Huobi Invests in U.S. Security Token Exchange


Chinese exchange giant Huobi has announced an investment in and partnership with the OpenFinancial Network. The OpenFinancial Network describes itself as “the first US based regulated security token trading platform.”

A security token, as opposed to a utility token, is designed to represent value of an outside source. Most commonly, it is supposed to represent ownership of a company or project, much like stocks represent ownership in companies in traditional finance.

In the United States, security tokens are generally seen as under the purview of the Security Exchange Commission (SEC). Since the SEC has strict laws on who can offer and invest in securities, that has put the US market out of reach for a lot of security ICOs. OpenFinancial Network is attempting to bridge that gap by using its contacts and experience in the industry. But more than just adding compliance to the bevvy of shady crypto ICOs, they also hope to tokenize traditional securities and enable their trade using the OpenFinancial Network blockchain.

Huobi has been making inroads in the US market, launching its US based exchange HBUS earlier this year. The investment with OpenFinancial Network seems to be a move towards expanding that reach and preparing for whatever comes next.

“Huobi Eco has always been committed to providing support and solutions for Huobi to operate within the compliant requirements of every country in which we do business.” Explained Huobi’s Head of Business Development and Investment for North America, Will Wang, in a press release “This is even more important as our market matures. We are looking forward to collaborating with OpenFinance and applying blockchain technology to revolutionize the financial technology market.”

While the idea of trading securities on the blockchain has been around for years, it hasn’t come to fruition yet. While you can buy tokens for hundreds of crypto-based projects, you can’t buy Apple or Tesla stock on the blockchain yet. However, there are huge inefficiencies in the way stock purchasing is done now. OpenFinance estimates that $80 billion are wasted every year due to those inefficiencies.

Blockchain technology has the potential to greatly reduce that wasted fortune. But for that to be successful there needs to be a solution that is (1) secure (2) easy to use and (3) compliant with regulators. Apple isn’t going to put its stock on an insecure, difficult to use and possibly illegal exchange, that much is obvious.

OpenFinancial Network wants to provide a platform that they could get on board. If Apple or companies like it will ever make that jump regardless remains to be seen, but the tools need to exist for there to even be a possibility.

OpenFinancial Network believes the traditional financial players will get on board eventually and apparently, so does Huobi.

“We believe that security tokens are the future of finance, and that Huobi’s investment in our trading platform is reflective of the rising interest around the globe in this emerging financial ecosystem,” said Juan M. Hernandez, CEO of OpenFinance Network in a press release.

The amount invested has not been disclosed at press times, but it did note that it was a part of Huobi’s larger strategy to make inroads in the United States.

While the bears are out, there are plenty of things in Crypto to keep our minds off of it. Huobi not shying away from throwing around some cash to increase their place in the market is certainly a good sign.

Schnorr Signatures: What, When & Why?

Bitcoin Schnorr Signatures

The last few months have seemingly been particularly fruitful when it comes to development activity surrounding second-layer Bitcoin technologies, with recent news pointing towards great progress for both the Liquid and Lightning networks. However, recent activity from prominent Bitcoin developer Pieter Wuille looks towards a set of changes to an area of the core Bitcoin protocol, namely the signature scheme. Wuille submitted a draft BIP (Bitcoin Improvement Proposal) last month outlining a proposed specification for a Schnorr signature scheme, with a view towards its eventual utilisation within the Bitcoin codebase. After some years since first being discussed, this is the first of many steps in actually moving towards adding Schnorr signatures to Bitcoin. This was made possible by the segregated witness upgrade which was completed last year, or more specifically the script versioning capabilities enabled by the changes.

Schnorr signatures were developed by Claus P Schnorr and subsequently protected by U.S. Patent 4,995,082 up until late 2008. As a result of the patent, Schnorr signatures had not been standardised or widely used in open-source crypto libraries at the time of Bitcoin’s inception. The signing algorithm used in Bitcoin is ECDSA (Elliptic Curve Digital Signature Algorithm), and although Schnorr was believed by some to be a more elegant signature solution with a simple mathematical proof when Bitcoin was first established, it’s protected status resulted in far greater adoption and standardisation of ECDSA across the computer science world when Bitcoin was being developed by Satoshi Nakamoto.

The BIP outlines a specification for 64-byte Schnorr signatures with the elliptic curve parameters: secp256k1. This is the same elliptic curve parameters that are currently used in Bitcoin with the ECDSA signatures. Schnorr signatures offer a number of benefits which indicate that using it within Bitcoin would be an overwhelmingly positive endeavour. The purported benefits of Schnorr include an on-chain size advantage for transactions, with Schnorr signatures capped at 64 bytes, compared to around 71-75 bytes for ECDSA. With an average of around 200,000 transactions sent every day, this small reduction in signature size has the ability to make quite a significant impact on the data added to the blockchain on a daily basis.

Schnorr also enables more compact multi-signature capabilities, wherein multiple signatures can be combined into one single Schnorr signature of 64 bytes. It is in multi-signature transactions that the largest efficiency gains will be made with Schnorr, and the proportional costs of these transactions will be brought in line with a standard 1-to-1 transaction.  This could be a great development for custodians and wallet-providers that routinely utilise multisig transactions for security, as large multi-signature setups currently require all signatures to be included in a transaction, greatly increasing the size and cost of making such transactions. Schnorr signatures also offer batch validation capabilities with an associated computational advantage, wherein a great many signatures may be validated at once, whilst requiring less computation than if they were verified individually.

There are also a number of additional applications of Schnorr which are mentioned by Wuille in the draft BIP, such as adaptor signatures which could be utilised for a new atomic swap mechanism and a wide variety of so-called “scriptless scripts” which utilise the linear nature of the Schnorr signatures to craft script-like behaviours without using actually using Bitcoin Script Opcodes.

Schnorr signatures have been reasonably widely discussed within the Bitcoin development community over the last few years, but an implementation is now possible through the use of the script-versioning feature which was introduced with segwit last year. This means the necessary opcodes for Schnorr can be added via a soft-fork, without causing any serious issues for nodes that are not using the most up-to-date software client.

However, as one of the more serious proposed changes since segwit, Wuille acknowledges that whilst it is a reasonably straightforward change to make from a technical standpoint, the challenging nature of politicking within the Bitcoin space may mean that achieving a community consensus could prove difficult. Hopefully this is not the case, as most participants in Bitcoin are likely able to see the direct benefits of using a more compact cryptographic proof across the network, particularly during the next somewhat inevitable period of rising on-chain transaction fees when block space demand increases. It is important to remember that this is only the first in a number of stages in bringing Schnorr signatures to Bitcoin, but it is exciting to finally see the wheels in motion on such a positive improvement which has been discussed widely over the years.

Squire Ltd. to Develop Next Generation 10nm ASIC Chips and Trade Bitcoins

Squire Mining Ltd. recently announced the closing of a non-brokered private placement equity financing of Canadian $25,500,000 to fund the developing, manufacturing, and selling data mining infrastructure and system technology.

The Next Generation of 10nm ASIC Chips Is Coming

The dizzying growth of the blockchain and crypto asset industry continues to attract new investors. Squire Ltd. estimates that the cryptocurrency market could rise to USD 1 trillion in late 2018 and USD 10 trillion by 2030.

Thus, encouraged by this sentiment, on August 10, 2018, the Canadian investment company Squire Ltd. announced that it now engages in the crypto industry.

According to the announcement, the net proceeds of the financing (Canadian $25,500,000) are to be invested, among other things, in the design, development, testing, and mass production of the initial next generation application-specific integrated circuit (ASIC) chips, as well as a mining rig for mining Bitcoin.

This financing also covers the development of a second next-generation ASIC chip and mining rig, marketing, and administrative expenses.

The company estimates that by the end of the fourth quarter of 2018, it will complete the manufacture and assembly of pilot production tests of its first ASIC chip and rig for mining Bitcoin.

On March 14, 2018, Squire Mining Ltd. entered into a binding agreement with Peter Kim to form the company that will focus in the development of ASIC chips. Under the letter of agreement,

The joint venture company, undertake the design, development, and commercialization of next-generation 10nm ASIC chips in which the Company will hold an initial 66 2/3% interest, and Kim will hold a 33 1/3% interest.

The agreement also stipulates that the joint venture company will “also initiate the sale of bitcoin and crypto-mining systems as well as developing its own mining facilities.”

Investing in Bitcoin Mining Gathers Steam

The battle for the supremacy of the ASIC chip manufacturing sector is heating up. New companies are entering the crypto mining space or expanding their operations.

For example, the chip manufacturer Samsung Foundry aims to expand its ASIC Engineering operations to better support North American operations. In this regard, the company is presently looking to hire a Senior ASIC Engineer.

Investment in Bitcoin mining was a profitable business in 2017. For instance, the Chinese Bitcoin mining giant Bitmain declared profits of between $3 billion and $4 billion USD in 2017. Now, Bitmain reportedly plans a multimillion-dollar expansion of its operations into the United States.

How do you think the growth of the Bitcoin mining space will affect Bitcoin’s value? Let us know your views in the comment section below.

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