Blockchain in Logistics Industry Will Improve Transparency, Enhance Process Accountability

Blockchain in Logistics Industry Will Improve Transparency, Enhance Process Accountability

Communication flow and logistics is an essential aspect of human existence

which forms the backbone of the transfer of goods, services and value. As international trade and logistics continues to expand, more efficient methods are being developed to enable effective service delivery and value transfer. However, Blockchain technology is bringing another dimension to disrupt the logistics industry in areas such as transparency and efficient tracking.

A globally significant industry

John Monarch, CEO at Shipchain, notes that the logistics sector employs the most people in the world. He explains that as this sector expanded over millennia, it has required innovation to scale and sustain practicality for the growing human population. This is happening again at the time of writing, with the fourth industrial revolution.

Monarch tells Cointelegraph:

“Connected devices revolving around the Internet of Everything (IoE) need a higher level of security. Blockchain technology is a matchless solution in this regard because it provides the best protection through distributed ledgers, advanced encryption, smart-contracts and reduced intermediaries. As a result, this will tackle corruption, ransomware, theft, premium-fees and tracking issues.”

He concludes that once Blockchain networks begin taking their first steps on a mass-market level, they will save the international trade industry at least $50 billion per year. And upon maturity, Blockchain technology could save the logistics industry a whopping $500 billion annually.

The actual role of Blockchain

Blockchain professional Aleksandar Matanovic tells Cointelegraph that Blockchain technology will indeed work as a tool to improve processes by bringing inherent properties into the industry.

Matanovic says:

“As in many other industries, I don't see Blockchain as a tool to increase efficiency, there are much more efficient systems than Blockchain-based ones. I see it as a way to make systems more transparent, more robust and less dependent on intermediaries.”

The importance of effective tracking

The COO of BitLand, Christopher Bates, explains that one of the main issues with chain of custody is knowing when property changes ownership or custodianship. Bates uses a car’s history

as an example:  

“It is pretty important to know if a car has been in a major accident and has frame/structural damage, he says. “If there was an immutable accessible record that kept track of the car history, there would be no way a car salesman could sell a car that had been extremely damaged.”

Bates also explains that ownership of land has many problems affecting it around the world.  One of the most consistent problems is when a parcel of land is double or triple sold, meaning a person will sell land to multiple people with only one of the sales (if any) actually being legitimate.  In some places, land titles are kept on paper or are tracked by only a single individual.  In these cases, it’s often impossible to truly know the proper chain of custody, and individuals manipulate ownership records for personal gain.  

Blockchain will enable accountability

Given that shipping anything is a sequence of custody handovers, having an immutable record of chain of custody transaction makes it impossible to lose track of who is responsible for a piece of property during each handover.  Existing courier services often track packages along their route, but such methods are imperfect.

Bates says:

“The issue therein is that since they are mutable, shipment records can be hidden or erased completely to the detriment of the people at large. Governments are able to hide their black budget spending by erasing shipping records or preventing records from being issued at all. On the one hand, governments will argue this is for national security, but on the other hand, the taxpayers that are sponsoring these budgets deserve transparency in spending.”  

Blockchain technology combines chain of custody control with the transparency of immutable record-keeping.  This creates an ecosystem that deters malicious actors, as they will eventually become known due to system transparency.  Bates concludes by noting that anyone who claims to be in the decentralization movement should be extremely happy any time a government decides to implement Blockchain tech of any sort.  It means that government is moving towards transparency whether they know it or not.

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Kraken Down Nearly 48 Hours, Gives Engineers Time to ‘Rest’ Before Resuming Service

Kraken Down Nearly 48 Hours, Gives Engineers Time to ‘Rest' Before Resuming Service

Cryptocurrency exchange Kraken is still down nearly 48 hours

after the site initiated a system upgrade. Kraken engineers had estimated the downtime would only be two hours. Much like Gilligan’s three-hour cruise that went horribly wrong, Kraken users all over the Internet are raging over the downtime and asking difficult questions.

Beset by problems

Nearly all digital currency exchanges have faced significant growing pains in the last year, as the interest in cryptocurrencies has grown exponentially. Coinbase and Bitstamp have been overwhelmed with user traffic, leading to delays. Bitfinex has been hit by DDOS attacks and recently had to stop registration for new users because of overwhelming demand. Binance and Bittrex have also halted new user signups.

Still, Kraken has arguably suffered the most problems of all major exchanges. Users, including myself, have experienced multiple connection errors and extraordinary difficulties placing and cancelling orders. It’s sometimes necessary to refresh Kraken’s page 10-15 times before being able to execute an action. Numerous users have complained that Kraken posted their orders multiple times (after telling them their order failed initially), in some cases costing them thousands of dollars.

Upgrade to fix it all?

While many have encouraged users of Kraken to go elsewhere, it’s not always that easy. US users are particularly limited in the exchanges they can use, particularly with Bitfinex ditching them earlier last year. For certain altcoins, US traders may only be able to use Kraken to trade them against fiat. Likewise, Kraken is one of the only markets where US residents can long or short Bitcoin. Such users were delighted when, on December 15, Kraken announced a major upgrade to fix the site’s

usability problems:

“Kraken.com performance is extremely degraded and unreliable.  Clients can expect severe latency and difficulty interacting with all web and API services.  Requests will frequently timeout and fail.  At the moment, the only solution is to wait and try again later.

Next week we will be rolling out a major systems upgrade which should resolve these scaling and load issues.  The upgrade is long overdue and has been substantially delayed by the diversion of resources toward the protracted fire fighting effort required to deal with the last several months of unrelenting growth.”

Two hours, possibly longer

The upgrade scheduled for the third week of December was rescheduled twice, before finally commencing January 10 at 9 PM PST. The status page Kraken set up for the
upgrade stated:

“We are performing a system upgrade on Thursday, January 11 at approximately 5:00 UTC (Wednesday January 10 at 9 pm PT). Kraken services will be offline for about 2 hours during the upgrade, possibly longer.”

Over the next two days, Kraken has continued to update the status page, complaining of late starts and the upgrade progressing more slowly than expected. Finally, they announced that the upgrade was in its final stages, before then posting that “a number of issues” came up in their “final testing.” Kraken is not clear on why this “final testing” was apparently done on production servers. About one day after the two hour upgrade began,

Kraken posted:

“We are making progress on the few remaining issues but don't have a definite launch time yet. We intend to cancel stale (and possibly all) orders and pause liquidations upon resuming service. More details to follow soon. Thank you for your patience.”

It’s unclear exactly how this will work. The price of Bitcoin and altcoins has of course changed over the last two days, and nobody is quite sure how Kraken will keep people from losing money on long and short positions that might have been closed had the exchange been working properly. Most astonishing of all, about 36 hours after the upgrade began, Kraken apparently sent their engineers home to take a nap!

Kraken writes:

“We are close but rather than launch immediately ahead of the team passing out, we will push off a bit to get some rest and be able to better monitor systems and react to problems following launch. Unfortunately, this means several more hours of delay.”

At press time, Kraken is still down with no ETA for resumption of trading, and the exchange has not responded to our requests for comment.

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Jonas Schnelli Wants You to Run a Bitcoin Full Node

Jonas Schnelli Wants You to Run a Bitcoin Full Node

That's the maximum load some personal laptops will store.

It's also roughly the amount of space the bitcoin blockchain currently requires. These bloating storage requirements are a longstanding problem for the community's efforts to keep bitcoin decentralized. But Bitcoin Core contributor and maintainer Jonas Schnelli has spent the past few years trying to make full nodes easier to run for a wider audience despite this huge data cost – and in turn, make bitcoin more resistant to centralization.

With so much information to download, setting up a bitcoin full node currently takes days or even weeks. This issue was at the heart of bitcoin's years-long scaling debate. While increasing transaction capacity by raising the block size limit might have eased the network's steadily rising transaction fees, it also would have disqualified more users from running bitcoin's core infrastructure.

And even though the block size held steady, the pressures favoring centralization remain, because of the storage space and time it takes to set up a full node. Yet, developers argue that running a full node is the best way to use bitcoin (some even going as far as to claim that without a full node to validate bitcoin transactions themselves, users are just wasting their time on cryptocurrency). In this way, users take full advantage of all bitcoin's benefits, including censorship-resistance and the minimization of trust in third parties.

"It’s very important to run bitcoin full nodes. It's the main or at least a significant reason to use bitcoin," Schnelli told CoinDesk. "If we throw that away we lose one of the more interesting parts of bitcoin." Schnelli's particular focus is on making Bitcoin Core, the most popular bitcoin software implementation, more user-friendly, for people he calls "non-geeks." And he feels, perhaps, a stronger commitment than most to this cause,

saying:

"I think it’s our duty as developers to make it possible to run full nodes."

To be sure, you could argue that most of the 15,000 updates to the codebase implemented over the years are geared toward the same goal, making bitcoin more efficient and faster to download. Yet, Schnelli is specifically focused on the software's user experience, coming up with creative ways to make it easier for people to run these full nodes.

Bitcoin on the go

And Schnelli doesn't want those full nodes leashed to the places they were set up, such as a user's desktop computer at home or the office, where it can only verify transactions from one location. Instead, Schnelli wants bitcoin full nodes to be mobile.

"We've almost reached that goal," he said, adding that other developers have been helping him bring recent additions to Bitcoin Core – such the ability to load multiple separate wallets when starting the software – that would help bring full node mobility to fruition. Once all the pieces are in place, users will be able to securely connect smartphone wallets to their full nodes running from home. Further, Schnelli is developing a hybrid Simplified Payment Verification (SPV) mode, which allows users waiting for their full node to download to still use Bitcoin Core to validate and make transactions in the meantime.

With an SPV wallet, the user has some information about the bitcoin transaction history, but must rely on trusting other full nodes to ultimately verify transactions. This scenario is one many bitcoin developers would like to avoid, but it would only be used for the time it takes to download the full node. Depending on the hardware and internet speeds being used to download a full node, the process can take days, and sometimes, weeks – which is an "unacceptable user experience," Schnelli said. Hence the need for some kind of connection in the interim. And once the full node download is complete, the software switches back to the more secure full node.

Like Apple TV?

Another project Schnelli is getting started on, in an effort to cut down the time it takes to set up a full node, is building devices that already have a bitcoin full node downloaded and set up on them. This comes from the knowledge that users generally need to buy "dedicated hardware," which can cost a few hundred dollars, to run bitcoin full nodes.

Also the co-founder of hardware wallet Digital Bitbox, Schnelli is calling the project a "full node in a box." He hopes to sell those devices in the future. While unsure how much they would cost, he said they would save a lot of time. "You could have a black box similar to an Apple TV or router that you just plug in and it works," he said. There are similar full node-only devices on the market, "but not in a way that I think is useful," Schnelli said. "It's hard to get affordable hardware that syncs pretty fast," and building a "good" full node device requires knowing the ins and outs of the Bitcoin Core code.

BitSeed devices, for example, cost between $200 and $350. Schnelli said he thinks he can ship a product that slashes this cost, partly by doing the marketing required to attract a few hundred or thousand buyers. Schnelli envisions the "full-node-in-a-box" device as a computerized auditor someone would run in their home to ensure their bitcoin finances are in check. Less entertaining than streaming television shows on an Apple TV, but perhaps producing greater satisfaction in the long run. Jonas Schnelli image via San Francisco bitcoin developers video

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Bitcoin Eyes Consolidation as Price Flirts with $14K

Bitcoin Eyes Consolidation as
Price Flirts with $14K

Bitcoin's price is back around $14,000

and is eyeing a short phase of rangebound trading. Despite yesterday's bearish price action, the sell-off in the world's largest cryptocurrency by market capitalization seems to have come to a halt today. As per Coindesk's Bitcoin Price Index (BPI), bitcoin (BTC) found takers at $12,878.60 (price at 00:44 GMT) and moved to an intraday high of $13,773.34. Soon before press time, prices were at $14,090 levels – that's up around 9.4 percent from the 12-day low of $12,878.

The sharp recovery indicates the markets may have digested reports of a trading ban under consideration in South Korea. Further, investors may have realized that South Korea is unlikely to announce the move anytime soon, if at all. So bitcoin may have found a short-term bottom, but that doesn't necessarily mean the cryptocurrency is heading back to record highs, as fears of a Korean clampdown could remain in the air for some time yet. While, BTC could have a hard time seeing big gains in the short-term, the technical charts do point to consolidation ahead.

A chart would show:

  • Despite the bearish price action, BTC defended the acending trend line (drawn from Nov. 12 low and Dec. 22 low).
  • BTC caught a bid wave today after the bears failed to cut through the trendline support.
  • The 50-day moving average (MA) continues to rise in favor of the bulls.
  • A bearish crossover between the 5-day and 10-day MA, and the 5-day and 50-day MA (short term average cuts long term average from above).

Another chart would show:

  • The sell-off ran out of steam near the upward sloping 10-week MA (currently at $12,743)
  • The 38.2 percent Fibonacci retracement level of $12,573.88 acted as a strong in the last week of December. Further, last week's candle shows signs of bearish exhaustion near the Fibonacci level.

The bullish (upward sloping) 10-week MA, 50-day MA and the repeated bearish exhaustion near the 38.2 percent Fibonacci level of $12.573 indicates any dips below $12,000 are likely to be short-lived. That said, the bearish continuation pattern (rising wedge breakdown confirmed earlier this week) and the bearish MA crossovers listed above are likely to keep BTC bears in the game. Thus, in the short-run, cryptocurrency could have a hard time holding onto gains above $16,000.

The odds of a fresh sell-off towards $8,000 would improve if bitcoin spends next few days consolidating in the range of $16,000–$12,000. Such a move would allow the 50-day MA to top out (shed bullish bias). So, bulls need to capitalize on the successful defense of the ascending trendline seen in the last 24 hours. Bullish Scenario: A close (as per UTC) above the upward sloping 50-day MA, followed by a move above $17,174 (Jan. 6 high) before Monday could open doors for a rally to record highs over $20,000.

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Florida Bill Would Legally Recognize Blockchain Signatures, Smart Contracts

Florida Bill Would Legally Recognize Blockchain Signatures, Smart Contracts

A lawmaker in Florida has introduced a bill

that, if passed, would create a legal foundation for blockchain data and smart contracts in the U.S. state. House Bill 1357 introduces multiple stipulations that blockchain ledgers and smart contracts be treated as legally-binding methods of data storage – provided that such measures do not break any pre-existing laws or regulations.

Notably, the bill states that a "record or contract that is secured through blockchain technology is in an electronic form and is an electronic record," and confirms that a signature recorded through a blockchain also qualifies as a valid electronic signature. As a result of these qualifications, the bill outlines that, if a person uses a blockchain to secure interstate or foreign commercial ventures, it would not impact ownership rights. In other words, if someone used a blockchain ledger to store information, the bill would legally recognize that person's rights to that information.

Similarly, the bill states:

"A contract may not be denied legal effect or enforceability solely because: 1. An electronic record was used in the formation of the contract [and] 2. The contract contains a smart contract term."

If signed into law, the bill would make Florida the latest state to recognize blockchain records and smart contracts. Last year, Arizona passed a similar measure, with identical notes on confirming blockchain records as electronic records, as well as giving smart contracts legal force. A slightly different bill in Vermont, when passed in 2016, allowed for the use of blockchain-based data as evidence in court.

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Atomic Action: Will 2018 Be the Year of the Cross-Blockchain Swap?

Atomic Action:
Will 2018 Be the Year of the Cross-Blockchain Swap?

What if there were no exchanges to hack?

As a new generation of crypto users begin to invest in the technology, developers are growing concerned about its infrastructure. They've seen this happen before – new users enter the space attracted by big gains, then suddenly, a catastrophic failure, usually at the very exchanges designed to hold and custody those funds.

But out of adversity, inspiration is taking hold, with high-profile coders turning their focus to atomic swaps, a concept that claims to allow for the direct, peer-to-peer transfer of cryptocurrencies across different blockchains. In the place of the vulnerable exchanges we use today, the idea behind atomic swaps is that these large repositories of customer money could be rendered obsolete by code. And seasoned blockchain developers like Alex Bosworth believe this is all too necessary, especially given that users today need to effectively give up custody of their assets if they choose to hold funds on exchanges.

He siad:

"Putting users in control of their own private keys has the best aggregate track record for security despite individual cases of loss. Funds under centralized control on exchanges have led to the most massive security failures we've seen."

Andrew Gazdecki, CEO and co-founder of Altcoin.io, which recently launched a beta wallet for atomic swapping between crypto tokens, describes the problem in similar terms, arguing that users should be empowered to hold their own private keys (the alphanumeric strings that allow users to unlock, access and spend their funds) without relying on others.

"There are literally billions of dollars being held within these digital honeypots, and it's nearly impossible to find the perpetrators," he said. Early examples of atomic swaps technology emerged in various stages in 2017, and while there's disagreement as to the timeline they'll be available to the public, some believe 2018 will be their year. As Jameson Lopp, a BitGo software engineer,

recently tweeted:

"Nearly instant atomic swaps … are coming sooner than everyone thinks. Definitely not a year away, but mere months."

Atomic swaps already?

In some ways, atomic swaps are already here – depending on the kind of atomic swap you're looking to make. For instance, last year saw swaps between different blockchains built on similar code – the cryptocurrencies decred, litecoin and bitcoin – executed. Meanwhile, atomic swaps between cryptocurrency tokens on the same blockchain became more commonplace, with decentralized exchanges such as 0x and, as mentioned above, Altcoin.io, adding instant trades between tokens on ethereum compatible protocols.

Cryptocurrencies running on blockchains with much different codebases, though, must rely on purpose-built tools to facilitate these kinds of transfers today. Toward this goal, a tool for exchanging zcash for bitcoin called ZBXCAT was developed last year. Described by co-developer Jay Graber as the "walkie-talkie of payments," the tool will soon be accompanied by a simplified web interface.

Indeed, atomic swaps "could always be done manually," Graber said. However, because this requires a degree of technical skill, before atomic swaps see mainstream use, easier to use platforms will need to be developed. At the same time, Lightning Labs, a company devoted to promoting bitcoin's Lightning Network, recently conducted its first off-chain atomic swap on its test blockchain. Completed in November, the transaction saw litecoin and bitcoin swapped on an off-chain payment channel.

Off-chain hurdles

Off-chain atomic swaps of this type are highly anticipated since trading would be automatic, not reliant on the processing times of different blockchains, but the technology needed to implement off-chain atomic swaps – things like the Lightning Network and Raiden Network on ethereum – are still under development. Which is why some, like Lightning Labs CEO Elizabeth Stark, are less optimistic about cross-blockchain atomic swaps. Stark recently discounted the hype, writing on a development channel, "Anyone telling people that Lightning swaps will be ready in months doesn't know what they're talking about."

And in interview with CoinDesk, Stark said:

"There's still a good amount of infrastructure to build."

One website, swapready.net, provides a breakdown of how close each cryptocurrency is to supporting cross-chain atomic swap capabilities – and to date, there's very few that can interoperate. Mirroring Stark's sentiments, Philippe Castonguay, developer relations manager at 0x, which offers on-chain atomic swaps of tokens on ethereum, told CoinDesk that developers looking to create atomic swaps between vastly different protocols are faced with "a lot of challenges." The infrastructure needed to interface between bitcoin and ethereum, for example, is still in development, and "to make it even worse, these cross-chain platforms also need to solve some of the main problems other blockchains are trying to solve, such as scalability," Castonguay said.

Still optimistic

Yet, even with a lot a work still to do, many remain assured advances are close. Bosworth, whose work has focused mostly on developing applications for bitcoin's Lightning Network, for one, made his excitement about a new era public, tweeting: "The atomic age is coming, what cannot be swapped will be left behind." And Castonguay, whose work focuses on ethereum, also remains encouraged by the development happening within that ecosystem. Even if swaps between blockchains with different code bases prove cumbersome, he believes the blockchain could yield other solutions given the expansive capabilities of its code.

"Eventually the ethereum blockchain will be able to communicate with other blockchains," he said. "Once this happens, all the different coins from different blockchains will be representable on the ethereum blockchain." For example, if bitcoin and ethereum blockchains can communicate with each other in a trustless way, then users could have an ERC-20 bitcoin on the ethereum blockchain, pegged one to one with bitcoin on the bitcoin blockchain, he posited. Such short-term solutions, he thinks, could help advance the atomic swaps concept overhaul.

Castonguay concluded:

"I do believe it is possible that some blockchains might be able to interact with one another this year, but I think 2019 through 2021 would be a safer bet."

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Kodak announces its own cryptocurrency and watches stock price skyrocket

Kodak announces its own cryptocurrency and watches stock price skyrocket

Kodak stock jumps 60 percent after the surprise announcement

There’s a growing list of companies that have added language about blockchain

or cryptocurrency into their names and mission statements, and it makes sense. Companies that do so see their stocks rise in value afterward. The latest company to jump on this trend is, unexpectedly, Kodak, which just launched its own KodakCoin, a cryptocurrency for photographers. As soon as the news was announced, Kodak’s stock (KODK) jumped up, and as of this writing, its stock price is $5.02, a 60 percent gain.

KodakCoins will work as tokens inside the new blockchain-powered KodakOne rights management platform. The platform will supposedly create a digital ledger of rights ownership that photographers can use to register and license new and old work. Both the platform and cryptocurrency are supposed to “empower photographers and agencies to take greater control in image rights management,” according to the press release. The digital currency is meant to create a new economy for photographers to receive payment and sell work on a secure platform.

Kodak CEO Jeff Clarke said in a press statement, “For many in the tech industry, ‘blockchain’ and ‘cryptocurrency’ are hot buzzwords, but for photographers who’ve long struggled to assert control over their work and how it’s used, these buzzwords are the keys to solving what felt like an unsolvable problem.” There’s also a precedent for selling artwork or illustrations through blockchain technology, as the world saw with the Ethereum-based CryptoKitties. CryptoKitties features artwork drawn by Guilherme Twardowski, who drew every single cat and cat feature in the game.

But while Kodak’s proposed blockchain-powered platform and virtual coin sound good on paper, it’s not clear why the photography company needs to use blockchain to achieve its goals, rather than just create another social media platform instead. It appears that Kodak, like the other tea and vape companies that received media attention last month for making the abrupt leap to blockchain, could just be trying to capitalize on the current cryptocurrency mania. KodakCoin’s initial coin offering opens on January 31st, under SEC guidelines as a security token, and it’s open to US, UK, Canadian, and other investors.

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What you should know about North Korea’s new favorite cryptocurrency

What you should know about North Korea’s new favorite cryptocurrency

  • North Korea appears to have taken a liking to monero, the world's 13th largest cryptocurrency by value
  • Researchers found evidence of hackers creating a malicious piece of software that infected computers to mine monero and send it back to North Korea
  • Monero developers claim it's a super anonymous cryptocurrency that can help avoid capital controls

North Korea appears to have taken a liking to monero,

the world's 13th largest cryptocurrency by value. Earlier this week, cybersecurity researchers at U.S. firm AlienVault found evidence of a malicious piece of software that infected computers to mine monero and send it back to North Korea. Mining is the process of solving complex mathematical equations in order to verify a transaction using cryptocurrency; the miner gets rewarded in that cryptocurrency.

What happened?

AlienVault said it found evidence of malware that took over a person's computer and mined monero. The mined currency was then sent back to Kim Il Sung University in Pyongyang. North Korea has been hit by sanctions from the United Nations and by countries including the U.S. "Cryptocurrencies could provide a financial lifeline to a country hit hard by sanctions," the researchers said in a blog post. "Therefore, it's not surprising that universities in North Korea have shown a clear interest in cryptocurrencies." There have been other incidents of North Korean attackers mining monero. A group called Andariel took over a server at a South Korean company last year and used it to mine the cryptocurrency.

What is monero?

Monero is a cryptocurrency built on a different blockchain to bitcoin. The blockchain is the underlying technology behind cryptocurrencies. These blockchains are public ledgers of activities that show all the transactions on a network. But monero's blockchain is purposely made to be more obscure. It works by obfuscating the so-called wallet addresses that people are sending monero from, making it more anonymous.

Why is it attractive to North Korea?

The increased anonymity that the developers of monero claim exists could be a reason it has been so favored by North Korean actors. Monero's website also claims that it is "safe from capital controls" or measures that restrict the outflow of traditional currencies, much like the North Korean won. Given that sanctions have hit North Korea, monero could be an alternative currency. Also, the time it takes for a monero transaction to take place is 21 minutes. For bitcoin, this rises to more than an hour and a half, and on any given day could be several hours.

How big is monero?

Monero is the 13th largest cryptocurrency in the world with a market capitalization of $5.9 billion, according to Coinmarketcap.com, which tracks prices of cryptocurrencies. It's worth noting that Coinamarketcap removed some South Korean exchanges from the way it calculates prices on its website, citing the large divergence in price in the country. This caused the price of some coins on its site to show price declines earlier this week. One monero token was worth just over $378 at around 4:15 a.m. ET on Wednesday, Coinmarketcap data showed.

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Bitcoin ‘fascinating’ because perception of risk and the economy is changing, fund manager says

Bitcoin ‘fascinating’ because perception of risk and the economy is changing, fund manager says

  • M&G Eric Lonergan said that the bitcoin phenomenon was "fascinating" as it demonstrates a new kind of risk perception among consumers.
  • Bitcoin prices rose more than 1,200 percent over the course of 2017 but have fallen steeply since a peak of $19,343.04 in December, according to Coindesk data.

Bitcoin 'fascating' because of risk-taking, fund manager says

People are pouring money into bitcoin and other cryptocurrencies because they are more willing to take risks in a benign economic environment, according to a fund manager. "To me, the big issue in markets is actually we have been in denial as investors globally about how good things are," Eric Lonergan, macro fund manager at M&G, told CNBC on Tuesday.

"But what this is telling you on the ground is people's experience of economic conditions is actually a good one, and so they are willing to take a risk." Lonergan said that the bitcoin phenomenon was "fascinating" as it demonstrates a new kind of risk perception among consumers.

"Ultimately, they have an intrinsic value of zero, and people are willing to change their careers, they're willing to speculate… If you go out to a group of people now where there are more than two or three people present, bitcoin comes up and they ask all of us what's happening with bitcoin or some other cryptocurrency."

Bitcoin prices rose more than 1,200 percent over the course of 2017 but have fallen steeply since a peak of $19,343.04 in December, according to Coindesk data. A number of high-profile business figures and regulators have raised concern about bitcoin, and cryptocurrencies more generally, over their wild volatility and use in illicit activities.

J.P. Morgan CEO Jamie Dimon called bitcoin a "fraud" in September last year, but on Tuesday told Fox Business that he regretted those comments, adding that he is "not interested that much in the subject at all."

China has also taken action to clamp down on virtual tokens, and in 2017 moved to close domestic bitcoin exchanges. The introduction of bitcoin futures contracts by Cboe and CME last year led to optimism from experts hoping more institutional investors would start to participate.

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Jamie Dimon says he regrets calling bitcoin a fraud and believes in the technology behind it

Jamie Dimon says he regrets calling bitcoin a fraud and believes in the technology behind it

  • J.P. Morgan Chase CEO said he regrets calling bitcoin a fraud.
  • "The blockchain is real," Dimon tells Fox Business.
  • Dimon remains concerned about how "governments are going to feel about bitcoin when it gets really big."

Jamie Dimon speaking at the 2017 Delivering Alpha conference in New York

J.P. Morgan Chase Chairman and CEO Jamie Dimon is backpedaling a bit on his earlier criticisms on cryptocurrencies.
In September, Dimon called bitcoin a fraud. "I regret making" that comment, he said Tuesday on Fox Business. "The blockchain is real," Dimon added in the interview. "You can have cryptodollars in yen and stuff like that. ICOs … you got to look at every one individually. The bitcoin was always to me what the governments are going to feel about bitcoin when it gets really big. And I just have a different opinion than other people." ICOs stands for initial coin offerings, a controversial way some cyrptocurrency companies are raising funds. "I'm not interested that much in the subject at all," Dimon added in the interview.

Jamie Dimon: Bitcoin will eventually blow up; it's a fraud

Along with his earlier bitcoin is a "fraud" statement the executive also blasted digital currency investors last year. "If you're stupid enough to buy it, you'll pay the price for it one day," he said in response to a moderator question at an Institute of International Finance conference in October. It is noteworthy how the outspoken CEO repeated his positive stance on the technology backing bitcoin, the so-called blockchain. Blockchain technology eliminates the need for a third party intermediary by creating a permanent, open record of all transactions on a network. As a result a buyer and seller interact directly, while their exchange is recorded on the blockchain ledger.

J.P. Morgan Chase announced in October the launch of a blockchain-based system that will "significantly reduce" the number of parties needed to verify global payments, reducing transaction times "from weeks to hours." Royal Bank of Canada and Australia and New Zealand Banking Group are the bank's partners in the project, called the Interbank Information Network. The price of bitcoin declined 1.4 percent to $14,760 Tuesday, according to data from industry website CoinDesk. The digital currency is up more than 1,500 percent in the past 12 months.

Chuck Reynolds


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