesful.

DAO members are currently trying to work on a technical fix. But the decentralised nature of the DAO means there's no central authority that can simply flip the switch and make changes.

Here's what the apparent theft has done to the price of ether over the last few hours:

The news comes after a recent boom for Ethereum (as well as sister digital currency bitcoin). It only recently passed $20/1ETH, in a first for the network.

The apparent exploit used by the attackers was documented earlier this month. "Your smart contract is probably vulnerable to being emptied if you keep track of any sort of user balances and were not very, very careful," Peter Vessenes wrote in a blog post on June 9. It looks like we're now seeing this in action.

This is a developing story. Check back for updates or click here to refresh the page. 

Join the conversation about this story »

NOW WATCH: Switzerland spent $12 billion to build the world's longest and deepest train tunnel

Ethereum took a drastic dive this morning as news came in that the DAO smart contract address is being drained of ether in an ongoing and developing news story. Millions of ether are moving to an unkown address with some suggesting that it may be a recursive split hack. Griff Green, spokesman for slockit, the […]

The post Ether Price Plumets; Ethereum DAO May Be Hacked appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

The International Monetary Fund (IMF) has published an article in the Finance and Development magazine that looks at how Bitcoin and blockchain technology has the ability to rewrite the financial sector. Written by Andreas Adriano, a senior communications officer in the IMF’s communications department, and Hunter Monroe, a senior economist in the IMF’s monetary and […]

The post IMF Senior Economist Sees Bitcoin and Blockchain Helping Banks appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Zeiss releases a premium Google cardboard product, Magic leap partners with Lucas Film to bring the star wars universe to life, Bitcoin Spikes pretty big this week and overall for the year, Microsoft buys wand labs, IBM Watson becomes the brains of a car called Olli. All this on Crunch Report. Read More