Binance scores Fiat, an EOS exploit, and Tezos' big day

Monday, September 17th

💤 Today we’re bringing you a special edition of CryptoPM. Mondays, right?

CryptoAM is brought you today by Cogent Law Group

Cogent Law Group LLP is a full-service business law firm with a particular focus on advising businesses in the cryptocurrency and blockchain sectors. Contact them for a free consultation!*

3 things you need to know:

One: Binance is launching beta testing of a fiat-crypto exchange based out of Singapore. “I just slipped that we will begin #Binance Singapore fiat exchange live money closed beta testing on Sept 18th, in 3 days. Invitation only first. Exciting!” - CZ

  • Big moves in Singapore: This will be one of Binance’s first fiat-to-crypto exchanges (they announced one in Lichtenstein last month), and it will likely feature conversions to Singaporean currency. Singapore was recently ranked #3 in ICO friendliness, and I believe they are seeking to position themselves as a global crypto hub. This new fiat-to-crypto exchange will certainly help.

  • Binance on a roll: Binance has been on a roll lately, Recently signing an MoU for a crypto exchange in Malta and announcing plans for a crypto-to-fiat exchange in Lichtenstein. Binance has cemented its status as a top exchange, and is continuing to explore projects to increase its market share. Other exchanges have stagnated once reaching critical mass, but Binance is doing a good job at continuing to grow organically.

  • Read more…

Two: An EOS smart contract was exploited, with hackers draining $600k in 36 hours. Smart contract weaknesses in EOS-based gambling dApp EOBet have allowed hackers to manipulate the outcome of blockchain dice rolls, capturing 126,000 EOS.

  • It’s all one big experiment: This illustrates that crypto/blockchain is still in its infancy. It’s going to take a lot of trial and error to get things right; it’s only natural that we see things like the EOBet exploit happen. In fact, EOBet isn’t the first EOS DApp to lose cash to smart contract flaws; it’s biggest competitor, DEOS Games suffered a hack recently as well. Funnily enough, EOBet fired shots at DEOS Games in a now deleted tweet:

    “DEOS Games, a clone and competitor of our dice game, has suffered a severe hack today that drained their bankroll. As of now every single dice game and clone site has been hacked. We have the biggest bankroll, the best developers, and a superior UI. Play on.”

  • The problem is being fixed: The EOBet team is fixing the smart contract bug, and it should be functioning properly soon. There are plenty of opportunities for EOS hackers to make a quick buck, and EOS dapps have to step up their game.

    “EOSBet has announced that new security measures such as more robust internal code testing, third party auditing, and improved smart contract monitoring will prevent further smart contract exploits. The EOS settcurity ecosystem has remained a prime target for enterprising hackers both black and white hat—to date, EOS bug bounties have paid out more than $417,000 in 2018 thus far.”

  •

Three: Tezos just went up by ~30% over the weekend preceding the network’s official launch. For the traders out there, mainnet launches are usually a good alpha generating event.

  • It goes down today: After a massive $200mm+ ICO, the mainnet will finally be launching today. The project was delayed due to a legal battle between the co-founders of the project which has been resolved by a change in governance. Tezos investors had to wait about a year to even get the token. The Tezos crowdsale ended on July 17th, at which time Ethereum was trading at $186 ($205 as of writing) and Bitcoin was trading at $2276 ($6318 at the time of writing).

  • Rising investor interest: Tezos volume spiked to a nine-week high of $5.13mm, which XTZ rode to capture some gains. The volume spike and the token’s subsequent appreciation signify an uptick in investor demand for XTZ.

  •

Also in the news:

Market Outlook:

Quick Take

Direction: We rejected the upper level of the range again. Volatility is still quite low, and although we’ve seen some 4-5% swing we are still trading within a range. We’re seeing strong support in the 6200-6300 range right now, which is key. Demand is high for sub 6.3k bitcoin. If we break below 6.2k, then that demand has likely dried up, and 5.9k is the next strong support where we’ve seen high demand.

Key Support:  6180, 6100, 5900

Key Resistance: 6500, 6580, 6700

Actions: Hedging my exposure to BTC here, and shorting Ethereum from 203 to hedge my spot alt positions.

Fear & Greed

F&G suggests that BTC will continue trading within range. Slight bias towards a bounce, but not significant enough to draw conclusions.

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

Gas Ain't Gold: Why Ether's Price Could Tank Even If Ethereum Succeeds

I normally write about articles that interest me, but in this case I’m going to link an article that I really dislike. The only reason I’m doing this article is because it was sent to me by 4 separate people asking me what I think.

Without further ado.

In this mildly controversial article, Michael J Casey makes the case that Ether (the token) could fall to zero even if Ethereum becomes widely adopted as the standard for decentralized application development.

His two points:

  • Gresham’s Law states that “bad money drive out good”. This is because people are incentivized to hold good money, and therefore good money will eventually be hoarded, and not used. He speculates that Ethereum is “good money” and will therefore go unused.

  • ICO treasuries and fundraising pose a threat to Ethereum, as they are incentivized to depress price.

Now, before I explore the flaws, I want to get some definitions straight. Namely, what successful means in this context. I’m going to define “successful” for Ethereum as a future where Ethereum holds the majority of decentralized applications on it’s platform (>50%) and experiences high transactional volume daily.

Ok, so. A lot of people make the mistake of comparing Bitcoin and Ethereum. This is often a false comparison. Ethereum’s main use case is to be a platform for centralized applications. Bitcoins main use case is to be money (whether transactional, or a SoV is an argument for another time).

What defines success for Ethereum does not define success for Bitcoin. Bitcoin can be judged “successful” if people treat it as a store of value. This means that Bitcoin can be successful even if no one even actually transacts on the Bitcoin blockchain.

This is not true for Ethereum. For Ethereum to be successful, people must actually use Ether. Applications are built on the Ethereum platform actually require Ether to be used, and burned. One cannot have a functioning Ethereum platform without Ether actually being used.

Gresham’s law doesn’t matter if people are actively forced to use the “good money” to participate in the system. Good money will be forced into circulation, as people are unable to hoard Ether if they want to access the Ethereum network and utilize the benefits.

With respect to ICOs, it is correct that they have markedly depressed the price of Ethereum through selling. While true, this does not mean that ICO selling will crash the price of Ether to zero. ICOs selling Moving forward though, I concede Ethereum will not be successful if it’s only use case is fundraising. If however, Ethereum “succeeds”, then ICOs selling their holdings will not be enough to crash the Ether price to zero.

Now before I get called a Ethereum shill, here are some possible failure points:

  • Proof of Stake is unproven, and theoretically could consolidate power in the hands of the wealthy.

  • It’s unclear how many good use cases there are for fully decentralized applications (Ethereum) vs meaningfully decentralized applications (EOS).

  • Decentralized applications are not user friendly, and have not garnered significant traction as a result. It’s unclear whether Ethereum is the best solution for building user friendly applications.

  • If Cardano, Zilliqa, RChain, Tezos or Dfinity solve “scaling” before or around the time Ethereum does, they would stand a solid chance at usurping ETH’s positioning. All of them are well funded and competitive projects.

Hopefully, this has been interesting. For further exploration on the bull case for Ether, let me suggest Spencer Noons take.

For the bear case, Tetras capital published a 42 page takedown of Ether, which can be viewed here.

The economics of Ethereum are relatively sound. The issues generally lie in the use cases and technology. I am going to advocate focusing our efforts on exploring those issues in the future.

Join the conversation on Telegram and Twitter

If you ❤️ our newsletter, tell your friends about us!

CryptoAM is a Ledger Group project. We offer consultancy, advisory and research services for established companies and start-ups interested in the blockchain & digital asset space.