Ethereum Completes Hard Fork to Delay Difficulty Bomb

The Ethereum network has completed the Muir Glacier hard fork on January 2, although it was scheduled for the first day of the year.

The Muir Glacier update with its sole improvement proposal (EIP 2384) was activated at block number 9,200,000. The only purpose of the update is to delay the notorious difficulty bomb for Ethereum, a built-in algorithm of the blockchain that could suddenly increase the mining difficulty if left unchecked. The Muir Glacier update will delay the difficulty bomb for another 4,000,000 blocks, which represents approximately 610 days.

The network upgrade is a necessary step, since the performance of the Ethereum blockchain started to slow down with block generation time increasing on average.

After 2018 and 2019, this is the third difficulty bomb delay deployed on the Ethereum network. The Muir Glacier is also a quick-fix update due to a miscalculation when planning Istanbul according to the core developers of the network.

The developer community estimated the difficulty bomb to become noticeable in mid-2020, but performance issues started to appear in October 2019, forcing the community to address the issue sooner.

This latest fork in Ethereum 1.0 has been hard coded to ensure that the network maintains an average block time by adjusting the mining difficulty that is required to produce new blocks.

The Ethereum network will have another 610 days of optimal performance until the difficulty bomb issue re-surfaces. The Ethereum community plans to release Ethereum 2.0 by that point, making the difficulty bomb obsolete. Nonetheless, it remains to be seen whether Ethereum 2.0 is close to being deployed and if its launch will take place smoothly.

The update didn’t complete as quickly as expected, since the timing of the latest improvement was unfortunate.

Node operators and developers were advised to prepare for the hard fork before the holidays by upgrading their nodes and downloading the latest versions. However, there are still some clients unprepared for the Muir Glacier fork.

Fortunately, all major exchanges have provided support for the latest hard fork, meaning that users will not be in any way affected by the update.

Fidelity Digital Assets Has Plans for Ether According to CEO Tom Jessop

Fidelity Digital Assets’ crypto chief, Tom Jessop, has recently announced that the firm intends on adding support for Ethereum (ETH) in 2020.

During a recent podcast, Fidelity Digital Assets CEO Tom Jessop stated the firm could support Ether sometime throughout 2020, as long as there is demand for it. He said:

“We’ve done a lot of work on Ethereum. We intend to support it in the New Year. We’re very led by our clients.”

At the moment, the firm only supports Bitcoin (BTC), the most popular digital asset with the largest market capitalization.

As to why the firm supports only BTC, Jessop stated that it derives entirely from the short track-records of digital assets. During the podcast, he explained that a lacking timeline creates a significant barrier when it comes to institutional adoption. In this case, BTC clearly has the longest track-record, and thus has also the highest demand from institutional capital.

Ether, on the other hand, has a shorter history and a relative lack of demand for custody or trade execution which is the main reason it has no existing support from Fidelity. He further added that price volatility, lack of regulatory transparency are also part of the hurdles to institutional adoption.

“Meaning like, ‘How do I know that if I buy this thing, it’s gonna be around tomorrow? Like what indicia of durability or longevity do I have based on the fact that the history of this asset is 10 years old?’ I think many of these things solve themselves with time,” elaborated Jessop.

Founded in early 2019 by Fidelity Investments, Fidelity Digital Assets is a platform that offers cryptocurrency custody and trading tools for institutional investors and traders. Their primary focus is institutional investors, including hedge funds, family offices, pensions, endowments amongst others. The platform does not cater to retail investors, as the platform wishes to protect its clients from the risky market.

As a provider of a growing number of services involving digital assets, Fidelity aims to bring about the reality where all types of assets are issued natively on blockchains or represented in tokenized format. Currently, they provide cold-storage custody services with an integrated trading service.

Meanwhile, the firm was granted last month a trust license by the New York State Department of Financial Services. The new license will allows Fidelity launch a cryptocurrency custody and trade execution platform for institutions and individual investors for New York residents. In addition to that, the firm was also selected by Galaxy Digital to offer third party custody for its two new bitcoin funds.

Korean Crypto Exchange UPbit Lost 342,000 Ether Following Hack

South Korean cryptocurrency exchange UPbit — run by a subsidiary of Korean tech giant Kakao — has been hacked, losing 342,000 Ether (ETH), around $50 million from its hot wallet.

The news has been confirmed by Lee Seok-woo – CEO of Upbit’s operator, Dunamu – via an official statement written on November 27th. The statement explained that the exchange had detected an abnormal transaction from its hot wallet to an unrecognized wallet, which led to an outflow of 342,000 ether (ETH). The exchange did not specify whether it had been hacked.

The statement read as follows:

“At 1:06 PM on November 27, 2019, 342,000 ETH (approximately 58 billion won) were transferred from the Upbit Ethereum Hot Wallet to an unknown wallet. Unknown wallet address is 0xa09871AEadF4994Ca12f5c0b6056BBd1d343c029.”

Following the incident, the exchange apologized to users for any inconveniences caused as the CEO had laid out several measures taken as a precaution. Respectively, the exchange transferred all cryptocurrencies from its hot wallet to a cold wallet and said the loss will be covered by its own corporate assets.

Meanwhile, withdrawals and deposits have already been suspended as a precaution. Later on, Upbit said it will take at least two weeks for deposit and withdrawal services to be back to normal, with Lee Seok-woo promising to inform users as soon as they reopen.

According to Whale Alert – a Twitter service that monitors blockchain transactions – the lost ETH worth $49 million at press time, was sent from Upbit’s wallet to an unknown ethereum address starting with 0xa09871 about 04:00 UTC on Wednesday.

About 30 minutes later, Upbit announced that it had temporarily suspended withdrawals and deposits due to server maintenance. Subsequently, the massive withdrawal alerts did raise suspicions, with several people on social media calling it a hack.

Whale Alert, in fact, noted several withdrawals taking place via UPbit, involving other cryptocurrencies and tokens as well, such as Tron (TRX) and BitTorrent (BTT), amongst others. In fact, more than $100 million worth of multiple cryptocurrencies have been sent out from Upbit today.

However, the exchange stated that only ETH holdings had been affected, and all other recent large-scale transactions were related to the exchange moving assets between hot and storage facilities to prevent further losses.

UPbit’s hack marks this year’s eighth breach, and the total amount stolen from cryptocurrency exchanges to date now stands at around $1.44 billion, according to data.

Meanwhile, Upbit isn’t the only South Korean exchange to have suffered loss. Earlier this year, Bithumb – the second biggest cryptocurrency exchange in South Korea, fell victim to an inside job. According to previous reports, it lost about $13 million in March 2019. In total, the exchange had suffered three major security breaches. Last year, Coinrail was hacked for $40 million.

Singapore Financial Watchdog Proposes Crypto Derivatives on Local Exchanges

Singapore’s central bank and financial regulator – the Monetary Authority of Singapore (MAS) – has announced a new proposal, which will allow the listing and trading of cryptocurrency derivatives on approved local exchanges.

According to a statement released on November 20th, the proposal would subject the trading of derivatives tied to cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) to the city-state’s Securities and Futures Act.

Singapore’s financial regulator has stated that plans to extend its remit to crypto derivatives have been spurred by interest from institutional investors such as hedge funds and asset managers, in trading “payment tokens” like BTC and ETH, who “have a need for a regulated product to gain and hedge their exposure to the payment tokens.”

The MAS has further added in a consultation paper on the proposal that:

“A well-regulated market for derivatives – particularly one anchored by institutional investors with sophisticated risk management and investment strategies – can serve as a more reliable reference of value for the underlying asset.”

So far, four exchanges have been approved by the MAS, which include Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading and Singapore Exchange Securities Trading Limited.

Notably, the public has until December 20th to submit comments to the MAS regarding the proposal.

Meanwhile, crypto derivatives have long since gained traction in the United Stated. For instance, derivatives exchange giant CME Group has been offering bitcoin futures since 2017. Up until now, it has traded nearly 7,000 futures contract on average per day. CME has also been preparing to launch BTC options in January.

Bakkt, a subsidiary of Intercontinental Exchange (ICE), also provides physically-settled bitcoin futures contracts and is planning to offer a cash-settled version of the product due to customer demand. Likewise, Bakkt is also planning to launch its options contracts soon through ICE Futures Singapore.
However, derivatives products are a particular concern for regulators that seek to protect investors, and MAS has stated it considers crypto derivatives not suitable for retail investors. Therefore, the MAS stands by its proposal to only regulate futures traded on exchanges it already regulates.

“The underlying payment tokens tend to exhibit high volatility and are intrinsically difficult to value. … Losses also amplified due to the leveraged nature of derivatives, and investors may even lose more than the whole amount they had put in,” stated the MAS.

Standard Chartered Joins Other Banking Giants at Enterprise Ethereum Alliance

British multinational banking giant Standard Chartered, with over $685 billion in total assets, has just announced its partnership with Enterprise Ethereum Alliance – a member-operated organization that works in the development of blockchain technology for consumers and businesses across the globe.

According to a post on the official website, Standard Chartered announced the partnership with EEA, stating that its main goal is to further develop blockchain technology research and its application in the banking sector. In addition to that, the EEA’s charter has indicated that its intent is to develop open blockchain frameworks to push interoperability between businesses and consumers.

Following the announcement, Standard Chartered joins other industry leaders, which are members of the EEA that wish to strengthen blockchain research and its application in the banking sector. Other banking giants include JP Morgan, ING, Citi, and Spanish bank BBVA. The alliance comprises of around 100 other members, all working towards encouraging the use of Ethereum blockchain as an open-standard to empower enterprises.

The post further reads that the bank strongly believes blockchain to be the best way for central banking and commerce as it would allow transactions to be verified, secure, and processed in real-time. Upon the announcement, Dr. Michael Gorriz – Chief Information Officer at Standard Chartered – stated:

“We are excited to be a part of the EEA and look forward to opportunities where we can collaborate to deepen blockchain research and application in the banking sector.”

Certainly, this is not Standard Chartered’s first venture into blockchain technology. The post has cited a lot of global collaboration projects with fintech firms to explore financial systems’ efficiency improvements, build blockchain-enabled financing solutions for supply chain, and assist cross-border remittance services between Hong Kong and the Philippines using blockchain technology.

The bank is a founding member of the blockchain- based trading platform Voltron and has also recently completed its first international letter of credit (LC) transaction on the platform for the oil industry.

The British bank has also invested in blockchain payments firm Ripple and is currently working with China-based Linklogis to develop a blockchain-based supply chain financing solutions. In addition to that, the bank is currently working with the Central Bank of Thailand to aid them in creating a CBDC, as well as backing the Monetary Authority of Singapore’ s initiative to explore DLT use for payment settlements.