Remember the spring of 2017? Altcoins were booming. Every other week new ERC-20 tokens were minted, shilled, pumped, and dumped. For the day-trader, it was a feeding frenzy like no other. Newbies went broke as the skilled got rich. And early adopters sat staring at green for months. 

All of it seemingly based on obscure whitepapers, contemporary looking websites, hype, and Twitter announcements. Now, it’s happening again. This time you can leave your Ethereum at the door. The star of this show is Monero.

Monero, as you know, is everyone’s favorite untraceable and fungible cryptocurrency. It’s a community project and open source, using a proof-of-work mining algorithm CryptoNight. Like Bitcoin before it, it’s going through a sort of renaissance; forks aplenty. With over 50 different CryptoNight coins, including Monero forks such as Wownero, there’s a lot of ideas brewing.

You can forget Initial Coin Offerings (ICOs) too. These projects are focusing on development first. Build a product and let it grow naturally. Here are some of the most intriguing projects in the space.

Figure 1. Wownero Doge.

Top CryptoNight Projects

Wownero plans to meme its way to the moon and become Monero’s DogeCoin with over-the-top ring signatures and bulletproofs. Others like Loki plan on bringing Monero’s famous anonymity to messenger applications. While less-inspired projects like Sumokoin and MoneroV have embraced the status quo and ASICs. And projects like Masari promising the ever elusive low hanging fruit that is ‘scalability.’

Others are a bit more ambitious. Projects such as Haven Protocol hope to create a stable off-shore banking system utilizing a dual coin blockchain. While Graft aims to become the Paypal of crypto by servicing real-time payment solutions and atomic swaps. Not to mention BitTube; the anti-censorship Youtube clone with a built-in cryptocurrency payment system.

There’s even an “Ethereum of Monero” named Dero looking to bring proof-of-work and anonymity to smart contracts. Using the familiar Golang coding language. Like in the golden age of ERC-20 tokens, the possibilities seem endless.

No ICOs; Development First, Funding Later

These aren’t Initial Coin Offerings (ICOs) either. As Turtle Coin’s homepage points out; there are all too many projects pumped on promises and no product. For the most part, Monero forks and the CryptoNight coins like them are unfunded projects with nothing more than a few passionate devs and lofty goals; believing value will create itself.

Turtlecoin
Figure 2. Turtlecoin.lol Homepage.

There’s no shortage of ideas or coins. With small market capitalizations and lots of room for ‘mooning,’ it’s a penny trader’s dreamland; an early adopters clearinghouse. Even in this bear market, these little-known coins are being pumped and dumped on a daily basis. All happening on courageous homebrew exchanges like TradeOgre.com.

The “Penny Stocks” of Crypto

TradeOgre
Figure 2. Tradeogre.com

Established in January 2018 Trade Ogre has become a consistent, and little known, exchange with coin offerings rarely seen on major exchanges. Offering more than just Monero forks and CryptoNight coins, such as Ethereum and XRP,  Trade Ogre’s is an altcoin feeding frenzy all to itself. Its user interface is simple and Trade Ogre is K.Y.C free (no need to verify your ID). It even has 2FA.

Intuitive and easy-to-use, Trade Ogre’s offerings may even seem overwhelming; much like Cryptopia’s. All you need is some Bitcoin, or Litecoin, an email you can verify and you’re ready to go. You may need to invest some time downloading, learning how to use new wallets, and visiting a couple Githubs. But that’s part of the fun.

If you’d like to join Monero’s renaissance without trading, your Bitcoin mining is always an option as well. You can view a list of CryptoNight coins and mine at https://cryptoknight.cc/. Most of which are listed for trade at Trade Ogre and Cryptopia.

Figure 4. Cryptoknight.cc Mining Pools.

Either way, let’s hope this trend continues and more exchanges like Trade Ogre begin popping up; as well as a few more coins. Be careful out there!

Disclaimer: the author is involved in the Wownero project as a designer and artist.

Learned something new in this article? Subscribe to the Block Explorer newsletter to get exclusive crypto insights before they appear on the site.

decentralized exchange

Binance just revealed a sneak peek of its new decentralized exchange (DEX). It’s slick, powerful, and will look familiar to current Binance users.

But why use a decentralized exchange instead of a normal cryptocurrency exchange like Coinbase or Kraken? Why is DEX the next generation?

In this article, we’ll run down some of the most important benefits. First, what exactly is a DEX?

What’s a DEX?

A decentralized exchange is a crypto exchange with no central authority.

Think about Coinbase for a minute. It is perhaps the most well-known exchange in crypto, but it’s highly centralized.

There is one company at the heart of it. Coinbase handles the exchange of money directly and stores all information on its servers. Most importantly, they control all funds on the platform. In other words, they technically own your crypto.

Centralized exchanges also require full identification, so your data is stored on their central servers.

A decentralized exchange aims to remove each of those elements. It’s a truly peer-to-peer exchange with no central authority and you keep full control and ownership of your funds.

Why Should I use a DEX?

1. Control your own funds

One thing you might not realize when you trade on Coinbase or Binance is that you don’t technically own your funds. The crypto is stored in wallets that belong to Coinbase or Binance. You are trusting them to look after it for you.

While that’s convenient, it’s not safe. It also goes against the grain of cryptocurrencies, which are designed to exist outside a third-party or banking system. With a DEX, you are in full control of your own private key and your own crypto funds.

2. Security

Because a centralized exchange like Coinbase holds your crypto in their wallets, it’s much more vulnerable to hacking. All data and funds are stored on the company’s server, so there’s one point-of-failure.

Crypto exchanges are regularly targeted by hackers because they hold vast sums of crypto in one place. Nearly $1 billion has been stolen from exchanges this year alone, and you probably remember the infamous $450 million hack at the Mt. Gox exchange.

A DEX removes that vulnerability by operating on a decentralized blockchain. Instead of one point of failure, the exchange operates on many servers all at once. That makes it extremely difficult to hack.

3. No government can shut it down

Since there is no central authority governing the DEX, it can’t be shut down.

For example, the Chinese government has a blanket ban on crypto exchanges. Binance was forced to move to Malta to get around the restrictions. In the US, exchanges like Coinbase must stick to strict regulations in order to operate.

You can’t close down or govern a DEX if there’s no central point of authority.

4. Permissionless

A founding tenet of cryptocurrencies is that they are “permissionless.” In other words, you don’t need someone’s permission (like a bank or a government) to use them.

When you use a central exchange like Coinbase, Coinbase is giving you permission to trade cryptocurrencies by asking for certain data and assigning you an account.

A DEX should be truly permissionless. Anyone can use it, with no restrictions.

5. Privacy

If you’ve used a mainstream exchange, then you’ve probably been asked to verify your identity. Coinbase, for instance, asks for ID verification to satisfy Know Your Customer (KYC) and Anti Money Laundering (AML) laws.

Your data is then stored on a central database. With a DEX, there should be no personal data stored on any central exchange. However, it remains to be seen whether the Binance DEX will require identification.

6. Faster and cheaper

By cutting out a central middleman, decentralized exchanges should operate with lower fees and faster transaction times.

The Downsides of DEX

Of course, decentralized exchanges are not perfect. They are still in their early stages and suffer from a number of problems:

Low liquidity – Not a lot of people use DEX platforms yet, so liquidity and trading volume is significantly lower than mainstream exchanges. That means it could be difficult to buy or sell certain assets.

Poor user experience – The benefit of using a mainstream exchange like Coinbase is that it’s slick and easy to use. DEXs are more primitive. They can seem overwhelming to beginners.

Lack of functionality – Again, because they’re in their infancy, DEXs have pretty basic functionality. If you’re looking for margin trading or stop-loss functionality, you may be disappointed.

No fiat conversions – You can’t load up your DEX account with dollars or euros because that would require KYC and AML procedures (ID verification). So you’ll have to make transfers in cryptocurrency only. Not a problem for intermediate users, but a big problem for beginners.

First Look at Binance DEX

If you’re excited by the concept of DEX trading, take a look at the new Binance platform:

Learned something new in this article? Subscribe to the Block Explorer newsletter to get exclusive crypto insights before they appear on the site.

binance CEO

October was the worst month of the year for cryptocurrency volume. Now deep into a bear market, the amount of crypto changing hands on a daily basis has slumped.

However, CEO of the world’s largest cryptocurrency exchange, Binance, says the real volume is at least twice as big as reported.

Speaking to CNBC’s Ran Neuner, Changpeng Zhao pointed to the enormous over-the-counter (OTC) market for hidden volume:

“What I’ve heard is the OTC market is at least as large as the live recorded volumes. So that is at least 50 percent of volume that is not being reported on CoinMarketCap.”

Crypto volume, explained: “Volume” is the amount of cryptocurrency changing hands on a daily basis. It is typically measured on CoinMarketCap by combining data from cryptocurrency exchanges like Binance, Coinbase, Bitfinex, etc. 

OTC Markets: Where the Whales Trade

Traditionally, over the counter markets are those in which trades are made in secret, and not recorded on an order book.

In the case of bitcoin, investors are buying and selling millions of dollars of cryptocurrency directly between one another, avoiding an exchange like Binance completely.

They may also operate through crypto brokers (such as BitStocks or Circle) which require high trading minimums. It allows “whale” investors to move their cryptocurrency without shaking the markets.

bitcoin whales

As Large as the Exchange Market?

As mentioned above, Changpeng Zhao believes this crypto OTC market is at least as large as the recorded volumes across the major exchanges. 

This chimes with a report released earlier this year by research firm TABB. They concluded that the crypto OTC market is at least two to three times larger than reported.

CoinMarketCap is currently reporting a 24-hour volume of $12.5 billion. If Changpeng Zhao’s analysis is correct, the real trading volume across the crypto market is closer to $25 billion.

Why Do “Whales” Trade OTC?

The first reason is liquidity. Crypto whales and institutional investors often trade multi-million figures in bitcoin and altcoins on a daily basis. 

Even the largest exchanges don’t often have millions of dollars in liquidity to facilitate such trades. Only by making private trades can they access the necessary buyers.

Furthermore, if a whale suddenly offloaded tens of million in bitcoin on a crypto exchange, it would very likely crash the market.

“We Are Still a Very Healthy Business”

Elsewhere in the interview, Changpeng Zhao reaffirmed that Binance was a healthy business, despite a 90% drop in volume since January’s boom.

Learned something new in this article? Subscribe to the Block Explorer newsletter.

kraken safest crypto exchange

The crypto world has a hacking problem.

Specifically, cryptocurrency exchanges have a hacking problem. In 2018 alone, we’ve seen at least four major exchange hacks with more than $750 million stolen (not to mention a few smaller exchange hacks).

Security and protection from hackers have become paramount when using a crypto exchange, but how do you assess the security threat?

Luckily, a prominent cybersecurity firm, Group-IB, has done it for us. In a new report, published in partnership with CryptoIns, every major crypto exchange is ranked based on a variety of security features.

Kraken is the Most Secure Cryptocurrency Exchange

Founded in 2011, Kraken is one of the oldest crypto exchanges out there. In that time, they have developed one of the most impenetrable exchanges.

Kraken was the first exchange to pass a verified proof-of-reserves audit and is integrated with BitGo, one of the leading cryptocurrency security companies.

The Group-IB report cites Kraken as the most secure exchange as a result. Further, Kraken is the only name in the report’s top-tier group, considered the least risky.

Further reading: 8 Cryptocurrency Best Practices (Keep Your Crypto Safe)

The Four-Tier Ranking

Group-IB divides the major cryptocurrency exchanges into four groups based on their security features. Below are the results:

Group A – Kraken.

Group B – Bittrex, Coinbase Pro

Group C – Binance, Bitifinex, Bitmex, Bithumb, Poloniex, Localbitcoins, MyEtherWallet.

Group D – OKEx, Huobi Pro, Coincheck, Bitstamp, Bit-Z, Zaif

OKEx: “Completely Uninsurable”

Group-IB considered the last pool “completely uninsurable” due to the security risk involved. That should come as a warning sign to anyone trading or storing their cryptocurrencies on these exchanges.

Perhaps the most surprising name in this group is OKEx. The exchange is now the second-largest in the world by 24-hour volume and was named the “Crypto Exchange of the Year” at the recent Malta Blockchain Awards.

How Were the Crypto Exchanges Ranked?

Group-IB compiled the rankings based on a number of security features including:

  • Technical security levels.
  • The reliability of private key storage.
  • Password requirements and 2FA options.
  • Protection of customer data.
  • Risk management.
  • Know your customer (KYC) and anti-money laundering (AML) procedures.

The exchanges were also submitted to penetration testing and finally ranked according to the relative cost of insuring them.

The exact scores in each of the categories were not released publicly for confidentiality reasons.

Caution: Don’t Keep Your Money on an Exchange for Longer Than You Need To

These rankings are vital for anyone looking to buy or sell cryptocurrencies. However, it doesn’t change the fact that keeping your cryptocurrency on an exchange is incredibly risky.

Hackers deliberately target exchanges and, as you can see above, not all institutions are secure.

The best course of action is to keep your cryptocurrency off the exchange and in a cold-storage wallet (i.e. not connected to the internet).

Exchanges are great for buying, selling, and trading, but don’t keep store your money there for a long period of time. If you don’t have 100% control of your private keys, you don’t have 100% control of your crypto.

Learned something new in this article? Subscribe to the Block Explorer newsletter.

bitcoin hack how to avoid

A small Canadian bitcoin exchange, MapleChange, was reportedly hacked in the early hours of Sunday morning, which they blamed on a “bug.” 

The little-known exchange says it is in “the process of a thorough investigation,” but “they cannot refund anything.”

In other words, if you trusted your money to MapleChange, you may not get that money back.

Maplechange hack

Hack or Exit Scam?

The suspicious nature of the announcement didn’t go unnoticed by commentators. Joseph Young, a contributor to Forbes and CoinTelegraph, called it an “exit scam.” 

Exit scam defined: An exit-scam is a shady technique in the crypto universe whereby a small, unregulated company lures money from people (usually through an exchange or an initial coin offering, ICO) before stealing it and removing all trace of the company.

The red flag came when MapleChange deleted all its social media accounts, an unnecessary move when depositors were desperate for more information.

While the speculation continues over the hack, we thought it best to put together three ways to make sure you never lose your money in an exchange hack or scam.

1. Don’t Keep Your Cryptocurrency on an Exchange, Period

All the biggest bitcoin hacks in recent history have taken place on an exchange. The Mt. Gox hack in 2014 was, of course, the most high-profile. $450 million was stolen by hackers before the exchange went bankrupt. At least four exchanges have been hacked this year alone.

Crypto exchanges are a prominent target for attackers, simply because they hold so much cryptocurrency. Many have security weaknesses that can be easily exploited. Many others are not regulated or protected by the governing authorities.

But most importantly, if you trust your crypto to an exchange, you have no control over those cryptocurrencies. It is entirely at the risk of the exchange and the safety precautions they have taken.

Instead, you should move your bitcoin or crypto off the exchange and into your own, personal cold storage.

Cold storage means keeping your cryptocurrencies offline, so they can’t be hacked. The best option is a specialized hardware device (Ledger or Trezor) are the best-known options.

ledger nano cold storage bitcoin wallet plugged into a laptop

Further reading: What is Cold Storage for Bitcoin?

2. Criteria for Choosing an Exchange: Reputation, Regulation, Insurance

Of course, we can’t stay clear of exchanges entirely. We need them to buy and sell cryptocurrency. But before you transfer any money, do your due diligence and research.

The first step is looking at reputation. Some quick research on MapleChange, for example, would have turned up very little information – a warning sign for investors.

On the other hand, trusting a major, high-profile exchange such as Coinbase or Gemini, while not 100% safe, is a more sensible solution. These giant exchanges are better regulated and have superior security features.

The likes of Coinbase and Gemini also go to great lengths to verify its users, which vastly reduces the likelihood of fraud or security breach.

Some exchanges are now fully insured, too. Gemini recently announced insurance coverage for its exchange and custody services. If you keep your money at Gemini, it is protected should the worst happen. 

Further reading: Cryptocurrency Insurance: What is it? (And Do You Need It?)

3. Holding Money on an Exchange? Choose One with Cold Storage

Sometimes, of course, holding money on an exchange can’t be avoided. If you are trading regularly, you may need quick, instant access to your money on an exchange.

If that’s the case, be sure the exchange keeps 95% or more of funds in cold storage. Cold storage keeps crypto offline and significantly more secure from hackers.

This advice was echoed by Binance founder, Changpeng Zhao, on Twitter in the wake of the MapleChange attack.

CZ binance cold storage advice

Coinbase, for example, holds 98% of all funds in cold storage. The remaining 2% are insured, so the risk of losing your money is much lower.

Conclusion

You’ll probably hear a lot about bitcoin’s safety and security in the wake of this hack. But it’s important to remember that bitcoin and its underlying system, blockchain, has never been hacked.

Hacking and theft only occurs through weak exchanges and poorly maintained wallets. In other words, storing your bitcoin safely is the most important decision you can make.

To sum up, always keep your cryptocurrencies offline, in cold storage, ideally on a hardware device you own, not an exchange. If you do use an exchange, ensure it is reputable, regulated, insured, and offers cold storage options.

Stay safe out there.

Note: this article was edited on 29th October. A previous version claimed that $6 million was stolen in the hack before the exchange in question re-opened communications and confirmed otherwise.

Further reading: 8 Cryptocurrency Best Practices (Keep Your Crypto Safe!)

Learned something new in this article? Subscribe to the Block Explorer newsletter.