ERC20 Tether Transactions Flip Their Omni Equivalent

Ethereum cofounder Vitalik Buterin told Bloomberg this week that the “[ETH] blockchain has been almost full for years.” ““I think it’s still good to develop …

Crypto enthusiasts have noticed that the Ethereum blockchain has come awfully close to reaching capacity due to the added transactions stemming from the Tether (USDT) network. The transaction count since mid-August shows the ERC20 version of tether has surpassed the original version that uses BTC. ERC20 tether transactions cost users more than $260,000 in the last 30 days and the over-saturation of trades is 17X larger than the infamous Crypto Kitties fiasco.

Also read: How to Create Non-Fungible Assets and Collectible Tokens With Bitcoin Cash

Tether Migrating to ETH Sparks Capacity Fears

In December 2017 during the height of the crypto bull run, the Ethereum blockchain was swamped with unique cats similar to Pusheens that could be collected and traded using the ETH network. The Crypto Kitties event prompted the creators to increase the cat birthing fee in order to incentivize miners to add birthing transactions to the chain. Fast forward to 2019 and Tether has started migrating coins from the Omni Layer network which uses the BTC chain to an ERC20 version which runs on top of the ETH chain. Tether is a $4 billion dollar network with coins spread across multiple blockchains which include BTC (Omni), ETH (ERC20), EOS, and Tron. Data pulled from the website Coin Metrics shows that the ETH-based tether transactions have surpassed the BTC-based versions this month. Today, on August 28, there are 39,000 tether transactions on the BTC network via Omni, but that number is eclipsed by the 126,000 ETH-based tether transactions. At the time of publication, there’s roughly 1.5 billion USDT minted using the ETH chain and 2.5 billion tied to the Omni Layer network.

ERC20 Tether Transactions Flip Their Omni Equivalent
USDT transaction count stemming from Omni Layer (dark green) and the USDT transaction count stemming from the Ethereum network (light green).

Since the tether transactions being used on the ETH chain have spiked significantly, the crypto community has been observing the ETH chain grow congested again. Ethereum cofounder Vitalik Buterin told Bloomberg this week that the “[ETH] blockchain has been almost full for years.” ““I think it’s still good to develop apps, but anything substantial should be developed with scalability techniques in mind, so that it can survive higher transaction fees that would come with further growing demand for Ethereum — In the longer term, Ethereum 2.0’s sharding will, of course, fix these issues,” Buterin asserted during the interview. Prominent Ethereum evangelist and founder of Mythos Ryan Sean Adams explained that every asset on Ethereum is “a future revenue source for ETH stakers.” “Tether paid 993 ETH over the last 30 days,” Adams said to further bolster his prior statement.

The fleppening just happened. Tether token on ETH now doing more daily tx then Tether token on Bitcoin Core. https://t.co/0mntDfpVS3#btc

— Crypto Mak 🌐 (@crypto__mak) August 28, 2019

For Stablecoin Use Cases Like Trading and Arbitrage, the Market Demands Faster Transactions and Lower Fees

The tether migration to Ethereum has been quite noticeable and Coin Metrics’ Nic Carter published data concerning Tether’s growth and transition to Ethereum. “USDT-ETH active addresses (the count of unique addresses that were active in the network as a recipient or originator of a ledger change) skyrocketed over the past week, jumping from 38,600 on August 19 to over 78,800 on 8/23,” the report notes.

ERC20 Tether Transactions Flip Their Omni Equivalent

“Meanwhile, USDT-OMNI active addresses continue to decline, despite two recent spikes.” The report also notes that the migration from Omni to Ethereum may have stemmed from market demand. “The primary use case for Tether is for active trading and arbitrage — For these use cases, Tether on Ethereum is faster (15-second blocks for Ethereum versus 10-minute blocks for Bitcoin) and require less fees,” the Coin Metrics’ State of the Network research explains. The report adds:

Since these characteristics are desirable for active traders, Tether issuance on Ethereum should continue to grow relative to issuance on Omni. The recent burn in Tether came solely from Tether issued on Omni.

ERC20 Tether Transactions Flip Their Omni Equivalent

Stablecoin Networks Using the Bitcoin Cash Network Will Benefit From Low Fees and More Capacity

Despite Tether’s move to the ETH chain, a few digital currency fans believe that there could be issues with the ERC20-styled tethers if the network grows too congested. Some skeptics and observers think tether users are paying way too much in network fees. On the bitcoin cash-oriented Reddit forum r/btc, some BCH supporters said that it would be far cheaper to host a popular stablecoin like tether on the BCH chain.

ERC20 Tether Transactions Flip Their Omni Equivalent

“Tether transactions alone pay $14,000 in transaction fees for 120,000 transactions every single day on Ethereum (a total of $57,000),” Reddit user u/eyeofpython remarked. “With a daily volume of $400,000,000 (source: SQL query on eth.events for the 23 August) — If Tether were to move to BCH, people would only pay $120 of fees in total.” On August 28, the average BCH network fee is only $0.004 per transaction, while the gas needed to push an ERC20 token is between $0.11-0.16 per transaction. Another BCH supporter wrote:

Tether should switch to SLP tokens on the Bitcoin Cash network, which never gets congested, unlike BTC and ETH.

Over the last few days, there have also been discussions as to whether ETH’s capacity can handle various apps alongside Tether. The number of transactions stemming from tether users has grown every year since the stablecoin launched and currently represents 30% of all cryptocurrency trades, rising at times to 40%. At the time of publication, tether (USDT) captures a whopping 77% of all BTC trades, 53% of ETH, and 54% of BCH trades worldwide.

ERC20 Tether Transactions Flip Their Omni Equivalent
USDT/BTC on August 28, 2019.

Tether continues to dominate, despite the fact there’s a slew of other stablecoins competing like USDC, DAI, TUSD, and USDH. Most of the stablecoin competitors use the ETH network as well, which presents another set of capacity problems for the chain. The stablecoin Honestcoin (USDH) does not use the BTC or ETH chain and is built on top of the BCH network using the Simple Ledger Protocol. USDH and its nascent network only has a $32,000 market capitalization and $173,000 in global trade volume. However, traders using stablecoins for quick swaps and arbitrage will quickly find that transaction fees at $0.004 per transaction or less are far cheaper.

What do you think about tether transactions on the ETH chain surpassing the Omni Layer-based tether transactions? Let us know what you think about this subject in the comments section below.


Image credits: Shutterstock, Coin Metrics’ State of the Network research, Crypto Compare, Coinlib.io, and Pixabay.


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Crypto Advertisement Still Unwelcome, How Is the Industry Coping?

Paid crypto ads disappeared from social networks in the country. …. to the emergence of the Virtual Currency Girls — a Japanese pop group that …

The United Kingdom’s Advertising Standards Authority (ASA) recently resolved a complaint regarding advertising of Bitcoin (BTC) from the BitMEXcrypto derivatives exchange. According to the ASA, the website showed Bitcoin graphs with misleading price dynamics since January 2019. The ASA received four complaints, each accusing the platform of being misleading about Bitcoin investment profitability. The court satisfied the complaints.

However, this was not the first time that a state took a tough attitude toward advertisement of cryptocurrencies. Here is an overview of how cryptocurrencies are advertised — or not — in the world right now.

Ban, no freedom

The first case arose in January 2018 in the United States, when the social network Facebookbanned the placement of any cryptocurrencies, binary options and initial coin offerings (ICOs) ads on the platform. The corresponding rules were provided by the new advertising policy of Facebook.

Rob Leathern, the product management director for Facebook, said that the measure was designed to “improve the integrity and security of ads, and to make it harder for scammers to profit from a presence on Facebook.” In this regard, the representatives of the platform have developed a new policy prohibiting the advertising of financial products and services, which are often associated with misleading or deceptive advertising practices.

Related: Dutch Billionaire Yet Another Victim of Deceptive Crypto Ads, Sues Facebook

Google also made the move soon after. In March 2018, Google’s parent company, Alphabet, announced in a blog that it will be changing its advertising policy. According to the Google platform, as of June 2018, it would be forbidden to place announcements about binary options, cryptocurrencies as well as related services — in particular, about ICOs.

Such changes, as it was specified in the blog, will be part of the broader measures taken by the company to counter the sale of the new type of high-risk financial products. Thus, cryptocurrency advertising was simply blocked.

Twitter also introduced a blanket ban in March 2018, banning everything crypto-related. The social network, however, made an exception for public companies with listings on large stock exchanges in Japan.

Also, it turned out that after the ban by Facebook, China began to introduce restrictions on the advertising of cryptocurrencies. Paid crypto ads disappeared from social networks in the country. A popular Chinese microblogging service, Weibo, and search engine Baidu introduced a ban on cryptocurrencies advertising. The service stated that cryptocurrencies are vulnerable to unfair advertising, as well as the creation of nontransparent financial pyramids and schemes.

Hodlers strike back

The fight against the restrictions began almost immediately. Crypto firms and enthusiasts from Russia, China and South Korea decided not to stand on the sidelines, and in March 2018, the cryptocurrency and blockchain associations of Russia, China and South Korea announced that they intend to file a group action against IT corporations that prohibit the advertising of cryptocurrency projects. The lawsuit was filed against Facebook, Google, Twitter and the Russian search engine Yandex.

The Eurasian Blockchain Association (EBA) has been created to file a lawsuit together with industry associations from Korea and China. The agreement on its creation was signed by the Russian Association of Cryptoindustry and Blockchain, the Korea Venture Business Association and the Chinese Association of Crypto Investors (LBTC).

Later, in April 2018, cryptocurrency and blockchain organizations in Switzerland, Kazakhstan and Armenia also joined the three aforementioned countries in filing a joint lawsuit against major IT companies.

More recently, in August of 2019, JPB Liberty, an Australian litigation finance company filed a $500 billion global lawsuit against Facebook, Google and Twitter over the cryptocurrency advertisement ban. Anyone affected in 2018 can register as a passive participant and join the lawsuit.

The CEO of JPB Liberty, Andrew Hamilton, believes that big IT companies should be liable for losses in the hundreds of billions of dollars. The company has already sent official letters to Facebook, Google and Twitter, notifying them of this claim for damages. The $500 billion JPB Liberty seeks in compensation comes from a combination of $350 billion in losses of investors and more than $150 billion in losses to exchanges in revenue.

Facebook the parent companies of the Australian affiliates of Facebook, Google and Twitter are participating in legal action. According to a statement to Cointelegraph from Hamilton, JPB Liberty intends to obtain justice in this case on behalf of all who participate:

“We are seeking and obtaining funding from a range of sources both within the Crypto Industry and outside it. We are in serious discussions with large institutional litigation funders and have a law firm and Senior Counsel lined up.”

A change in course?

Six months after the initial ban was introduced, big IT companies changed their minds a little. In October 2018, Google allowed crypto advertisement once more. According to an official statement, cryptocurrency advertising became available for purchase in Japan and the U.S. However, only officially registered American and Japanese crypto exchanges are privileged to use the Google AdWords platform.

In May 2019, Facebook updated its advertising policy, adding an item allowing users to advertise blockchain technologies and educational courses on cryptocurrencies without special permission, as was stated in the blog of the social network.

Related: Internet Authority: History of Centralized Companies Being Hostile Toward Crypto

In order to advertise cryptocurrencies, users still have to get special permission from Facebook moderators. Also, the social network has retained a ban on advertising ICOs and binary options. According to the statement provided to Cointelegraph by a Facebook spokesperson, the company took time to work on the policy:

“In 2018, we made clear this policy was broad — along with our hope to refine it while working to better detect deceptive and misleading advertising practices. After a thorough review, the policy was narrowed to no longer require prior approval to run ads related to blockchain technology, industry news, education, and events related to cryptocurrency. This update makes good on our commitment, and keeps critical safeguards in place to reduce bad ads (i.e. that promote ICOs and binary options) and enforce against misleading or scam ads.”

In general, this shifting behavior of Google and Facebook is not surprising, taking into account the fact that the leaders and main investors of these social networks are favorable to cryptocurrencies and blockchain technology. For example, Twitter CEO Jack Darcy has repeatedly said that he believes in a future in which Bitcoin will turn into a full-fledged internet currency.

However, in a statement to Cointelegraph, JPB Liberty’s Hamilton outlined a belief that companies like Facebook have their own reasons to ease the ban, which are not related to the protection of their users from scams or misleading information:

“In my view Facebook’s own cryptocurrency plans, now known as Libra, were the reason for the Ad Bans in the first place. Facebook was threatened by the rapid development of cryptocurrency/blockchain based competitors offering a better consumer proposition. They chose to engage in an illegal anti-competitive attack on those competitors while they developed their own ‘cryptocurrency.’ They have only eased it enough that Libra is not itself banned but still block ads from the majority of the cryptocurrency industry.”

Alternatively, as it was rumored before the Libra was announced, Facebook could set up a system whereby users viewing advertisement posts and videos could earn stablecoins for their actions. However, no information has since come out to suggest that Libra would be used in this way.

The announcement from June 2019 by the founder and CEO of Facebook, Mark Zuckerberg, who said that Libra’s mission is to create a simple global financial infrastructure that empowers billions of people around the world, may suggest that such a product could still be developed.

Life under the ban

Despite the extensive ban, which was in fact lifted in some countries, the crypto exchanges and ICO projects can still find ways to avoid roadblocks. In doing so, they end up turning to a completely different set of tools to promote their products.

For example, crypto advertising is not banned on content platforms such as Telegram, Medium or Steemit. Anyone can maintain a blog, collaborate with authors and use internal website advertising.

The most progressive crypto community is Japan, with its quickly developing cryptocurrency market, which contributed to the emergence of the Virtual Currency Girls — a Japanese pop group that popularizes cryptocurrency through songs and dances. Each of the singers symbolizes a famous cryptocurrency. Also, according to The Japan Times, local cryptocurrency exchange BitFlyer first released a TV commercial in April 2017.

The cryptocurrency community painfully embraced the ban on advertising their businesses because the online advertising market today is the most popular and profitable, but at the same time, crypto enthusiasts have shown that they can fight for their businesses not only with the help of courts but also through others ways to post information — even the most unconventional.

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Real-time Threat Detector Launched by Chainalysis for 15 Major Cryptocurrencies

This is the first compliance alerts solution available which includes all 15 cryptocurrencies supported by Chainalysis. The cryptocurrencies include …

In a recent press release, Chainalysis announced the launch of Know Your Transaction (KYT). KYT is a real-time anti-money laundering (AML) compliance solution for monitoring suspicious cryptocurrency transactions.

This is the first compliance alerts solution available which includes all 15 cryptocurrencies supported by Chainalysis. The cryptocurrencies include Bitcoin, Ether, etc, and top stablecoins and ERC-20 tokens such as Tether, Maker, and Dai. Additional cryptocurrencies will be added soon.

Chainalysis KYT alerts help cryptocurrency businesses and financial institutions mitigate exposure to regulatory and reputational risk. This helps the compliance teams to enforce compliance policies while better allocating resources.

“As lawmakers and regulators focus their attention on the industry, it is more critical than ever that cryptocurrency businesses demonstrate compliance best practices,” said John Dempsey, VP Product, Chainalysis. “Every minute counts when managing exposure to sanctioned entities, hacked funds, darknet markets, and other illicit activities, which is why Chainalysis is investing in fast, actionable alerts to help our customers mitigate risk across cryptocurrencies.”

Chainalysis KYT provided real-time transaction monitoring for large volumes of cryptocurrency activity. It will now generate an alerts signal whenever a transfer involves a risky counterparty and crosses a threshold value. These alert levels are categorized into Severe, High, Medium, and Low. The alerts are based on factors such as category, service, direct versus indirect exposure, the direction of funds, and amount.

The user interface and API of Chainalysis KYT application will help cryptocurrency businesses and financial institutions to keep track of, investigate, or take action on risky transfers. Also, it will leverage the customers to customize the risk parameters based on their business policies.

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Report: Bitcoin’s Dominance in Crypto Market is Dramatically Understated

Notice how they don’t mention Ethereum, Litecoin, or Bitcoin Cash, but just Bitcoin. This tacit “maximalism” has been reflected in institutional investors …

Over the past few months, Bitcoin has dominated the investment scene. Year to date, the cryptocurrency has gained some 200%, which comes as traditional assets have bled out in anticipation of a recession and due to rising macroeconomic risk.

But one not-talked-about fact is that not only is Bitcoin outperforming traditional assets but altcoins too.

King Bitcoin

CoinMarketCap data shows that Bitcoin dominance — the percentage of the cryptocurrency market’s capitalization that is BTC — has risen to 70%, which is a level not seen in over two years. Even this 70% reading, however, may be understated.

Bitcoin Really is The Crypto King

Blockchain analytics firm Arcane Crypto recently released a report, accentuating that the traditional Bitcoin dominance statistic is somewhat invalid. They wrote:

“Using the price and market valuation as signal of strength is of course a weak proxy. Price is far from everything and many projects might be hugely successful without the token capturing a large market capitalization.”

They thus argued that a better way to measure a cryptocurrency’s dominance is by weighting the market capitalization of all cryptocurrencies against their trading volume, which they claimed is a measure of market liquidity.

In doing this, their research found that “Bitcoin’s market dominance is pushed well above 90%. This is true whether we use the volumes as recorded on CoinMarketCap, excluding stable coins, which are representations of other assets rather than “true” cryptocurrencies, [or Bitwise’s “Real Ten” exchanges].”

Their research has been indirectly corroborated by a comment from a prominent crypto fund manager.

Speaking on the “Citizen Bitcoin” podcast recently, Murad Mahmudov, a former Goldman Sachs banker, explained that Bitcoin, by many measures, is the only liquid cryptocurrency on the market. He even explained that if you were to place a $1 million sell order of any top 15 cryptocurrency save for Bitcoin, you could crash the market.

Why is Bitcoin Outperforming?

As reported by Blockonomi previously, Binance’s research division believes that much of this underperformance stems from a “flight to quality” from low-quality altcoins to the market leader.

You see, the countless altcoins that were propped up in 2017 and early-2018 have failed to deliver. Even bigger names in the cryptocurrency space have underperformed investors’ expectations.

That’s not all. The investors that are foraying into this industry are focusing their sights on Bitcoin. Just look to the media coverage of the cryptocurrency space. Notice how they don’t mention Ethereum, Litecoin, or Bitcoin Cash, but just Bitcoin.

This tacit “maximalism” has been reflected in institutional investors making sorties into this space. There’s a reason why Bakkt, the New York Stock Exchange-backed crypto startup, is starting with Bitcoin futures, not Ethereum futures or an altcoin basket ETF.

And to top it all off, regulators have taken a heavy stance against altcoins, especially those issued via a token sale or generation event. The U.S. Securities and Exchange Commission (SEC) has recently begun to wage war against ICOs, bringing lawsuits against Veritaseum and Kik’s KIN, for instance.

These cases have resulted in massive sell-offs for these tokens and have likely only added to the anti-altcoin sentiment currently brewing in the market.

With Bitcoin and Ethereum being the only two digital assets really signed off on by the SEC, traders are likely focusing their investment in these areas to avoid potential regulatory risks.

Do Altcoins Have Any Hope?

This may leave you wondering if Bitcoin will continue to dominate.

According to a number of cryptocurrency venture capitalists and investors, Bitcoin’s strength against altcoins — well at least Ethereum — may soon end. Placeholder’s Chris Burniske recently wrote that Ethereum is currently like Bitcoin in 2014 in 2015, which is when the cryptocurrency exhibited “the best risk/reward period for investors”.

His tweet implied that Ethereum’s fundamental momentum and price are bifurcating, but that should history repeat, ETH’s value could soon surge.

1/ $ETH is enduring its 1st mainstream bear market, just as $BTC did in 2014/15.

In retrospect, 2014/15 was the best risk/reward period for investors to get BTC exposure.

— Chris Burniske (@cburniske) August 20, 2019


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England’s central banker touts digital currencies over US dollar

It’s a big enough deal that even SWIFT—the biggest bottleneck in the system—has moved to partner with R3’s Corda distributed ledger technology …

The governor of the Bank of England just touted digital currencies as a possible replacement for the U.S. dollar as the world’s reserve currency. Such a digital asset, whether backed by central banks or even Facebook’s Libra stablecoin, would “dampen the domineering influence of the US dollar on global trade,” Mark Carney said in a speech on August 23 to the 2019 Economic Policy Symposium in Jackson Hole, Wyo.

Calling this type of asset a “synthetic hegemonic currency” (SHC), Carney suggested that a digital currency backed by a network of central banks would prevent economic conditions in the U.S. from spilling over “onto both the trade performance and the financial conditions of countries even with relatively limited direct exposure to the U.S. economy.”

It would also prevent another fiat currency, notably China’s renminbi, from displacing the dollar but leaving the same problems in place, he pointed out.

Another reason to look at digital currencies as an SHC is that historically, the rise of a reserve currency is based first and foremost on its ability to reduce the cost and increase the convenience of international payments, he asserted.

Making international payments faster and cheaper is perhaps the single biggest factor pushing financial institutions to look at blockchain-based payment systems. Companies ranging from blockchain payment platform Ripple to banking giant JPMorgan Chase invested in cryptocurrencies to bypass the slow and costly SWIFT bank settlement system. It’s a big enough deal that even SWIFT—the biggest bottleneck in the system—has moved to partner with R3’s Corda distributed ledger technology (DLT) platform to ensure it doesn’t get cut out by cryptocurrency-based payments.

Carney even pointed to Facebook’s highly criticized and widely distrusted Libra cryptocurrency project as a possible private-sector solution, commenting that the stablecoin would be backed by a basket of currencies, not just one.

“There are a host of fundamental issues that Libra must address, ranging from privacy to [“anti-money laundering” and “countering the financing of terrorism” compliance] and operational resilience,” he pointed out. “The Bank of England and other regulators have been clear that unlike in social media, for which standards and regulations are only now being developed after the technologies have been adopted by billions of users, the terms of engagement for any new systemic private payments system must be in force well in advance of any launch.”

Even so, Carney added, “it is an open question whether such a new SHC would be best provided by the public sector, perhaps through a network of central bank digital currencies.”

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