Euro Exim Bank will be the first bank to use Ripple’s cryptocurrency service xRapid. The London-based bank will actively use XRP to source liquidity and settle cross-border payments.
It’s a major development for Ripple. As reported by Block Explorer, a handful of Ripple’s partners in the finance world now use xRapid, but most are money-transfer services. None have a banking license.
Euro Exim Bank is the first official bank to flip the switch to xRapid.
What is xRapid?
xRapid is Ripple’s flagship service that uses XRP as a bridge currency to speed up cross-border payments.
Tests have reported 70% savings and almost instantaneous settlements.
xRapid is a solution to the outdated foreign exchange system which takes days and incurs high fees.
While Ripple now has more than 200 banking partners, only a few are actively using xRapid. The companies include Mercury FX, Cuallix, Catalyst Corporate Credit Union, and Viamericas.
“Dozens of banks” will be using xRapid by the end of 2019
Ripple CEO Brad Garlinghouse has previously boasted that “dozens of banks” will be using xRapid by the end of 2019. But XRP holders have been disappointed by the lack of fully-licensed banks switching over to the cryptocurrency service.
Alongside the Euro Exim announcement, Garlinghouse also revealed that four additional companies will tap into xRapid: JNFX, SendFriend, Transpaygo, and FTCS.
“We’re beginning to see more customers flip the switch and leverage XRP”
“In 2018, nearly 100 financial institutions joined RippleNet, and we’re now signing two—sometimes three—new customers per week. We also saw a 350 percent increase last year in customers sending live payments, and we’re beginning to see more customers flip the switch and leverage XRP for on-demand liquidity. At the end of the day, our goal is to make sure our customers can provide excellent, efficient cross-border payments experiences for their customers, wherever they are in the world.”
Euro Exim Bank director, Kaushik Punjani, said: “We have designed, tested and are implementing both xCurrent and xRapid in record time, and we look forward to the benefits these will bring our customers.”
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While the Ethereum roadmap isn’t definitively laid out, there are many important updates planned to take place in 2019. We can also expect to see more of the research that has taken place over the past two to three years begin to enter preliminary testing phases and eventual implementation on mainnet. Without further ado, here’s what you should know about Ethereum’s development efforts in 2019 and beyond.
How Will Ethereum Scale?
Ethereum has already accomplished a lot as a blockchain protocol since its initial project development began in 2014. With thousands of decentralized applications (dApps) built on top of Ethereum, it’s the clear leader of ecosystem creation amongst blockchain projects. However, a number of newer blockchain projects are beginning to challenge this. EOS, POA, and Steem are all excellent examples of blockchains that also have a number of native applications.
In early 2019, there are a number of challenges that remain unresolved for Ethereum. The primary focal point of Ethereum in the immediate future is clearly on improving Ethereum’s scalability.
Making an exact timeline for when we should expect to see these solutions implemented can be difficult. Nonetheless, it’s good to use estimated time frames based on various sources to show how close (or distant) Ethereum’s upgrades are.
The Ethereum Roadmap at a Glance
Raiden Red Eyes
Off-chain solution for faster and cheaper transactions.
Constantinople hard fork
January 16th, 2019
Lays the technical groundwork for significant scaling projects in the future.
The introduction of “child” chains off the main Ethereum blockchain for faster and cheaper transactions. Similar to how the Lightning Network works on Bitcoin.
Ethereum’s main scaling goal. Casper is the shift from Proof-of-Work to the more efficient Proof-of-Stake.
Partition the existing blockchain into smaller pieces known as shards.
Serenity (aka Ethereum 2.0)
The culmination of Casper and Sharding will create “Ethereum 2.0.”
Implementation of a ‘super quadratic sharding’ solution which could facilitate one billion transactions per day.
Before we look at the roadmap in more detail, let’s also give some context to where the project is today.
Ethereum 1.0 (July 30, 2015 to Present)
Classifying the various Ethereum versions can be tricky. This is because the project isn’t the same as it was during its mainnet launch in July 2015. Plus, there are two commonly-accepted classifications.
First, you’ll find that the Ethereum blockchain in early 2019 is still referred to as ‘Ethereum 1.0’. Ethereum 2.0 is referred to as Serenity. The official Ethereum Wiki page shows that Serenity is technically classified as Ethereum v4, and its release date is to be determined.
Some major development milestones of Ethereum 1.0 include:
Olympic (v0, released in May 2015)
Frontier (v1, released in July 2015)
Homestead (v2, released in March 2016)
Metropolis (v3 aka vByzantium released in October 2017).
Metropolis (v3.5 aka vConstantinople) will be released in January 2019.
Raiden’s Red Eyes Launched on Ethereum Mainnet (December 21, 2018)
Although this technically happened in 2018, it’s still an important and recent achievement on the roadmap to reaching greater scalability for Ethereum. In sum, the Red Eyes protocol allows for quicker transaction completion times through payment channel technology, which takes place off-chain.
Some innovative features of Red Eyes include single and multi-hop transfers, REST API with endpoints for all functionalities, rewritten and more gas-efficient smart contracts (e.g. only one contract per token network), recoverability in case of an irregular shutdown of the Raiden node, and the integration of the Matrix transport protocol for messaging.
Still, the current version of Red Eyes has a few known issues to be aware of. For example, third parties are currently unable to monitor channels on behalf of nodes or to pathfinding services. It also isn’t possible to do atomic swaps or upgrade smart contracts with Red Eyes.
The only way to upgrade the network is to close all channels and redeploy a new smart contract and reopen the channels. Additionally, Raiden’s blog post mentions numerous security notes. Some known issues include a compromised user system, a full disk, blockchain congestion, and chain reorganizations.
Once fully deployed, Raiden is designed to enable the Ethereum blockchain to process one million transactions per second and make transactions significantly cheaper to complete than before.
Three 1,000 ETH Grants (December 2018)
In December 2018, Vitalik Buterin sent 1,000 ETH grants to three different blockchain companies: Prysmatic Labs, Sigma Prime, and ChainSafe Systems. Even though this was positive news, it actually led to mixed reactions from members of the blockchain community.
For example, one VC investor stated that Ethereum is “missing ship dates [and] are lacking basic operational leadership.” A CEO of a crypto project said, “Ethereum has taken its lead for granted for too long (2 years). Needs increased focus and urgency on scalability to reclaim its narrative. Move fast or die slow.”
Whether or not you agree with these criticisms, it’s safe to say that most of Ethereum’s innovations are still listed on the future roadmap, and a lot of work is needed to sustain its position as a leader in blockchain and crypto. With that being said, here are some future events to look forward to.
Metropolis, vConstantinople (January 16, 2019)
Constantinople is the first major Ethereum update of 2019 and quite possibly the most important since the October 2017 update. Constantinople marks a hard fork of the Ethereum blockchain. After this update is released, members of the community will have to decide whether to run the old network or switch to the new one.
Lane Rettig, an independent developer, has called Constantinople a “maintenance and optimization upgrade.” While these changes aren’t all that big from an end user’s perspective, they do present new opportunities as well as challenges overall in several key areas. For example, upgrades implemented with Constantinople should make it easier for the Ethereum team and projects building on top of Ethereum to continue on tackling scalability issues in the future.
Constantinople will include the following five EIPs (Ethereum improvement proposals):
EIP 145 introduces a more efficient method of information processing known as Bitwise shifting. According to the EIP145 proposal notes, it costs around 35 gas to do a shift using arithmetic. However, this solution introduces an Ethereum Virtual Machine (EVM) native operation that only costs 3 gas. This results in a 91.4% savings in gas costs.
EIP 1052 provides a solution for optimizing large-scale code execution on Ethereum. More specifically, this functionality returns the keccak256 hash of a contract’s bytecode. It improves upon the design of the EXTCODECOPY opcode. As a result, large contracts that only require the hash will be cheaper to process.
EIP 1283 is based on EIP 1087. This proposal aims to help smart contract developers by reducing gas costs related to changes made to data storage.
EIP 1014is utilized in state-channel use cases that involve counterfactual interactions with contracts. It allows interactions to (actually or counterfactually in channels) be made with addresses that do not exist yet on-chain.
EIP 1234 is the somewhat controversial proposal that reduces the block mining reward issuance from 3 ETH down to 2 ETH. This will change Ethereum’s underlying economic policy.It also delays the introduction of the “difficulty bomb” for 12 additional months. The difficulty bomb is a piece of code which will eventually increase the difficulty level of puzzles in the mining algorithm used to reward miners with ETH.
Plasma and Plasma Cash (TBD)
Even though it’s up for debate, most consider Plasma to be an on-chain scaling solution. This is due to the fact that Plasma relies upon the inherent security of the Ethereum blockchain.
Plasma chains have the ability to be better than ordinary sidechains due to increased security and easier accessibility. For example, if a Plasma sidechain breaks, funds are still secure thanks to the main chain. Meanwhile, users can also withdraw funds from a Plasma sidechain to the main chain at any time with balances from the last valid block.
Plasma Cash is another solution that’s supposed to be even more efficient than Plasma. However, this is still in the research phase as of the beginning of 2019. The OMG team has been working with other researchers to simplify an atomic swap protocol which utilizes Vitalik Buterin’s atomic swaps and defragmentation work.
Loom Network is another blockchain project that has been working on developing similar Plasma solutions to improve the scalability of the Ethereum blockchain.
Casper is Ethereum’s pure Proof of Stake consensus algorithm. Why the change to Casper? Simply put, Proof of Stake blockchains are typically more scalable than Proof of Work blockchains. Additionally, there are growing concerns over the environmental impact of cryptocurrency mining operations.
As of the beginning of 2019, transactions on the Ethereum blockchain are still reliant upon Proof of Work. This means that cryptocurrency miners play a big role in verifying the accuracy of transactions. When Ethereum switches to Casper, transactions will be validated with staking.
In basic terms, sharding aims to securely partition the existing blockchain into smaller pieces known as shards. This solution, like most others on this list, is something that many non-Ethereum blockchain developers and researchers are also working on.
When it comes to implementing sharding on a mainnet, Ethereum won’t be the first. This title will likely go to Zilliqa upon the release of its mainnet on January 31, 2019. However, Ethereum’s sharding implementation isn’t too far down the road. According to various estimations from developers, we should expect the Ethereum blockchain to implement phase one of sharding sometime in 2020 and phase two sometime in 2021.
Serenity a.k.a. Ethereum 2.0 (2019/2020)
Earlier, we mentioned that Ethereum is still in version 1.0 as of the beginning of 2019. So when will Ethereum 2.0 be released? This is still difficult to say exactly. That’s because Ethereum 2.0 is generally considered to be a combination of Casper CBC (full PoS) and sharding. As stated above, Casper will likely be ready mid-2019.
Meanwhile, sharding for Ethereum won’t be initially implemented until 2020. In that sense, it’s easier to think of the move to Ethereum 2.0 as the culmination of two separate upgrades and not something that will have a single release date.
Ethereum 3.0 (2022 to 2025)
While Serenity (Ethereum 2.0) is still on the horizon, the core Ethereum team is already working towards Ethereum 3.0. This mostly involves research, rather than implementation. As to be expected, objectives that are further along in the roadmap have broader time frame ranges.
This is because delays or even circumstances that speed up the current projects or the future development of Ethereum 3.0 could take place.
Super quadratic sharding is a major part of Ethereum 3.0. As this site explains it, “So say, Ethereum currently has 16,000 nodes and all of them are currently processing the same transactions. You split that into 160 node groups of 1,000 nodes each. Ethereum’s current capacity is around one million transactions, so in this sharded chain its capacity would be one million x 160.”
Once everyone is confident in the capabilities of the sharded chain, it’s possible that, sometime between 2022 to 2025, Ethereum can split those 1,000 nodes each into 10 groups of 100 nodes each. This would make it possible to process one billion transactions per day with Ethereum.
Ethereum continues to make progress on its roadmap goals for 2019 and beyond. Much like any project, there will likely be a few speed bumps along the way. However, a large group of core developers and an ecosystem of independent developers and projects building infrastructure for Ethereum is what continues to accelerate innovation.
In a recent Reddit Ask Me Anything (AMA) session, Cameron and Tyler Winklevoss, the identical twin founders of crypto exchange Gemini, maintained their optimistic stance on bitcoin.
In one exchange, Tyler Winklevoss claimed that bitcoin’s market capitalization would surpass gold:
“Our thesis around bitcoin’s upside remains unchanged. We believe bitcoin is better at being gold than gold. If we’re right, then over time the market cap of bitcoin will surpass the ~7trillion dollar market cap of gold.”
Bitcoin’s market cap is currently at $71 billion, a far cry from gold’s $7 trillion.
“Crypto Needs Rules”
The Reddit AMA comes a week after Gemini launched a controversial new marketing campaign. Gemini posters erected near Wall Street in New York declared that “crypto needs rules.”
Further adverts in the New York Times claimed “the revolution needs rules” and promoted “crypto without chaos.”
Rules like mathematics? Sure. Crypto needs that. Rules like "KYC AML licencing taxation Patriot Act bitlicense bullshit?" No. Crypto doesn't need that. pic.twitter.com/8azzqCKlwa
It’s a controversial position among many in the cryptocurrency community who resent the presence of regulators in the space.
Since the launch of the Gemini exchange, the Winklevoss twins have operated within strict regulations and licenses. As Chris Roan, head of marketing at Gemini told the Wall Street Journal, “We believe that investors coming into cryptocurrency deserve the exact same protections as investors in more traditional markets.”
Committed to Bitcoin ETF
In the Reddit AMA, the Winklevoss twins also doubled down on their goal to launch a bitcoin exchange-traded fund (ETF). Cameron Winklevoss said, “We are committed as ever to making an ETF a reality!”
He also outlined some of the Securities and Exchange Commission’s concerns and how Gemini would work to satisfy them. This includes the addition of a Nasdaq-style market surveillance system.
Mining pool, Etherchain, has reported that Ethereum Classic (ETC) has succumbed to a successful 51% attack “with multiple 100+ block reorganization.”
A 51% attack occurs when a malicious actor commands more than half the hashing power on a blockchain. It allows the attackers to “double spend” a cryptocurrency, hence why it’s often known as a “double spend attack.”
“Block reorganization” as mentioned in Etherchain’s tweet, refers to a blockchain which excludes blocks that were initially thought to be part of the longest chain. This is consistent with a double spend attack.
We can confirm that there was a successful 51% attack on the Ethereum Classic (#ETC) network with multiple 100+ block reorganization. We recommend all services to closely monitored the chain and significantly increase required confirmations.
There’s no other way to say it: 2018 was a true rollercoaster for the blockchain world.
While it started with a historic surge to an unbelievable crypto market capitalization of $900 billion at its peak, the market disastrously retraced by nearly 90% since those glory days.
Despite countless financial analysts and crypto experts predicting heights of up to $60,000 per bitcoin in 2018, the year, unfortunately, turned out to be one of the worst for the crypto market.
However, now it’s time to focus on the future. In order to effectively prepare yourself for the following year, you definitely want to take a look at the following sectors of the blockchain world.
1. Bitcoin Exchange-Traded Funds (ETFs)
Date to Watch: 27th of February, 2019 – VanEck and Solid X Bitcoin ETF Decision Date
Bitcoin ETFs have undoubtedly been one of the hottest topics during the past 12 months, especially since they are regarded as a potential catalyst for rapid price increases of bitcoin and other cryptocurrencies.
One ETF application, in particular, has been declared as a possible game-changer. The collaboration between investment firm VanEck, the blockchain company SolidX and the Chicago Board Options Exchange (CBOE). It is one of the few physical ETF proposals that is actually seen as promising by several financial experts.
If a trading vehicle of this kind was approved, the ETF issuer would need to actually buy real bitcoins from an exchange or, more likely, the over the counter (OTC). A potential ETF of this size requires tens of thousands of bitcoins, and the ensemble would need to acquire them, which could lead to a rapid increase in price.
Furthermore, an ETF would enable investors and traders to eventually trade bitcoin on a traditional stock exchange, which would also help the digital currency to gain popularity and availability.
Unfortunately, the US Securities and Exchange Commission (SEC) has not yet decided on the ETF submitted by VanEck and SolidX. The final decision has been postponed several times, however, the SEC announced an ultimatum on December 7, 2018. The Commission chose the 27th of February, 2019, as the day for either the approval or disapproval of the proposal.
Although dozens of established cryptocurrency specialists, like CNBC expert Bill Barhydt, believe that we will see an ETF approval in the following months, it remains to be seen if the SEC is convinced that the time is right to unleash the first physical Exchange-Traded Fund for Bitcoin.
“Security tokens, not utility coins, will attract significant amounts of Wall Street money next year.”
Security tokens or tokenized securities were definitely buzzwords that grew in the past 12 months in crypto. This is, of course, because tokenized assets are one of the most promising innovations in the blockchain sector, as they could disrupt the corporate and financial world.
Rohit Kulkarni, the managing director of SharesPost, one of the leading marketplaces for private securities, firmly believes that 2019 is going to be the year of tokenized securities. In a recent article on Nasdaq, Kulkarni stated that “security tokens, not utility coins, will attract significant amounts of Wall Street money next year.”
Despite missing regulations often being seen as a major stumbling block for the industry to grow, Kulkarni is confident that the space will mature in the near future. “We ultimately expect a more stable regulatory environment over the next six to twelve months,” he said.
In 2018, many companies already started engaging in the security token industry. Overstock, for example, became the first billion dollar company to start building their very own security token exchange, which is expected to open up trading during this year.
Moreover, Open Finance became the first U.S. based security token exchange that went live on December 13, 2018. With traditional stock exchanges, such as Switzerland’s and Malta’s main stock exchanges, forming partnerships to build security token exchanges, the industry is without a doubt worth to keep an eye on in 2019.
3. Nasdaq and New York Stock Exchange Get Involved in Crypto
Date to Watch: Late January – The expected launch of Bakkt.
The two biggest stock exchanges in the world will step into the crypto ring in 2019: the New York Stock Exchange and the Nasdaq.
Bakkt, a cryptocurrency exchange built by ICE, which is the parent company of the NYSE, planned to launch the first physical-backed bitcoin futures on January 24. Although the start has already been postponed several times, crypto enthusiasts still see the exchange as a potential game-changer for involving institutional investors into the market, due to the reputation and experience that is connected with its operator.
Meanwhile, Nasdaq is following Bakkt on its mission and recently announced it was working on Bitcoin future trading for 2019 as well. Further news from Nasdaq include the exploration of security tokens and a potential exchange for such assets in the following time.
While it is not yet certain what kind of future security token trading Nasdaq will be providing, it still shows that some of the biggest financial enterprises in the world are not scared of the overall bearish market sentiment of 2018. “The concept of having a digital currency that does allow for transfer of money across borders, that really transcends the banking system, and allows for a seamless transfer, is really really fascinating and one that we have to assume will become a part of the ecosystem of the internet,” Nasdaq CEO Adena Friedman commented on digital currencies such as bitcoin.
Fidelity: We’ll “make digitally native assets, such as bitcoin, more accessible to investors”
$1 billion in cryptocurrency was stolen in 2018 with high-profile crypto exchange hacks hitting the headlines. Keeping cryptocurrency on an exchange is risky. And, while holding bitcoin yourself in a personal wallet is safe, you risk losing the wallet.
That’s why custody and storage solutions will be a huge talking point in 2019.
As for institutional investors, bitcoin or storage solutions are seen as major hurdles for attracting the big fish to the crypto market. Most institutional investors are prohibited from investing in assets unless they are held in secure custody provided by highly specialized firms,
Coinbase and other blockchain companies already gave birth to novel crypto asset custodial solutions in 2018. Fidelity, an established asset management firm that administers its clients’ assets with a combined worth of about $7 trillion, also decided to “make digitally native assets, such as bitcoin, more accessible to investors,” and founded a new subsidiary that focuses on storing digital assets for its clients. According to CNBC, the company is already in the process of onboarding clients and is expected to launch its platform in early 2019.
Some say that we should even expect major banks to join Fidelity and Co. in providing services for storing bitcoin and other cryptocurrencies. As stated in several reports, Ripple CEO Brad Garlinghouse, at the Singapore FinTech festival in 2018, mentioned that banking institutions are about to offer blockchain asset custody solutions to their clients during the next year.
5. Over-the-Counter (OTC) Trading
The Circle Trade OTC desk
Circle reported $24 billion in OTC crypto trading last year
OTC or over-the-counter trading is another keyword that pops up here and there when scanning the blockchain related stories of 2018. OTC trading is the private buying and selling of cryptocurrencies, often in huge amounts, off the major exchanges.
Bitcoin OTC coverage has increased in the media and social networks, but the trading activity itself seems to have increased in 2018 as well.
With Goldman Sachs-backed Circle’s OTC trading platform recording $24 billion in OTC trading last year, it is regarded as a true money-making machine. “We have seen triple-digit growth enrolling in our OTC business. That’s a big growth area,” mentioned Jeremy Allaire, the CEO of Circle, in an interview with Bloomberg in October.
Consequently, some of the biggest cryptocurrency exchanges are now working on their own OTC trading desks or, in regard to Coinbase, quietly launched one in the matter of a few months.
Binance, on the other hand, decided to act in a different way, as its newly founded investment wing Binance Labs recently invested $3 million into a U.S. based OTC desk called Koi Trading.
With major exchanges moving into the OTC business, the field is likely to play a key role in the blockchain world during 2019.
Creating a “seamless experience for storing and managing digital assets”
Banking institutions around the globe are already experimenting with blockchain technology in order to improve cross-border trading and daily operations. In 2018, several achievements were made and they might give us an outlook of how the following 12 months could look like for banks.
The first real customer transactions between several big international banking institutions were conducted on the blockchain platform We.Trade on July 3, 2018. This event is considered a major milestone for blockchain adoption, as institutions across all industries were previously not interested in leaving their sandbox test environments.
While established banks are continuously pushing forward adoption of distributed ledger technologies, new players are also eyeing the creation of banks that are focused on blockchain assets.
Smaller offshore destinations in the Caribbean, e.g. Bermuda, recently announced an update of their banking legislation in favor of blockchain technology and assets. Additionally, a young enterprise called EQIBank, founded by previous bankers from HSBC, UBS and Credit Suisse, just opened their first customer accounts in December 2018.
EQIBank aims to provide a seamless experience for storing and managing both traditional and digital assets, as stated in a recent press release. This can definitely be considered as an upcoming trend since crypto startups around the world are currently applying for banking licenses in their countries.
7. The Cryptocurrency Insurance Industry
“The evolution is dramatic”
Insurance giants, such as MetLife and Allianz, are often regarded as notable blockchain researchers and adopters. Fair enough, considering that transparent ledgers and smart contracts seem to be the perfect enhancements for the daily business of an insurance company. The most promising use-cases include, but are not limited to, automating payments once the terms of a claim are met, increasing the transparency of transactions, storing information and enabling blockchain powered IoT processes.
Ryan Rugg, the global head of insurance at R3, believes the current evolution of insurance companies is a huge leap for the industry. “These developments would be innovative in any sector, but when you consider the processes underpinning the insurance industry have remained largely unchanged for hundreds of years, the evolution is even more dramatic,” Rugg explained in an article on BlockTribune. When talking about the future, Rugg further stated that “2019 will undoubtedly see the insurance industry enter the next stage of its digital transformation.”
“We need appropriate regulations to be put in place and enforced to safeguard the interest of investors”
2018 has definitely seen some considerable developments in terms of global blockchain regulations. With Malta officially becoming a blockchain island, smaller jurisdictions opening up to security tokens and the SEC finally cracking down on a majority of all the controversial ICOs, the blockchain space clearly advanced and is on its way towards becoming a matured industry. Still, there are countless regulatory issues left that hamper the global adoption of blockchain technology and services.
With 2018 as a foundation, we most probably will see exponential progress in the following year in the most important jurisdictions, such as the US and the EU. In fact, there are already several signs that validate this assumption. On October 18, the SEC announced the launch of a new FinHub, where regulatory approaches to novel financial technologies, like blockchain, are researched and evaluated.
After Singapore, Malaysia is another Asian country that wants to introduce new legislation for blockchain in the following year. “While some parties might still be skeptical of this space, there can be no doubt that we need appropriate regulations to be put in place and enforced to safeguard the interest of investors,” said Lim Guan Eng, Finance Minister of Malaysia. In Liechtenstein, the government is currently working on the Liechtenstein Blockchain Act, which should pave the way for institutional investors in 2019.
Further countries that are expected to unveil updated laws for blockchain include the United Arabian Emirates, Israel, Russia, Thailand and seven major states within the EU. The ball is finally rolling and global regulations in various areas of distributed ledger technology seem to be closer than ever before. We definitely have an exciting year ahead of us and might even be looking towards one of the most productive years for the blockchain industry ever.