VanEck Launches Bitcoin Exchange-Traded Note on Deutsche Boerse

VanEck, the New York-based investment management firm with around $50 billion in AUM, has launched a bitcoin exchange-traded-note (ETN) that for trading on the Deutsche Boerse Xetra.

Listed on the Frankfurt, Germany-based trading venue Wednesday, the VanEck Vectors Bitcoin ETN (VBTC) is physically backed by bitcoin and tracks the MVIS CryptoCompare Bitcoin VWAP Close index.

“Bringing to market a physical, fully-backed major exchange-listed bitcoin ETP was a top priority of our firm,” Gabor Gurbacs, director of digital-asset strategy at VanEck, said. “We hope to serve many clients and partners in Europe, Asia, and across the world using our innovative, investment-friendly, and regulatory-conscious access vehicles.”

An ETN is a type of unsecured debt security payable to the bearer that tracks an underlying asset or an index. In effect, they mean, investors can gain exposure to an asset class without owning it.

VanEck has partnered with Liechtenstein-based crypto custodian Bank Frick for secure bitcoin storage services. The total cost associated with managing and operating the instrument, or the total expense ratio, is 2%. The investment product is currently limited to investors from Germany, the Netherlands and the U.K.

There are now three bitcoin ETNs listed on Xetra. ETC Group was first listed in late June, followed by crypto ETP issuer 21Shares in July.

The firm’s decision to launch an ETN comes after several failed attempts to win approval for an exchange-traded fund, or ETF, from the U.S. Securities and Exchange Commission.

Disclosure

‘BitcoinTuesday’ to become one of the largest-ever crypto donation events

BitcoinTuesday, scheduled for Dec. 1, aims to become one of the largest cryptocurrency fundraisers in history. 

The Giving Block, a crypto donations company, has secured partnerships with over 120 nonprofits and 30 blockchain companies to spearhead BitcoinTuesday — a one-day event that promotes charitable giving via cryptocurrency.

Some of the biggest names in crypto will participate in the event, including Cointelegraph, Gemini, Ledger and Blockfolio. Along with dozens of other blockchain companies, they are stepping up to help over 100 charities collect Bitcoin (BTC) and other cryptocurrency donations before the holidays.

BitcoinTuesday will feature several trivia fundraising events, where HODLers can test their knowledge of the cryptocurrency and blockchain industry. Users are also encouraged to create their own fundraising events, such as live streams or poker tournaments, to support their favorite charity.

The Giving Block tells Cointelegraph that BitcoinTuesday 2020 will see “1,000% growth in nonprofits accepting cryptocurrency donations.” Organizations like Save the Children, No Kid Hungry, and The American Cancer Society are just some of the charities that will participate in this year’s event.

According to The Giving Block:

“All our charities accept more than just Bitcoin. Bitcoin is front and center, but you can donate every crypto currently supported on Gemini.”

A similar event last year successfully onboarded a dozen charities. BitcoinTuesday 2020 is an order of magnitude bigger, signaling a clear shift in how nonprofits view digital assets.

With hundreds of billions of dollars flowing into the cryptocurrency market this year, digital assets offer new fundraising options for charities. The Giving Block tells Cointelegraph that crypto adoption has a positive impact on donations as holders look to offset capital gains taxes by making charitable contributions.

They also believe that nonprofits themselves can aid crypto adoption by offering users the opportunity to donate via digital assets:

“Nonprofits adding crypto as an option across their website and platforms, calling for crypto gifts in their communications, posting about crypto on social. This drives their mainstream audiences into the crypto scene which is invaluable.”

Of course, charitable giving is nothing new for the crypto community. In Dec 2017, an anonymous Bitcoin charity called the Pineapple Fund gave away 5,057 BTC to 60 charities. The Giving Block is looking to replicate the success of the Pineapple Fund and lay the foundation for an even bigger charity drive in years to come. Although there is no set goal for how much BitcoinTuesday can raise, The Giving Block says, “we think raising millions is perfectly reasonable.”

They added:

“It will depend on who steps up and makes a statement!”

Nonprofit charities can participate in BitcoinTuesday by applying directly through The Giving Block. Other companies can participate in the event by becoming a sponsor or promotional partner.

If you are a donor interested in making a large crypto donation, contact The Giving Block to facilitate a conversation between you and the charity of your choice.

What the History of Airlines Tells Us About Blockchain Commerce

We may be nearly 30 years into the internet era but nearly every asset, product and service in the global economy remains an offline asset. From cars to farm tractors to apartments to storage spaces, the truth is the vast majority of the world’s productive economic assets are offline. We don’t know if they’re busy or not, if they need maintenance or if they’re available to be rented. We can’t even find our car keys.

That’s going to end soon. In the coming years, a combination of blockchain, wireless networks and internet of things (IoT) is going to start connecting, digitizing and tracking the world’s stock of productive assets. Every piece of capacity can be represented as a digital token on a blockchain, accessible through smart contracts, and managed and available based on IoT-enabled connectivity. The impact is going to be enormous; some industries are going to be turned upside down overnight, while others might not change much at all. How will we be able to know and predict what will be impacted and how? I suggest a brief study of history.

Paul Brody is EY’s global innovation leader for blockchain. The views in this article are those of the author and do not necessarily reflect the views of the global EY organization or its member firms.

While the possibility of true digitization has been around for about 30 years, we still have a long way to go. One case study worth considering is the airline industry, which was one of the very first to be fully digitized and has had, to put it mildly, a very rough ride along the way.

In the fall of 2005, I remember landing at San Francisco International Airport on a flight from Dallas. Over the PA, the flight attendant thanked us, as usual, for choosing her airline. She concluded her message with a line that made the whole plane laugh: “We know you had a choice of bankrupt airlines for your flight today and we thank you for choosing us.” At the time, nearly every major U.S. airline was under the protection of Chapter 11 bankruptcy. For some of them, it was their second visit in less than a decade.

While the immediate cause of this particular wave of bankruptcies was a combination of the dot-com collapse and the Sept. 11, 2001, terrorist attacks, the financial situation of the major airlines had been dire for a long time. Since airlines were deregulated in 1979 there has been a steady stream of bankruptcies and mergers as the industry consolidates. This isn’t a story about deregulation, however; it’s a story about digitization.

The airline industry offers a unique and interesting real-world experiment in what happens when you digitize an industry. What makes this industry particularly interesting is that it’s possible to look at the impact of digitization as having effectively taken place from one moment to the next. This is because although digitization of the airline industry took more than a decade, regulations that governed where airlines could fly and how much they could charge meant that no real impact on pricing or economics could be seen while the industry was regulated.

Every piece of capacity can be represented as a digital token on a blockchain, accessible through smart contracts, and managed and available based on IoT-enabled connectivity.

never returned. Famous names from the earliest days of aviation disappeared, including Pan Am and TWA. Many of the others merged with the stronger survivors – “strong” being a relative term because nearly all of the industry’s “winners” spent a stint in bankruptcy as well.

See also: Paul Brody – Enterprises Need Third Parties for Oracles to Work

The economics of air travel are challenging for a couple of reasons. First and foremost, the marginal cost of flying an additional passenger on a plane is nearly zero. Selling that ticket for as little as a few dollars is better than leaving the seat empty. And because seats cannot be filled after take-off, there is always a “final sale” going on. This often leads to airlines selling seats that are at the margin, profitable, but are on average far below costs. 

Perhaps most painfully for airlines, and despite decades of work on everything from service quality to scheduling analytics it turns out most consumers buy their plane tickets based on only one major criteria: price. And though at times it may seem like the entire world is addicted to frequent flyer miles, they turn out not to be a strong enough lure to sustain substantially better pricing over a long period of time.

The result: Prices trended towards marginal cost of flying one more passenger (which is nearly zero) and far below the actual average cost whenever the industry has excess capacity. The industry has historically been good at creating excess capacity by both ordering more planes and getting much more efficient at flying those planes. Nor is parking the plane an option, not when they cost up to $100 million each and are purchased with borrowed money.   

Finally, and this is where digitization is so powerful, the structural elements of the ecosystem (high fixed costs, low marginal costs) are amplified by the digital marketplace. Every seat on every flight is instantly visible, making comparison-shopping and capacity-planning very easy. That leaves no quiet, profitable corners of the market hidden from view.

And now as digital rolls forward, there might be many more similar industry experiences in multiple industries. IoT is going to instrument a lot of industrial capacity, much of which is presently both idle and invisible. Just like the airline industry, once a huge amount of idle capacity becomes visible and bookable online, the likely effect is a plunge in pricing. How many idle MRI machines or pieces of mobile, heavy construction equipment are out there? 

Which products and industries are most at risk? Not every product is easily subdivided or shared, but those with capacity that can be shared are at higher risk than others. Industries that have low asset utilization are also at risk. Even before COVID-19, most offices sat idle much of the time. Movie theaters are empty during the week. Classrooms are quiet three months of the year. What if all these facilities and assets could be managed, booked and utilized online?

We’ve learned the hard way in the last few months that we probably pay for much more office space than we really need. What’s next?

a 12% return on invested capital for routes that operated with at least 55% capacity utilization. Airlines often assumed that mid-week flights would run nearly empty and holiday destinations would have weak performance in the off-season. 

In the decades after deregulation, airlines discovered they could fill mid-week flights and off-peak destinations to the brim if the price was right. In 2018, the average U.S. airline had a load factor of 83%. That means, as many have experienced, full planes, seven days a week, 365 days a year. With the proper incentives, we should not be surprised if, a couple of decades from now, new movie theaters or classrooms are easily reconfigured into offices or meeting spaces, and MRI services are open 24 hours a day.  

Can enterprises prepare themselves for this future of digital disruption? They can start by getting a much deeper understanding of their assets, which ones are essential, how much they are really being utilized and how necessary they are for operations. We’ve learned the hard way in the last few months that we probably pay for much more office space than we really need. What’s next?

Disclosure

Ethereum 2.0’s long and winding road to scalability launch

On Nov. 4, Ethereum (ETH) core developers hit a significant milestone. In a “quick update” on the Ethereum Foundation blog, developer Danny Ryan confirmed the release of the v1.0 specs for the hotly anticipated Ethereum 2.0 upgrade, which includes the mainnet deposit contract address. Anyone who wants to participate as a validator on the Ethereum 2.0 mainnet can now start depositing their minimum stake of 32 ETH.

The initial results looked promising, with 14,000 ETH (worth around $5 million) staked in the first eight hours alone. However, the developers have set a minimum total stake of 524,288 ETH from 16,384 validators as the trigger for launching the mainnet, known as the beacon chain. The target must be met at least seven days beforehand, so by Nov. 24. If this doesn’t happen, the launch will take place seven days after the minimum staking threshold is met.

Is the Dec. 1 deadline achievable?

At the time of writing, less than 20% of the total amount has been staked. If staking continues at the current rate, the Ethereum 2.0 mainnet will launch not on Dec. 1, but in the early weeks of 2021.

Of course, the participation rate could change. As Nov. 24 draws closer, the growing anticipation may encourage more people to stake their ETH. Ben Edgington, the lead product owner at ConsenSys Quorum Protocol Engineering advising on Ethereum 2.0 development across the ConsenSys organization, maintains a positive outlook on the Dec. 1 launch date, telling Cointelegraph:

“I expect that the pace of deposits will accelerate sharply as the cut-off date nears. There’s little benefit in staking early, so I think people are just taking their time. Whether there will be enough to push us over the threshold in time is hard to judge, but I remain optimistic. If there is a delay to genesis, I expect it to be short.”

The numbers show that the potential is there, as the number of addresses holding 32 ETH hit an all-time high of 126,852 in the hours following the news. This means that fewer than 13% of addresses need to participate to hit the threshold.

On the other hand, those who do stake will be locking up their tokens in a one-way contract until the current Ethereum mainnet joins the beacon chain. Exactly when this happens, nobody knows, although the current Ethereum 2.0 roadmap specifies it will be in 2021.

Whether the beacon chain launches on Dec. 1 or in the weeks following, there won’t necessarily be any “big bangs” to look forward to on the launch. The role of the beacon chain is to secure transactions on shard chains, which won’t be available until later. The current Ethereum 1.0 mainnet will continue running as it does now.

The road to sharding

So what are the next steps, and when can Ethereum become fully scalable? The beacon chain launch is known as Phase 0 on the Ethereum 2.0 roadmap. The next significant developments are slated for 2021 and will involve the launch of 64 shard chains, which will operate under the proof-of-stake consensus validated by those who staked ETH. However, in their initial state, shard chains won’t support smart contracts or user accounts.

Perhaps the most significant milestone for the existing Ethereum 1.0 ecosystem will be Phase 1.5, when the Ethereum mainnet joins the beacon chain as a shard chain. This will mark the transition of Ethereum to a full proof-of-stake consensus. Again, it’s set to happen in 2021, but no exact date is available as of yet.

Only when the final stage of Phase 2 comes around will it be possible to assess the full effect of the Ethereum 2.0 upgrade on the network’s scalability. At this time, shards will be fully operational, supporting smart contracts and all transaction types. However, this could be as long as two years away. On the roadmap, the Ethereum Foundation states, “Phase 2 is still very much in the research phase,” effectively confirming that development isn’t yet underway.

No solution to rule them all

Even if all the roadmap phases are delivered within the next 18 months, which is a big “if,” it will be well into 2022 before the full scalable potential of Ethereum 2.0 is visible. However, rather than focusing on the development of Ethereum 2.0 as the endgame, it’s worth taking a bird’s eye view on the evolution of the Ethereum ecosystem over the coming years.

Despite coming into some criticism, layer-two solutions still offer the best hope of Ethereum scalability in advance of the Ethereum 2.0 mainnet becoming fully operational. Even Vitalik Buterin himself appears to favor other layer-two platforms as the current scaling solution of choice.

This year, both Matic Network and the OMG Network unveiled layer-two solutions based on variations of Plasma, which makes use of side chains to take processing load off the main Ethereum chain.

However, while Plasma was the scaling technology of choice for a while, the focus for much of this year has been on rollups, a solution also endorsed by Vitalik Buterin. Additionally, privacy protocol Aztec has launched private smart contracts based on zero-knowledge rollups. Zero-knowledge rollups bundle transactions together using zero-knowledge proofs to verify validity.

Another type of rollup, called optimistic rollups, is also in development by several projects. Optimistic rollups use game theory to avoid the need for the heavy computational load required by zk-Rollups. Erick De Moura, founder and CEO at Cartesi, explained to Cointelegraph how he believes rollups outperform Plasma-based scaling solutions:

“Rollups solve a huge problem that is inherent to Plasma — data availability. With rollups, all transaction data is bundled, or rolled up, and made available on Ethereum in a way that’s cheaper than it would be for regular blockchain-based transactions. Besides, all the entailed computation load is done off-chain, making for large gains in throughput and transaction cost-efficiency.”

Cartesi is set to launch its own version of optimistic rollups on its testnet during early 2021. The launch will come with a Linux-based infrastructure, effectively making a scalable version of Ethereum available to developers used to mainstream standards.

A scalable ecosystem

It’s worth pointing out that the arrival of Ethereum 2.0 won’t negate the development efforts of the layer-two platforms currently attempting to solve for scalability. Instead, technologies such as rollups or side chains will continue to help Ethereum 2.0 scale beyond its renewed capacity once sharding is fully implemented.

So, strap in and settle down for a long ride. Ethereum 2.0 may be gearing up for an initial launch, but it’s still only the first of many steps on the long road to scalability. The ongoing development of layer-two solutions means there’s plenty of company along the way.

Zcash celebrates first halving with implementation of ‘Canopy’ upgrade

Privacy-focused cryptocurrency Zcash (ZEC) celebrated its first halving event on Nov. 18.

The occasion was marked by the implementation of the Canopy upgrade, which establishes a development fund for the platform and removes the controversial “Founders Reward.”

The halving and upgrade occurred at block 1,046,400, just over four years after Zcash was first mined in late October 2016.

Canopy is the fifth major upgrade to Zcash, primarily consisting of the change to the mining rewards distribution. Prior to this, funding for the development of the platform was potentially set to expire at the point of the first halving. Technical upgrades were relatively minor, with three improvement proposals tweaking some security and performance parameters.

The changes, which were proposed and ratified by the Zcash community, establish a continued development fund for the next four years.

While 80% of mining rewards will still go to the miners, 8% will now be reserved for the Major Grants Fund. This will be exclusively reserved for independent third-party developers.

The remaining 12% will be split between the Electric Coin Company, which will receive 7%, and the Zcash Foundation, which will collect the remaining 5%.

The change primarily impacts the founders and employees of ECC, while the share reserved for the company itself has been raised slightly. In addition, bringing external teams into the Zcash development environment was seen by the community as essential to ensure the integrity and growth of the protocol in a decentralized manner.

Previously the 20% of network rewards that didn’t go to miners was split between the ECC, the Zcash Foundation, and the founders and investors who helped create Zcash. The community’s strongest point of contention was the latter share, as the initial founders took the lion’s share of 14.2% of the entire mining reward.

As Cointelegraph reported, the ECC recently released its updated and more efficient “Halo 2” source code into the public domain.