(Page 126)

The driving force behind the cryptocurrency market is of course trade, and that trade takes place on the many cryptocurrency exchanges. We are going to have a look at some of the most popular exchanges in this three part series. Have a look below and see if you are trading on the right exchange.

Coinbase

Coinbase is located in San Francisco, California, and is a comprehensive platform that functions like an exchange, a digital wallet, and a range of tools traders can use to conduct their business. It is a very popular platform among beginners due to its simply design and ease of use. More advanced traders can use Coinbase’s sister platform GDAX (soon to be Coinbase Pro). With over 20 million people using it, it is considered to be one of the most prominent exchanges, and is valued at more than $1 billion. Having already partnered with companies like Overstock and Expedia, Coinbase has plans to expand into the Japanese market.

BitMEX

BitMEX is a cryptocurrency exchange based in Hong Kong, and processes around $2 billion worth of transactions every day. For better or worse, the platform is very reliant on Bitcoin, as all profits and losses made from trades are converted into Bitcoin. This means that even if a trader buys and sells cryptocurrency tokens other than Bitcoin, any eventual yields are dependent on the value of Bitcoin. BitMEX calls their unique system ‘leveraged contracts’, ‘futures contracts’ and ‘perpetual contracts’. Although the exchange is based in Hong Kong, it is registered in the Seychelles, which means it is subject to very little regulation.

Binance

Not constrained by a single location, Binance is a series of cryptocurrency exchanges spread out across several Asian countries. Although it only came into being last year, Binance already processes $1 billion worth of transactions every day. Rather than having a separate platform for advanced users, traders can switch between ‘beginner’ and ‘advanced’ modes when using the platform. What also makes Binance special is that it has its own cryptocurrency token called Binancecoin (BNB for short). Although BNB tokens are not a requirement for users of the platform, traders who hold BNB tokens receive a discount on transaction fees.

OKEx

Another exchange based in Hong Kong is OKEx. Processing over $1 billion worth of transactions every day, the exchange has announced plans to expand to the Maltese market. As with Binance, OKEx has its own token called OKB, and similar to Binance traders can get a discount if they hold OKB tokens in their digital wallet. As opposed to Binance, however, owners of OKB tokens also get the right to vote on company issues, and access to fiat and margin trading. One of the drawbacks of OKEx is the restricted areas. It is not possible for traders in countries like the United States and Hong Kong to use the platform.

Huobi

Huobi is another pan-Asian exchange, originally founded in China and now with offices in Singapore, Japan, Korea, Hong Kong, as well as the United States. The latter is interesting, as the platform is currently not available to US traders due to regulatory issues. Nevertheless, Huobi is divided into Huobi OTC, where users can trade fiat money for crypto tokens for free, and Huobi Pro, which is similar to the more advanced trading platform offered by Coinbase. Huobi is about to launch a cryptocurrency ETF called HB10.

Hackers are having a field day with the cryptocurrency market. Another South Korean cryptocurrency exchange has now been hacked. This time, it was Bithumb, which is based in the South Korean capital of Seoul. More than $30 million worth of cryptocurrency tokens has been stolen. This comes hot off the heels of the Coinrail hack that happened recently.

Bithumb grinds to a halt after the hack

The exact amount the hackers got away with, as reported by Bithumb, is $31.56 million. This comes out to approximately 35 billion won, which is the local currency. As a safety measure, the cryptocurrency exchange has stopped all deposits and withdrawals until the situation is under control. The exchange has also issued a statement saying that it would compensate all customers who lost part or all of their funds.

As with the Coinrail hack, the cryptocurrency market as a whole has suffered from this hacking incident. Right after the hack was reported, the value of Bitcoin fell by 2% down to $6,600. This is a continuation of the very bad year 2018 has been for Bitcoin, as well as other cryptocurrencies like Ethereum and Ripple. Bitcoin has not been able to progress much since its all-time 2018 low in February.

Cybersecurity expert says hacks are part of the cryptocurrency market

Wall Street Journal interviewed Yo Kwon, who is the the head of a cybersecurity firm specializing in blockchain projects. Kwon mentioned that cryptocurrency exchanges being hacked is bad for the industry as a whole. However, he also pointed out that because the hacks happen so frequently, it has pretty much become part and parcel of trading in cryptocurrency.

The reason why this hack is a bit different than the other is that Bithumb is one of the biggest exchanges in the world. As a matter of fact, it was the exchange with the highest trading volume this time last year. South Korea is, despite their tough regulation of cryptocurrency, the global leader in cryptocurrency exchange. Bithumb recently lost its top position to another South Korean cryptocurrency exchange called Upbit.

Hacking remains a huge problem in the cryptocurrency space

Altogether, cryptocurrency traders and investors have collectively lost more than $1.4 billion due to hacks over the past four years. Fortunately, there are organizations working on reducing the number of attacks. The Asia Securities Industry & Financial Markets Association (ASIFMA) is one of the organizations that have laid out a series of best practices for cryptocurrency exchanges.

ASIFMA reported that the “lack of due diligence and independent insight” were the main reason the hackers could gain access to the cryptocurrency exchanges. Because the industry as a whole is relatively young, many exchanges lack the experience it takes to prevent these kinds of hacks.Hopefully, as the market matures, these kinks will be ironed out.
What do you think can be done about the hacking incidents? And why are cryptocurrency exchanges especially vulnerable compared to other digital organizations? Leave your comments in the section below!

Educational material about cryptocurrency has already been introduced to several universities around the world, and it is now also possible to take a degree where you specialize in crypto-finance. Now, however, some are debating whether or not the future of cryptocurrency is so certain that it would be wise to start teaching it in schools.

From university to high school to…?

Among the American universities offering courses in crypto-finance is the University of California, University o Pennsylvania New York University and Stanford University. Countries like the United Kingdom has also begun offering the classes at places like Cambridge University for students studying finance.

Back in the United States, there has been an increase in demand from high school students that the teachers educate them on the world of cryptocurrency. So strong is the enthusiasm for this subject that the students are happy for it to be taught as a non-curricular educational session. CNN interviewed a high school teacher from New Jersey, who mentioned that cryptocurrency is now part of his Business and Personal Finance course.

Has the time come for cryptocurrency classes in schools?

As the trend only seems to go in one direction, the conversation has naturally fallen on whether or not schools should include cryptocurrency in their curricula. Nate Flanders, the owner of a cryptocurrency trading platform, notes how coding languages are becoming more relevant in today’s society. Studying the coding behind blockchain would, therefore, be very beneficial to students.

Flanders is not alone, as the CEO of Mandela Exchange also is of the opinion that coding should form a much larger part of a school’s curriculum than it does now. Some of the coding languages he thinks there should be more focus on including Java, C++, and Python. He does not believe the schools are far off. With there already being a movement to implement programming languages into school systems, it should only be a short step further to offer blockchain courses.

The volatility of the cryptocurrency market is creating uncertainty

One of the main factors holding cryptocurrency back is the extreme volatility of the market. Although Bitcoin has been around for a decade, it is still considered to be in its infancy. And it is easy to see why. With the popular coin having plummeted in value in 2018, it is anything but a stable currency or asset. It is then easy to understand that many would be hesitant to include courses on a phenomenon that might not be around in a few year’s time.

Many have criticized the volatility and think it is a sign of a Ponzi scheme. Christian Ferri, however, is of a different opinion. As the CEO of blockchain advisory company BlockStar, he believes that volatility is not only an inevitable phenomenon in any economy, but that is is also a good thing. Why? Because every savvy trader will be able to take advantage of all the ups and downs there is in an economy. The only question is who will make a profit and who will lose out.

Cryptocurrency mining has, up until recently, not been for everyone. In order to make a profit, one has to invest in an expensive mining rig, and be prepared for a huge electricity bill. As more tokens of a given cryptocurrency come into circulation, the processing power and electricity required to mine new tokens rises proportionally.

More recently, however, it has been possible to mine for cryptocurrency using smart devices like phones and tablets. This has allowed small-time miners to utilise the processing power of their devices when they are otherwise dormant. It has also allowed for app developers to exploit the app users by secretly using their phone to mine for tokens without their knowledge.

Apple bans Calendar 2 app

Earlier this year, Apple decided to ban one such app from their App Store. Calendar 2 was an app with a different business model than other apps. Rather than asking the users to pay for the app or show them advertisements, the developers opted to have the app mine for Monero tokens as a way of payment. This turned out to be a lucrative idea, as the team managed to earn $2,000 worth of Monero tokens in just three days by utilising the app users’ processing power to mine.

At that point, the reason for banning the app was a violations of Apple’s App Store guidelines, which states that “Apps should not rapidly drain battery, generate excessive heat, or put unnecessary strain on device resources.” Since cryptocurrency mining takes up a lot of resources and processing power, the Calendar 2 app was in clear violation of the guidelines as this is exactly what happens to devices when used for that purpose.

Apple rolls out new guidelines for hardware compatibility

Since the emergence of apps that use the devices for cryptocurrency mining, Apple have had to adjust their guidelines for apps in the App Store. Section 2.4.2 of Hardware Compatibility has now been changed to mention cryptocurrency mining specifically:

“Design your app to use power efficiently. Apps should not rapidly drain battery, generate excessive heat, or put unnecessary strain on device resources. Apps, including any third party advertisements displayed within them, may not run unrelated background processes, such as cryptocurrency mining.”

Expanded guidelines for all Apple products

Moreover, Apple has expanded their guidelines section, and have laid out some rules that will apply to all of their devices and operating systems, including iOS (for iPhones and iPads), macOS (for MacBooks, iMacs, etc.), watchOS (for Apple Watch), and tvOS (for Apple TV). The rules are:

1. Apple will allow virtual currency wallet apps, as long as they’re offered by developers who are enrolled as organizations.

2. The only cryptocurrency mining apps allowed are those that mine outside of the device, like cloud-based mining.

3. Apps can help users make pay, trade, or receive cryptocurrency on an approved exchange, but the apps must be from the exchanges themselves.

4. Similarly, apps involved in initial coin offerings, bitcoin futures trading, or other cryptocurrency securities trading need to be from the banks, firms, or other approved financial institutions. And they must be lawful.

5. Cryptocurrency apps can’t offer users virtual coin for tasks like downloading other apps, getting other users to download the app, or boosting social media activity.