In this week’s cryptocurrency round up: JP Morgan Chase has decided to step into the cryptocurrency world and issue their own coin, and many are wondering whether it means that they are actually issuing a “cryptocurrency”, Luxembourg offers new protection and transparency with regards to blockchain transactions thanks to some new legislation, Coinbase has apparently paid more than they ever have for a bug bounty, and well-known cryptocurrency brokerage service Coinmama suffers a data breach.
JP Morgan Chase Joins The Crypto Club
Whether you follow the cryptocurrency markets closely or not, there is one thing that is obvious if you have seen cryptocurrency mentioned in the news: that there are many in the finance sector that have downplayed the idea. There are all sorts of high-profile finance executives that might have acknowledged the potential of blockchain, but not only dismissed cryptocurrency, but seemingly railed against the entire sector in a malicious manner. Of course, some of these include those who work with central banks, which many believe are directly threatened thanks to the decentralized nature of cryptocurrencies.
One great example is Nouriel Roubini, who is a respected economist. He was given the nickname “Dr.Doom” after he was able to predict the housing crisis of 2007-2008. It’s no doubt that Roubini’s accomplishments are impressive, as he has been involved with some of the most well-known financial institutions in the world, including The Federal Reserve, World Bank, and the international Monetary Fund. However, when it comes to cryptocurrency - Roubini often speaks and acts in a way that many wouldn’t describe as professional. When Roubini appeared before the Senate, he made claims that Bitcoin was “worse than an excel spreadsheet” and that cryptocurrency would bring us back to the “Stone Age”. His statements seemed much more rooted in emotion rather than fact. His continued rants on Twitter eventually lead John Bollinger, one of the most celebrated technical analysts in the finance sector, to publicly question his motives.
Roubini isn’t the only one - Jamie Dimon, the CEO of J.P. Morgan Chase often is cited as an example of someone who has openly criticized Bitcoin as a “fraud”. One of the most interesting things about Dimon’s comments is that it happened right before the infamous cryptocurrency bull run of late 2017, which led many to question his credibility with regards to understanding the cryptocurrency markets. He walked back his comments later. Either way, it appears as though Dimon’s comments haven’t aged well - as J.P Morgan Chase will now become the first U.S. bank to roll out its own cryptocurrency, the “JPM Coin”. The move is huge news for the cryptocurrency world, as J.P Morgan Chase handles trillions for its clients in the wholesale payments business.
Each JPM Coin is redeemable for a dollar, and the idea would be to allow for real-time settlements rather than clients waiting days for payments. There are many large scale corporate clients that are used to utilizing international money transfer services, and JPM Coin obviously seeks to disrupt this sector.
There are many that believe the sheer status of J.P. Morgan Chase and its influence will mean that more institutional money will either be aware or interested in blockchain and cryptocurrency than ever. After all, it banks an astonishing 80% of the Fortune 500. Umar Farooq, who heads up J.P. Morgan’s blockchain projects - puts it this way: "Pretty much every big corporation is our client, and most of the major banks in the world are, too," Farooq said. "Even if this was limited to JPM clients at the institutional level, it shouldn't hold us back."
Although there are many that championed the move, there are many others that criticize the fact that the bank is issuing its own stablecoin. In a tweet that has since gone viral, Roubini chimed in, claiming that it was “a joke” to call JPM Coin a cryptocurrency. He pointed to the fact that the coin would be private and centralized as obvious reasons why it shouldn’t be defined as such.
The CEO of Ripple, Brad Garlinghouse, has criticized the move, stating: “As predicted, banks are changing their tune on crypto. But this JPM project misses the point — introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer.”
Luxembourg Asserts Itself As Crypto-Friendly Nation
There are all sorts of different attitudes and perspectives when it comes to cryptocurrency all around the world, and for different reasons. There are forward-thinking countries such as Malta, where the prime minister himself champions cryptocurrency as the future, and then there are other countries such as China, which has decided to crack down on the sector because of the potential for fraud and criminal activity. There are many countries all around the world that seem to be wavering between these stances, and trying to decide exactly how to proceed regulating the space. Luxembourg has made it clear that it will be crypto-friendly, thanks to a recent law passed that protects blockchain transactions the same way that other transactions are protected. In this way, Luxembourg has already “legitimized” cryptocurrency in a way that many other countries have not.
One interesting point to note is that there was very little opposition to the bill, unlike other countries, where there are politicians and lawmakers that have spoken vocally about the dangers of cryptocurrency. Specifically, only 2 individuals out of 60 voted against the bill. This certainly would indicate that Luxembourg is eager to embrace the sector rather than opposing it.
While the country is a small one (has a population of a little over a half-million people), Luxembourg is still considered a financial hub of Europe, despite its size. There are many believe that post-Brexit, this will be the case more than ever, as well. The country is often praised for its innovation and economic stability. Most recently, it made international headlines for becoming the first country to provide free public transport to its inhabitants. It has also previously been praised for its progressive animal rights agenda, as well.
The idea is that this will bring a new level of transparency and legitimacy to cryptocurrency. This should be good news for Bitstamp, which is a cryptocurrency exchange located in the country. The exchange recently made news for its partnership with Dukascopy Bank to enable Bitcoin deposits and withdrawals.
Many already believed that more companies would be looking to Luxembourg as a viable option post-Brexit, and it is more clear than ever that there might be blockchain startups that will look to either be based in Luxembourg, or open an office in the country, due to the legislation.
Coinbase Pays Out Significant Bug Bounty
There are plenty of companies that are known within the blockchain/cryptocurrency space, but Coinbase is arguably one of the most well-known. That is probably why the company’s logo was included in the intro to the HBO hit TV show Silicon Valley, which has actually referenced cryptocurrency in multiple episodes. It appears as though Coinbase recently paid out its biggest bug bounty ever, leading many to ask what the nature of the flaw was.
For those that are unaware, bug bounties are a common practice in the cryptocurrency sector. Security is a huge issue, and those that spend their time to find potential vulnerabilities are incentivized by money, even if it might not be a sizable amount. Coinbase has been paying out bug bounties for some time now. In fact, the company has paid out over $300,000 in bug bounties, and offers bounties in various tiers. For example, if the issue involves a low-impact bug, the payment might be as low as $200. Considering that the recent payment (logged on February 12th) was for $30,000 - it is obvious that this was a high-profile security flaw. Coinbase has set a maximum amount for bug bounties as $50,000. The bug has to be identified as a true vulnerability for the bounty to be paid out. A spokesperson for Coinbase confirmed the vulnerability, but did not elaborate.
There are many cryptocurrency companies out there that often cater to a certain region, even if they might not have achieved much exposure on a global scale. It appears as though Israel-based crypto brokerage Coinmama has suffered a hack, which exposes the information of well at least 450,000 users to hackers and cybercriminals of all kinds. The brokerage made a point to advertise that it allowed credit card purchases, and it has marketed itself as a financial services company that aims to “empower humanity”.
Interestingly enough, Coinmama was not a single target in an orchestrated attack, but rather one of two dozen companies that affected the records of over 700 million consumers. The other companies were involved in sectors that had nothing to do with blockchain or cryptocurrency brokerage services, such as gaming and media companies.
Coinmama urged users to reset their passwords as soon as possible, and is currently working with cybersecurity firms to monitor the breach and investigate if the data is being used externally, as well.