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<ul class="summary-list"><li><keyword id="13037119" type="UNKNOWN" weightage="60" keywordseo="dappradar" source="Orion">DappRadar</keyword> sees 80% of <keyword id="11899100" type="UNKNOWN" weightage="60" keywordseo="defi" source="Orion">DeFi</keyword> apps vanishing if the <keyword id="11893898" type="UNKNOWN" weightage="60" keywordseo="crypto" source="Orion">crypto</keyword> bear run lasts, according to a Bloomberg report.</li><li>Plunging crypto has seen <keyword id="12681147" type="UNKNOWN" weightage="60" keywordseo="liquidations" source="Orion">liquidations</keyword> and usage drop in DeFi apps, Bloomberg reported Tuesday.</li></ul>Four out of five DeFi apps could disappear if the crypto rout lasts for a year, says DappRadar, according to a <a href="https://www.bloomberg.com/news/articles/2022-01-25/defi-shakeout-seen-as-liquidations-lead-to-crypto-user-exodus?utm_source=twitter&amp;utm_campaign=socialflow-organic&amp;utm_medium=social&amp;utm_content=crypto">Bloomberg report</a> Tuesday."As far as <keyword id="12751906" type="UNKNOWN" weightage="60" keywordseo="crypto-winter" source="Orion">crypto winter</keyword>, DeFi dapps have never gone through it," Pedro Herrera, senior data analyst at tracker DappRadar, was quoted as saying by Bloomberg."They have experienced crashes, but this feels like a prolonged one. Probably 20% of the apps that hold 80% of the industry value will survive," he said.Cryptocurrencies have come under intense pressure so far in January, with <keyword id="11893902" type="UNKNOWN" weightage="60" keywordseo="bitcoin" source="Orion">bitcoin</keyword> tumbling to six-month lows. Meanwhile, some of 2021's <keyword id="11961768" type="UNKNOWN" weightage="60" keywordseo="altcoin" source="Orion">altcoin</keyword> stars — such as solana, cardano and polygon — have fallen even more sharply this month, losing almost 40% in value. Decentralized finance, or DeFi, has a taken a drastic hit from the crypto market's ongoing bear run. Almost <a href="https://dune.xyz/dsalv/Liquidations">$300 million</a> assets were liquidated in DeFi protocols in the last week, according to industry data tracker Dune Analytics, as reported by Bloomberg.A report by <a href="https://news.bitcoin.com/value-locked-in-defi-slides-21-in-2-weeks-200b-tvl-still-10x-larger-than-this-time-last-year/">Bitcoin.com</a> found the value locked in DeFi has fallen by over 20% since January 4, although it is still 10 times higher than this time last year.There are almost 150 active DeFi-related decentralized apps, or dapps. They currently hold $30 billion less than at the start of 2021, according to DappRadar. Usage of DeFi dapps is decreasing, with active user wallets interacting with the major apps falling 20-30% in the last two weeks, it said. Ethereum-based DeFi apps such as Aave, Compound and MakerDAO processed a record $200 million of liquidations on Friday, data from Dune Analytics shared by Delphi Digital shows, <a href="https://www.coindesk.com/markets/2022/01/25/ethereum-money-markets-see-record-liquidations-as-ether-tanks-makerdao-revenue-surges/">according to CoinDesk</a>. DeFi apps aim to<a href="https://www.cnbc.com/2021/03/17/mark-cuban-learn-about-defi-nfts-cryptocurrency-like-eth.html"> recreate traditional financial systems</a> with cryptocurrency. Most run on the <keyword id="11892696" type="UNKNOWN" weightage="60" keywordseo="ethereum" source="Orion">ethereum</keyword> blockchain. Falling ether prices triggered the mass liquidation in DeFi apps. Ethereum's native ether token, the world's second largest by market value after bitcoin, is down 32% year to date.

A long 'crypto winter' of falling prices could end up killing off a slew of DeFi apps, according to DappRadar: report

<ul class="summary-list"><li>Grayscale said it added <keyword id="11931714" type="UNKNOWN" weightage="60" keywordseo="solana" source="Orion">solana</keyword> and <keyword id="12019780" type="UNKNOWN" weightage="60" keywordseo="uniswap" source="Orion">uniswap</keyword> to its Digital Large Cap Fund on Friday.</li><li>Solana has the 4th largest weighting in the fund and uniswap the 5th.</li><li><keyword id="12045888" type="UNKNOWN" weightage="60" keywordseo="sol" source="Orion">Sol</keyword> has gained 335% so far this year, while uniswap has risen by almost 200%.</li></ul>Grayscale, a <keyword id="11893898" type="UNKNOWN" weightage="60" keywordseo="crypto" source="Orion">crypto</keyword> asset manager added altcoins solana and uniswap to one of its funds, according to a company <a href="https://www.globenewswire.com/news-release/2021/10/01/2307400/0/en/Grayscale-Digital-Large-Cap-Fund-and-Grayscale-DeFi-Fund-Announce-Quarterly-Rebalancing-of-Funds.html">announcement</a> on Friday. The company said it had added the solana network's sol token and <keyword id="12240813" type="UNKNOWN" weightage="60" keywordseo="uni" source="Orion">uni</keyword>swaps' uni to its Digital Large Cap Fund, which has $494.6 million assets under management, according to its <a href="https://grayscale.com/products/grayscale-digital-large-cap-fund/">website</a>. The weightings were adjusted so that bitcoin would have the largest weight followed by ether, ada, sol and then uni based on "quarterly reviews", Grayscale said. Sol and uni have picked up steam in 2021 in terms of popularity among traders. Sol has gained 335% so far this year, while uni has risen 197%, according to Coinbase data, thanks in large part to the decentralized-finance capabilities of their respective networks. "(This) is the first time solana will be included in a Grayscale investment vehicle," the press release said. The company said it had also adjusted the weight of the Grayscale DeFi Fund so uniswap is the top weighted token, ahead of the likes of aave, makerdao and sushi.Uniswap, first conceived in 2016 by ethereum co-founder Vitalik Buterin and later developed in 2018 by Hayden Adams and Uniswap Labs, is a decentralized exchange and hosts the uni token. So-called "DEX tokens" such as uni and sushi shot up in late September after China effectively <a href="https://markets.businessinsider.com/news/currencies/china-crypto-ban-uniswap-sushiswap-dxdy-decentralized-exchanges-tokens-ether-2021-9">banned</a> all crypto-related activity, which lured a lot of users to decentralized exchanges, where transactions happen without any intermediaries. Sol has outperformed most other major coins this year, thanks to a series of upgrades that will make its network capable of running smart contracts, much like larger rival ethereum. Sol was last down 2.4 % over the last 24 hours to $167.09 at 05:46 a.m. ET, while uni was also 3% lower on the day around $25.29, according to Binance data.

Crypto asset manager Grayscale has added altcoins solana and uniswap to one of its funds

Cyber-security researchers on Wednesday reported that world's largest <keyword id="4668945" type="General" weightage="20" keywordseo="nft" source="Orion">NFT</keyword> (non-fungible token) marketplace called <keyword id="11928103" type="General" weightage="20" keywordseo="opensea" source="Orion">OpenSea</keyword> had compromised security which, if exploited, could have led hackers to hijack user accounts and steal entire crypto wallets of users, by sending malicious NFTs. After seeing reports of stolen crypto wallets triggered by free airdropped NFTs, Check Point Research (CPR) investigated OpenSea, the world's largest NFT marketplace. The investigation led to the discovery of critical security vulnerabilities on OpenSea's platform. The team immediately disclosed findings to OpenSea, who went onto deploy a fix in less than one hour of disclosure. <cmsannotation type="cmsannotation" annotationid="wazirx" comment="wazirx" text="wazirx">wazirx</cmsannotation> OpenSea is known as the world's largest NFT marketplace, recording $3.4 billion in transaction volume in August alone. "These attacks would have relied on users approving malicious activity through a third-party wallet provider by connecting their wallets and providing a signature for the malicious transaction," OpenSea said in a statement. "We have been unable to identify any instances where this vulnerability was exploited but are coordinating directly with third-party wallets that integrate with our platform on how to help users better identify malicious signature requests, as well as other initiatives to help users' thwart scams and phishing attacks with greater efficacy," the company added. NFTs allow people to buy and sell ownership of unique digital items in cryptocurrencies, and keep track of who owns them using the Blockchain. NFTs can technically contain anything digital, including drawings, artworks, tweets, animated GIFs, songs, or even video games. The investigation of OpenSea was prompted by reports of free airdropped NFTs allegedly gifted to users. The security researchers recommended that users must be careful when receiving requests to sign your wallet online. "Given the sheer pace of innovation, there is an inherent challenge in securely integrating software applications and crypto markets," said Oded Vanunu, Head of Products Vulnerabilities Research at Check Point Software. "We sternly warn the OpenSea community to watch out for suspicious activity that may lead to theft, as we believe bad actors will continue to expand their efforts, in order to hijack crypto wallets while exploiting system vulnerabilities," Vanunu added. SEE ALSO: <a href="https://www.businessinsider.in/cryptocurrency/news/stablecoin-regulation-will-be-less-risky-in-super-countries-than-in-the-us-according-to-makerdao-founder-rune-christensen/articleshow/86965660.cms">‘We should be ready for the worst’ — MakerDAO founder is not optimistic about the stablecoin regulation in 2022</a> <a href="https://www.businessinsider.in/cryptocurrency/news/bitcoin-crosses-57000-for-the-first-time-in-five-months-altcoins-continue-to-struggle/slidelist/86957497.cms">Bitcoin crosses $57,000 for the first time in five months — altcoins continue to struggle</a> <a href="https://www.businessinsider.in/cryptocurrency/news/binance-to-halt-chinese-yuan-crypto-trading-and-restrict-mainland-china-customers-to-withdrawals-only/articleshow/86992235.cms">Binance to halt Chinese yuan-crypto trading and restrict mainland China customers to withdrawals only</a>

A bug in the world's largest NFT market could have allowed crypto wallets to be hijacked or stolen

<ul class="summary-list"><li><keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">Bitcoin</keyword>, <keyword id="2810876" type="PERSON" weightage="60" keywordseo="ethereum">ethereum</keyword>, and other <keyword id="2420795" type="PERSON" weightage="60" keywordseo="cryptocurrencies">cryptocurrencies</keyword> have experienced a wild few weeks.</li><li>The price swings are nothing new for crypto, but with newfound mainstream acceptance, volatility presents issues.</li><li>Insider spoke with cryptocurrency experts to see how the recent "stress test" has affected the community.</li></ul>On April 11, 2021, the price of <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> rose as high as $63,729.50 as enthusiasm surrounding the crypto market swelled.Coinbase, one of the largest cryptocurrency exchanges, was <a href="https://markets.businessinsider.com/news/stocks/coinbase-stock-price-ipo-direct-listing-trading-debut-cryptocurrency-platform-2021-4-1030304997?utm_source=markets&amp;utm_medium=ingestgest">set to go public</a> in just three days, and Tesla had said it would <a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-elon-musk-tesla-accepts-cryptocurrency-as-payment-2021-3-1030239685">begin accepting bitcoin</a> as a form of payment for its vehicles.A month and a half later, bitcoin is trading below $40,000 per coin, Tesla is <a href="https://markets.businessinsider.com/currencies/news/tesla-will-no-longer-accept-bitcoin-over-climate-concerns--says-musk-10131562">no longer accepting</a> bitcoin, and Coinbase stock is <a href="https://markets.businessinsider.com/currencies/news/coinbase-stock-price-lowest-since-ipo-crypto-exchange-2021-5-1030398413">down roughly 30%</a> from its all-time highs.For new entrants to the crypto world, this kind of volatility can be disturbing, but for old hands, it's nothing new.In fact, bitcoin experienced six pullbacks of more than 30% in 2017 alone, despite the price rising more than 1,000% that year.Still, considering the <a href="https://www.businessinsider.com/crypto-users-pass-100-million-boomers-gen-x-bitcoin-btc-ethereum-2021-2">rapid growth of new cryptocurrency holders</a> and an increasing <a href="https://markets.businessinsider.com/currencies/news/bitcoin-btc-institutional-interest-cryptocurrencies-wall-street-tesla-microstrategy-jpmorgan-2021-3-1030194067">institutional interest</a> in the space, swelling volatility can be an issue.Below, Insider breaks down how cryptocurrencies' wild few weeks have affected the industry.From miners to the <keyword id="4164994" type="PERSON" weightage="60" keywordseo="defi">DeFi</keyword> companies, the crypto community has been forced, once again, to navigate price swings. Here's a look at how they made out according to the experts.<h3>Traders and Investors</h3>Some short-term traders and long-term investors were greatly impacted by bitcoin's recent price swing, but for others, it was business as usual.The majority of the pain dished out by falling prices in cryptocurrencies was felt by new entrants to the space looking to make a quick buck by trading but ended up sellig coins at a loss.According to <a href="https://insights.glassnode.com/the-week-on-chain-week-21-2021/">data from Glassnode</a>, "there is no question that a large portion of the recent spending activity was driven by short-term holders, those owning coins purchased within the last 6-months."Insider spoke with Todd Jones, the chief investment officer of the wealth management firm Gratus Capital, to confirm Glassnode's findings.Jones said that none of his long-term focused clients have been selling their cryptocurrency and noted that much of the sell-off in bitcoin's price was a result of traders' "leverage unwinding."On-chain margin traders raced to exit their leveraged positions when cryptocurrencies faced their most recent bout of volatility, according to a May 19 Daily Gwei <a href="https://thedailygwei.substack.com/" target="_blank" rel="noopener nofollow">newsletter.</a><a href="https://markets.businessinsider.com/currencies/eth-usd">Ethereum</a> gas fees (the fee required to successfully conduct a transaction on ethereum) surged to record highs as a result driving "gas wars amongst liquidators and arbitrageurs," according to <a href="https://twitter.com/Delphi_Digital/status/1395092600286326785">Delphi Digital.</a>"The price was falling so fast that people were getting scared for their on-chain leveraged positions and were willing to pay anything to get their transaction included in the next Ethereum block (presumably to close their positions)," ethereum developer Anthony Sassano speculated, per <a href="https://cointelegraph.com/news/fallout-ethereum-fees-skyrocketed-as-traders-raced-to-unwind-leveraged-positions">Coin Telegraph</a>.Bitcoin traders using up to 100-to-1 leverage also rushed to sell, furthering volatility in the asset.This leverage unwinding added to cryptocurrencies' woes. However, for long-term holders of ether and bitcoin, the price drop and rising gas fees weren't relevant.Essentially, the most recent bout of volatility hurt traders far more than long-term investors, who still believe their holdings will appreciate moving forward."Recent price volatility should not be very impactful to a long-term holder of BTC. It comes with the territory. Any asset that can go up 800% in a year also has the potential to collapse 90% (similar to the early days of AMZN). Price volatility goes hand in hand with speculative assets," Todd Jones of Gratus Capital said.In Jones' view, now is a "good time to add" to cryptocurrency holdings as a part of a diversified portfolio.<h3>Miners</h3>Cryptocurrency mining, and in particular <keyword id="1660859" type="PERSON" weightage="60" keywordseo="bitcoin-Mining">bitcoin mining</keyword>, has become a multi-billion dollar business. Publicly traded miners like <a href="https://markets.businessinsider.com/stocks/riot-stock">Riot Blockchain</a>, <a href="https://markets.businessinsider.com/stocks/mara-stock">Marathon Digital Holdings</a>, and <a href="https://markets.businessinsider.com/stocks/hvbtf-stock">Hive Blockchain</a> have expanded their operations amid a meteoric run for the crypto space.However, like all mining operations, the value of the end product is a critical component to securing profitability.Insider spoke with Phil McPherson, Riot Blockchain's vice president of capital <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>, to delve into how cryptocurrency price swings can affect miners.McPherson said that when bitcoin's price falls, miners could be forced to sell coins in order to continue their operations. The key is the mining cost per coin, which varies greatly depending on the company."Smaller miners with higher fixed costs and costs of goods would probably be hurt more," McPherson said.The VP added that his company is in a "unique position" due to its strong balance sheet. Riot ended the first quarter with $241 million of cash on hand and an average cost per coin mined of around $15,000, enabling them to keep all the bitcoin they mine and continue operations even in a down market for the digital asset."On a daily basis, we're mining call it six or seven bitcoin a day, sometimes it's higher, sometimes it's lower, but we're not selling that bitcoin, we're stacking it," McPherson said. "So the fact that we're bullish long term, the price volatility hasn't affected our business from a financial standpoint because we're not selling it into this depressed market."McPherson noted that when bitcoin's price falls, the global hash rate (the difficulty of mining the currency) falls as well, which is actually a benefit for miners who can remain in operation."From our perspective, the volatility in some ways has been good for market leaders like us," McPherson added.<h3>DeFi</h3><keyword id="11094379" type="UNKNOWN" weightage="60" keywordseo="decentralized-finance">Decentralized Finance</keyword>, or DeFi, is a system that allows users access to financial products on a public, decentralized blockchain network.Most DeFi companies use the ethereum blockchain to run their operations, and the total value locked on the DeFi network is now over $62 billion, according to <a href="https://defipulse.com/">data from Defipulse.com</a>.DeFi applications include stablecoins, lending platforms, prediction markets, and much more, and the industry allows traders to profit from tactics like <a href="https://markets.businessinsider.com/news/stocks/gamified-yield-farming-with-nonfungible-tokens-9742455">yield farming</a> and <a href="https://markets.businessinsider.com/news/stocks/lending-giant-aave-set-to-launch-liquidity-mining-program-10055234">liquidity mining</a>.Jeff Dorman, CFA, the chief investment officer of the digital asset management firm Arca, told Insider the recent volatility in cryptocurrencies was a "real stress test" for the DeFi space.According to the CIO, DeFi companies passed this latest test without issue, but in the past, that wasn't always the case.Dorman pointed to differences in the DeFi system amid recent price swings compared to volatile periods from the past.The CIO gave an example of MakerDao, a popular DeFi lending and borrowing platform, that "basically broke" in March of last year when the crypto market saw a steep drop in pricing and was forced to take $4.5 million in socialized losses from the event."There was price feed issues with regard to their API connectivity, and as a result, borrowers were being liquidated even though they shouldn't have been because of a price issue. MakerDao had to socialize those losses and raise new money and pay back all the victims over time," Dorman said.This time was very different, however, according to the CIO."This time around, it was the exact opposite. I can't give you an example because nothing happened. Every price oracle worked, every decentralized exchange worked, every decentralized lending and borrowing platform worked, every decentralized insurance company worked. I mean, it was unbelievable to see," Dorman said.The CIO pointed out that centralized entities in the crypto world like Coinbase and Binance "were all having problems" with price volatility this time around. DeFi companies, on the other hand, were able to navigate the price swings without issue.DeFi liquidations did rise 14-fold during the broad crypto sell-off, Debank data shows, as traders in the space looked to protect themselves from losses.However, at the end of the day, the crypto community was able to whether recent price drops and volatility fairly impressively.Some traders, especially those using excessive leverage, were hurt, but overall, the industry kept on trucking in what will likely be thought of as a positive sign for the future of the space.

Cryptocurrencies have had a wild few weeks. Here's how the volatile price swings have affected investors, traders, miners, and DeFi companies.

<div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://www.reutersconnect.com/all?id=tag%3Areuters.com%2C2018%3Anewsml_RC16F94A0C80%3A1754375426&amp;search=all%3Acoins%20">REUTERS/Arnd Wiegmann/File Photo</a>'Stablecoins' are hot.</div></div></div><ul class="summary-list"><li>'Stablecoins' are the hottest thing in crypto right now, with over 50 projects in development.</li><li>A 'stablecoin' is a cryptocurrency that's price is pegged to a real-world asset like gold or the dollar.</li><li>Here's a guide to what they're used for, how they work, and why people are excited about them.</li></ul>LONDON - The latest innovation in the fast-moving world of cryptocurrencies is the "stablecoin" - cryptocurrencies pegged to real-world assets such as the dollar or gold.<a href="http://www.Blockchain.com/research">A report from crypto wallet provider Blockchain</a> released this week found that "the number of active stablecoin projects has dramatically increased over the past 12-18 months and more than a dozen project teams have stated they plan to launch in the coming weeks/months." There are now over 50 in development globally.Here's everything you need to know about the hottest new area of crypto:<h2>What is a stablecoin?</h2>"Stablecoins" are cryptocurrencies whose prices are linked to a real-world asset. In theory, they could be linked to anything, but the majority are linked to currencies such as the dollar or euro.<h2>How do they work?</h2>There are two main types of stablecoins: reserve-backed and algorithmic.Reserve-backed stablecoins function a little like paper money used to when it was linked to the gold standard. Just as cash used to be ultimately backed by gold reserves in a central bank, reserve-backed stablecoins are backed one-for-one by reserves of the currencies they are pegged to.Issuers of <a href="https://www.businessinsider.com/goldman-sachs-circle-usdc-stablecoin-explained-crypto-2018-9">coins like USDC</a> or <a href="https://www.businessinsider.com/tether-explained-bitcoin-cryptocurrency-why-people-worried-2018-1">Tether</a> "tokenize" dollars by exchanging them for a stablecoin and depositing the dollars in a bank. Those dollars are then left untouched until somebody redeems the stablecoin for the dollars. It's this confidence that the stablecoin can be redeemed that maintains the price peg.The second type of stablecoin is one that is not backed by any reserves but instead controlled by an algorithm.<div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="http://www.blockchain.com/research">Blockchain</a></div></div></div>Garrick Hileman, head of research at Blockchain and author of the recent stablecoin report, told Business Insider: "They're really using software rules to try and match supply with demand to maintain a peg to something like the US dollar."As demand for an algorithmic stablecoin increases, supply also has to increase to make sure there's not an appreciation in the value of the stablecoin. At the same time, as the value decreases, there needs to be a mechanism by which supply can be reduced again to try and bring the price of the stablecoin back to the peg."That's really the class of stablecoins that are much more challenging to design. They're really unproven at this point."Examples of algorithmic stablecoins in development include Basis, Terra, Carbon, and Fragments.<h2>Why do people need stablecoins?</h2>Cryptos have been plagued by price volatility, with swings of 5% or even 10% in a day not unusual. This volatility has led critics to say that cryptos are speculative investments rather than currencies or assets.Stablecoins are an attempt to harness the benefits of cryptos - value can be transferred digitally - and combine them with the stability and trust in mainstream currencies.Hileman told BI: "For millions of individuals, tens of millions in our view, as well as institutions, the volatility of crypto assets that we saw last year really is keeping a number of people's on the sidelines of the cryptocurrency movement."Stablecoins can address that and enable a number of use cases that bitcoin or ether or other more volatile cryptocurrencies are suboptimal for - things like insurance."<h2>What are they used for?</h2>The most common use case for stablecoins at the moment is as a liquidity tool for cryptocurrency exchanges. Many exchanges have been shut out of mainstream banking because banks are wary of dealing with anything crypto-related for compliance reasons.As a result, many exchanges can't accept dollar or euro deposits. Clients want to buy with dollars and to be able to trade out of cryptos into dollars at times of high volatility. Stablecoins offer an elegant solution to this problem.However, proponents of stablecoins think the technology could allow for more complex financial products to be built on crypto - things like insurance, smart contract dividend payments, and loans.<h2>Which are the biggest stablecoins?</h2><a href="https://www.businessinsider.com/tether-explained-bitcoin-cryptocurrency-why-people-worried-2018-1">Tether is by far the most popular </a>stablecoin and is used primarily by exchanges to offer dollar-like liquidity."Tether (USDT) is the second most actively traded cryptocurrency (~60% of BTC daily trading volume) and earlier this year entered the top-10 crypto asset rankings by market value," Blockchain said in its report.Hileman said: "Certainly, last year we saw Tether really demonstrate that there was a real demand for a stablecoin. We saw use of Tether on exchanges like Poloniex that did not have access to US dollar deposits really take off. It helped facilitate the rise of a number of exchanges that were either cut off or chose not to integrate with the existing banking system."<h2>Who's developing them?</h2>Stablecoins are being developed by both new startups and existing crypto businesses such as Circle and Gemini, the crypto exchange run by the Winklevoss twins.There are currently 57 stablecoins in development according to Blockchain's report. 23 are already live.Recent examples include the <a href="https://www.businessinsider.com/winklevoss-exchange-gemini-launching-new-stable-coin-2018-8">Winklevoss twins' Gemini coin</a>, Paxos Standard, the <a href="https://www.businessinsider.com/goldman-sachs-circle-usdc-stablecoin-explained-crypto-2018-9">US Dollar Coin, developed by Goldman Sachs-backed Circle,</a> and the LBXPeg.<div class="KonaFilter image-container display-table"><div><div class="image on-image">BlockchainThe number of stablecoins in development has boomed over the last 18 months.</div></div></div>Venture capitalists are also betting big on the space. Blockchain's report said: "$335 million in venture funding has been raised by all stablecoin project teams to date." A notable investment in the space came from Silicon Valley fund Andreessen Horowitz, <a href="https://cointelegraph.com/news/andreessen-horowitz-invests-15-million-in-stablecoin-firm-makerdao">which recently invested $15 million into </a>stablecoin<a href="https://cointelegraph.com/news/andreessen-horowitz-invests-15-million-in-stablecoin-firm-makerdao"> project MakerDAO.</a><h2>Why are so many appearing?</h2>Hileman said that the success of Tether "really set off a whole load of innovative teams to think about: how can we do this better?"Despite its popularity, <a href="https://www.businessinsider.com/tether-explained-bitcoin-cryptocurrency-why-people-worried-2018-1">Tether has been beset by criticism of its auditing standards, corporate opacity, and claims of manipulation.</a> As a result, many in the industry feel there is an opportunity to provide a better solution.The potential for stablecoins to be used in everything from crypto insurance to lending and savings means entrepreneurs also hope there can be room in the market for many successful stablecoins.<h2>What are the challenges stablecoins face?</h2>Heilman told BI that one of the biggest challenges facing stablecoins is scaling. For reserve-backed stablecoins to reach a level where liquidity is deep enough to support interesting applications of the technology, backers will have to invest millions or even billions in each coin.This could create "a cap on how fast the stablecoin can grow," Heilman said. "When you're talking about use cases in the trillions, having any upward limit or friction on how quickly something can grow is potentially a huge problem."Heilman also believes that stablecoins looking to replace Tether as a liquidity proxy may end up having a tougher time than some may assume."Tether, for all the complaints and criticism and concerns, has generally been pretty reliable at holding its peg to the US dollar. It's worked well enough," he said. "Tether had a huge head start. It has a network effect - it has a love of exchanges, over 150 that have listed it, it's a top 10 cryptocurrency."<div class="KonaFilter image-container display-table"><div><div class="image on-image">REUTERS/Stephen Lam The Winklevoss twins are developing their own stablecoin.</div></div></div>Another potential hurdle is regulatory scrutiny. Heilman believes that central banks may be quicker to act on stablecoins than they were on cryptos like bitcoin because stablecoins more closely resemble fiat money and could have effects on monetary policy.Not everyone believes in the promise of stablecoins either. Bitfinex'd, a prominent crypto Twitter account that attacks what it sees as bad practice in the space, recently said: <a href="https://twitter.com/Bitfinexed/status/1044965017613946882">"Essentially the only application for them is for scam exchanges to use it,"</a> in relations to those outside the banking system.Preston Byrne, a fellow of the Adam Smith Institute and the former COO of blockchain company Monax, has also expressed skepticism, <a href="https://prestonbyrne.com/2017/12/10/stablecoins-are-doomed-to-fail/">calling stablecoins "doomed to fail" in a lengthy blog post.</a>Finally, the emerging asset also faces a variety of technical challenges. Blockchain's report concludes: "The technology is still nascent and it is highly unlikely that the perfect stablecoin design exists at present; we expect further experimentation and innovation." <a href="http://www.businessinsider.com/intelligence/future-of-zelle-venmo-and-p2p-payments?IR=T&amp;utm_source=businessinsider&amp;utm_medium=ctgr&amp;utm_term=ctgr_leadgen&amp;utm_content=payments_ctgr_leadgen&amp;utm_campaign=payments_ctgr_leadgen_future-of-zelle"></a> <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/big-mistake-investors-make-late-cycle-inflection-point-economy-versus-stocks-liz-ann-sonders-2018-8">Beware one huge mistake investors often make when the economy is at a crossroads, says Charles Schwab's investment chief</a></h3> <div> </div> </div>

The crypto world is going wild for 'stablecoins' - here's everything you need to know about them

<div class="KonaFilter image-container display-table"><div><div class="image on-image">REUTERS/Stephen Lam </div></div></div><ul><li>Gemini, the cryptocurrency exchange, is launching its own stable-coin pegged to the US dollar, the company announced Monday. </li><li>The firm hopes the crypto will become a digital cash, bringing together the best of fiat and blockchain assets. </li><li>Gemini says the crypto's design, which includes oversight by US financial regulators and monthly audits, will make it a more attractive alternative to other stable-coins, including Tether. </li><li>Gemini will store the US dollars backing its coins at State Street. </li><li>Business Insider spoke with Tyler Winklevoss, the co-CEO of Gemini, about the project. </li></ul>Gemini, the bitcoin exchange founded by the Winklevoss twins, is gatecrashing a red-hot corner of the cryptocurrency market with a new stable coin, the company announced Monday. The so-called Gemini dollar would be pegged to the US dollar, with each token backed by a US dollar in a reserve of cash held by State Street, the Wall Street custody bank. The firm is hoping the new coin, which is based on Ethereum's network, will serve as a new type of digital cash that can be used at stores by customers. The project, which is over a year in the making, addresses "a trust problem" common among other stable-coins, according to its white paper.Gemini says oversight from financial regulators, specifically the New York Department of Financial Services, will lend its crypto more credibility than its competitors. The crypto is also subject to New York Banking Law, according to the exchange operator. Already, it was assessed by information security company Trail of Bits over the course of eight weeks. Gemini, according to documents reviewed by Business Insider, fixed all the issues discovered by the audit.<div class="KonaFilter image-container display-table float_left"><div><div class="image on-image">Thomson Reuters Entrepreneurs Tyler and Cameron Winklevoss arrive at the Met Gala in New York </div></div></div>The Gemini dollar would go head-to-head with Tether, the controversial firm behind their USDT stable-coin that has dominated the market for stable coins. Skeptics have questioned whether Tether actually has the dollars it says to back its crypto.And some market participants have linked the crypto to market manipulation. For instance, academics at the University of Texas published <a href="https://www.businessinsider.com/bitcoin-price-june-13-university-of-texas-paper-alleges-bitfinex-tether-manipulation-2018-6?r=US&amp;IR=T">a paper alleging that Tether was used last year to manipulate the price of bitcoin</a>, propping up its run to $20,000 in December.Still, since the beginning of 2018 trades between USDT and bitcoin have become more common, Morgan Stanley found. The bank, which compiled data from over 350 exchanges, estimates 14.2% of bitcoin trades are paired against USDT, up from less than 1% in October.Across the crypto space, projects are attempting to step on Tether's turf, including TrueUSD and MakerDAO.The Gemini dollar will launch next week and will ultimately trade on numerous exchanges, according to a spokeswoman. Business Insider spoke with Gemini cofounder and co-CEO Tyler Winklevoss about the project and related topics in the cryptocurrency space. Business Insider: Walk me through the evolution of this project. What's the idea behind it and how did it come to fruition?Tyler Winklevoss: We have been thinking about the stable coin idea for over a year now. The thing that is attractive about the concept is that is does something different than any other digital asset. When we think about the first ever digital asset, bitcoin, which is a virtual commodity, it took years for the market to sort out the broad understanding of what bitcoin is. The legal precedent and the use-case is definitely coming down as virtual commodity. And ether is the same. Those are very cool use cases. Ether as a digital oil. And bitcoin as a digital gold. The idea of a digital commodity is there and well understood. And then we had the intro of securities on the blockchain, normally referred to as ICOs, representing a share in a company or project. Being in this space over the years it has been really cool to see the development of both virtual securities and virtual commodities. But when something is a store of value, you generally don't want to spend it. We use the word digital currency as an umbrella term in this space, and early on this term was used, but not many of these digital assets behave like currencies. And it makes sense. You don't buy things with your gold or with your shares of Apple. Similarly it doesn't make sense to do that with an ICO or bitcoin. A stable coin is different and necessary for the ecosystem as that medium of exchange.BI: What problems does Gemini dollar try to tackle?Winklevoss: We saw two problems we wanted to address when we thought about how we could build a viable stable coin. The first was the technical implementation. A computer science problem. Making sure you have the smart contracts, picking the right network. Ether was a good network obviously because of the human capital around it, the level of adoption, its track record. And building the engineering of a viable stable coin. That's where Gemini's strong team comes in. Then there's trust. Whether we print too many or too much, we need to make sure it corresponds with the fiat dollars in a bank account. As a trust company, we are regulated by the state of New York, but the trust problem doesn't start or stop there. It is about building a network of trust among all participants in the ecosystem. Multiple eyes are looking over it.Getting on an auditor is not a trivial task. They have to be comfortable with you as a business. That was another interesting, but good challenge. And getting ready for approval takes a long time. [Editor's note: Gemini's US dollar balance held at State Street will be audited by an independent accounting firm on a monthly basis, according to a news release.]<div class="KonaFilter image-container display-table"><div><div class="image on-image">Carl Court / Getty Images</div></div></div>BI: Stable-coins such as Tether have been a darling among trading shops that can use them to quickly transfer their coins out of the volatile markets of bitcoin and other cryptos without having to engage with the slow fiat off-ramps. Have you been speaking with those market participants about Gemini dollar, and what is their impression?Winklevoss: We obviously talk to all of our clients, retail, prop shops, market making firms, trading firms, sometimes one firm can do all of those things and more. There is a lot of demand there. We thought a stable coin was important for the ecosystem. But we also have seen a lot of demand from those clients. And so basically bringing USD onto the blockchain is key here. Linking the traditional financial network with the world of crypto in the way that includes all the good utilities of money, giving them all the positives things of crypto. The obvious use case for a trader is arbitrage or being able to move capital around in an efficient matter. It is not just demand coming from traders. I think that dollars on the blockchain is a really important and crucial component. We do think that a good stable coin is a really important catalyst to adoption. Because there is a reason why fiat lives side-by-side with stocks, bonds, and precious metals. They don't cannibalize each other because they fulfill different use-cases. There is a use case of being able to accept dollars for decentralized applications. They can accept bitcoin and ether. But if you are creating a decentralized Uber, people aren't going to want to pay with an asset that most of us believe could go up 10 or 20 times in the future. BI: Across the market, I've noticed bitcoin exchanges entering businesses outside of trading, including custody or venture and now in your case, the stable-coin business. Do you view the role of exchanges in crypto as being more than just facilitating trading in order to help shepherd the market to the next level?Winklevoss: I think that a lot of us, and especially the good actors, are definitely proactively doing things we don't have to do. Or aren't required to do. But it is a longterm approach. This is something we have to do to push the ecosystem forward. And we want to see the market continue to mature. Wall Street is aware of digital assets it isn't really in cryptocurrencies today the way it can be in the future. If we want compliance departments at banks to get comfortable then we have to speak their language. Whether that means the right internal controls, or a SOC2 designation, than that is what it means. The big point is market surveillance. <a href="https://www.businessinsider.com/gemini-crypto-exchange-launching-working-group-2018-8">The Virtual Commodity Association we are obviously going to be a member in pushes the ball forward.</a> All of those things are going to help mature the market. And it's also just time as well. You can't build markets and trust over night. it is so young and so early. But also a lot has changed in a short amount of time. A couple years ago the conversations were so different. And even a year ago, there's been tremendous change. BI: In order to get Gemini dollars to become digital cash, one would think big merchants would have to come on board. Is Gemini talking with merchants like Starbucks to accept the stable-coin at their stores?Winklevoss: That's a great point. There was a time in this world when people didn't know if bitcoin would kill fiat or the financial system or both. And some people tried to live off bitcoin for a month. As it turns out people generally don't believe bitcoin will be used to buy Starbucks or a Happy Meal. The question is actually does it disrupt gold or exist side-by-side precious metals in a portfolio? The beauty of a stable coin is you don't need to worry about spending it. And groups don't need our permission to use it. Starbucks could accept it if they wanted to. And we will be open to those conversations. Get the latest Bitcoin price <a href="http://markets.businessinsider.com/currencies/BTC-USD">here.&gt;&gt;</a> <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/samsung-foldable-phone-galaxy-x-f-winner-2018-9">Everything we know about Samsung's foldable phone</a></h3> <div> </div> </div>

'This is something we have to do to push the ecosystem forward': Tyler Winklevoss explains why Gemini's launching a crypto coin pegged to the US dollar

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