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Everything you need to know about litecoin

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What is Litecoin?

One of the top five cryptocurrencies by market cap in December 2017, Litecoin (LTC) is well worth looking into. Litecoin is an open-source, peer-to-peer cryptocurrency that was first introduced in October 2011. Created by former Google developer Charlie Lee, it’s a fork of the Bitcoin Core client. The mining of litecoin features an algorithm called Scrypt, which is generally seen as more accessible for new miners since ASICs are not required.

Litecoin was one of the first cryptocurrencies to adopt Segregated Witness (SegWit), an implemented soft fork change. This is intended to solve the blockchain size limitation problem that has reduced the transaction speed of Bitcoin. Litecoin also took part in the very first Lightning Network transaction, which is a proposed solution to the scalability problem faced by Bitcoin.

Litecoin’s use of the Lightning Network has led it to explore atomic swaps. This would allow for a decentralized exchange of cryptocurrencies without the need for third-party exchanges which charge fees. While this is still a work in progress, there have already been some successful atomic swaps.

In terms of the price of litecoin, it has seen a huge rise in 2017, much like many of the biggest cryptocurrencies. It was in December 2017 that the price of litecoin rose from $88 at the start of the month to well over $300 just two weeks later. The value of litecoin has grown significantly and, at the time of writing, its market cap is close to $20 billion.

How is it different from Bitcoin?

Often referred to as the silver to Bitcoin’s gold, Litecoin is identical to Bitcoin in many respects. While it was inspired by Bitcoin, Litecoin does have some technical differences and improvements. In particular, Litecoin aims to be faster and lighter than Bitcoin. Litecoin’s blockchain features a 2.5-minute block generation time, as compared to that of Bitcoin which is 10 minutes. The faster block time of Litecoin means quicker confirmations and transactions. Another advantage of Litecoin over Bitcoin is that it has very low fees.

Buying and selling

Litecoin is one of the oldest cryptocurrencies, having been introduced back in 2011. One of the top five cryptocurrencies by market cap, it’s available on many cryptocurrency exchanges. As of December 2017, you can buy and sell litecoin on numerous exchanges, including GDAX, Bitfinex, OKEx, Bithumb, Binance, Bittrex, Coinbase, Poloniex, Bitstamp, and Kraken. These are among the biggest exchanges in terms of Litecoin trading volume. There are also plenty of smaller cryptocurrency exchanges on which you can buy litecoin.

When it comes to buying litecoin, you have the option of doing so with fiat currency, such as USD and EUR, on various exchanges. You can also buy and trade litecoin for other cryptocurrencies, in many cases. In particular, ShapeShift allows you to swap many different cryptocurrencies such as bitcoin, ethereum, and monero for litecoin. What’s more, no registration is required and the litecoin is sent straight to your wallet. Changelly works much the same but does require registration.

Be sure to find out if cryptocurrency is legal where you’re located before you make a litecoin trade. Cryptocurrency is something of a grey area in many countries, with little to no regulation in most cases. You’re probably keen to know where to buy litecoin! Here is a guide to help you buy and sell litecoin in specific countries and regions:

USA: One of the quickest and easiest ways to buy litecoin online in the US is via Coinbase. With it, you can pay by debit or credit card and receive litecoin almost instantly. However, the fees on Coinbase are higher than many other cryptocurrency exchanges. Alternatively, there are several exchanges with an LTC/USD pair, including GDAX, Bitfinex, and Bitstamp. Being able to trade litecoin to USD, and back, is very convenient.

Canada: While you can use exchanges, such as Coinbase, to buy litecoin online if you’re in Canada, you won’t be able to withdraw in CAD. For this reason, it’s worth taking a look at QuadrigaCX which is the best litecoin exchange in Canada. This cryptocurrency exchange has an LTC/CAD pair. One of the real advantages of this exchanges is that they accept a wide range of payment methods.

UK: While there are a few cryptocurrency exchanges with an LTC/GBP pair, they’re smaller and less established. One that does have good reviews is Bittylicious (don’t let the name put you off). Alternatively, you can always use Coinbase, which makes it easy to buy and sell litecoin . However, you’d need to send your funds elsewhere in order to convert litecoin to GBP.

Australia: The best litecoin exchange for those of you located in Australia is BTC Markets, which is an Australian cryptocurrency exchange. This is the only viable LTC/AUD option available to you at this time. Otherwise, it’s worth trying Coinbase, as verification is usually quick and easy and the exchange is known for being user-friendly.

Europe: If you’re in Europe and wondering where to buy litecoin , then the most convenient cryptocurrency exchanges for you are GDAX, Bitstamp, and Kraken. These exchanges all have the LTC/EUR pair. Kraken is particularly easy in terms of the initial account verification, but it has been very unreliable as of late. Coinbase is another popular option to consider for its ease of use.

Storing Litecoin

Storing options

Once you’ve purchased your litecoin , you’ll want a safe place to store it. If you’re trading litecoin on a regular basis, you’ll want to keep some on your cryptocurrency exchange of choice. However, it’s worth knowing that this is not the safest place for storing your litecoin . Exchanges can be hacked, suffer downtime, or shut down completely. While such events are unlikely, it’s better to be safe than sorry. At the very least, ensure that you have a secure password and that you use the other security measures available to you such as Two-factor Authentication.

A litecoin wallet is typically safer than a cryptocurrency exchange. There are several types of wallets available, including mobile and desktop wallets. We’ll take you through each of these, recommending the very best litecoin wallets for each category.

Wallet options

  • Desktop: A desktop wallet is as simple as it sounds. You download the wallet to the desktop of your PC or Mac. One of the very best is the Electrum Litecoin wallet which, while not particularly attractive, is simple and secure.
  • Hardware: While a desktop wallet is quite safe, it’s still vulnerable to hacks or viruses. A hardware wallet is even safer since it’s an offline device. The Ledger Nano S and Trezor Wallet are both able to hold litecoin.
  • Mobile: While not solely a litecoin wallet, Jaxx is a great mobile wallet option. It’s a popular multi-currency wallet and allows you to control your funds on the go. It’s available on iOS, Android, and even has a desktop version.
  • Web/Online: A web wallet isn’t the most secure, since the private keys are typically kept by a third party. Regardless, LiteVault does offer a comparatively secure litecoin web wallet that is well worth considering if you are keen on the convenience of an online wallet.
  • Paper: A litecoin paper wallet is a great way to give litecoin as a gift. Keep in mind however that paper is prone to wear and tear. LiteAddress is one of the most obvious options if you do want a wallet that is completely offline, offering greater security.

Buying stuff

Thanks to its fast transaction speeds and low fees, the litecoin currency is a much more practical cryptocurrency than bitcoin, when it comes to everyday spending. Cryptocurrency is still in its very early stages, but adoption is growing at a rapid rate. As of December 2017, here are a few of the businesses that accept litecoin as payment:

  • Cryptopet: Cryptopet is a cryptocurrency pet store accepting litecoin and several other cryptocurrencies, including bitcoin.
  • Cheapair: Established in 1989, Cheapair allows you to buy affordable airline tickets with litecoin.
  • Bitify: Bitify is a marketplace and auction site on which you can buy a wide range of items with litecoin and bitcoin.
  • Sean’s Outpost: A charitable organization providing meals and shelter to homeless people in Florida, Sean’s Outpost accepts litecoin by way of donation.
  • Re/Max: Re/Max is a London-based real estate agency which lets people buy and rent with litecoin as well as bitcoin.

 

Litecoin Mining

Mining

How it works

Litecoin mining involves specialized computers which are used to solve mathematical puzzles. If a miner is successful in doing this, they are then rewarded with new litecoin. This is how the currency is created. Those who mine litecoin also help to secure the network by verifying transactions. Litecoin uses a different proof-of-work algorithm than Bitcoin, which means ASICs (powerful computers specifically designed for mining) are few and far between and very expensive.

Unlike bitcoin, you can mine litecoin with a graphics card. Mining for litecoin is a costly process, in terms of time and energy. What’s more, the mining algorithms become increasingly difficult over time, in order to ensure a more steady distribution of the litecoin currency. Many miners join mining pools which allow you to pool your processing power with other miners in order to mine blocks at a more rapid rate. The downside of this is that you have to share the reward. However, going solo means there’s no guarantee you’ll be rewarded. A mining pool is seen as a safer bet.

How to set up

  1. Before you start mining litecoin , you’ll need a wallet to store any litecoin you earn. Take a look at our ‘Wallet options’ section for more information.
  2. Next, you’ll also need to build, or purchase, a mining computer. It should have multiple graphics cards in order to have a greater chance of being profitable over time. Such computers produce a lot of heat so be sure to also install a sufficient cooling system. You could buy an ASIC Scrypt miner, but keep in mind that these are expensive.
  3. Once you have your equipment, you’ll want to join a litecoin mining pool, of which there are many. Be sure to link your wallet to your mining pool account in order to collect your earnings.
  4. Create a worker in your mining pool. This represents the work you do when mining and the process of creating a worker can vary by mining pool. It’s possible to create multiple workers if you have more than one mining rig.
  5. Now it’s time to download a mining program. There are several available. One of the most popular is cgminer. Once the mining program is installed, you’re good to go!

Mining Pools

When choosing a litecoin mining pool, it’s important to consider factors such as the size of the pool, the reward type offered, and the fees charged. Here are two of the main litecoin mining pools:

  • Litecoinpool: Litecoinpool has been around since 2011 and is by far the most popular litecoin mining pool. It is fee-free and features instant payouts.
  • NiceHash: A multi-mining pool formed in 2014, NiceHash is another good option. However, there’s a 3% fee. Additionally, the pool was hacked in December 2017.

Calculate Mining Profitability

It’s a good idea considering the cost of litecoin mining. There’s not only the cost of equipment to consider, but also the electricity consumed. That’s why so many mining pools are located in China where electricity is cheaper. Take a look online and you’ll find there are plenty of mining profitability calculators. There you can input the cost of your equipment, hash rate, power consumption, and the current price of litecoin. The calculator will help you work out how long it will take to break even and eventually profit.

Litecoin Ecommerce

E-commerce

It’s now possible to accept litecoin for payments in your physical or online store. In fact, you can accept a wide range of cryptocurrencies, including bitcoin. It’s certainly worth weighing the benefits of accepting litecoin versus bitcoin, as well as whether you want to accept one or the other, or even both!

How to accept litecoin payments

Litecoin is particularly ideal for payments, thanks to the fast transactions and low fees involved. If you’re a developer, you can accept litecoin payments by integrating litecoin into your website or application.

If you’re a merchant, litecoin can be integrated into your website through an e-commerce service for merchants, such as CoinGate, GoCoin, or CoinPayments.

E-commerce services for merchants

There are multiple e-commerce services for merchants that allow you to accept litecoin payments for your online store. Let’s take a look at the most popular:

  1. CoinGate: With CoinGate, you can accept litecoin and dozens of different altcoins. CoinGate claims to offer the best market rate with no hidden fees.
  2. GoCoin: GoCoin prides themselves on making litecoin integration quick and easy. Integration is possible with a number of different plugins.
  3. CoinPayments: CoinPayments is an integrated payment gateway for not only litecoin , but for dozens of other cryptocurrencies as well.

A person contemplates stablecoins

Your most comprehensive guide to stablecoins

Tamer SameehSep 28, 2018
ImageFlow / Shutterstock

The term stablecoin refers to any cryptocurrency coin or token pegged or backed by an asset with a relatively stable price, such as fiat currencies or gold. A stablecoin can be under control of a central entity, such as Tether (USDT), or a Decentralized Autonomous Organization (DAO), such as Dai, a stablecoin which is issued on the Ethereum network. Nubits is another stablecoin which is partly controlled by a DAO, but is also under control by a central authority, representing a hybrid issuance model.

A stablecoin is typically backed by a reserve asset that has the exact equal value of the coin/token. The reserve can be a fiat currency, a precious metal (e.g. gold), or a cryptocurrency. The issuer, whether it is a central entity, or under control of a DAO, should only issue an amount of stablecoins equal to the reserve they own. New coins can be issued only when the reserve grows.

How do we define stability?

What is stable? To be considered stable, a currency or asset’s value has to experience only minor fluctuations, such that its value remains relatively steady over time. Is bitcoin stable? As of yet, we have not seen bitcoin stable in terms of value.

Why do we need stablecoins?

Why are we seeing so much interest in stable crypto? The truth is that while the volatility of cryptocurrency values makes them a popular choice for those who enjoy high-risk investments, this volatility isn’t ideal for those who actually want to use their cryptocurrency. Until we start to see a stable BTC value, people are going to look for alternatives. A stable coin can be seen as an attempt to marry the best parts of digital currencies with the relative stability of real-world assets.

The four most common uses of stable cryptocurrency are as follows:

  1. To create stability in cryptocurrency trading pairs in forex-style trades. Tether (USDT) was frequently used for this purpose, though recent concerns about that currency (explained later in this article) has lead to many exchanges replacing it with other stable coin options.
  2. Professional investors and hedge funds can use stablecoins to diversify their portfolios in times of market instability. You’ll see institutional investors in the coming months and years trying to determine what is the most stable cryptocurrency to use for this purpose.
  3. Because a stablecoin has a steady and predictable value, it can be used for transactions as easily as a fiat currency. Those with an interest in seeing mass adoption of cryptocurrency see stablecoins as a natural step towards this goal.
  4. Similarly, their stable value makes stablecoins the ideal medium for recurring payments such as salaries and rent. The current volatility of major cryptocurrencies can make it difficult to use them for monthly payments, as the value can swing wildly from month to month. Stablecoins may be especially attractive to blockchain startups who want to make a statement by paying their teams in cryptocurrency.

Popular Stablecoins

Let’s take a look at some of the most popular stablecoins across the cryptoverse.

Tether (USDT)

Tether (USDT) is a stablecoin that is issued by Tether Limited, which claims that each USDT is backed by one USD (often cited when making a stable currency definition). However, the company has never managed to provide audits for the token’s USD reserve. Most cryptocurrency experts believe that Tether Limited was printing millions of Tether that had no USD backup. The main objective of USDT is to facilitate exchange transactions between cryptocurrencies and fiat currencies with a rate pegged to the USD.

USDT is issued on Bitcoin’s blockchain via the Omni Layer Protocol. Tether Limited claims that each USDT is backed by one USD held in the company’s reserve, yet users cannot necessarily redeem them via the Tether Platform or partnering exchanges. USDT can be stored and transacted just like any other cryptocurrency. To transact and store Tether, users have to have an Omni Layer-enabled wallet such as Holy Transaction, Ambisafe, or Omni Wallet. USDT offers an alternative means to Proof of Solvency via introduction of a Proof of Reserves process.

The USDT Proof of Reserves system, the number of USDT tokens in circulation, can be checked on Bitcoin’s blockchain via the tools available on Omnichest.info. The amount of USD comprising the backup reserve can be proven via publishing the company’s bank account balance and undergoing periodic audits performed by professional auditors, who publish the financial transfer statement and the bank’s account balance of Tether Limited.

During the period between January 2017 and September 2018, the volume of circulating USDT rose from around $10 million to more than $2.8 billion. During the early months of 2018, USDT represented around 10% of bitcoin’s total trading volume, yet during the third quarter of 2018, it accounted for around 80% of bitcoin’s trading volume.

In June 2018, USDT was the tenth biggest cryptocurrency by market capital. Researchers and crypto experts proposed that a price manipulation scheme that exploited USDT, accounted for around 50% of the rise in bitcoin price during the fourth quarter of 2017.

USDX

To solve the problems associated with USDT, USDX was created to bridge the gap between cryptocurrencies and fiat. The USDX token is pegged to the USD via a novel logarithmic protocol, mitigating the risks that accompany the usage of USDT or other stablecoins.

USDX promotes stability of its value through its algorithmic central bank, which boosts and reduces the total supply of USDX tokens to match the value of USD in real time. A market price feed is delivered via Oracle Feed, which extracts price data from multiple exchanges. To boost transparency, exchange rates have to be accepted or dismissed via randomly selected token holders. Through this process, the system boasts a decentralized, trustworthy means to accommodate value indicators.

Despite the fact that USDX is not the only stablecoin that utilizes a transparent, elastic supply mechanism, its founders claim that it promotes superior decentralization and stability via its innovative algorithmic protocol.

TrueUSD (TrueCoin)

TrueUSD (TrueCoin) was developed to solve USDT’s problems, as it is based on regular auditing, maximum levels of transparency, full backup reserves (collateral), and legal commitment to exchange TrueCoin tokens to USD whenever needed. The company plans to create stablecoins pegged to the Euro, Yen, precious metals (gold and silver), and other assets (real estate, stocks, etc).

While USDT is marked by a centralized and suspicious architecture, TrueCoin has partnered with a wide range of chartered banks and trusts to make sure that there is a transparent reserve of USD backing up the stablecoin. The strong legal architecture of TrueCoin represents a clear improvement upon the questionable nature of USDT. When you buy a TrueUSD token, you are legally an owner of one USD that is fully redeemable upon request.

Havven

Reliance on unrelated assets such as fiat currencies or altcoins poses a serious challenge when it comes to the development of stablecoins. Havven was established to provide the market with a decentralized payment network and a stablecoin solution that defies volatility. nUSD is Havven’s first nomin, which is a stablecoin pegged to the USD. Havven is planning to issue nomins for several fiat currencies, towards the end of 2018, including nGBP, nEUR, nJPY, and nAUD.  

Havven’s system is based on a dual token design that offers a stablecoin solution that is on-chain, asset backed, and decentralized. Nomins are backed up by the value of the system’s collateral token, havven. The value of havvens originates from fees charged by nomin transactions, which reward holders of havven tokens for staking their tokens. Overall, nomins’ value is stabilized via nomin holders, who are rewarded with the ability to control the overall supply via the percentage of fees they receive. Havven, the company, holds 80% of the total supply of havven tokens in escrow, to shield the system against the aftermaths of price drops accompanying large scale sell-offs.

Havven is endorsed by a group of the world’s top cryptocurrency investors and funds, including AlphaBlock Investments, BlockTower Capital, and GBIC. Furthermore, the company has also announced future partnerships with some projects that will rely on nomins for providing a stable medium for transacting including intimate.io, MARKET Protocol, Swapy, and others.

Rockz

Rockz is a stablecoin that is pegged to arguably the world’s most stable currency, the Swiss franc (CHF). For every Rockz token issued, one CHF is held as a backup reserve, legally enforceable by the company. 90% of the total CHF backup reserve of Rockz is held in paper form and stored in vaults secured high in the Swiss mountains. The remaining 10% is held in some of Switzerland’s most trusted and secure banks to promote liquidity.

Every holder of Rockz tokens has the full enforceable legal right to the corresponding amount of CHF. As such, in the event of the company declaring bankruptcy, token holders will have direct access to their funds secured in the vaults and/or Swiss banks.

Every month, Rockz’s holdings are audited via a trusted third party auditor, so that token holders are transparently assured that 100% of their investments are solidly backed by the CHF collateral. Rockz is a stablecoin that can help crypto investors ride out periods of extreme price drops without having to convert their crypto holdings to fiat and deal with high fees and taxes.

MakerDao/DAI

DAI has been issued to solve some of the problems associated with stablecoins, especially those pegged to fiat currencies. Mainly, whenever a stablecoin is backed by fiat currencies saved in bank accounts, manipulation and legal actions taken against the holder of the bank accounts will jeopardize the token’s value.

The creator of the MakerDAO coin solves this problem via the use of Ethereum’s smart contracts to promote stability. Instead of purchasing DAI coins, users create it after locking up their ETH in the Maker system. When a user doesn’t need their DAI coins any more, the CDP smart contract will return to them the same amount of ETH that was collateralized. To mitigate the problems associated with ether’s price volatility, DAI boasts an automatic liquidation process whenever ether’s price drops. The ETH locked up by the CDP smart contract is proactively auctioned off right before its price falls below the value of the DAI it backs up.

Basecoin

Basecoin’s approach to stablecoins is very innovative. In contrast to other stablecoins, the concept behind Basecoin is very simple. Basecoin’s value is pegged to either an asset or an index, such as the Euro, USD, Consumer Price Index, SP500, or others. Via continuous monitoring of price feeds, the total supply of Basecoins is automatically modified to offer a stable value.

Basecoin also relies on another pair of currencies; Base Shares and Base Bonds. These currencies serve as an economic incentive for holders of the token to adjust the token supply by exchanging their Basecoins for bonds, which opens the door to users to earn profits on their investments. Shares are issued whenever the supply has to be boosted. Both of these processes promote the stability of Basecoin’s value.

Even though Basecoin will be initially pegged to fiat currencies, this is planned to shift to an index offering promoting decentralization of the whole system, price stability, and complete independence from reliance on fiat for token pegging.

DigixDAO

DigixDAO was the first company to issue a stablecoin pegged to gold. DigixDAO issued two tokens on Ethereum’s blockchain; DGX and DGD. One DGX token has the value of 1 gram of gold, and is backed up by real gold. DGD tokens offer their holders voting power that is proportionate to the amount of tokens they hold.

Seigniorage Shares

Seigniorage Shares is a non-collateralized stablecoin. It is intended to form a central bank via smart contracts that can continuously issue a currency with a value of $1 to control the overall supply. The smart contract is programmed to issue new coins and offer them for sale whenever the price skyrockets, until the price drops back down to $1. As such, the smart contract will generate profits. On the other hand, buying Seigniorage Shares coins takes place to reduce supply, which will lead to a rise in price.

Basis.io

Basis.io is an algorithmic stablecoin offering, designed to expand and contract supply, similar to the way central banks buy and sell fiscal debt. The intention is therefore to stabilize purchasing power, as when demand rises, the blockchain will create more Basis. This expanded supply is designed to then bring the Basis price back down. It’s important to note that there are no tangible assets with Basis, but the system creates incentives designed to build up a stable equilibrium for the currency. The more that Basis grows, the stronger its status as a potential medium of exchange, and the stronger its stable equilibrium. The company has raised $133M from an impressive list of top VCs.

Terra Money

This is another stablecoin which expands and contracts supply algorithmically, with a Stability Reserve intended as a decentralized guarantee of solvency. Most central banks maintain reserves via foreign currency and gold, and similarly, Terra’s Stability Reserve finances contraction of the Terra money supply whenever necessary. The company has the ambition of Terra becoming a global currency, and it is designed for mass adoption, with an eye to making everyday transactions possible. Terra has raised $32M from Exchanges and VCs.

Other stablecoins

Other stablecoins that are backed by crypto include Shelling Coin and TruthCoin. Digix Gold and OneGram are backed by gold. Kowala, Stably, Augmint, Carbon, Nubits, Gemini dollar, Paxos, Nushares and USDC are stablecoins pegged to the USD. GJY is a stablecoin backed by Japanese yen. EURS which is stable crypto backed by EUR

Final thoughts

Even though some of the stablecoins discussed might seem promising, picking the winning horse among them can be quite confusing. Governments might have begun to accept cryptocurrencies, especially in that they support the shift towards a cashless society. However, the high volatility of crypto and the fact they are non-collateralized currencies are the main reasons that governments remain reluctant to accept mass adoption of crypto. As long as governments have to ask “How stable is bitcoin?” we can’t count on them to trust it. Stablecoins might be the answer to governments’ fears, but we have yet to witness the birth of a stablecoin that perfectly adheres to the principles of the blockchain technology: decentralization, full transparency, optimum security, and immutability.

This article is part of Cointelligence’s Stablecoin Week! For more information and opinions about stablecoins, see What does ‘stable’ mean? and Subjecting stablecoins to the duck test and A stablecoin fairytale.

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City skyline with an overlay of transactions via security exchanges

An Overview of Security Token Exchanges Expected to Launch in 2019

Tamer SameehSep 5, 2018
Pushing Images / Shutterstock

The year 2018 has definitely witnessed the breakthrough of security tokens. The blockchain technology has permitted the tokenization of various forms of securities and assets. It is inarguable that security tokens have made it possible to tokenize almost everything that bears a value including equities, goods, real estate, fundraising, futures, credit, time based rentals, service leases, creative products such as music, art, and literature, credit, futures, and more.

Security tokens are revolutionizing security markets and mitigating most of the problems associated with conventional security trading. The blockchain technology promotes transparency as all trades and ownership records are stored on public ledgers which cannot be tampered with. Security tokens make it possible to tokenize securities, so financial assets such as stocks, bonds, futures, equities, swaps, and forwards can all be managed via distributed ledgers.

However, where will security tokens be traded? Presently available cryptocurrency exchanges are not equipped to support security token trading. Moreover, most exchanges don’t have the necessary licenses to permit the trading of securities. As such, licensed security token exchanges have begun to emerge to fill this gap and provide liquidity for the security token market.

Obviously, security tokens will attract an enormous share of Wall Street’s money during 2019. This expected shift has urged many venture capitalists and entrepreneurs to invest in the establishment of security token exchanges during the past couple of years. Throughout this article, we will take a look at security token exchanges that are expected to launch in 2019 and 2018’s fourth quarter.

Before we get started, let’s explore the most important security token exchanges that have been already established and are currently promoting liquidity of the security token market.

Current Security Exchanges

BankToTheFuture (BTF)

BTF is a crypto security investment platform that is only open to professional investors. To qualify to join BTF, investors have to have an annual income of over $200K, and should be able to invest at least $1,000 with them.

BTF is trying to establish itself as a market for blockchain-based projects that issue security tokens, shares, conventional bonds, futures, and other forms of tokenized securities.

By issuing their native token, BFT, they have taken a big step towards bringing together the highest net worth investors interested in tokenized securities, cryptocurrencies, and other forms of Fintech solutions.

tZero

tZero is the brainchild of Overstock which has been established to serve as an exchange for security tokens. The greatest thing about tZero is its user interface which is extremely friendly and easy to use. The platform boasts front-end integration of a risk management system, an order management system, an order matching engine, place orders, market orders, proprietary technology, and full support for security token trading.

tZero has partnered with Polymath to simplify the legal process of issuance and trading of security tokens. Polymath has innovated a new Ethereum based token standard, the ST20, which can only be owned and held by a list of authorized Ethereum wallet addresses, which have completed KYC verification procedures, which enforces compliance with government regulations.

tZero recently concluded the private sale phase of its security token (TZRO) which lasted til the end of August; that’s when the trading platform went live.

Bancor

Bancor has innovated the Smart Token protocol which is the seed for a decentralized cryptocurrency exchange. Smart Tokens can be continuously and autonomously converted to other tokens on the network using a technology that operates in a manner that is somewhat similar to Atomic Swaps.

Bancor has joined the world of Security Token exchanges. Literally, the Bancor protocol is fully compliant with security token trading and the BNT token will act as a connector token, or a bridge token, that can intermediate the exchange between any pair of security tokens.

Now, let’s take a look at the security token exchanges that are expected to launch during Q4 2018 and 2019.

Forthcoming Security Exchanges

Gibraltar Stock Exchange

The Gibraltar Stock Exchange (GSX) is a Gibraltar based stock exchange. GSX was the first fully licensed stock exchange in Gibraltar. The exchange was fully operational in 2015’s first quarter. In October 2017, the CEO of GSX announced the establishment of a new subsidiary for the exchange, the Gibraltar Blockchain Exchange (GBX), which aimed at the establishment of a regulated utility token marketplace. Soon after the GBX announcement, GSX Group Ltd. confirmed that it was planning to revamp the group’s stock exchange (GSX) to become the world’ first ever regulated security token exchange.

Even though trading of security tokens was planned to kick start by the fourth quarter of 2018, delay in regulatory approval by the Gibraltar Financial Service Commission (GFSC) led to adjournment of the process to the first quarter of next year. The launch of security token trading on GBX will mark a big moment for the crypto community as security tokens become recognized by an EU licensed stock exchange.

Coinbase

Coinbase, the popular US-based cryptocurrency exchange, has announced that it is on track to enable security token trading on its platform. Being based in the US, acquiring the necessary banking licenses and brokerage statuses can take years. To overcome this, Coinbase has decided to merge with companies that already have the required licenses and registrations. That’s why Coinbase has successfully purchased three financial institutions: Venovate Marketplace Inc, Keystone Capital Corp, and Digital Wealth LLC.

Approval of these acquisitions by the government will help Coinbase acquire the legal standing of a full brokerage, which will enable the exchange to launch security token trading on its platform. It is expected that users will be able to trade security tokens on Coinbase in 2019, yet a specific date for the launch of Coinbase’s security token exchange hasn’t been announced.

Templum

Templum is another US based security token exchange that is planned to launch in 2019. Templum Markets LLC is a subsidary of Templum that is established to permit issuance and trading of various forms of tokenized assets.

Last February, Templum acquired Liquid M Capital, which gave the company access to an ATS, enabling a secondary market for the institution. Via the ATS, Templum will be able to offer security token trading on its platform in compliance with the US SEC regulations.

Even though Templum’s trading platform is live, the listed tokens are very few. So far, BanQu was the only company to conduct a TAO, and BCAP is the only secondary trade successfully completed. Templum has just partnered with CUSIP Global Service to be able to bring the standardized identification number to ICO security tokens.

The platform is expected to be completely developed in 2019, enabling security token trading that is fully compliant with the US SEC regulations.

SharesPost

In 2009, SharesPost was established to open the door for online private equity secondaries. Today, SharesPost has over 50k accredited investors and has executed more than $4 billion worth of shares transactions for over 200 technology companies.

Last May, SharesPost announced that it would revamp its current ATS to be able to offer security token trading on its platform. Thereafter, the company announced in June that it managed to close a $15 million Series C round that had been led by LUN Partners and Kinetic Capital to expand their ATS and open markets in Asia. SharesPost’s CEO aims at creating a global marketplace for trading of both conventional and tokenized security assets of various private companies.

Australian Securities Exchange

The Australian Securities Exchange (ASX), Australia’s primary stock exchange, announced in 2017 that it was working on becoming the world’s first stock exchange to develop an infrastructure for its trading platform based on the blockchain technology. ASX planned to use public ledger technology to replace its clearinghouse framework, known as Clearing House Electronic Subregister System (CHESS) to offer traders improved system efficiency, security, and reliability. Australia’s top stock exchange is actually developing their own blockchain, i.e. “permissioned blockchain”, to tokenize securities for the equity market in Australia.

Even though ASX planned on launching its security token trading platform in Q4 2020, the exchange’s board has announced recently that the launch date was adjourned to March/April 2021. ASX started exploring various applications of the blockchain technology in 2015, in order to be able to replace the exchange’s settlement, registry, and clearing system with a blockchain based system developed via collaboration with Digital Asset (DA), a software company specializing in the development of distributed ledger based solutions for financial institutions.

The new trading platform will operate on a permissioned blockchain where registered account holders will have to obtain clearance to be able to use it, while ASX will represent the only party with the ability to commit financial transactions to the ledger. As such, the new platform will represent a centralized network for trading of tokenized securities.

Malta Stock Exchange

Malta Stock Exchange has just inked a number of deals aiming at enabling MSX, the fintech arm of the exchange, to launch a trading platform for tokenized securities. These deals will see MSX partner with Neufund, a platform for the issuance of security tokens, to build a decentralized, fully regulated, stock exchange for trading of tokenized securities in addition to security tokens.

The partnership is planning a pilot during the next few month, which will include an ICO hosted on Neufund’s primary market, and the ICO tokens will later on be listed and traded on Binance (via means of a separate agreement with Neufund).

MSX is working closely with the regulators in Malta to comply with the Malta Financial Services Authority Act. Malta has emerged as a haven for blockchain investors, with big businesses like OKEx and Binance relocating to the country, which has been referred to as the “blockchain island” during the past few years.

SIX Swiss Exchange

SIX Swiss Exchange, Switzerland’s primary stock exchange, announced last July that it is developing a fully operational trading, settlement, and custody platform for security tokens and tokenized securities. The exchange’s new project, which has been named “SIX Digital Exchange” (SDX), is intended to be the world’s first end-to-end exchange for tokenized asset markets. SDX will tokenize existing conventional securities and other forms of non-bankable assets to boost the liquidity of illiquid assets. Furthermore, SDX’s services will include the issuance, listing, and trading of security tokens. SDX will be fully compliant with the regulations of the Swiss financial regulator FNMA, and endorsed by the Swiss National Bank, similarly to the SIX Swiss Exchange.

London Stock Exchange

London Stock Exchange, one of the world’s earliest stock exchanges, announced last July that it is collaborating with UK’s main financial regulator, the Financial Conduct Authority (FCA), in addition to two UK based firms; 20|30 and Nivaru, to issue tokenized equities in a UK based company in full compliance with the regulations of UK’s Financial Conduct Authority.

The planned partnership will utilize LSEG’s Turquoise platform, a hybrid exchange that offers a broad universe of European equities. The equities will be based on Ethereum’s blockchain and will be mainly comprised of ERC20 standard tokens. Later this month, 20|30 will be the first platform to test the process. Following a one year lock-up period, the service will be launched to the public, enabling startups and corporations to tokenize their shares. Interestingly, a large number of companies are awaiting to test out the process.

Final Thoughts

Finally, it is worth mentioning that all these emerging security token exchanges and trading platforms for tokenized equities represent just the beginning of a new era that will take equity markets to a whole new level. Blockchain based security tokens offer traders a myriad of efficiencies and advantages that promote transparency and security. Even though a considerable percentage of the world’s conventional financial institutions are resisting utilization of the blockchain technology, the market has just begun to adapt, as we’re witnessing the emergence of many trading platforms for security tokens and tokenized equities during the upcoming year. As more and more people are beginning to realize the advantages of the public ledger technology, the market will definitely start moving towards a new model based on tokenization of assets.

I wouldn’t be surprised if all of the world’s equity markets shift to the blockchain within the next few years. Who knows? Let’s just wait and see!

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A vintage detective investigates ICOs in black and white

Quick way to spot an ICO scam

HarelAug 31, 2018
sergign / Shutterstock

Everybody knows that it’s important to perform your due diligence before any investment in the ICO industry. But few people seem to understand what that actually means. One of our missions is to teach people how to spot a scam, rather than relying on others to do it for them. In the interest of increasing your own self-reliance and ability to outwit the scammers, we’re presenting a new tutorial on how to validate image authenticity on ICO websites.

Know your templates

As we’ve mentioned before in our above-linked guide, many ICOs use ready-made website templates as a way to both present the ICO without a lot of effort and save money on web design. While some of these templates give ICOs a base structure and allows them to use it to create a very personalized page, others offer a completely generic pack with very few possible changes.

Becoming familiar with the most common ICO templates, and what they look like in their unmodified forms, is a valuable tool in your scam-prevention arsenal. One common red flag is when the ICO has not changed the default images that come with the scheme. Let us demonstrate.

In this case, we searched for the image of the mobile application presented on the website of Referpay Network, a known scam. This image was originally used in the template from which this website was created.

Default image of an app from ICO website

By simply searching this image, we found that more than 70 ICO websites had never changed this image and are still presenting it as their “app-to-be-developed” on their website. It didn’t stop there.

We went through each one of these websites to confirm that the actual image is still there. As we discovered two very interesting things:

  1. The vast majority of these sites were scams. Luckily, about 90% of these scams had already ended in February. Unfortunately, there are 7 scams that are still active (which we will be publishing in the coming week). All initially connected by the same image. One of these scams has actually created a wallet app that looks exactly like the image, yet does nothing.
  2. Although the majority of the websites had a false link to the various application stores, some of the sites had links for the HB Wallet app on all the stores. We followed up with HB Wallet, and they stated that there is no connection between them and these wallets.

Image searching: quick, easy, necessary

This is a great example of how important it is to Google the images used on an ICO’s website. This wasn’t a team member’s profile picture or something buried in the whitepaper, it was prominently displayed as the mobile app image.

But how do you search for an image? It couldn’t be easier! Simply right click on the image, and click on “Search Google for image”. See many results, from different sources, containing that image? Congratulations, you have found a stock picture.

Not sure which image to Google? Since it’s so quick and easy, we recommend searching every image that presents information about the ICO. Team members, apps, charts, and graphs should all be investigated. And remember, you can save yourself a lot of search time by familiarizing yourself with the most common ICO templates and the images they use, so that you’ll recognize them when you see them later. The more you research and investigate ICO websites, the more you’ll start to develop a hunch about what images have been carried over from the default or stolen from other sites.

We hope that this guide will help you in your efforts to spot ICO scams!

 

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