IDAX froze withdrawals and deposits, but trading volume is increasing by trillions every hour

This morning, IDAX exchange froze withdrawals and deposits after reporting that the Global CEO has been missing for days. IDAX didn’t go into any further explanation about why funds were frozen, but it is implied that the Global CEO would be able to withdrawal users money at will.

The situation could also be related to China cracking down on crypto exchanges, as IDAX stopped serving Chinese customers last week and it is a China based exchange.

After the news settled, we noticed that IDAX volume is still increasing on their website, by seemingly 1 trillion dollars every 10 minutes. It is possible that they have a ticker inaccurately summarizing their average volume and forgot to turn it off, or it can be a sign that funds aren’t actually frozen.

IDAX volume increasing after being shut down

DeFi fans have taken advantage of this occurrence to vocalize how risky it is to leave money on centralized exchanges.

“The disappearance of the CEO of Chinese crypto exchange IDAX shed a light on the ever-growing problem of crypto exchange centralization,” Cryptoslate tweeted.

By now, “exit scam” is becoming unfortunately common terminology in the crypto space, especially with the looming threat of BitMEX being investigated by U.S. regulators. Exchanges that don’t comply with government regulations simply can’t be held accountable to the same extent that TD Ameritrade would be, which is why decentralization can be so appealing when it comes to crypto exchanges.

In reality, the chances of TD Ameritrade exit scamming is much less likely than any crypto exchange that doesn’t require KYC. Anyone can start a crypto exchange, and for all users know, there might be language in an agreement that can allow them to close the exchange and take all of the funds. Obviously, with enough evidence a scammer would be taken down, but this Global CEO disappeared, just like anyone else could.

 

The Giving Block started #BitcoinTuesday, but they plan on sticking around for much longer

GivingTuesday is an initiative started in 2012 that encourages people to make donations after they’re done buying gifts5 during Black Friday and Cyber Monday. This year, #BitcoinTuesday (Dec. 3rd) was created by The Giving Block in an attempt to capture some of the attention and generosity of people who might have more crypto to give than cash.

Alex Wilson and Pat Duffy created The Giving Block to provide a solution that allows nonprofits to easily accept crypto donations. Wilson was an emerging tech consultant and Duffy worked at a nonprofit when they both realized the demand for this type of service.

“We noticed hundreds of millions of dollars being donated to nonprofits in the form of cryto, but most nonprofits having no idea how to accept it.” – Wilson told Cryptocult

Since The Giving Block’s start over a year ago, they have connected with over 100 nonprofits such as The Mona Foundation, Tor Project and Save the Children. Recently, The Mona Foundation even had Rainn Wilson, who played Dwight in The Office, vouching for crypto donations through The Giving Block’s Service.

For #BitcoinTuesday specifically, The Giving Block was able to obtain sponsors including Brave and Gemini to help with promotion and fees.

“Brave for example is doing an ad takeover for Bitcoin Tuesday, while Gemini is putting up some of their exchange fees that day as match dollars.”

Gemini is a key part of their ability to accept multiple crypto assets. The Giving Block uses the Gemini exchange along with their own platform to nonprofits access to Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Zcash, and the Gemini Dollar. This is also how nonprofits are able to convert to USD right when a donation is made.

Wilson says that because the donations always go to a 501c3 nonprofit, the donor and nonprofit do not need taxes. Still, some services/products The Giving Block provides can take away from the donations.

“Because the donations always go directly to a 501c3 nonprofit (we are not a middle man), the donor and nonprofit both do not need to pay tax.”

There are other options that allow people to donate and not get taxed, but The Giving Block has filled the niche of allowing various types of cryptocurrencies. Even though people may be hearing about them for the first time because of #BitcoinTuesday, they’re ensuring donors that the platform will be open year round.

Why is everyone competing over a digital dollar?

Within the past few months, a centralized digital dollar has been brought up by major nations such as China, the United States and Europe. When Facebook introduced their Libra coin, it caused fear in many governing bodies that their powers could be taken away from them, because of the reach and efficiency of digital currencies.

Even before Libra, countries have been thinking of ways to dethrone the U.S. dollar. So, Why is everyone suddenly so inspired to compete? and how could a digital dollar be considered a threat to national security?

Europe on competing with Visa and creating a digital currency

“A central bank digital currency could ensure that citizens remain able to use central bank money even if cash is eventually no longer used”. – Benoît Cœuré

The most recent conversation about a central bank backed digital currency was had in Europe at the Joint Conference of the ECB and the National Bank of Belgium. Cœuré, Executive at the ECB, named many reasons for this consideration. Untested stablecoins like Libra as a threat, foreign run cards dominate European transactions, and like everyone else, they’d like to take some power away from the USD.

Another recent European announcement, the Pan European Payment System Initiative, (codename, Pepsi) intends to compete with Mastercard and Visa by allowing faster transactions. The project is backed by 20 major European banks including BNP Paribas and Deutsche Bank, and would allow transactions to settle instantly in the Euro area. Cœuré mentioned that the EBC would assist in making that technology a possibility.

China’s loves being cashless, and might be the first with a digital dollar

China has had plans for a digital currency for several years, under the acronym DCEP. Things were going slow until August 2019 when there talk of Libra’s currency was floating about the internet. Suddenly, as The Block reported, China’s Central Bank became ready to “soon release” their digital currency.

The Chinese renminbi is already a powerful currency, with central banks holding about $213 million worth in the first quarter of 2019. The country also has been very progressive in becoming a cashless nation. In a recent Unchained Podcast, hosted by Laura Shin, media figure Dovey Wan said that China was looking to add privacy features to their digital currency that, heavily used, Alipay doesn’t give to users.

Because of China’s knack for digital payments, it’s not surprising they are looking like the first to the chase when it comes to a digital dollar. It has not been specified what tech will support the currency, but recently, Chinese President, Xi Jinping expressed expressed support for Blockchain technology.

The U.S. is slow, but fear is driving change

After Libra’s congressional hearing, a top U.S. federal official spoke out about the U.S. considering a digital currency. This could have been triggered by conservatives at the Libra hearing mentioning feeling threatened by China beating them to the tech, or because a former CFTC chair had just published an Op-Ed encouraging the U.S. to create a digital dollar.

The U.S. is pretty far behind in adopting digital technology, being one of the most strict nations in terms of crypto regulations. One thing that the U.S. has going for it is that Facebook is an American company. The Libra Association’s strongest members are made up of mostly big U.S. corporations. This is likely one of the reasons that China wants to be the first to create a digital currency.

Still, Libra is a polarizing topic in U.S. politics and Facebook won’t release it until regulators approve. Unfortunately for Facebook, regulators aren’t very keen on the coin.

Why digital cash is a threat to nations who fall behind

Let’s be clear, no cryptocurrency or blockchain project have been able to test a userbase to the extent of what a digital currency would acquire. That being said, EOS transacts faster than Visa, Ripple has proven to save time and money for companies like MoneyGram and this type of tech is still in it’s youth.

So, disregarding the unproven effectiveness of servicing a majority of the world, let’s imagine everything works out. If China is the first to release a scalable, cheap, efficient and easily accessible digital currency, then then everyone would have some sort of incentive to use it.

The digital token would be as stable as any other national currency because of central bank backing. It would be ideal for sending money across borders, it would be cheaper for retail merchants too transact with, and even when sending money to a friend, users wouldn’t have to pay any sort of significant fee to receive it instantly.

China would have no reason to keep the currency within their borders. In fact, Alibaba, owners of Alipay would be one of the first to receive the currency and Americans can download Alipay on their smartphones. It would take significant effort for every retailer in America to accept the currency, and for American employers direct deposit salaries into it, but it would be possible if America never caught up.

There’s tons of economics behind why the U.S. government wouldn’t want their citizens using Chinese currency, but just believe that they do not. It would eventually lead to a weaker dollar, which could change global industries and power structures.

Back in 2009, China and Russia were expressing their desire for a global reserve currency to provide more stability than relying on the U.S. That never worked out, and now they’re both more progressive with financial tech than the U.S.

I wonder why.

Fold releases new Bitcoin cash back app. Earn and spend at Amazon, Starbucks, Delta and more

Fold just released the final version of their new app that lets users get cash (in the form of Bitcoin) back from spending at Amazon, Target and more. It works through buying Fold registered gift cards through the Lightning Network. When you spend, they refund you a percentage.

Currently there are 17 merchants to buy from, including Starbucks, Chipotle, AMC, Delta and Uber. The least return users will get for purchases is 2% at Home Depot and the most they can get is 20% back from P.F. Changs.

Fold’s CEO, Will Reeves told Decrypt that Fold rewards are instant. Presumably, Fold is able to see purchases made with gift cards, then their system refunds Bitcoin via the lightning network.

“they can spend it on future purchases, save it, or withdraw it their personal wallets.” – Will Reeves

Users are also able to remain anonymous on the app because transactions are recorded as being from Fold rather than the actual customers.

Fold is able to give cash back rewards because companies save on credit card fees by teaming up with them. Cash (Bitcoin) back competitors use their status as affiliates with companies to provide returns for customers. Fold combines payments with rewards in order to provide greater returns.

One demographic that this could really gain traction for is crypto traders. Within the amount of crypto traders that are profitable, there is a group that purchases consumer goods through gift cards in order to avoid taxes on selling crypto, which can get pretty high.

Many of them trade on sites that don’t have KYC policies, so for all the government knows, they could have been given their crypto from a friend. Instead of exchanging the Bitcoin to fiat, they buy gift cards with Bitcoin earned to pay for expenses other than food and rent.

With Fold’s selection of stores, they are able to provide customers with all clothes and food from Target, electronics from amazon, a few places to eat and a some of the most popular airlines for travel. It’s a pretty good start for those who try to keep as much money as possible in Bitcoin.

0x hopes to solve DeFi’s liquidity problem in v3

0x is a protocol whose initial function was to allow developers to build exchanges off of their platform. With v3 on the way, they plan to not only connect exchanges that build off of their protocol, but connect any exchange in DeFi together and even tap into locked up value. Their proposals are very intriguing as one of the main things holding back DeFi’s success is exchange liquidity.

DeFi’s liquidity problem

Decentralized Finance (DeFi) is pretty cool. Developers have found ways to let users lend, borrow, exchange and use margin with accessible interfaces, in a decentralized fashion. The biggest issue plaguing the growth of DeFi is the lack of liquidity. If you are a guy with $1000 to trade, you might be able to trade DAI for ETH around listing price, but once anyone trading at a larger scale is bound to experience extreme slippage.

Right now, on DyDx‘s most liquid market, ETH-SAI, typing in $5000 dollars will impact the price by 3.25%. On an exchange like BitMEX, a $5000 order would incur very minimal slippage, and therefor incentivize traders with serious money to stay on a centralized platform.

Oasis, an exchange that sources liquidity directly from Maker has even worse slippage for $5000 worth of DAI. The same order on Maker’s platform would incur 12% slippage, a trade that no sane person would take. To be fair, there is much less DAI in circulation than SAI, and instead of ETH, they sell W-ETH, but still it is a flagship token on their flagship exchange.

The 0x solution

According to DeFi Pulse, there is about $650 million locked into DeFi. $300 million is locked into MakerDAO’s protocol which is used to produce around $100 million worth of DAI. Another $150 million is locked into Synthetix which produces a variety of stable coins that are traded on their derivatives platform. The third largest source of locked value is Compound which acts as a  pool for users to borrow and lend from.

DeFi doesn’t have credit scores, so all borrowers over-collateralize in order to receive loans or mint coins as a form of insurance. This means that much of the locked up value is actually just sitting, waiting to save the borrower from liquidation.

0x has reportedly created mechanisms to access locked value which could created millions of dollars worth of liquidity. Still, the liquidity will be split up by however many exchanges are plugged into 0x protocol and it is hard to gauge exactly how much value will be available.

Along with accessing stagnant value, they have implemented “bridge contracts” to access liquidity from networks like Kyber, Uniswap and Oasis. With all of this aggregation, it seems like exchange consolidation would be the next step to creating a market that competes with centralized standards.

To top it all off, they have provided incentives for market makers by reallocating fees.

“ZRX staking mechanism gives market makers monetary rewards (in ether) and additional ZRX voting power for providing liquidity.” – 0x

With this, 0x governance will be in the hands of market makers because they are in such high demand.

“Market makers are important stakeholders in the 0x ecosystem, as they provide the liquidity necessary for markets to function and are directly incentivized to support proposals that result in new markets and greater trade volume.” – 0x

0x plans to release version 3 on the mainnet, December 2nd. Watch the detailed presentation here: