Japan Trust Banks to Protect BTC Investors in a New Way

Japanese trust banks are going to protect crypto investors' assets from hackers and exchange bankruptcies
12 February 2018   372

Japanese trust banks plan to offer new ways to protect crypto-currency investors by managing the digital assets of exchanges. This is reported by the Nikkei Asian Review.

Such services, as financial institutions consider, will ensure the safety of clients' funds even in the event of bankruptcy of exchanges.

Traditionally, Japanese trust banks are engaged in lending and receiving savings, as well as carry out trust operations, usually with property or pension funds.

Now they can expand the range of services offered, covering the cryptocurrency industry. According to the plan, users of crypto exchanges will continue to trade transactions on them, but banks will manage the funds. The exchanges themselves will become just intermediaries between traders and financial institutions.

The first who is expected to implement such an initiative in April, will be Mitsubishi UFJ Trust and Banking. In addition, Sumitomo Mitsui Trust Bank also plans to provide similar services.

The new law on payment services, which took effect in April last year, requires that exchanges manage user funds separately from their own. However, many Japanese crypto-exchanges are small start-ups with limited investment opportunities, and often they consider users' means as their own. And the latest incident with Coincheck, the second-largest crypto exchange in Japan, has shown that large platforms are also at risk, whose capabilities in terms of providing protection are much broader.

Guarantees for the return of funds to investors in the event of fraud, burglary or bankruptcy, as a rule, are not provided, and this is exactly what Mitsubishi UFJ Trust and Banking wants to solve. The current legislation requires that trust banks manage assets separately, and in the case of crypto-exchanges it is assumed that users' funds will be stored in "cold" wallet without connection to the network. In addition, the bank will create numerous keys to online purses - this will help prevent unauthorized access and withdrawal of large amounts.

It is assumed that cooperation with trust banks will help exchanges make transactions more secure, but there are also fears that they can become more lengthy. Nevertheless, as the incident with Coincheck showed, the issues of security and safety of customer funds are increasingly coming to the fore.

Cloning BTC Doesn't Fix Its Flaws, Weiss Rating Believes

Researchers from Weiss Rating says that "Bitcoin is as brilliant as it is flawed", and, unfortunatelly, clons inherit its flaws
24 April 2018   17

Clones of Bitcoin has BTC's flaws. This idea Weiss Rating tries to provide in its new research.

Weiss notes that bitcoin was conceived as the basis of a fundamentally new financial system, over which no centralized structure would have control. Nevertheless, as the development of the crypto currency, its shortcomings become more and more obvious. They flow, according to the rating agency, from the "disadvantageous position of the pioneer" bitcoin.

As is often the case with the first iteration of any new technology, it is slow, expensive and has fatal design problems that are not easily overcome.

Weiss Ratings

These are main BTC disadvantages: 

  • There is no easy way to upgrade Bitcoin’s protocol (software code).
  • Transactions take up to an hour to confirm. 
  • Another major design flaw is lack of “settlement finality,” meaning that a transaction is never truly closed in an accounting sense.
  • Bitcoin has a limited supply.
  • Bitcoin cannot be used as a real currency. 
  • Bitcoin mining (based on Proof-of-Work) is very centralized, with just a handful of miners controlling the majority of the hash power.
  • Bitcoin mining requires the consumption of ever-increasing amounts of electricity.

Here’s Bitcoin’s strength, its first-mover advantage: Despite all its deficiencies, Bitcoin can boast one thing that no other cryptocurrency in the world has: global brand recognition. Most people around the world have heard of Bitcoin; they know what it is.

Weiss Ratings

Unfortunately, trying to solve one or two problems, copies of bitcoin still inherit its fundamental weaknesses: low speed, inability to scale, high costs, energy inefficiency, lack of privacy, etc.

Weiss recognizes that Bitcoin Cash, for example, is 8 times faster than the original bitcoin. Bitcoin Gold is more decentralized from the position of mining. But this is hardly enough.

This are the problems of "BTC Copycats":

  • The Bitcoin copycats still use deflationary models.
  • They still rely on unsustainable electricity consumption for securing their networks.
  • They still rely on a fee structure that gives too much power to the miners, often creating conflicts of interest between them and the end-users.
  • They’re still plagued by the difficulty of upgrading the protocol.