Recent data published by OnChainFX showed that nearly all the major cryptocurrencies have lost roughly 90 percent of their value since the attained all-time high.
Crypto market going against the predictions
Back in February, Tom Lee — co-founder of Fundstrat Global Advisors stated that he believes that the cryptocurrency market has turned a new corner and new highs should be expected by the middle of the year. However, several months after that, the market is deeper in the red zone than it has been for a very long time.
The data showed that of the 15 largest digital coins by circulating market cap, 11 of them have lost more than 90 percent of their values from their respective all-time highs. Ripple’s XRP which is now the second largest cryptocurrency ahead of Ethereum trades around the USD 0.34 mark, meaning that it has lost roughly 92 percent of its value since the record high of USD 3.84 it recorded back in January.
Ethereum now trades above the USD 100 mark and has subsequently lost 93 percent of its value after it reached a peak of USD 1’431. This is quite surprising as recent reports indicate that crypto whales have been increasing their Ethereum holding since the start of the year as they look to take advantage of a cryptocurrency they believe has huge potential.
Amongst the leading cryptocurrencies, Bitcoin Cash and Cardano are the ones that have been affected the most, with the duo losing 97 percent of their value respectively after peaking at USD 4’329 and USD 1.33. Bitcoin Cash has experienced a torrid time since the controversial hard fork. Cardano has however made developmental strides since the start of the year but none of that has affected the price positively.
The leading cryptocurrency, Bitcoin hasn’t reached that level year as it has lost just 81 percent of its value peaking around USD 20,000 and is now trading around the USD 3,800 mark. NEO and NEM (XEM) are also amongst those to have recorded massive loses, plunging by 96 percent from their peaks. NEM experienced a fall in price earlier this year following the Coincheck hack and it has not been able to fully recover from it. Tron is also amongst the losers, with Justin Sun’s darling project losing 95 percent of its value since the highs it experienced early this year. Other top 15-cryptocurrencies facing declines of 90 percent or greater include EOS and Llitecoin (LTC).
Cryptocurrencies experience a tough couple of weeks
Digital currencies have experienced a tough couple of weeks, with regulatory issues and Bitcoin cash hardfork some of the major catalysts responsible for the recent downfall. We reported earlier this week that the G20 is working on finding ways to regulate cryptocurrencies in line with standards put in place by the Financial Action Task Force (FATF). The organization is looking to regulate the industry with the aim of curbing issues such as tax evasion, money laundering, and other crimes.
Effects of GDPR on companies using Blockchain technology
Since the implementation of the GDPR, its hard requirements are set to change the way Blockchain based businesses process personal data.
All over the world, data privacy is increasingly becoming a point of concern for businesses and their customers. More people are becoming aware of the threat of data harvesting and breaching of personal data for commercial use. In a move to reshape the way data is handled across different sectors, the EU parliament approved the GDPR (General Data Privacy Regulations) on March 25th, 2018. This came about after 4 years of preparations designed to bring harmony in the data privacy laws in Europe. Even though the laws of the EU GDPR only apply to EU subjects, many organizations have taken the initiative to re-evaluate their data protection policies.
Since the implementation of the GDPR, its hard requirements are set to change the way Blockchain based businesses process and host user personal data. Given that Blockchain is a technology in its infancy, there is a lot of ambiguity on whether it can co-exist with regulations such as the GDPR.
Will GDPR stop Blockchain?
There are more than half a billion European data subjects set to be affected by the GDPR laws. This means companies in the EU zone, as well as all companies around the world that provide services to EU citizens, are going to be affected.
The changes, however, won’t have a huge effect on cryptocurrencies like Bitcoin since such technologies are designed to be used as fungible digital assets. However, for global conglomerates like Amazon and Facebook, GDPR laws will control how they process personally identifiable data while giving more freedom to the users on such platforms.
Likewise, there are various emerging companies using Blockchain to store user’s personal data that will be affected. GDPR requirements will not necessarily put an end to Blockchain technology but decentralized applications that record any user’s health, business and financial data will have to re-evaluate their use of the immutable technology.
Here is how Blockchain companies are set to be affected by GDPR:
More strict KYC and service restriction
Since all companies that serve EU citizens are now obligated to give users full access to their personal data, you can expect Blockchain companies to consolidate personal data in various ways as well. For a user to be able to modify, delete or view their own personal data at will, Blockchain based companies will have to restrict the user from using a single account. Businesses will have to implement tools and portals on their platforms for the purpose of displaying a user’s personal data all in one location. This is because the only way to make data easy to delete is to store it off-chain on the cloud with a hash on the Blockchain. Additionally, cryptocurrency exchanges will have to adopt strict know your customer (KYC) verification procedures to prevent any risk of non-compliance to GDPR.
Service restriction based on geographic location
Even though there are some Blockchain based services that will see it fit to bring about changes for all the users, some will find it affordable to only effect GDPR compliance in the EU. A good example is Coinbase which is a cryptocurrency exchange that currently has a separate privacy rights dashboard only accessible to EU residents with separate privacy policies for its UK and US customers. The downside to GDPR is that some companies will completely shut down their activities in the EU. Such examples have already been seen with companies such as CoinTouch (a P2P cryptocurrency exchange) that have announced the termination of their services for EU citizens.
Improved of 3rd party access to user personal data
Unbeknownst to most platform users, service providers often let third-party entities have access to user personal data in the name of better service delivery. As a result, these third-party companies can harvest data and process that data for a wide range of purposes without the knowledge of the platform’s user. With GDPR, Blockchain based companies will have to update their privacy policies such that the third parties with access to a user’s data are clearly detailed in the terms and conditions. This will allow users to learn more about how the service provider conducts business leading to better transparency.
The ICO market might suffer the most
After Bitcoin’s meteoric rise in price last year, the ICO market followed suit with investors from all over the globe rushing to invest in the most promising ICOs. With GDPR in place, data storage specific Blockchain applications are facing huge risk keeping in mind Blockchain immutability and GDPR’s right to erasure and privacy. In fact, the problem might prevent users in the EU from buying ICO tokens as the process requires registration with personally identifiable data on the Blockchain.
If the EU parliament was to amend the GDPR laws and include Blockchain transactional data as identifiable personal data, then cryptocurrencies, as we know them, would be illegal in the EU. For now, GDPR’s effect to cryptocurrencies is still unknown as the guidelines for compliance are open to interpretation. For Blockchain applications, however, there are unexpected impacts that go beyond the few we have mentioned above. Blockchain-based companies should, therefore, look for alternative technologies that allow for compliance to GDPR or seeks to re-evaluate their privacy policies entirely.
Hyperledger and how it can help to follow the GDPR
Ever since the GDPR was put into action on 25th May 2018, companies in Europe and all over the world have been putting in efforts to ensure compliance with the new rules, when in the crypto sector this is aimed to be achieved with the help of Hyperledger. In this article, we get in-depth on this topic.
The discussions around Blockchain and the hard requirements of the EU General Data Protection Regulations have taken center stage in the technology and enterprise community for some time now. Ever since the GDPR was put into action on 25th May 2018, companies in Europe and all over the world have been putting in efforts to ensure compliance with the new rules, when in the crypto sector this is aimed to be achieved with the help of Hyperledger. In this article, we get in-depth on this topic.
Problems with GDPR and Blockchain
Questions such as what entails personal data under the GDPR regulations are still some of the main puzzling queries that stakeholders are currently struggling with. According to GDPR, personal data comprises any sensitive personal data (this includes biometric data and uniquely identifiable data) that a company holds. The laws monitor how businesses handle personal data while giving individuals more control over their own data.
In the time of governments having cryptocurrencies in sight, how do Blockchain businesses remain compliant to these newly implemented regulations? And how do these businesses deal with cryptocurrency & Blockchain bottlenecks that arise with privacy and anonymity? Well, here is where Hyperledger comes into play.
What is a Hyperledger?
To understand what a Hyperledger is, you need to first know how a Blockchain operates. A Blockchain is an “immutable transaction ledger, maintained within a distributed network of peer nodes”
To put it simply, it is a network of computers that are linked together by a consensus protocol such that they record a ledger of the transaction between themselves. These recorded transactions are immutable. It means that they cannot be changed once recorded on the ledger. Plus, the ledger is distributed among all the nodes, therefore, there is no single point of failure.
Over the recent past, Blockchain has become popular as a result of the meteoric rise in the price of Bitcoin (the cryptocurrency that runs on this network). Thanks to the decentralized and immutable nature of Blockchain, Bitcoins can now be used on it as an exchange of value without double spending. At its core, Blockchain acts as an accounting system for Bitcoin.
Other cryptocurrencies apart from Bitcoin have also come up. However, as the popularity of Bitcoin and other top cryptocurrencies grew, businesses have been keen on finding ways to take advantage of the underlying Blockchain technology. As it stands, however, Blockchain is unable at the moment to guarantee compliance with regulations such as the GDPR.
Even though it holds a lot of promises, Blockchain has failed to achieve the following:
- High transaction volume
- Anonymous participation
- High latency transaction confirmation
- Personal privacy and confidentiality of personal data
To help solve these and many other shortcomings of Blockchain’s application for enterprise, Hyperledger Fabric was developed as an open source solution for enterprises that seek to integrate a permission distributed ledger technology.
How Hyperledger Fabric came to be
The Hyperledger Fabric platform was established under the Linux Foundation with the main purpose of delivering key differentiating capabilities over Blockchain. With over 200 developers working on the platform, Hyperledger Fabric has so far been developed to be an open source modular platform that is configurable and versatile for a broad range of industry use cases. This newly improved software can now be used in banking, insurance, healthcare, and finance without conflicting with data protection regulations like the EU GDPR.
Hyperledger Fabric’s Solution
First of all, the Hyperledger Fabric leverages a combination of different features that give it better performance in processing and confirming transactions. It does not require native cryptocurrency as an incentive for confirmation of transaction like Blockchain does and it uses smart contracts to build trust.
Here is a quick look at some of its features that make it useful for businesses that want to be GDPR compliant.
The specific architecture of the Hyperledger Fabric is such that businesses can configure the software to fit into their organization’s requirements. Unlike Blockchain which comes with a fixed set of features, a Hyperledger Fabric comprises of modular components such as the following:
- A peer to peer gossip service that orders output to other peers by blocking output to uninvolved parties.
- A pluggable membership service provider that gives entities cryptographic identities in the network.
- A pluggable ordering service that sets up a consensus protocol of transactions and publishes the transaction to the blocks
- Smart contracts that can be written in a standard programming language without direct access to the ledger state
- A validation and endorsement policy that is pluggable to allow independent configuration with every application.
- As a result of these modular pluggable services added to the Hyperledger Fabric, there can never be a single distributed ledger protocol that all enterprises have to bow to. Each company can have its own software that can be configured to their own compliance demands.
Privacy and confidentiality
Even with solutions such as a Zero Knowledge Proof (ZKP), and encrypting of personal data, Blockchain still has a long way to go before it can solve GDPR requirement of data privacy and right to be forgotten. The ledger on a Blockchain is always accessible and identifiable by the public. The Blockchain has simply been unable to establish a private channel that allows a pair of participants on the network to share private information.
For this reason, the Hyperledger Fabric brings about a different approach with permission platforms that enables confidentiality through channel architecture. What this means is that a “channel” is established between participants that want to have exclusive visibility to a set of data on the distributed network. The channel acts more like a network overlay that only gives participating nodes access to the specified information on the network. This way, businesses, and individuals can share information on a distributed network while preserving the privacy of shared information.
A Hyperledger Fabric can have multiple ordering services and consensus protocols. This means participants can configure their network with a set of add-on applications that fit the purpose of their transaction. Since GDPR regulations give individuals the right to the erasure of their personal data, an entity running on a Hyperledger Fabric can easily fulfill a customer’s request to delete their data with a pluggable consensus application added to the platform. Unlike Blockchain which requires a proof of work or a proof of stake to achieve consensus on the network, a Hyperledger Fabric platform can be configured with certain trust assumptions that achieve consensus easily.
Out of the existing Hyperledger platforms being developed out there, the Hyperledger Fabric is the most active and the most promising for entities looking to comply with GDPR regulations. As the community of developers grows steadily, this platform is set to advance and improve compliance with data protection laws. At the moment, the Hyperledger Fabric v1.2 has just been released and has been updated to fix confidentiality issues that existed with the earlier version. Therefore, there is more hope for businesses that seek to use distributed ledger technologies while being compliant with the law.
ETCDEV team shuts down as bear market continues
The cryptocurrency market has purged out so many industry players over the past few months as the bear market that started early this year continues to bite.
The cryptocurrency market has purged out so many industry players over the past few months as the bear market that started early this year continues to bite. The bear trend has now taken ETCDEV, a major Ethereum Classic development team that started operating back in 2016.
The founder of ETCDEV Igor Artamonov recently announced that the group is closing down its operations due to bankruptcy. He stated on Twitter that “As is publicly known, we have struggled with funding our operation in the last few weeks. This was partially due to the market crash, combined with a cash crunch in the company.”
He revealed that the team has tried to find short-term alternative sources of funding but they have so far been unsuccessful. This latest development comes just a few days after the Russian software developer noted that several cryptocurrency startups are battling with low cash at the moment. Last week, he wrote on Medium that “As everyone knows, we are going through really tough times. Markets are crashing and startups are running out of money. That’s a big problem for most of the companies in our space and that includes ETCDEV, of course.”
Ethereum Classic going nowhere
Ethereum Classic knew that this announcement by ETCDEV might cause panic in the community posted on its verified Twitter account that the cryptocurrency is going nowhere despite ETCDEV shutting down its operations. Ethereum Classic wrote a short message; “Keep Calm, and Build On.”
This move doesn’t come as a surprise to many as Ethereum Classic has experienced a torrid 2018 alongside other cryptocurrencies. The drastic drop in market prices has seen the major cryptocurrencies lose 80% or more of their value and this has, in turn, affected the cryptocurrency companies.
The plunge in crypto prices is a very serious one, with Steemit — the decentralized social media platform announcing last week that it would be laying off 70 percent of its staff. Ned Scott, the founder, and CEO of Steemit while commenting on this stated that the bullish market predictions the company made earlier this year have fallen awfully short of expectations following the recent crash. He stated that “While we were building up our team over the last months, we had been relying on projections of basically a higher bottom for the market. Since that’s no longer there, we’ve been forced to lay off more than 70% of our organization.”
Ethereum giant ConsenSys also revealed last week that it was undergoing a restricting as they look to streamline the business and cut costs, with the bear market looking to hang on for a while. The CEO Joseph Lubin who is also the co-founder of Ethereum sent out a letter to employees stating that they need to cut down on costs, do away with projects that are underperforming, and focus their energy on creating tangible value with positive returns on investments. He wrote that “We must retain, and in some cases regain, the lean and gritty startup mindset that made us who we are.”
Crypto enthusiasts still hopeful of a market turnaround
As the cryptocurrency market continues to underperform, most cryptocurrency enthusiasts are still optimistic that the cryptocurrency market will turn things around and the bull market will return. They believe that the market operates in a cyclical form and everyone needs to calm down and get a grip. Barry Silbert, the founder of Digital Currency Group is of the view that the current market situation is something that is inevitable considering it is still a new industry.
Silbert stated that the cryptocurrency prices don’t tell the whole story and to understand the market, one needs to look back at past bubbles and corrections to gain perspective. He stated that “We’re 5, 6, 7, times through this now. The first couple of times you see your balance sheet drop by 80 percent, it’s kind of rough on the stomach. By the third or fourth time, you get used to it. Now we view this as a fantastic opportunity.”
He pointed out that developments are made that will change the industry and those moves are not being reflected in Bitcoin prices just yet. He noted that “What’s happening behind the scenes is companies are being built to create the infrastructure to enable the on-boarding of a whole new category of investors. That’s the institutional investors. So behind the scenes, nobody has slowed down.”