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Nigeria SEC Freezes Crypto Proposals After CB Ruling

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The Securities and Exchange Commission of Nigeria (SEC) announced on Feb. 11 that it put on hold certain procedures until it coordinated with the Central Bank of Nigeria (CBN).

The move comes after the CBN issued a Feb. 5 circular regarding the legality of cryptocurrency in Nigeria. As a result, the SEC is halting processes connected to bringing people and products under the SEC Regulatory Incubation Framework.

In its Feb. 11 press release, the SEC insisted that its 2020 ruling regarding cryptocurrencies and their relation to securities remained sound. Furthermore, the SEC recognized the CBN’s concerns over the banking system.  The two bodies will work together in order to ensure order in both the securities and banking realms. As such, the SEC will reopen its sandbox when participants are able to work within the Nigerian banking system.

However, the SEC intends to continue working with fintech companies bringing new technologies to the capital markets.

The SEC declared on Sep. 14 that it recognized all cryptocurrencies as securities. At the time, the CBN did not explain how to regulate the banking side of the issue. Though analysts saw the SEC statement as positive for Nigeria, the effect on banking was largely overlooked by observers.

Nigerian Market Reaction

Nigerians reacted negatively to the news. Members of the crypto community in Nigeria stated that the move would just drive them to the P2P market and avoid banking altogether.

South Africa

Nigeria is not the only country in Africa tightening crypto regulation. In November, the South Africa Financial Sector Conduct Authority (FSCA) announced new regulations. Crypto holdings themselves were not touched. The FSCA required exchanges, brokers and advisors to register with them. 

However, the possibility of further regulation regarding tokens may be in the future for South Africa as well. After the Mirror Trading bitcoin ponzi scheme blew up in January, the FSCA has been calling for tighter regulation of cryptocurrency.

Will Kenya Adopt Bitcoin?

The possibility that Kenya will adopt bitcoin as a currency is a rumor that surfaced last week, though supposed quotes from Central Bank Governor Patrick Njoroge come from broken links. As in Nigeria, digital currencies are popular in part because of constantly depreciating currency. One thing that is sure, though, is that Kenya is among the top bitcoin maximalist countries on the planet. Kenya, along with Nigeria and South Africa, ranks high among bitcoin using nations, both in terms of Google searches and a Chainalysis report.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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James Hydzik is a finance and technology writer and editor based in Kyiv, Ukraine. He is especially interested in the development of regulation in the face of increasingly rapid technological change. He previously covered the CEE region for Financial Times banking and FDI magazines. An ardent believer in gut renovating eastern Europe one flat at a time, he currently holds more home renovation gear than crypto.

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Source: https://beincrypto.com/nigeria-sec-freezes-crypto-proposals-after-cb-ruling/

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Tether and Bitfinex hit with $18.5m penalty in NYAG case

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The New York Attorney General (NYAG) Letitia James has issued Bitfinex and Tether with an $18.5 million penalty after both parties settled an ongoing lawsuit.

Tether is a stablecoin that is pegged to the US Dollar, it has been under scrutiny for more than four years as a result of rumours that suggested it wasn’t entirely backed by USD, and that it had a role in manipulating the Bitcoin price in the 2017 bull market.

However, as previously mentioned to Coin Rivet, Bitfinex and Tether CTO Paolo Ardoino dismissed those rumours, adding that there was evidence to the contrary.

The settlement with NYAG includes a stipulation that restricts Bitfinex and Tether from offering services to New York residents, while it also states that the company has to become more transparent by submitting audits.

“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General James.

“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”

The price of Bitcoin immediately rose from a low of $45,800 to $49,000, quelling fears over continuation of a correction that has spanned over the past 48-hours.

For more news, guides and cryptocurrency analysis, click here.

Source: https://coinrivet.com/tether-and-bitfinex-hit-with-18-5m-penalty-in-nyag-case/

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Latest Bitcoin price and analysis (BTC to USD)

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Bitcoin is in the midst of a major correction from it’s all-time high of $58,500 following a failure to breach the psychological level of resistance at $60,000.

The world’s largest cryptocurrency is currently trading at $53,550 after temporarily taking out the $50,000 level of support.

The dramatic move to the downside coincided with a wider cryptocurrency market correction that led to a number of top exchanges like Binance suffering downtime.

Despite showing quite clear vulnerabilities in the short term, Bitcoin remains in a bullish posture on the weekly and monthly chart, that is until it begins closing daily candles beneath the $50,000 level.

BTCUSD chart by TradingView

Warning signs, however, are still there for Bitcoin. The 12-hour MACD has now suffered a bearish cross that resembles the cross in early January, while the sheer volume on this correction indicates a shift in the previously bullish sentiment.

If Bitcoin can continue its bounce and close Monday’s daily candle back above $55,400, it will likely go back to test its all-time high before the end of the week.

Much of it also depends on the economic situation around the world as lockdowns begin to ease coupled with the potential of increased interest rates in the United States.

For more news, guides and cryptocurrency analysis, click here.

Bitcoin pricing

Current live BTC pricing information and interactive charts are available on our site 24 hours a day. The ticker bar at the bottom of every page on our site has the latest Bitcoin price. Pricing is also available in a range of different currency equivalents:

US Dollar – BTCtoUSD

British Pound Sterling – BTCtoGBP

Japanese Yen – BTCtoJPY

Euro – BTCtoEUR

Australian Dollar – BTCtoAUD

Russian Rouble – BTCtoRUB

About Bitcoin

In August 2008, the domain name bitcoin.org was registered. On 31st October 2008, a paper was published called “Bitcoin: A Peer-to-Peer Electronic Cash System”. This was authored by Satoshi Nakamoto, the inventor of Bitcoin. To date, no one knows who this person, or people, are.

The paper outlined a method of using a P2P network for electronic transactions without “relying on trust”. On January 3 2009, the Bitcoin network came into existence. Nakamoto mined block number “0” (or the “genesis block”), which had a reward of 50 Bitcoins.

More BTC news and information

If you want to find out more information about Bitcoin or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.

Source: https://coinrivet.com/latest-bitcoin-price-and-analysis-btc-to-usd-113/

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VeChain Review: Blockchain Supply Chain Management

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VeChain is one of the foremost supply chain focused blockchain projects currently out there. They continue getting quite a bit of attention since their main-net launch from June 2018

This was the mainnet launch that saw them release their native VET tokens that have seen increasing volume across a number of exchanges. However, VeChain is not alone in its supply chain focus and there are a number of companies and projects that have launched since then

So, with so much competition, is VeChain still worth considering?

In this VeChain review I will attempt to answer that. I will also analyse the use cases for the VET token and its potential for eventual mass adoption.

What is VeChain?

VeChain is an interesting spin on the uses of blockchain technology. Started in 2015, it is focused on business applications, primarily in the logistics field through supply chain management that provides tracking, quality control, inventory management, and much more.

The mainnet for VeChain was launched back in June 2018, and the project has pushed forward strongly since, bringing many partners into the VeChain ecosystem. In fact, hardly a month passes without the project announcing a new partnership or business that’s adopting the VeChain technology.

VeChain Technology Stack
VeChain Entire Technology Stack. Image via VeChain

It has become a part of the Price Waterhouse Cooper incubation program, is working on a proof of concept with BMW and Renault, and has recently partnered with Australian winemaker Penfolds to provide proof of authenticity for their wines being delivered to China.

Unfortunately for investors all of these strong partnerships have had little impact on the price of the VET token,  which fell throughout 2018, failed to mount much of a recovery in 2019 and early 2020, and then dropped again following the March 2020 meltdown in traditional financial markets.

Also of recent concern is the December 2019 hack in which roughly $6.5 million worth of VET tokens were stolen. We’ll discuss below how the hack played out, and whether it remains a security concern at this time.

The VeChain project has continued to forge ahead nonetheless, bringing new partnerships onboard, starting new pilot programs, and growing in the business space. This hasn’t been reflected in the token price yet, but it does point to increased adoption, which should eventually be reflected in the token price.

Proof of Authority 1.0 and 2.0

VeChain runs on a Proof of Authority (PoA) consensus model that requires nodes by authorized before they can participate in blockchain consensus. Once a node becomes authorized it joins the pool of other authorized nodes and each has an equal chance of publishing new blocks and receiving rewards. Under this system the rich nodes have no advantages, and there is no requirement for nodes to compete with one another and use vast amounts of resources.

The PoA system also features efficient bandwidth usage, which leads to higher throughput for the network. This equates to a greater number of transactions per second and increases the scalability of the network.

Proof of Authority VeChain
Benefits of Proof of Authority at Vechain

Although PoA has obvious advantages, and the VeChainThor blockchain continues to operate efficiently and securely, there are remaining limitations to this consensus method. One of these limitations is an inability to prevent a node from manipulating the entire system when it has the right to add a new block.

However there are ways the blockchain can trace any misbehavior and use it as evidence against the node later. Additionally, as part of the family of Nakamoto consensus methods, PoA only gives us a probabilistic assurance that transactions are secure. This could leave the network vulnerable to large-scale network partitioning.

Because of these limitations the VeChain Foundation is working on the next generation of Proof of Authority, which they are calling PoA 2.0. This new version of PoA will give the network the stability and security needed to support the growing number of business use cases on-chain. According to the VeChain Whitepaper 2.0 the new PoA 2.0 will deliver:

  1. Absolute finality (or safety guarantee) on blocks and transactions;
  2. significant reduction of the platform’s risk of being temporarily disrupted, which will result in better stability of blockchain service;
  3. faster-converging probabilistic finality, which will result in faster transaction confirmation for applications.

Late in 2020 the VeChain project announced they were close to delivering the improved Proof-of Authority 2.0 and would launch on testnet in 2021. VeChain’s chief scientist Peter Zhou tweeted the following:

VeChain Tweet

VeChain Cheif Scientist Tweet. Image via Twitter

VIP-193 is also known as SURFACE and it is planned to improve the scalability of the VeChain network while also speeding transaction confirmations. The improved PoA implementation will give VeChain all the strong points found in PoW blockchains while also making the blockchain more robust thanks to a Byzantine Fault Tolerance (BFT) mechanism.

What’s more, Zhou has made it clear that the prototyping of VIP-200 is now complete. VIP-200 is being created to make it possible for the VeChain distributed ledger to reach BFT finality by allowing blocks to carry extra finality related messages.

VeChain Governance and VeVote

Recently VeChain has also updated its governance model in oder to meet the needs of large enterprises, regulators, and government while maintaining its ability to scale. The new system was released this past November 11, 2019, and it gives VeChain a flexible governance model that will allow for rapid changes when needed.

VeChain VeVote
Example of Recent VeVote & Overview of Mechanism

The revised VeChain Governance Charter includes the following changes to the Articles of Association:

  1. Specified the scope of fundamental subjects that require all stakeholder voting;
  2. Redefined the categories of stakeholders with voting authority as Authority Masternode, Economic X Node and Economic Node;
  3. Adjusted the voting authority model according to the new stakeholder categorization;
  4. Streamlined the all stakeholder voting procedure.

In addition VeChain also introduced the VeVote platform as a way to increase governance transparency. VeVote is a decentralized voting platform and was adopted by a Steering Committee vote of 5-2 on December 13, 2019. The approval of the VeVote platform has also opened it up for use in voting by stakeholders.

VeChain describes VeVote as follows:

The VeVote platform provides an immutable, transparent and decentralized platform for stakeholders to cast their votes on important decisions based on their voting authority. The voting is done via VeVote smart contracts and the result will be recorded on the VeChainThor blockchain.

As of February 2021 there have been three proposals voted on and passed by the community and 1 proposal voted on and passed by the steering committee. Two of the three stakeholder votes were for contests and the third was to postpone the 2nd VeChain steering committee election to June 30, 2021. The steering committee vote was to update the VeChain Foundation Governance Charter.

The updated charter included the following major changes:

  • Specified the scope of fundamental subjects that require all stakeholder voting
  • Redefined the categories of stakeholders with voting authority as Authority Masternode, Economic X Node and Economic Node
  • Adjusted the voting authority model according to the new stakeholder categorization
  • Streamlined the all stakeholder voting procedure

The Sync 2 Wallet

Anyone who’s been using the internet knows what a web-based application is, whether the purpose is ecommerce, communications, or simply entertainment. And thanks to the development of the modern web browser these web apps are accessible across all types of hardware devices and operating systems.

While we would like to think that blockchain dApps are just as simple the truth is the technology isn’t there yet. Blockchain dApps for users to use specific browsers or wallets to access them, and users may need to switch the wallet or browser being used depending on the hardware or operating system being used. It’s really inconsistent and inconvenient for users.

Add to this the need to manage the crypto assets necessary for the dApp and pay gas fees, not to mention the need for a certain degree of technical savvy that’s needed when using decentralized platforms. All of this awkwardness, cost, and complexity has kept dApps as they are currently implemented from reaching mainstream adoption.

VeChain hopes to change all this with the introduction of the Sync 2 digital wallet app. The Sync 2, which was released in its alpha version in January 2021, provides the missing pieces of critical infrastructure in enabling the true mass adoption of dApp technology.

Sync 2

VeChain expects the Sync 2 to revolutionize dApp usage.

Sync 2 frees users from the restrictions of browser type, hardware, and OS and makes using dApps as simple and intuative as using any web-based app. In combination with VeChain’s native fee delegation protocols, users will no longer need to manage crypto to pay gas fees. Instead, dApp owners or DaaS service providers can fund gas fees on a user’s behalf.

Sync 2 is designed to work with all mainstream web browsers (e.g., Chrome, Safari, MS Edge, Firefox, etc), allowing dApps to be accessed by ever-greater numbers of users

It can be installed as a local app on desktop or mobile device, or used simply as a web application with no installation requirement, providing maximal flexibility and consistent user experience.

Put simply — Sync 2 is the missing jigsaw piece that enables a truly seamless dApp experience, paving the way for the mass adoption of decentralised applications by removing all barriers to entry. A first for the entire blockchain industry.

VeChain Partnerships

VeChain recognizes the importance of having an established business and client base, and with that in mind has been very active in creating partnerships. Through the end of the second quarter of 2019, there are no less than 31 partners which VeChain is working on pilots with, any of which could lead to a breakthrough and wider adoption of the blockchain. And they continue adding new partnerships.

A few of these partners are Price Waterhouse Cooper, Walmart China, LVMH Group, NTT Docomo, and most recently Australia’s leading wine producer Penfold’s.

Onboarding of new partners and clients is handled quite smoothly by VeChain since they operate on a Blockchain-as-a-Service model, and set up all the infrastructure for clients, including any necessary customization. It’s this model that has allowed VeChain to partner with such a broad and diverse group of industries.

The partnership with PwC has given VeChain access to many companies across China and Southeast Asia and has been valuable in spreading the word about VeChain.

VeChain Partners
Only a small selection of some of the VeChain Partners

With LVMH, VeChain is developing a system that tracks limited edition luxury goods. Pirating of these types of products is widespread, especially in China and Southeast Asia. With LVHM’s broad offerings of luxury goods, this is a perfect partnership.

VeChain has also been working with DNV GL to increase the transparency of products from the factory or farm to the consumer. In this partnership, VeChain has developed a blockchain-powered digital assurance solution they’ve called MyStory.

Using this dApp consumers are able to learn about the story behind a bottle of wine from the vineyard, to the bottler, through distribution, and to their store’s shelves. All this is accomplished by simply scanning a QR code on the wine bottle.

Another valuable partnership is the one with Chinese automaker BYD, where VeChain has been working on a proof of concept for handling carbon emission imbalances. This partnership is working on building a dApp that will track and record the emissions data of millions of cars, buses, trains, and other vehicles onto the public VeChain blockchain.

Most recently Vechain has been active in adding hospitals and tracking infection risk management in connection with the COVID-19 pandemic.

Not surprisingly these partnerships are helping VeChain grow, although it does remain smaller than major players such as Ethereum and EOS, who have more highly developed dApp ecosystems, with greater offerings of games and other applications.

The VeChain Team

The primary driving force behind the adoption of VeChain and the VET token is the VeChain Foundation, an organization founded in Singapore which governs and maintains the project, its development, and promotion. The Foundation is governed by the Steering Committee, which is elected every two years and is currently represented by the project founders.

Sunny Lu is the CEO of VeChain and one of the founding members of VeChain. Prior to founding VeChain, he was CIO at Louis Vuitton China. He has over a decade of experience working for Fortune 500 companies in executive IT positions.

VeChain Team
From Left: Sunny Lu, Jay Zhang, Kevin Feng & Jianliang Gu

Jay (Jie) Zhang was the CFO at VeChain, and is also a co-founder of the project. Due to the hack that occurred in December 2019, which he accepted full responsibility for, he has reportedly stepped down from his role as CFO, although the VeChain website still lists him as the project’s CFO. Prior to working at VeChain he was employed at Deloitte and prior to that he spent more than a dozen years with PwC. He was responsible for the design of the VeChain governance framework.

Kevin Feng is a partner at VeChain and acts as the COO of the project. He came to VeChain with over 12 years of experience working at PwC. His expertise is in risk assurance and cybersecurity, and he was a driving force behind the development of PwC’s blockchain services.

Jianliang Gu is the CTO at VeChain, coming from TCL & Alcatel’s R&D center he has more than 16 years of experience developing mobile hardware and software. He has amassed over 100 patents in the mobile communication field.

VET and VTHO Token Economics

VeChain is the type of blockchain which uses a dual token economic model in order to avoid the cost of transactions increasing when the value of the token rises. In the case of VeChain, there is a VET token used for speculation on exchanges and governance of the blockchain. The VET token is also used for staking and the generation of VTHO tokens.

The VTHO tokens are used to pay for network transactions, with the default transaction fee equal to 21 VTHO ($0.006719 as of February 20, 2021). Users can increase the number of VTHO paid for a transaction in order to increase its priority on the network. VTHO tokens can be purchased from exchanges, or they can be generated by holding VET in a wallet.

Both tokens are drastically different in terms of the function they serve, total supply, and inflation.

By using a dual token model such as this the network fees are kept separate from the potential volatility in the price of the VET token, which in turn makes the blockchain more suitable for business and enterprise uses.

Users who choose to hold VET in a wallet will generate VTHO over time, which enables them to make transactions for free in essence. One side effect of this is that it should increase demand for VET as the network usage grows.

Besides generating small amounts of VTHO it is possible to generate much larger amounts by running nodes to help support the network. There are three types of nodes in use, and each requires a substantial amount of VET.

Authority Nodes

These nodes participate directly in consensus and require a minimum of 25 million VET. In addition, the owners of authority nodes must be able to prove they are able to make a significant contribution to the VeChain ecosystem as well as passing stringent KYC measures.

VeChain Masternodes
Benefits of Authority Nodes on the Network

Authority masternodes are awarded 30% of the daily VTHO usage.

Economic Nodes

There are three different types, and while they don’t participate in consensus, they do provide network stability. Economic nodes receive a portion of VTHO generated by a pool of 15 billion VET set aside for this purpose.

The economic nodes also receive VTHO based on their VET stakes. The three types of economic nodes and staking requirements are the Mjolnir Masternode (15 million VET required), the Thunder Masternode (5 million VET required), and the Strength Masternode (1 million VET required).

X-Economic Nodes

These are nodes that supported VeChain in its early stages of development. They receive the VTHO generated by a pool of 5 billion VET set aside for this purpose. It’s no longer possible to create new X Economic nodes.

The VET Token

VeChain conducted their ICO on August 17, 2017, raising 200,000 ETH with tokens priced at $0.0008 each or 1 ETH = 3,500 VEN. Note that I said VEN and not VET.

The original tokens were ERC-20 tokens, but these were swapped for the native VET tokens at the ratio of 1:100 after the VeChain mainnet went live on June 30, 2018. At the time the VEN token was worth $1.62, making VET tokens worth $0.0162 each.

The all-time high also occurred while the VEN token existed and was $8.28 on January 23, 2018. That would be equivalent to $0.0828 for VET. The VET token only ever reached an all-time high of $0.06044 on February 13, 2021.

VET Chart

VET Price Performance. Image via CMC

Price dropped following the swap to VET and dipped under $0.010 in August 2018, but recovered to trade between $0.010 and $0.015 until dropping again in November 2018. The all-time high for VET occurred during this period and was $0.019775.

Price remained below $0.01 until July 2020, although it nearly recovered that level in June 2019 and again in February 2020. Since July 2020 the VET token has been climbing strongly alongside the massive rally across nearly all altcoins. After hitting its all-time low of $0.001678 on March 13, 2020 the VET token has reached $0.057 as of late February 2021

Buying & Storing VET

There are a number of markets for the VET token as it is listed on quite a large range of exchanges. These include the likes of Binance, VCC Exchange, and LBank. There is strong volume on these exchanges which is more than I have seen for other coins of a similar market cap. While the trading volume for the token was once highly concentrated on just two exchanges that has changed and it is not actively traded on a number of exchanges, which helps with liquidity.

Taking a closer look at the individual order books it appears as if they are pretty robust. For example, below are the Binance BTC / VET order books. They are quite deep and there is a reasonable amount of daily turnover.

Binance VET
Register at Binance and Buy VET Tokens

Once you have bought your VET tokens you are going to want to take them offline and store them in a wallet. We all know the risks that come from keeping tokens on large centralised exchanges.

Given that these are the native VET tokens, you don’t have too much choice for storage. We actually have a post on the best VeChain wallets. Perhaps your best bet for storage ought to be a secure hardware wallet.

Traditional Competition

While the threats from blockchain projects are currently minimal, there are players in the traditional technology sector that do pose a real threat already.

One of these is IBM, who have partnered with the shipping giant Maersk to create a global shipping management blockchain platform. This platform has attracted great interest already and has nearly 100 companies on-board, including ocean transport companies, logistics companies, ports, and others.

IBM Maersk
IBM Digitizing Global Trade with Maersk. Images Source

IBM has also begun work with Walmart and Unilever to uncover new areas of the supply chain that can benefit from blockchain technology. With its technological dominance and global reach, IBM is a threat that can’t be overlooked.

SAP is also entering the blockchain logistics space and is working with shipping and pharmaceutical companies to create a blockchain-based supply chain tracking system. SAP is another huge global player with massive resource and an extensive customer base to draw upon.

The most recent addition to traditional competition is coming from the world-famous auto manufacturer BMW. It’s interesting to note that BMW was one of the early partners of VeChain.

BMW Partchain
BMW Part Chain overview. Image via BMW

It has plans to roll out its blockchain supply chain solution to 10 of its suppliers sometime in 2020. Named “PartChain”, it was designed to ensure data transparency and trace-ability for automotive components throughout the supply chain.

This will be beneficial in the complex supply chains employed by BMW, where components are sourced from multiple international suppliers. Eventually BMW hopes to create “an open platform that will allow data within supply chains to be exchanged and shared safely and anonymized across the industry.”  In the long-term they hope to bring tracking all the way to the raw materials used to create automotive components.

With all of that however VeChain maintains its lead in the space as of early 2021. There haven’t been any major developments reported from IBM, SAP, or BMW.

VeChain Opportunities and Threats

While VeChain is targeting several different markets, its core focus remains on the supply chain and logistics industries. It has also been developing its smart contract functionality and has its eyes on delivering Internet of Things solutions.

The focus on the supply chain industry makes sense, as this is a massive, multi-billion industry that can benefit immensely from the addition of blockchain technology.

VeChain has already forged several partnerships with luxury brands to develop blockchain tracking systems that will serve to maintain the authenticity of products, whether that be luxury handbags, premium wines, or the service history of automobiles.

One key to these tracking systems is the VeChain NFC chip. This tiny chip can be embedded in any product, and consumers are then able to scan products with their smartphone to confirm their authenticity. Counterfeiting of luxury goods is a huge problem globally, with some estimates claiming global counterfeiting affects some $1.2 trillion in goods annually.

Another area of strength for VeChain has been in the medical space. It’s tracking technology is now in use by a number of hospitals and other medical facilities. It is also making inroads into the food industry, as its tracking technology can be used to authenticate the freshness of highly perishable products such as seafood.

Oddly, the biggest threat competitively for VeChain is not other blockchain projects, although there is some competition from that direction, but rather from traditional companies.

In the crypto-space VeChain is up against competition from IOTA in the Internet of Things space, and from Waltonchain in supply chain management. But the adoption of these two projects remains low, and until we have a blockchain project that can scale a working case it isn’t likely there will be a leader in the blockchain space.

VeChain Development & Roadmap

There is no doubt that the VeChain team has been active making partnerships and rolling out updates, but how much of these work is actually reflected in the code?

Given that VeChain is an open source project it may make sense to go into their public code repositories. This can give you a good idea of just how much work is being done on the protocol.

Hence, I decided to dive into the VeChain GitHub and take a look at the coding activity in their repos. Below is the commit activity on two of their most active repos over the past year.

VeChain GitHub
Commits over past 12 months for Select Repos

As you can see there has been a fairly low level of activity. This is below average for some of the other projects that I have covered. There are a further 35 repositories out there although these also have low levels of activity.

Looking forward, there are quite a few things that one can look forward to. While there is no official roadmap that has been laid out, you can glean some information from this blog post.

For example, the developers are actively working on cross chain interoperability of VeChain. They are currently still working on “technical preparations” for this technology. This interoperability could no doubt increase the adoption of VeChain.

Then, there is further studies that are being done on the eventual implementation of anonymous transactions. This will be through the use of Bulletproof technology that has already being popularized on the likes of Monero (XMR). Of course as of February 2021 the most highly anticipated upgrade to VeChain is the launch of PoA 2.0.

If you want to keep up to date with the project development then you should keep your eyes on their official blog as well as their Twitter account.

Conclusion

There’s no doubt that VeChain has been one of the most successful blockchain projects in terms of generating partnerships. With pilot projects ongoing for nearly 3 dozen companies VeChain is beginning to see some successes. If it can build on those it could see increased adoption.

The project is well-thought out, with good governance, and a unique economic model that works very well when taking into account the needs of large organizations and enterprise customers. It also hasn’t faced the scalability issues common at many blockchain projects, although that could be due to lack of adoption.

It’s also been able to successfully get past the December 2019 hacking issue, which could have been a major concern for the VeChain community.

With all the successes VeChain has had, there is still the threat of competition faced from large traditional technology companies such as IBM, BMW,and SAP. Investors are understandably worried that VeChain will be buried by these mammoth companies. The VET token has been able to make strong gains during the altcoin rally of 2021, but if VeChain can’t establish a dominant position in the logistics space soon investors could lose their optimism for the project.

The coming year will be a crucial one for VeChain. If it can get PoA 2.0 launched it will have the means to attract more high-profile clients. It remains ahead of the major traditional companies working in this space, but maintaining that momentum will be key to keeping VeChain in the lead.

Featured Image via Fotolia

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

Source: https://www.coinbureau.com/review/vechain-vet/

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Terra (LUNA) Review: Programmable Money Protocol

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Price volatility in cryptocurrencies is well known by anyone involved in the markets and ecosystems that have been created by the invention of the blockchain and cryptocurrencies.

Because of the set issuance schedules and speculative demand nearly all cryptocurrencies see wild price fluctuations. This price volatility has been a hinderance in gaining adoption for cryptocurrencies as a medium of exchange or as transactional currencies.

Very few people want to be paid in a currency that could decline by 10-20% or more in a 24-hour period. This problem is made worse when deferred payments are involved like mortgages or employment wages. Using the current volatile digital currencies in these cases is prohibitively expensive and unreliable.

Enter the Terra Protocol

There are some projects working on a resolution to this issue, and one of them is the Terra Protocol. It uses an elastic monetary policy to create price-stable cryptocurrencies that are pegged to a variety of fiat currencies. However the team recognized that price stability alone isn’t enough to foster wide-spread adoption.

Terra

The Terra Protocol is an innovative approach to cryptocurrency volatility. Image via Terra blog.

Currencies have well known network effects. A consumer isn’t likely to adopt a new currency unless there are a number of merchants accepting that currency, but at the same time merchants have little or no incentive to accept a new currency unless there’s strong customer demand to do so. This is one explanation for the lack of mainstream adoption of Bitcoin as a transactional currency.

The team at Terra Protocol believe that an elastic monetary policy is the solution to stability for cryptocurrencies, and that a strong fiscal policy can drive adoption of new cryptocurrencies. So they are creating an efficient fiscal spending regime, managed by a Treasury, with multiple stimulus programs competing for financing.

That is, proposals from community participants will be vetted by the rest of the ecosystem and, when approved, they will be financed with the objective to increase adoption and expand the potential use cases. The Terra Protocol with its balance between fostering stability and adoption represents a meaningful complement to fiat currencies as a means of payment and store of value.

What is the Terra Protocol?

Terra is a blockchain protocol that develops and supports stable payments and open financial infrastructures. The entire protocol is supported by a basket of seigniorage style stablecoins pegged to various fiat currencies. All are stabilized algorithmically by the native asset of the blockchain, the LUNA token.

Terra Luna System

Terra and LUNA make up the dual token ecosystem of the Terra Protocol. Image via CoinCodex.com.

By releasing fiat pegged stablecoins Terra is one part digital central bank. Another part of the system helps replace the current complicated and expensive payments chain that includes banks, payment gateways, and credit card networks. Terra is thus providing efficiencies for merchants and consumers, while continually improving on the infrastructure and tools of the ecosystem to eventually reach a transparent, distributed, credibly neutral payments system.

The project is already boosting mass adoption through its partner system CHAI, a South Korean payments gateway that already has over 2 million users. Using that as a springboard the team hopes to create a more widespread system by moving into other areas of Asia.

What is LUNA?

LUNA is the native token of the Terra network, used for staking to secure the network, governance, and collateralization for the price-stability of the stablecoins. LUNA is in essence the backbone and foundation of the entire Terra network and ecosystem.

LUNA Staking Rewards

The primary purpose of LUNA is to protect the network by locking value in the Terra ecosystem though a staking mechanism. Of course at the same time the holders of LUNA are exposing themselves to the price volatility risk of the LUNA token itself. Staking rewards for LUNA holders is a way to incentivize them to take on these risks and to hold LUNA long-term.

Staking LUNA

Users can stake LUNA tokens for rewards. Image via Terra blog.

Staking rewards are distributed first to network validators, who take a small commission for themselves before passing along the rewards to individual delegators. The size of those rewards are determined by the size of the stake. They also increase as the transaction volume in the network increases, since part of the staking rewards come from transaction fees.

As of mid-February 2021 31.77% of LUNA holders are staking the token and the return is 4.89% annually. The staking rewards come from transaction fees (or gas), taxes on transactions, and seigniorage rewards.

Gas

Gas is a fee that’s added to each transaction to prevent spamming of the network. The validator group sets the minimum gas price and any transactions with implied gas price above this minimum are rejected. At the end of each block the gas fees are released to the validators.

Taxes

The protocol charges a small tax that ranges from 0.1% to 1% on each transaction, but is capped at 1 TerraSDR. These are implemented as a stability fee and can be paid in any Terra currency. The taxes are also disbursed to validators at the end of each block.

Seigniorage Rewards

The group of validators can participate in the exchange rate oracle process and they collect rewards from the seigniorage pool each time their vote falls within the reward band.

Phases of LUNA

LUNA can exist in three states:

LUNA Bonding Phases

The three bonding phases of LUNA. Image via Terra blog.

Unbonded – Luna that can be freely transacted as a regular token, with no restrictions.

Bonded – Bonded LUNA is considered staked, and while it is bonded it continues to generate rewards for the validator and delegator it is bonded to. When bonded LUNA cannot be freely traded and remains locked in the ecosystem.

Unbonding – Undelegating or unstaking LUNA is also known as unbonding. The unbonding period lasts 21 days and during this time there are no staking rewards, nor can the LUNA be freely traded. After the 21 day unbonding period the LUNA is considered to be back to the unbounded state.

Validators

Terra is powered by Tendermint consensus, which relies on a set of validators to secure the network. Validators run a full nodes and work to provide consensus for the network. They commit new blocks to the blockchain and are compensated for their work by receiving rewards. They  also participate in the governance of the treasury and their voting influence is based on the total amount of their stake, including delegations.

Luna Validator

A list of LUNA validators for delegating at Terra Station.

Only the top 100 validators with the most weight will be active validators. If validators double-sign, or are frequently offline, they risk their staked Luna (including Luna delegated by users) being “slashed” by the protocol to penalize negligence and misbehavior.

Delegations

Delegators are LUNA holders who either choose not to become validators, or cannot for some reason. Delegators use the online Terra Station website to delegate their LUNA tokens to a validator, and in exchange they receive a proportional amount of staking revenue.

LUNA Staking Returns

Current staking returns as shown at Terra Station.

Because delegators share in a portion of the revenues from staking they also share in a portion of the responsibilities of the validators. That means when a validator misbehaves and is slashed, the delegators are also slashed in proportion to their stake. This is why delegators need to choose those they delegate to wisely, and should always spread their stake across multiple validators.

Because delegators are responsible for choosing validators they provide a crucial function within the network. Although it may seem like delegation is passive, it is not. Delegators need to remain aware of the actions of the validators they are delegating to, and be ready to switch whenever the validator is not acting responsibly.

Slashing Risks

Validators have a large responsibility in the network, and because the number of validators is limited to 100 there are liveness and safety guarantees to be met. Validators risk having their stake (and those of their delegators) slashed if they are unable or unwilling to meet these guarantees.

Luna Risk Reward

In addition to staking rewards there are some risks. Image via Chorus.one blog.

The three major slashing conditions are:

  1. Double signing: When a validator signs two different blocks with the same chain ID at the same height;
  2. Node downtime: When a validator becomes non-responsive or can’t be reached for more than a specified amount of time;
  3. Too many missed oracle votes: When a validator fails to report a threshold amount of votes that lie within the weighted median in the exchange rate oracle.

Validators are also responsible for watching their peers for misbehavior and one validator is capable of submitting evidence of misbehavior of another validator. If found guilty the misbehaving validator not only has their stake slashed, but they are also “jailed” for a period of time, or excluded from the validator set.

Tokenomics

Terra includes a number of stablecoins that are pegged to fiat currencies and are used for e-commerce payments. Terra network payments are posted to merchant accounts within 6 seconds, and there is a small 0.6% fee for using Terra. That compares quite favorably with the current credit card networks who have a 7-day settlement period and charge 2.8% or more in fees.

Terra Money

Terraform Labs created Terra Money. Image via Steemit.

As of November 2020 Terra processed $330 million worth of payments, which resulted in roughly $3.3 million in revenues. Those revenues are paid out as staking rewards.

Price Stabilization

Terra’s stable assets achieve their price stability by adjusting their supply according to fluctuations in demand. So, when a surge in demand causes a surge in the price of Terra stablecoins the system goes into action to apply balancing to ensure the asset doesn’t deviate from its peg. In the case of rising demand the supply of the token needs to increase as well to offset that demand. This is known as fiscal expansion. The protocol handles this by minting and selling Terra to increase the market supply of the token.

Terra is simply taking advantage of efficient market forces, where arbitrageurs step in to collect risk-free profits by purchasing the newly minted TerraSDR (currently worth more than the peg) for 1 SDR of LUNA and then selling it immediately for a profit. The LUNA basically collateralizes the newly minted Terra and the value is then recaptured. This mechanism is known as seigniorage and represents the profit gained from minting Terra (and it costs next to nothing to mint!).

Terra Stability

The mechanism for maintaining the Terra peg. Image via Terra blog.

If the price of Terra falls below the peg the supply of Terra needs to be reduced to maintain the peg. This is known as contraction and is handled by the protocol by minting LUNA and offering 1 SDR of LUNA for 1 TerraSDR when the Terra is worth less than 1 SDR. The falling value is thus absorbed by LUNA holders and as the Luna supply is diluted, the value is transferred from the Luna collateral to raise the price of Terra.

So, this is the basic mechanism used to maintain price stability in Terra. It is the use of an elastic monetary policy that reacts swiftly to price deviations and to supply/demand imbalances. While Terra does do a good job in maintaining a peg by exchanging value back and forth across currency and collateral it’s impossible to design a perfectly stable asset under all conditions, and the Terra protocol does have vulnerabilities.

Miner Incentive Stabilization

The price stability of Terra does require a base level of demand for the token to persist despite any extreme volatility. This is because the entire system fails if there is a drop in the total value of all LUNA that makes it impossible to hold the Terra peg. Terra maintains its price stability due to the stability in mining demand because the miners help to absorb the volatility through the price changes in LUNA.

This means miners must remain incentivized to stake LUNA during all market conditions. Staking has to be a long-term commitment to maintain the economy. However, there is inherent volatility in unit mining rewards, since miner reward is directly correlated with economic cycles of the Terra economy — the more transactions, the more you make in transaction fees.

Terra Incentive

Miners must remain incentivized to keep the economy functioning. Image via Terra blog.

When mining rewards increase in volatility miners become more reluctant to maintain their stake because it is increasingly difficult to determine if the staking will remain profitable or not since staking requires LUNA to remain locked for a long period of time, and the unbonding process takes 21 days.

The way to eliminate miner uncertainty is by ensuring mining rewards remain stable and unaffected by market conditions. So in addition to the price stabilization mechanism there is also demand stabilization for LUNA to help counteract any volatility due to macroeconomic trends in the Terra economy. Miners are more comfortable making a long-term commitment to staking if they know there is a predictable, stable profit rather than volatile rewards.

Powering the Innovation of Money

The Terra ecosystem gathers value through the conversion of fiat to LUNA. In turn, Luna collateralizes Terra because 1 TerraSDR can always be exchanged for 1 SDR of Luna. Luna also stabilizes Terra through the action of arbitrageurs who resolve price differences when they act to extract profits. This is because the profits being extracted are always in Terra and LUNA.

The balancing act involves exchanging value between currency and collateral. Those who invest in collateral (miners / Luna holders) are investing long-term in the network and agree to absorb short-term volatility in exchange for predictable mining profit and steady growth. Terra holders pay transaction fees to miners for them shouldering the price changes. This system continues to work if there is enough value in Terra or Luna to continue the momentum of the balancing act.

Terra Growth

More partners means more growth for the Terra network. Image via Terra blog.

As more businesses agree to accept Terra stablecoins the value of the entire network will grow. Over time fees will also improve. The value in LUNA is maintained by encouraging staking with stable mining rewards with assured growth.

Who are Terraform Labs

Because Mirror Finance was created by Terraform Labs and runs on the Terra Network it is important to know the background and who Terraform Labs is.

Terraform Labs is a company based in South Korea that was founded in January 2018 by Do Kwon and Daniel Shin. With $32 million backing from large venture capital firms such as Polychain Capital, Pantera Capital, and Coinbase Ventures they soon released the stablecoin LUNA.

Founders of Terra

The founders of Terra. Image via Coindesk.

They also created the Terra Network, which is designed to be a decentralized global payment system. It features minimal transaction fees and is able to settle a transaction in just 6 seconds. While it hasn’t gained traction yet in Europe and the Americas it does have over 2 million monthly unique users generating over $2 billion in monthly transaction volumes.

The bulk of these are through the South Korean payment platform CHAI and the Mongolia-based MemePay. The LUNA token is somewhat unique among stablecoins as it distributes yield back to its holders. That yield comes from the transaction fees, which are returned 100% to LUNA holders. You can learn more in the Terra Money whitepaper.

Terra Governance

Governance in Terra is provided by LUNA token holders and it allows them to make changes in the protocol when demonstrating consensus support for proposals.

Proposals

Proposals are made by Terra community members and are submitted along with a small initial deposit for the consideration of the entire Terra community. Some proposals can be automatically applied when voted to approval by the community. These include changing the tax rate, updating the reward weight, spending from the community pool, and changing the parameters of the blockchain.

Other issues like large directional changes or decisions requiring human involvement (manual implementation) can be also be voted on, through submitting a text proposal. Proposals are submitted on the network through creating a proposal, depositing some Luna tokens, and reaching consensus through a community vote.

LUNA Token History

The ICO for LUNA finished in February 2019 and saw the team raining $72 million by selling tokens for $0.80 each. That turned out to be profitable for early investors when the LUNA token was listed in September 2019 around $1.30. Subsequently the LUNA token went into a steady decline that took it eventually to its all-time low of $0.1199 in March 2020. The token regained strength, popping higher in July and August of 2020 and nearly reaching $0.60 in the latter rally.

LUNA Chart

The price history of LUNA. Image via Coinmarketcap.com.

December 2020 saw the token begin climbing higher in the altcoin rally that lifted markets broadly. As of February 19, 2021 the LUNA token is still tracking higher, and is trading at $6.39. That is off the all-time high struck the previous day at $7.52.

Mirror Protocol

The Mirror Protocol is a product that was launched in December 2020 and it creates digital representations of real-world assets. Initially it has been launched with representations of U.S. equities and ETFs, as well as Bitcoin and Ethereum. These digital assets can be traded on the Mirror platform, on Uniswap, and most recently on Binance Chain’s PancakeSwap.

Asset Tokenization

Tokenize anything with Mirror. Image via Medium.

Using the Mirror Protocol any user can easily buy and sell the synthetic assets, called mAssets, that are created on the platform. It’s also possible to effectively short any asset by locking in collateral and issuing the asset. Currently Terra’s UST is the only stablecoin being accepted as collateral in the system.

There is also a native token for Mirror called MIR and it acts as a governance token for the network and as a staking token. There is a 0.3% transaction fee in the Mirror exchange and MIR token holders receive 0.05% of those transaction fees.

If Mirror is successful, it will drive demand for Terra’s stablecoins. Higher demand for stablecoins is linked to increasing value of LUNA token via the process called seigniorage described further down.

Anchor Protocol

Anchor Protocol allows Terra stablecoin deposits to earn stable yield, powered by block rewards of leading proof-of-stake blockchains. It was created by the same team that created Terra because they believe that a reliable savings protocol is the key to the mass adoption of cryptocurrencies.

Anchor yield is powered by steady staking rewards from multiple PoS blockchains, offering attractive and low-volatile interest rates on stablecoin deposits.

Conclusion

At its core the Terra Protocol is acting like a central bank for digital currencies, providing stability via algorithms and smart contracts.

With a hybrid design that uses both stable coins and a native staking currency it not only provides a stable transactional mechanism, but also the ability for users to earn yields by holding the staking coin. The stake coin also serves to collateralize the reserves.

The design of Terra is quite innovative and different from the approach of many other stable coins that have chosen to peg with a fiat-collateralized mechanism. Terra’s stablecoins also benefit from improved decentralization by its mechanism. As long as there are sufficient transaction fees Terra can easily cover the costs associated with its decentralized mechanism and risk compensation.

Of course there is the risk that the transaction fees will dry up, which would cause the entire ecosystem to collapse, but with the more than 2 million users already transacting the protocol appears to have a solid base to grow out of. The team is already looking to expand from South Korea into other markets, such as Taiwan and Japan. If successful there’s little risk of the ecosystem collapsing due to a lack of transactions.

There was also some concerns over a single user or organization gaining control of 51% of the total Luna tokens, but with the market cap currently near $3 billion that risk is minimal.

The Terra ecosystem has also grown to include the Anchor Protocol and Mirror protocol, both of which serve to drive demand for the Terra stable coin and LUNA native currency, further securing the network and stabilizing the ecosystem.

Featured Image via Shutterstock

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

Source: https://www.coinbureau.com/review/terra-luna/

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