ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 8
ProBit Global to Steer Clear of Litecoin’s MWEB Confidential Transactions Upgrade
Last week, some Korean exchanges halted support for Litecoin (LTC) following a unanimous delisting after the cryptocurrency activated the Mimblewimble Extension Block (MWEB) privacy feature upgrade on its network.
ProBit Global has taken a similar stance and will not support LTC deposits utilizing MWEB so please be aware when sending your LTC to the exchange. The contention against MWEB is its anonymous transaction function which leads to an inability to verify the sender’s address leading to a potential loss of funds.
Crypto Platform Profiles A Typical African Crypto Buyer
A major crypto platform has in the past week come up with what it considers to be the profile of a typical crypto buyer in Africa. Luno, in view of its data suggesting that Africans’ interest in crypto is rising, states that the average African crypto buyer is most likely to be a male who spends about US$20 on his first buy to HODL for roughly nine months.
It cites the buying and selling of Bitcoin, Ethereum, and XRP as the most common among buyers in Africa while subsequently retreating to the USDC stablecoin — ranked as the least popular on its platform — during a dip to hedge against market volatility.
Meanwhile, Kenyan and Nigerian central bankers reiterated during a virtual event that cryptos pose risks to financial stability and pushed central bank digital currencies as the best option to address issues like financial inclusion.
Singapore’s Regulatory Body to Test Tokenization, DeFi
In a venturous move, Singapore’s financial regulator announced the start of an initiative that will explore the benefits of asset tokenization under its watch.
Called Project Guardian, the Monetary Authority of Singapore (MAS) wants to test whether its oversight can successfully manage the process of tokenizing various financial assets using smart contracts and DeFi along with its risks to financial stability and integrity.
The project was commissioned at the Asia Tech X Singapore Summit where the country’s Deputy Prime Minister Heng Swee Keat acknowledged the high risk of cryptocurrencies as evidenced by the losses incurred in the Terra UST debacle while simultaneously acknowledging its potential to transform the future of finance.
MAS is partnering with industry players like DBS Bank Ltd., JP Morgan, and Marketnode in its first pilot under Project Guardian pending regulatory approval to explore DeFi-based money markets that will operate as a permissioned service ala Aave Arc.
Illicit Crypto Activities Decline in 2021 Amidst Market Growth
CipherTrace’s latest Cryptocurrency Crime and Anti-Money Laundering (CAML) report points out that compared to prior years’ much larger dollar value, illicit cryptocurrency activity continues to represent an ever-shrinking percentage as of 2021.
There was enormous growth in the crypto space in 2021 — from approximately $135 billion on January 1, 2019, to about $2.1 trillion on March 31, 2022 (+1,456%) — and it brought with it an inevitable increase in illicit activities, the blockchain analytics firm states.
CipherTrace estimates that only between 0.10% and 0.15% of overall cryptocurrency activity is categorized as illicit activity in 2021, a drop from the 0.62% to 0.65% exhibited in 2020. The firm notes in its report that DeFi-related hacks in 2021 saw nearly one attack reported per week and rug pulls — the exit scam in which a project is abandoned completely — at nearly 40% of DeFi fraud in 2021.
The report concludes with expectations of the trend to continue in 2022 with the hope that government legislation and enforcement would establish a measure of control to guide the space and prevent a full-on collapse into a modern-day Wild West.
Ethereum Difficulty Bomb Delayed, Again
Ethereum developers have disclosed that they are delaying the network’s difficulty bomb once again following a meeting last week. An EIP drafted by some of the developers calls for the delay by a further 700000 blocks to mid-September 2022.
The bomb is a key feature of Ethereum’s pending The Merge upgrade that will switch the network to a Proof of Stake (PoS) mechanism. It is a blockchain slowdown mechanism that reduces the speed of block mining and will discourage mining after the switch to PoS. As the difficulty ramps up, this leads to a drop in profitability for prospective miners.
While it is crucial in the build-up to The Merge upgrade, the difficulty bomb is a completely independent event and has already been delayed five times before. With no date confirmed yet for The Merge, the bomb’s pushback is likely indicating that the developers are looking at September or later for the transition following the success of Ropsten.
IMF Presents Energy Use Comparison for CBDC, PoW Cryptos
A first-of-its-kind paper by the International Monetary Fund (IMF) that compared energy use for the leading payment systems has shed light on the benefits that central bank digital currencies (CBDCs) can have over crypto assets.
The study shows that based on the design of the supporting DLT network, the energy needs of assets using a proof-of-work (PoW) consensus, like Bitcoin, can be very intensive. Whereas, non-PoW permissioned networks are estimated to be more energy efficient than current credit card processing centers which rely on inefficient legacy systems.
It measures the annual electricity consumption of the Bitcoin network at an estimated 144 terawatt-hours (TWh) per year, or roughly 0.6% of total global electricity consumption as of April 25, 2022. On the other hand, the global payment system including all credit cards and cash in the world uses an estimated 47.3 TWh (or about 0.2% of total global consumption).
The IMF submits that CBDCs could be designed to use infrastructures that are less energy-intensive than the current payment system while CBDCs based on non-PoW, permissioned networks could further optimize energy use based on the total number and location of their nodes.