Week in crypto, 04/02/2019 – 10/02/2019

In this weekly feature, Incenti gives a synthesis of the prominent developments in the world of crypto, blockchain gaming and related areas that caught our attention during the previous week.


General crypto news

In a Twitter thread also accessible to non-technical audience, protocol engineer for PegaSys Cem Özer gave a high-level overview of Ethereum 2.0, and particularly, its first phase that is referred to as the Beacon Chain. He noted that the research phase for the first phase was mostly complete and it was hoped to be launched this year. Ozer also discussed the state of progress of the other two phases: shard chains without computation and sharded chains with a shared virtual machine, which would enable distributing computations among shards.

In a potential sign of the growing maturity of the blockchain community, a major scam attempt involving a fake Bakkt website failed to deliver its perpetrators any funds at the type of writing.

Bakkt is a not-yet-launched project involving Bitcoin futures with physical delivery. The wake website claimed that the platform would launch on March 12 and announced a second investment round for all interested in contributing. The address to which they were supposed to send BTC features zero transactions at press time.

Outside observers may find a lot of weird phenomena at cryptocurrency markets. It is enough just to point at projects such as Tron and Bitcoin SV having higher market capitalizations than Cardano. Nonetheless, at least as far as the most important crypto asset, BTC, is concerned, a recent publication by reputable researchers may suggest that it is becoming a more mature financial asset.

Scientists from the Institute of Nuclear Physics of the Polish Academy of Sciences (IFJ PAN) in Cracow have recently published a paper in the prestigious journal Chaos: An Interdisciplinary Journal of Nonlinear Science analyzing BTC prices from 2012 to April 2018. Their analysis suggests that after the first two years in the period under analysis, BTC prices started showing the same features as more traditional financial assets. These features are rates of return describable by the inverse cubic law, the absence of correlation between the signs of returns, the reluctance of the market to change trend, and multifractality. The pre-print text of the paper is available on arxiv.

The potential major caveat about this study may be that it focused on a multitude of very short time periods, and that the massive cycles of price increases followed by dramatic downturns still make BTC suspect. However, this may stem not from the problems of BTC market functioning but from the very high uncertainty associated with the asset itself.

 

Blockchain adoption

Recently, the blogging social network Reddit launched an experiment with the so-called ‘Donut’ tokens in the r/ethtrader subreddit. The idea was to reward the users with most Reddit karma received for posts and comments. Initially, donuts were supposed to be tracked in a centralized database with a bridge to an ERC20 contract on Ethereum.

Last week, Reddit admin u/internetmallcop announced that the project could now switch to tracking donuts on an Ethereum smart contract directly. The contract would also take over Reddit’s responsibilities for handling the donuts, such as issuing new Donuts to users weekly. If the experiment ultimately succeeds, Reddit will become the first major social network to meaningfully adopt smart contracts.

One of the most promising economic development-promoting ideas may have seen one of its first tangible steps forward thanks to blockchain technology.

In December 2017, Overstock’s Medici, Inc. and Hernando de Soto created a joint venture to bring to life de Soto’s groundbreaking ideas about how to help the poor in developing countries by better protecting their property rights through blockchain technology.

De Soto’s key insight is that many of the poor people in the developing world are struggling not because of global capitalism (as many believe) but because of their lack of the capacity to participate in it. The legal systems of many countries make it too cumbersome for the poor to define and protect their titles to land and other assets. The blockchain can obviously help better reflect those rights at a much lesser cost and minimizing the role of potentially corrupt officials.

Last Monday, Medici Land Governance signed a memorandum of understanding with the municipality of Tullum in Mexico with a view to develop a blockchain-based property rights register for a defined zone of the municipality. The core idea is to reflect the real distribution of the property rights and to create procedures for automatic administration of transactions.


Regulatory

The Bitcoin ETF saga has long attracted attention of people within the blockchain community and until recently, has been a major driver of cryptocurrency market swings. The reason for this is that ETFs may finally allow institutional investors to enter cryptocurrency markets in a significant manner and perhaps help mitigate their wild fluctuations and bring more liquid capital to the space.Hence, it may be a reason for optimism that U.S. SEC commissioner Robert J. Jackson admitted that he believed that there would eventually be an ETF that would satisfy the SEC’s standards for approval.

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