Are you looking to take out a Cryptocurrency Loan? This is what you need to know

Audy Castañeda
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Are you looking to take out a Cryptocurrency Loan? This is what you need to know

Cryptocurrency-based lending has become one of the most widely used decentralized finance (DeFi) to emerge from the cryptoverse.

Cryptocurrency-based lending has become a mainstay of the decentralized finance (DeFi) universe ever since smart contract-based lending/crediting platforms began offering the service to cryptocurrency users. The Ethereum network, the first Blockchain to scale smart contract functionality, sees most of the total value locked (TVL) in DeFi protocols dominated by cryptocurrency lending platforms.

According to data from DeFi Pulse, the top 4 of the 10 DeFi protocols are lending protocols accounting for $37.04 billion in TVL, only 49% TVL of the entire DeFi market on the Ethereum Blockchain. Ethereum leads in terms of being the most used Blockchain for the DeFi and TVL market on the network. Maker and Aave are the biggest players here, with a TVL of $14.52 billion and $11.19 billion, respectively.

Even on other Blockchain networks like Terra, Avalanche, Solana, and BNB Chain, the adoption of cryptocurrency-based lending has been one of the major smart contract use cases in the DeFi world. There are around 138 protocols providing crypto loan-based services to users, amounting to a total TVL of $50.66 billion, according to DefiLlama. Apart from Aave and Maker, the other prominent players in this category of protocol on Blockchain networks are Compound, Anchor Protocol, Venus, JustLend, BENQI, and Solend.

Johnny Lyu, the CEO of crypto exchange KuCoin, spoke to Cointelegraph about choosing Blockchain networks for crypto lending. He said that, “the ideal Blockchain for lending and DeFi does not exist as each has its own advantages. At the same time, Ethereum’s leadership is undeniable due to many factors.”

Considering that the liquidity and reliability of the Ethereum platform is the highest now due to it being the most widely used Blockchain within DeFi, one might consider leveraging the same and making it the Blockchain of choice.

Prominent Players

To get started, the borrower must choose from the major lending protocols on the network, such as Maker, Aave, and Compound. Although there are a large number of cryptocurrency lending platforms, we consider the most prominent ones for easy explanation and relationship.

Cryptocurrency loans allow users to request and lend digital assets in exchange for a fee or interest. Borrowers need to post collateral that allows them to instantly take out a loan and use it for their portfolio goals. On platforms like Aave you can take loans without any collateral, known as flash loans. You must pay back these loans in the same block transaction and are primarily a feature intended for developers due to the technical skills required to run them. Furthermore, if you do not repay the amount borrowed and interest, they cancel the transaction even before its validation.

Since loans and credits are managed through smart contracts, there is no real age limit for the younger generation to get involved, which is traditionally not possible through a bank due to a lack of credit history.

Considerations and Risks

The main risk involved in crypto lending is that of smart contracts, as there is a smart contract in play that manages capital and collateral within each DeFi protocol. One way to mitigate this risk is through robust testing processes implemented by the DeFi protocols that deploy these assets.

The next risk to consider is liquidity/settlement. The liquidity threshold is a key factor in this case, defined as the percentage from which a loan is under-guaranteed and, therefore, gives rise to a margin call. The difference between the LTV and the liquidity threshold is the security cushion for the borrowers of these platforms.

Despite the risks mentioned, cryptocurrency-based lending is one of the most evolved spaces in the DeFi markets and still witnesses constant innovation and growth in technology.

By Audy Castaneda

Developers Intend to shield Bitcoin from Attacks with Quantum computers

Jenson Nunez
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Developers Intend to shield Bitcoin from Attacks with Quantum computers

The possible solutions suggested involve applying a soft fork at some point. The new proposals may get shared on a website built to achieve this goal.

A group of Bitcoin Core developers has been debating on their mailing list different methods to shield up Bitcoin and protect it from getting harmed by quantum computers.

Quantum computing, according to IBM, is a branch of technology that uses principles and laws of quantum mechanics to solve problems that may be too complex for traditional computing.

The fastest quantum devices will eventually be able to create the signatures of a Bitcoin address without requiring knowing its private key. This action implies a delicate potential vulnerability since an individual or organization with similar technologic capacities could migrate bitcoins between third-party accounts without any struggle.

Proposals to Resist Quantum Computer Attacks on Bitcoin

Because of the threat quantum computing represents to the future of Bitcoin and gossip that such potential equipment is just around the corner, developer Erik Aronesty opened a thread on the Bitcoin developer mailing list to expose possible solutions.

Aronesty suggested the possibility for users to receive payments in a wallet or public key that implements an algorithm resistant to quantum attacks. At the same time, the BTC would get housed in a conventional Bitcoin wallet. The goal of this procedure is that, in the face of quantum attacks, coins cannot get extracted without first unveiling the flaws using the two algorithms implemented in the wallets.

The drawback implicit in Aronesty’s proposal is the need to perform a soft fork on Bitcoin to apply this change. The biggest problem that this action would bring would be that fewer transactions fit in each block. This situation happens because the token of transactions made with algorithms resistant to quantum attacks covers more space than the token of a traditional Bitcoin transaction.

Developer Lloyd Fournier, meanwhile, suggested counterattacks from quantum devices on Bitcoin. This operation develops a standardized scheme that allows outgoing transactions made with Taproot to get sent both to a public key or wallet resistant to quantum attacks and a conventional Schnorr public key.

According to Fournier’s proposal, public keys safe from attacks by quantum devices cannot make payments. Although, if the possibility of being attacked is high, Bitcoin users could perform a soft fork that activates financial operations linked to payments with addresses resistant to quantum attacks.

Both Aronesty and Fournier suggested that these and other steps to consolidate Bitcoin against quantum threats get included on the BitcoinProblems.org site to share possible advances against this situation.

By: Jenson Nuñez

Ukraine Bans Purchasing Bitcoin Using Local Currency

Jenson Nunez
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Ukraine Bans Purchasing Bitcoin Using Local Currency

Bitcoin purchases with UAH qualify as transactions that generate capital outflow. Transfers to international payment systems reached USD 1.7 billion in March.

Within the framework of the Martial Law proclaimed last February 24 in Ukraine, the Central Bank of that country revealed a set of prohibitions on cross-border operations, prohibiting people from purchasing bitcoin with the local asset, the hryvnia ( UAH).

In a statement released on April 21, the agency observed that, from now on, Ukrainians could only purchase bitcoin and other digital assets with foreign currencies. Total monthly purchases got limited to 100,000 UAH (about $3,300). This limit also applies to international peer-to-peer (P2P) operations.

In an amendment to a resolution issued at the end of February, the National Bank of Ukraine explains that the procedures went into action to prevent the outflow of unproductive capital from the nation. A situation boosted during the conflict unleashed since Russia’s invasion of Ukrainian regions.

The war has caused an increase in the number of citizens abandoning Ukraine to different parts of the globe, especially in neighboring Eastern European countries like Poland. Calculations highlighted that by April 13, 2022; more than 4.7 million Ukrainians had fled their country to find safety.

This massive diaspora has generated a growth in settlements with international payment systems, all due to the use by Ukrainian citizens of transactions.

These transactions got carried out mainly to avoid the current obstructions of the National Bank, particularly to investing abroad. Therefore, they should get interpreted as leading to unproductive capital outflows.

This type of operation includes the purchase of cryptocurrencies with UAH, the local currency, transfers to digital wallets, and transactions with foreign currencies. For these activities, people often use cards issued by Ukrainian banks to account for national currency outside the nation, primarily to acquire goods and services.

The preceding situation causes an increase in the volumes of foreign currency purchases by Ukrainian banks for settlements in international payment systems. This situation creates additional pressure on the foreign exchange market.

According to the National Bank of Ukraine, pressure levels reached a critical level, considering the millions of citizens forced to flee the area temporarily.

The Purchase of Bitcoin got Banned Shortly after its Legalization

The ban on the purchase of bitcoin, using the local currency of Ukraine, happened just over a month after the digital asset got legalized.

On March 16, President Volodímir Zelenski activated the Law on Virtual Assets, bringing legal back-up to bitcoin and other digital assets. This event took effect within the framework of the flow of donations in crypto assets that the government kept receiving to deal with the armed invasion executed by Russia.

Legalization gave origin to the massive use of bitcoin in the Ukrainian region. The authorities used digital assets to strengthen many of their financial activities, including those linked to the current war in their territory.

For their part, those citizens abandoning Ukraine have the alternative of taking their bitcoins with them when crossing the

By: Jenson Nuñez

Study Showed that Brazil and Colombia are the Countries with the Highest Crypto Adoption in Latin America

Jenson Nunez
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Study Showed that Brazil and Colombia are the Countries with the Highest Crypto Adoption in Latin America

According to the study revealed by Sherlock Communications, Brazil and Colombia are where there is more interest among citizens in purchasing digital assets. The research also shows that there is still a lot of ignorance regarding Blockchain and cryptocurrencies.

Sherlock Communications, the communications agency, recently led research that confirmed the crypto adoption rate in many Latin American countries. It found that Brazil and Colombia appear at the top of the ranking, where residents expressed a more enthusiastic intention from users to convert said assets.

The research consulted the opinion of at least 1,200 participants distributed between Brazil, Colombia, Mexico, Peru, Argentina, and Chile. It determined that the Latin American environment presents good signs for improving the adoption of digital assets.

The Countries with the Highest Adoption in Latin America

Specifically, regarding Brazil and Colombia, the indicators of good adoption are directly related to what would be the proportion of respondents interested in purchasing digital assets in the next year.

In this sense, of those citizens surveyed in Brazil, at least 25% highlighted their intentions to invest in digital assets, representing 91% compared to last year’s results. Only 13% of the surveyed expressed an interest in obtaining cryptocurrencies.

Estimates highlighted by Sherlock Communications show that of the total number of residents living in the South American nation, 36 million could potentially become crypto users by 2023.

The agency found that 22.3% of those surveyed would be interested in investing in digital currencies on the Colombian side. However, compared to last year, its growth surpasses 208% since, for the previous study, only 5.2% agreed to become crypto investors.

The following places in the ranking are Argentina (18.4%), Mexico (16.9%), Chile (16%), and Peru (12%). Still, the latter was the country where the growth compared to last year was much more prominent since the number of interested parties peaked at more than 1,100% compared to the previous study.

When comparing these results with those reflected in the report revealed in August by Chainalysis, crucial changes are evident. Venezuela got spotted as the Latin American country with the most prominent crypto adoption in that research, followed by Argentina, Colombia, and Brazil. Still, other rankings mainly linked to data brought by exchanges and P2P platforms got considered here.

Other Curious Factors

Among other exciting factors revealed by the Sherlock, Communications team is that Latin America, in general, got listed as a region that could go through an extensive crypto adoption between 2022 and 2023.

However, the research also highlights that many aspects play against this prediction. Among them is that there is still a significant lack of knowledge and understanding about how cryptocurrencies work.

There is also a lack of knowledge regarding the most recommended procedures for the acquisition of these currencies, reasons highlighted by the respondents as reasons that stop the interested parties from acquiring digital assets.

By: Jenson Nuñez

The Spanish Ministry of Finance Considers that NFTs Do Not Qualify as Cryptocurrencies

Alexander Salazar
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The Spanish Ministry of Finance Considers that NFTs Do Not Qualify as Cryptocurrencies

The Ministry of Finance explained that the owner of an NFT has no right to the real object. The buyer will have to pay value-added tax for the collectible tokens, not the seller of that crypto asset.

A Spanish citizen consulted the Ministry of Finance of his country about the legal aspects of non-fungible tokens (NFT) and Bitcoin. The government agency told him that the former would not participate like cryptocurrencies.

The regulator considers that NFTs do not qualify as cryptocurrencies and cannot treat them as fungible goods.

They also believe that an NFT having a replica in real life does not give the buyer the right to the object.

The Spanish Ministry of Finance explained that the transaction consists of the digital authenticity certificate that the NFT represents. Besides, the physical delivery of the image file or the associated digital file is unnecessary.

They give the same treatment to works of art or collectible objects. Concerning the taxes on those crypto assets, they establish that the amount will depend on the person or entity that buys the NFT.

If a company or a person sold the NFT as part of their professional activity, the buyer would have to pay VAT.

It is relevant to remember that NFTs are cryptographic tokens representing unique and unrepeatable assets limited in quantity. People also know those digital items as crypto collectibles as they have scarcity and rarity characteristics. For that reason, they are attractive for mass purchase and collection.

Spain is one of the countries that have taken steps to create a regulatory framework for cryptocurrencies. It has advanced laws that impose restrictions and limits on companies operating with Bitcoin and cryptocurrency investors.

Regulation Also Reaches Bitcoin and Other Cryptocurrencies

Despite the lack of clear legislation on NFTs, several rules seek to control that industry in Spain. The authorities believe that the crypto sector contributes to illegal activities like money laundering and terrorism financing.

For example, in November, the Central Bank of Spain opened a registry of virtual asset service providers. It requires exchanges and digital wallets to appear before the highest Spanish monetary authority.

In addition, the anti-fraud legislation of the Ministry of Finance puts Spanish Bitcoin exchanges at a disadvantage to foreigners. The latter do not have to fulfill any responsibility with the Spanish State.

However, one of the latest measures of Spanish regulators seems to attack Bitcoin holders in the European country. The Central Bank of Spain can prevent users from acquiring cryptocurrencies on exchanges authorized to offer services by sending fiat money.

Bitcoin and other cryptocurrencies have become increasingly relevant in the economy, which regulators in several countries have not overlooked. However, many legislators believe that crypto assets contribute to illicit activities and harm the environment.

Bitcoin is trading at around USD 39,724 and has accumulated a 0.6% gain over the last 24 hours. Its trading volume is above USD 15.05 billion, and its market capitalization is about USD 754.91 billion, according to CoinGecko.

By Alexander Salazar

OFAC Detected four Crypto Addresses Connected to the Ronin Network Hack and Relates them to the Lazarus Hacker Group

Jenson Nunez
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OFAC Detected four Crypto Addresses Connected to the Ronin Network Hack and Relates them to the Lazarus Hacker Group

The report revealed by OFAC and the indicated addresses coincides with the information presented by other investigative entities, which directly connect the North Korean group, Lazarus, to the Attack that extracted funds from the Ronin network.

The Office for Foreign Assets Control, an entity linked to the US Department of the Treasury, identified four crypto addresses allegedly linked to the hack perpetrated by attackers on the Ronin network. The hack harmed the famous Blockchain ecosystem associated with the popular P2E game Axie Infinity, which fell victim to an attack that made it lose about $600 million in crypto assets.

OFAC Flags Addresses Linked to the Ronin Network Attack

According to the OFAC, the addresses connected to this Attack on the Ronin network. Still, one of them got already revealed by the regulatory entity in a previous report.

According to the report, officials link the accounts to the Lazarus hacker group, which has strong connections with the North Korean administration. It also has links with other high-profile attacks against reputable businesses and organizations in the US and other countries.

The Attack on the Ronin Network

As many may already know, the Ronin network fell victim to a hack at the end of March, resulting in losses of more than USD 625 million after extracting 173,600 ETH and some 25.5 million USDC tokens.

According to the report published by the developers, the Attack affected the Ronin Network validation nodes for Sky Mavis and the Axie Decentralized Autonomous Organization (DAO). The hacker behind these attacks used the hacked private keys to fake withdrawals, extracting funds from the Ronin bridge with two subsequent transactions.

The exploit took effect on March 23 but got discovered after a user experienced some flaws when he unsuccesfully tried to withdraw 5,000 ETH.

Regarding the investigation, the CEO of Binance, Changpeng “CZ” Zhao, highlighted that his team achieved the recovery of USD 5.8 million connected with the hack executed against the Ronin network.

Sky Mavis’ Ronin chain relies on at least nine validator nodes. Five of the nine signatures are crucial to recognizing a Deposit operation or a Withdrawal activity. The criminals gained power over Sky Mavis’s four Ronin signatures that serve as validators and a third-party validator executed by Axie DAO.

The validator key scheme got built to work as a decentralized scheme to limit an attack vector. Still, the attacker detected a weak point through a gas-free RPC node, which they disrupted to obtain the signature that leads to the Axie DAO validator. 

Sky Mavis asked for assistance from the Axie DAO to spread free transactions due to a massive user load. The Axie DAO permitted Sky Mavis to sign some transaction activities. This action ceased in December 2021, but the access did not get removed from the system.

Once the criminals gained entrance to the Sky Mavis network, they acquired the signatures from the Axie DAO validator by applying the gas-free RPC.

By: Jenson Nuñez

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