Transaction Speed and Profitability Are Linked in Crypto

Transaction Speed and Profitability Are Linked in Crypto

To gain profits in the crypto space, transaction speeds remain one of the most important characteristics for the industry

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Crypto markets move at the speed of light, but many financial institutions today are still using cumbersome cold storage and hardware wallets — the most well-known digital asset security methods — to secure their coins.

However, institutions are realizing that these methods are simply too slow to be practical for day-to-day use, and that using them in 2020 risks falling behind market pace.

For financial institutions working with crypto, increasing transaction speed by adopting new storage and transfer tech will be the path toward accelerating profitability in 2020.

Related: Secure Encryption Key Management Modules, Explained

The correlation between speed, profit and exchanges

It’s common knowledge that the price of Bitcoin (BTC) often fluctuates rapidly. In 2011, the Mt. Gox flash-crash — one of the largest in the history of Bitcoin — led to the price of Bitcoin dropping 99.4% in a matter of minutes.

Bitcoin has had a solid 2020 so far, with price movements generally trending upward. But even during a strong growth period like the one we’re in, prices can vary enormously. In fact, on Feb. 19, Bitcoin had its fifth-largest hourly price drop ever: a drop of nearly $800 in an hour.

Source: TradingView

Currently, exchanges require prefunding of assets to receive trading credit. This process is cumbersome and requires effective risk management in terms of managing exchange liquidity. At the same time, it does not allow users to easily take advantage of market-positive opportunities across different trading venues. The process is an inefficient use of capital, requiring users to allocate on exchanges even if market forces don’t necessarily indicate they should be trading on that exchange, as a trader would never want to be out of position on an exchange.

All these operational inefficiencies are currently tolerated in order to maximize transaction speeds. In this industry, opportunities can disappear at the drop of a hat, and hedging your position for timeframes of hours can be complicated and expensive. Being able to quickly fund your account with a liquidity provider affects your top-line in a direct way.

As a result, quick transaction speeds are an untapped opportunity for organizations that want to accelerate profits this year.

In 2020, it’s all about getting the transaction speed as high as possible, which means looking into new ways of storing and moving crypto.

Scaling operations isn’t linear

So, you’re ready to focus on upping transaction speed in 2020 to maximize profits. An obvious first step toward doing so (and one that would allow a tight grip kept on asset security) is to scale operations by increasing headcount.

Related: Crypto Exchange Hacks in Review

But raw headcount alone can’t speed up operations to a level where you’re really seeing profit margins change. Ultimately, you can only move as fast as your operational processes allow you to. Whether you have one operations manager, five or 20, sluggish access to your digital assets caused by the limitations of your storage solution will get in the way of execution speed. Needless to say, scaling your operations team will also impact your bottom line.

That’s why institutions in the crypto space are looking at altering the way they do business entirely. Instead of hiring more operations managers, they’re piloting new technologies that make crypto significantly more accessible without sacrificing top-grade security. 

Swifter, more secure transactions

One new technology that’s gained traction is MPC (multi-party computation) cryptography. When paired with hardware isolation (especially at the chip level), MPC private key sharding removes the possibility of a single point of compromise without jeopardizing instant access to assets. 

Institutions are also starting to eliminate time-consuming test transfers entirely by joining private networks where deposit addresses have been eliminated. In these networks, whitelisting happens automatically on the backend, preventing spoofing and man-in-the-middle attacks while significantly decreasing transaction times.

Transaction speed is really the next frontier — institutions need to be focused on bringing traders closer to a single credit pool, allowing them to seize market opportunities faster. Some teams have embraced solutions like Fireblocks, Omniex and AlgoTrader to accelerate trade execution and scale operations without increasing headcount, giving them a leg up on the competition.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Michael Shaulov is the CEO and co-founder of Fireblocks. He is a serial cybersecurity entrepreneur and investor. Before founding Fireblocks, a digital asset security platform, Michael co-founded Lacoon Mobile Security, which was acquired by Check Point. Prior to his commercial endeavors, Michael pioneered the mobile security field in an elite military technological unit (8200), where he received the Israeli Presidential Excellency Honor for his contributions. He holds a BSc in Computer Sciences and Physics from Ben-Gurion University, Israel.


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To gain profits in the crypto space, transaction speeds remain one of the most important characteristics for the industry

New York Court Proceeds Against Man Allegedly Linked to OneCoin

New York Court Proceeds Against Man Allegedly Linked to OneCoin

A New York court continues the proceedings against man accused of laundering about $400 million of OneCoin Ponzi proceedings

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The New York Southern District Court granted a continuance in the lawsuit against David Pike over his alleged link to the OneCoin Ponzi scheme.

Finance news outlet FinanceFeeds reported on Dec. 21 that the continuation of the case was approved until Jan. 12, 2020 based on court documents filed on Dec. 20.

“Fenero Funds” — tracking OneCoin’s laundered money trail

Assistant United States Attorney Nicholas Folly reportedly stated that the parties‘ counsels are discussing a potential pre-indictment disposition. The extension has been deemed as appropriate, given that those discussions are still taking place.

Pike was the chief operating officer of an alleged private equity fund known as the “Fenero Funds.” Those funds were reportedly employed to launder money from the OneCoin Ponzi scheme.

Pike is accused of having made materially false statements and representations in front of special agents from the FBI, the IRS Criminal Investigation Division and the United States Attorney’s Office for the Southern District of New York representatives.

$4 billion dollar Ponzi finally ends

The defendant is alleged to have falsely claimed he was not aware that roughly $400 million was transferred into the aforementioned fund belonged to OneCoin founder Ruja Ignatova or that the money came from the scheme.

As Cointelegraph reported earlier this month, the official website for OneCoin has finally shut down, months after United States authorities indicted one of its founders for running a $4 billion pyramid scheme.


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A New York court continues the proceedings against man accused of laundering about $400 million of OneCoin Ponzi proceedings

French-Regulated Napoleon Bitcoin Fund Linked to CME Futures

French-Regulated Napoleon Bitcoin Fund Linked to CME Futures

A French company launched a regulated Bitcoin fund to be traded as futures on the Chicago Mercantile Exchange

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Paris-based asset management firm Napoleon AM announced the launch of a regulated Bitcoin (BTC) fund, the Napoleon Bitcoin Fund.

The company announced in a press release that the fund was created on Nov. 8 and is a specialized professional fund under French law. The company claims that its product is one of the first regulated vehicles giving exposure to Bitcoin’s price movements.

The product — with daily liquidity — aims to provide portfolio diversification to institutional and professional investors. The fund replicate the performance of futures listed on the Chicago Mercantile Exchange in cash settlement.

High hopes for Bitcoin’s potential

The company noted that cash settlements were chosen to avoid the hassle of storing and valuing Bitcoin. The custodian is Financière d’Uzès, while the auditor is PwC. Per the release, the asset manager decided to develop the product after realizing the potential of Bitcoin and blockchain technology:

“Convinced of the major transformation challenge carried by the blockchain for the entire industry, Napoleon AM got quickly interested in the financial potential of what intrinsically emanates from public blockchains, digital assets.”

The firm believes Bitcoin to be particularly unique given its high volatility, abnormally biased performance in favor of positive returns and low correlation to traditional assets. Those features, the company notes, make Bitcoin suitable to diversify portfolios to optimize risk/return ratios.

There is increasing competition between funds aiming to facilitate institutional investors interested in Bitcoin. In an attempt to better suit the needs of accredited investors, publicly-traded Bitcoin fund Grayscale Bitcoin Trust filed Form 10 with the United States Securities and Exchange Commission to become the first crypto fund to report to the regulator.


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A French company launched a regulated Bitcoin fund to be traded as futures on the Chicago Mercantile Exchange

HSBC Blockchain Connection Reduces Transaction Time by 40%

HSBC Blockchain Connection Reduces Transaction Time by 40%

HSBC and Landmark Group linked two blockchain platforms, which reduced transaction time by 40%

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Global banking giant HSBC has tested out its blockchain-based trade finance platform Voltron and reduced transaction time by 40%, the Chartered Institute of Procurement & Supply reported on July 10.

To arrange a shipment between Hong Kong and Dubai, HSBC partnered with major retail organization Landmark Group which provided its blockchain platform ReChainMe. The companies linked up their respective platforms, which reportedly resulted in the reduction of transaction time by 12 days, or 40%.

Sunil Veetil, regional head of trade at HSBC MENA and Turkey, said that blockchain-based platforms will provide businesses a competitive advantage by increasing trade speeds. HSBC reportedly stated:

“Having the two platforms seamlessly connected meant all parties in the supply chain ecosystem were able to track and view the progress of the transaction, agree on the terms of the transaction including logistics, co-create and approve documents and fast track supplier payments, all in real time.”

In February, HSBC revealed that its blockchain-powered platform cut costs for foreign exchange trade settlement by a quarter. The platform — based on a distributed, but permissioned, ledger — reportedly allowed HSBC to coordinate payments in real time across its trading hubs in the Americas, Europe and Asia Pacific.

Béatrice Collot, Head of Global Trade and Receivable Finance at HSBC, previously argued that transparency and instantaneity are the main strengths of blockchain technology. According to Collot, blockchain will transform global trade finance by bringing together stakeholders and allowing information to be shared in a more transparent way.


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HSBC and Landmark Group linked two blockchain platforms, which reduced transaction time by 40%

Bloomberg: Bitcoin’s Recent Renaissance Could Be Linked to Algorithmic Trading

Bloomberg: Bitcoin’s Recent Renaissance Could Be Linked to Algorithmic Trading

Algorithmic trading funds might have triggered the recent market recovery, Bloomberg reports

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The recent crypto market jump could be linked to algorithmic trading, Bloomberg writes on Wednesday, April 3.

Algorithmic trading — a method that uses automated software to detect trends and determine when trades should be made — has been on the rise in the last few months, according to Bloomberg. The industry has seen 17 new algo or quantitative funds launched since September, an amount that purportedly comprises 40 percent of crypto hedge funds started during this period.

While crypto funds in general lost around 72 percent due to the 2018 bear market, these algo funds reported on gains of between 3 percent and 10 percent per month during the so-dubbed crypto winter.

Bloomberg states that Bitcoin’s (BTC) unexpected 20 percent surge price on Tuesday, April 2, shortly after the Asian markets opened, might have been provoked by a $100 million trade made on three major exchanges.

As experts told Reuters, a 20,000 BTC order (around $100 million at press time) was spread across United States-based crypto exchanges Coinbase and Kraken, as well as Luxembourg’s Bitstamp. Triggered by the giant order, the bots could then start trading, forcing the prices and volumes to rise.

Some entrepreneurs quoted by Bloomberg think that algo trading will have a positive impact on the crypto industry. Wei Zhou, CFO of Malta-based crypto exchange Binance, says that they are going to be the new rock stars of the industry.

Meanwhile, others fear that algo trading can trigger market manipulation. Travis Kling, founder of the Los Angeles-based crypto hedge fund Ikigai, told Bloomberg that some of them could use fake orders to trick other traders.

Bloomberg has issued a series of articles and TV spots citing the possible reasons behind the visible market uprising. For instance, Bloomberg author Eric Lam recalled an April Fool’s Day story that claimed that the U.S. Securities and Exchange Commission had finally approved a Bitcoin ETF as possibly affecting the crypto markets.

Another reason cited by Bloomberg is the upcoming question of Brexit, as some believe that investors are changing pounds to BTC in the wake of Britain’s divorce with the EU.


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Algorithmic trading funds might have triggered the recent market recovery, Bloomberg reports