Coinbase is reducing the number of confirmations required for several assets on the platform. We expect this change to both improve customer experience and security posture.
What’s changed
New confirmation requirements for Bitcoin, Litecoin, Ethereum, and Ethereum Classic pursuant to the table below:
Why we made these changes
Confirmation requirements for assets are based on many factors. These factors change over time just like the assets themselves. To ensure a great customer experience, Coinbase continually evolves our security posture and periodically amends confirmation requirements.
For Bitcoin, Ethereum, Litecoin, and Ethereum Classic, it has been determined that confirmation requirements can be reduced. In practice, this means that deposits will be confirmed on Coinbase faster than before while still meeting a high bar for asset security.
In our last post we walked through the basics of blockchain analytics and attribution. In this follow-up post, we will demonstrate how powerful blockchain analytics is and how tricky it can get at scale. We’ll start with reviewing some of the common blockchain analytics scaling methods used in fortifying Compliance programs as well as bolstering sanctions controls.
1. Commonspend
Blockchain analytics software relies on detecting patterns of certain address activities, known as heuristics. The primary heuristic applied to all UTXO blockchains (Unspent Transaction Output, like Bitcoin, Litecoin and their forks) is the commonspend heuristic.
It works as follows: take the following address 1P354Tw8VaSteYph84ext3f4fAYnSJQGuZ, as seen in this Youtube video involving a deposit to LocalBitcoins. So, we know this address belongs to LocalBitcoins and is an individual’s deposit address.
In this transaction we see that our LocalBitcoins address appears as one of the inputs:
Since we know that 1P354Tw8VaSteYph84ext3f4fAYnSJQGuZ belongs to LocalBitcoins and because we know that in order for this address and others to be spending funds together in the same transaction hash (i.e. inputs), the sender must have all of the private keys to each input address. We therefore can reason that all input addresses in this transaction belong to LocalBitcoins. Thus all input addresses belonging to Local Bitcoins can be clustered together.
Some block explorers automatically apply the commonspend heuristic to their analysis. For example, if you take a look at our original address in CryptoID or WalletExplorer, you’ll see that it belongs to a cluster of 990k+ addresses.
This heuristic remains a cornerstone of blockchain analytics. In fact, the most popular blockchain analytics tools already apply the commonspend heuristic to all Bitcoin addresses before they even know what the attributions for the addresses are.
But heuristics, even as straightforward as commonspend, can’t always be trusted.
2. Commonspend isn’t always common
So when does the common spend heuristic not apply? Consider this transaction:
The above transaction has multiple inputs and also multiple outputs. This is a more complex type of a transaction, referred to as coinjoin. Several users who don’t necessarily know each other might decide to participate together in a coinjoin transaction, pooling all their funds together. This is often done through dedicated privacy software such as Samourai or Wasabi wallets.
Coinjoin above leads to obfuscation of funds through seemingly random output addresses. It also renders any commonspend-based analysis ineffective, even though each party that participated in the coinjoin still gets out the same amount of Bitcoin that they originally put in (minus the fee paid to the service). Demixing such transactions is difficult (but not always impossible), and it is just one example of defeating commonspend.
3. Bringing it all together
Now that we’ve learned about ground truth, evidence quality, deconflictions, misattributions, and what commonspend is, let’s walk through how it comes together in identifying addresses belonging to illicit entities, like those 25k we discussed in our previous blog post.
The Office of Foreign Assets Control (OFAC) — a regulatory agency in the US responsible for sanctions enforcement — published a notice designating about 100 addresses, as well as entities they belong to. So, how did we go from under a hundred to over 25 thousand addresses?
3E7YbpXuhh3CWFks1jmvWoV8y5DvsfzE6 was one of the addresses designated by OFAC as belonging to Chatex — Russian Telegram bot that allows users to exchange crypto:
An official government website is a pretty reliable source of information, giving us confidence in the evidence quality. Now we need to assess each address to identify whether it’s a part of a larger group of addresses (e.g. a cluster) controlled by an entity. Using commonspend heuristic, we can associate 3E7YbpX…vsfzE6 address with a group of over 25k addresses. You too can verify this using a public block explorer, such as CryptoID:
After some additional checks we confirmed that all of these addresses belong to Chatex. And since the entity was sanctioned by OFAC, we are required to block respective transactions. It is worth noting that our list of blocked addresses is significantly larger. It includes other sanctioned entities as well as designated individuals. We also engage in proactive work to identify sanctioned activity originating from various jurisdictions, including Russia. But that’s a subject for another blogspot…
Bitcoin and many other cryptocurrencies are often referred to as pseudonymous. Everyone can view records on a public ledger, but not necessarily know who’s behind each address or transaction. But what does pseudonymity look like in practice? How are cryptocurrencies tracked? And can you really unmask someone on the blockchain? Let’s find out.
The public nature of blockchains allows for a certain degree of predictive analysis, enabling researchers to associate addresses and transactions with entities and sometimes individuals. Anybody can look at blockchain, but what makes a difference is the accurate interpretation of this public data, as well as corroborating it with other types of information gathered externally. Once combined such data can be used for blockchain analytics.
Blockchain analytics is widely used for market intelligence, trend analysis, and investigations, among many emerging spaces. The main objective of blockchain analytics is attribution — linking specific assets and events to particular entities or even individuals.
Attributing ownership, however, is often nuanced because outside observers can only infer it depending on factors such as availability and quality of the evidence. Evidence means proof that indeed an address belongs to an individual or entity. Unless you own an address yourself, it is very difficult to say with absolute certainty who an address is owned by. This is why it’s more fitting to consider blockchain analytics more of an art than science.
Let’s understand the basics of blockchain analytics and learn why attribution is often more complicated than it looks.
Attribution Basics
Can you tell what entity this address belongs to:
1JxXMEbYX6juuEK7QPe6CxGXywQ91ZB5mZ?
Is it an exchange? Is it a darknet market? Or maybe a private (otherwise known as an unhosted) wallet? To answer this question we need to dig for some ground truth.
1. Ground Truth Evidence
A search for truth often starts with plain googling or crowd-sourced sites like BitcoinAbuse.com:
Websites like BitcoinAbuse.com can be used by anyone to anonymously report BTC addresses linked to suspicious activity. Sadly, the reliability of such information can be very low. According to Blockchain.com, our address of interest received over 767 BTC. WalletExplorer.com implies this address is linked to a large offshore cryptocurrency exchange, which is corroborated by commercial blockchain analytics tools.
Indeed, commercial blockchain analytics tools identify this address as belonging to a large offshore cryptocurrency exchange.
So what about the nature of the activity? Is the exchange user involved in ransomware?
Further research connects this address to an exchanger called Coinguru.pw:
Coinguru allows users to swap between various cryptocurrencies, providing nothing more than an email address.
At this point you’re probably asking yourself: so who does this address belong to?
the BitcoinAbuse crowd-reported ransomware operator?
A large offshore cryptocurrency exchange?
Coinguru?
…all of the above?!
Well, the answer is complicated.
We have first-hand evidence of 1JxXMEbYX6juuEK7QPe6CxGXywQ91ZB5mZ being used by Coinguru, an exchange service operating an account on a large offshore cryptocurrency exchange. Exchangers like Coinguru often use bigger platforms’ infrastructure to reduce costs and get access to liquidity. We refer to these as nested services. These also cater to users who might not want to go to the trouble of creating their own accounts on an exchange. In fact, some nefarious actors may use these services to cash out of illicit funds.
For labeling purposes, it would suffice to say this is an exchange-owned address. If a regulator or a law enforcement agency investigating ransomware related transactions decides to enquire about the details, the cryptocurrency exchange will refer them to Coinguru who would be best positioned to provide further information on specific transactions.
2. Evidence quality and standard of proof
Evidence can vary in quality and blockchain analytics is no exception. Sometimes you might stumble upon a “smoking gun”, but it’s more likely you will need to spend time corroborating incomplete, circumstantial, fragmented or straight out misleading evidence. Nevertheless, even the weakest evidence can hint on a particular activity or entity behind it.
As we’ve already witnessed, crowd-reported sources such as BitcoinAbuse stand on the bottom of the reliability ladder. Not that they should be fully discounted, but evidence leading to attribution of crypto addresses is best gathered directly from the source. In the case of exchange services, the source would be their website displaying a deposit address.
The ultimate attribution comes from the ability to interact with the service, earning such evidence the highest confidence score. However, this is often prohibited, especially when investigating activities such as terror funding (TF). In cases like these, research shifts into the world of open source intelligence (OSINT). Much can be learned from aggregator websites, online forums, chat groups, mobile communication platforms, hidden domains on the Tor network and information scraping in an automated fashion by third party vendors. But even the best evidence is not helpful without proper investigative tools.
3. Deconflicting misattribution
Blockchain investigation tools include blockchain analytics software, private and open source databases, search engines, etc. The best investigative practice is to combine a mix of these tools, including commercially available software, and corroborate evidence using independent sources. Sometimes, however, those sources can offer conflicting information.
For instance, consider this address: 1N9SxKeNvFoBFuFKEDU8yFCwPwoeHqgmhu.
Imagine an investigator receiving intelligence linking this address to the sale of Child Sexual Abuse Material (CSAM). Attribution of this address will vary depending on which blockchain analytics tool you consult: some don’t have it labeled at all, while others attribute it to a merchant service. Open source research confirms this particular service allowed users to upload files and sell them for various cryptocurrencies. Addresses like the one above were generated for every user and were all connected to different types of activity, depending on what an individual user was buying.
While some uploads to this merchant service have been benign, some were identified as illicit, according to the Internet Watch Foundation (IWF), a non-profit combating the distribution of CSAM. Reportedly, the same merchant service was also used for ransomware decryptor key uploads. So, can the address of interest belong both to an illicit vendor and to the merchant service? Yes.
The correct way to attribute this service in a blockchain analytics tool would be to take all of the known addresses associated with the service and label them accordingly. Then, as a result of investigating individual addresses and their related activities, specific labels should be applied in accordance with documented findings. Labeling the whole service as illicit would be a misattribution. It can negatively impact tools and services that rely on blockchain analytics data, such as transaction monitoring systems or law enforcement subpoenas, leading to increased false positive alerts and erroneous leads.
4. The unknown unknowns
Back in October 2019, a medium article was published with a flashy title — “Huge Ethereum Mixer”. A Russian data scientist analyzed ETH flows between February and September 2017 claiming that “…68% of total Ethereum transaction value [is] controlled by one system… Funds come and leave within one hour, and addresses are never used again.” The researcher spent a great deal of effort analyzing the behavior of the “mixer”, its transaction patterns, and share of total transactions across Ethereum over time. At the center of the article was this diagram:
Notice how most large exchanges at the time are present: Kraken, Poloniex, Bitfinex, etc. Can you guess which one(s) are missing?
Hopefully, at this point it’s fairly evident that an external observer cannot possibly gain a full picture or claim 100% confidence in attribution. Keep in mind, when it comes to blockchain, everyone is an external observer, with the exception of addresses you control.
Stay tuned for the second part, where we’ll dive deeper into examples of how blockchain analytics can both enlighten and confuse.
Bad facts make bad law. We see this in jurisdictions all over the world, especially when it comes to digital assets. Unfortunately, we are about to see this again — this time in the European Union — in the form of a revision to the Transfer of Funds Regulation. If adopted, this revision would unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets. The vote will likely take place this week so time is running out.
Here are the bad “facts”:
(1) digital assets like Bitcoin, Ethereum and others are a primary way criminals hide and move money
(2) law enforcement has no way to track these movements
(3) requiring collection and verification of personal information associated with self-hosted is not a violation of their privacy
State of play
The truth is that digital assets are in general a markedly inferior way for criminals to hide their illicit financial activity. That’s why, according to the best research available, by far the most popular way to hide illicit financial activity remains cash. Unlike with cash, law enforcement can track and trace digital asset transfers with advanced analytics tools. None of this requires upsetting the settled privacy expectations of wallet holders because the open architecture underlying digital assets is public and offers unprecedented transparency into transaction details. The records are also permanent — no one (not crypto companies, not governments, not even bad actors) can destroy or alter information. In short, digital assets and the immutable nature of their blockchain technology actually enhances the ability to detect and deter illicit activity. But rather than embracing and leveraging the benefits that arise from the increasing use of digital assets, the EU’s proposal would cast them aside and impose a host of new privacy invasions on wallet users.
For example, all crypto transactions will be deemed “travel rule eligible”. This means crypto is treated differently to fiat (which has a 1,000 EUR threshold), which establishes a clear advantage for traditional financial service providers over new technology, with significant anti-competition and anti-innovation implications.
Among the worst of the proposed provisions are new obligations on exchanges to collect, verify and report information on non-customers using self-hosted wallets. For instance, one provision requires exchanges to not only collect personal data about wallet users who are not their customers, but to also verify the data’s accuracy before allowing a transfer to one of their customers. In fiat terms, this would basically mean you cannot take money out of your bank account to send to someone else until you share personal data with your financial institution about that person and verify their identity. Not only is this verification requirement nearly impossible to do but requiring exchanges to engage in extensive data collection, verification, and retention about non-customers runs against core EU data protection principles of data minimization and proportionality.
Another dangerous provision would require exchanges to inform “competent authorities” of every single transfer from a non-customer’s self-hosted wallet equal to or greater than 1,000 EUR — regardless of any suspicion of bad activity. The proposal even leaves the door open to a total ban on transfers to self-hosted wallets even though there is no evidence that such a ban would have any impact on illicit activity at all. Like we said, bad facts make bad policy.
Make your voice heard
There’s precious time to act and we need to makeour voices heard. A vote on Parliament’s draft proposal could come as early as Thursday, March 31st. If you care about protecting the privacy of individuals, and focusing the law on solutions that actually address legitimate concerns about the illicit use of digital assets, now is the time to speak up and be heard. We must speak with one, strong voice against this proposal before it’s too late.
Coinbase’s Applied Researcher, Yehuda Lindell, has won the prestigious “Test-of-Time” award for 2022 from the International Association of Cryptologic Research (IACR). The “Test-of-Time” award recognizes papers published 15 years ago that have had a lasting impact on the field of cryptography. Yehuda’s pioneering work was published a year before another important paper you may be familiar with: “Bitcoin: A Peer-to-Peer Electronic Cash System”.
His 2007 paper, “An Efficient Protocol for Secure Two-Party Computation in the Presence of Malicious Adversaries,” was the first to outline a two-party multi-party computation (MPC) protocol that was efficient enough to be implemented. In layman’s terms, secure two-party computation allows two “people” to solve a problem while keeping critical information private. For example, it solves the classic millionaires’ problem by allowing two people to understand who has more money without revealing their respective net worths. Yehuda’s work laid the foundation for future practical constructions.
Why cryptography is critical
Beyond their shared etymology related to something “hidden” or “secret”, cryptocurrency and cryptography are very intertwined. Cryptography’s mathematical and technological innovations underpin the entire crypto industry. The Bitcoin white paper makes this clear by introducing a cryptographic protocol in place of a trusted third party to validate transactions. This shift makes decentralization possible by “allowing any two willing parties to transact directly.”
Cryptography is essential to enabling transactions that are anonymous, secure, and “trustless.” The final point is the least obvious and perhaps most important. You don’t need a bank, credit card company, government, or other third-party intermediary since cryptographic tools such as public-private key encryption provide secure, direct confirmation.
Coinbase invests in fundamental research
Coinbase cares deeply about the security and reliability of our systems and the crypto industry as a whole. Investing in fundamental research is a core part of our mission to increase economic freedom in the world. We are honored to have Yehuda on our team and to support research that advances our mission.
If you feel strongly about advancing the field of cryptography, come work with us.
As part of our mission to build a more fair, accessible, efficient, and transparent financial system enabled by crypto, we actively monitor for security threats not only to Coinbase but to the crypto ecosystem as a whole. As we have discussed in our previous blog posts on industry-wide crypto security threats and airdrop phishing campaigns, malicious activity against any crypto user or business is bad for the industry. That’s why it’s important to have a community mindset when we see security threats in the wild. As they say, rising tides lift all boats.
Recently, our security teams have uncovered ongoing mining pool scams targeting users of self-custody wallets. These scams have primarily leveraged malicious smart contracts on the Ethereum network. Based on blockchain research into known scammer wallets, Coinbase estimates these have resulted in the theft of over $50 million in crypto assets from a variety of non-custodial wallet applications. These scams target those using any decentralized wallet browser (e.g. Coinbase Wallet, Metamask, Trust, etc).
The scam typically follows this chain of events:
Victims are contacted via social media and/or other messaging services by scammers claiming to offer an attractive crypto investment opportunity to stake USDT (Tether) in their wallet for a guaranteed return
Victims are directed to visit a fraudulent website that can only be accessed via a crypto wallet browser or extension. These websites generally contain fake reviews, endorsements, live-feed payouts, and partner lists to add an appearance of authenticity
Scam sites will often fraudulently claim to be sponsored by or partnering with recognizable crypto brands such as Coinbase, Binance, and MetaMask
Example mining pool landing page
Source: Scam Site
Clicking the ‘Receive’ button displays a pop up similar to this
Source: Scam Site
Clicking this ‘Receive’ button will then display a fake pop-up designed to impersonate the Coinbase Wallet interface. The permissions that are displayed are not the true permissions that are actually being requested and are intentionally displayed in a way to attempt to trick users into clicking ‘Connect’
Source: Scam Site
Viewing the smart contract via a trusted token approval checker shows the true permissions being requested. The scammer gains delegated transaction approval status with an unlimited transaction allowance within the victim wallet, meaning the scammer can approve USDT sends of any amount on behalf of this wallet.
Source: etherscan.io
Attackers will remove USDT from the victim’s wallet and the scam site will show that their balance is increasing. Scammers will frequently reassure victims that if they add more funds, they will get more USDT in returns by mining.
At the end of the period, the funds are not returned to the victim and no profits will be received.
If the victim contacts customer support via the fraudulent website, the attacker may indicate they detected irregular activity on the account and that in order to fix that issue, the victim would need to pay additional USDT to ‘release’ the funds. However, no funds are ever returned regardless of whether or not the victim makes payment.
The following security steps can be taken to defend your assets:
Be wary of investments that claim a guaranteed return
Be wary of investment advice and opportunities from unknown or untrusted sources
Do not visit or connect self-custody wallets to any unknown site
Do not hold high value assets in the same wallet used to regularly interact with dapps. Use cold storage or custodial solutions such as the freely available Coinbase Vault.
Use a token approval checker to validate actual permissioning on self-custody wallets and revoke approvals that you did not knowingly authorize.
Coinbase is working with industry partners to take down these sites and developing ways to warn users when visiting known scam sites in order to help limit the damage caused by this type of scam.
Coinbase Cloud provides web3 APIs, services, and infrastructure to power the next generation of software builders. As part of our vision to empower developers building the future of web3, we are launching a suite of blockchain infrastructure solutions and services for the growing Avalanche ecosystem.
Avalanche is a high-speed smart contract platform with near-instant finality and EVM compatibility. Developers can deploy their Ethereum applications on Avalanche’s C-Chain or deploy custom-built blockchains as a subnet. Avalanche has seen accelerated growth in 2021 since its launch in 2020, reaching new highs in active addresses, transactions, and total value locked. A number of high-profile projects such as Curve, Aave, and DeFi Kingdoms expanded into Avalanche alongside native projects like Trader Joe, BENQI, and Crabada.
Coinbase Cloud is committed to supporting the Avalanche ecosystem, making it easier and faster for developers to build innovative applications and unlock new use cases.
Secure, reliable staking infrastructure
Today, Coinbase Cloud has a public validator that lets delegators easily and securely stake their AVAX.
Validators support the continued growth and the security of the network by verifying transactions, participating in consensus, and adding blocks. By staking tokens, delegators can contribute to validators that do the important work of validating the chain.
To get started, delegators will need a minimum of 25 AVAX to stake, plus funds to cover the gas fees. Coinbase Cloud offers a step-by-step guide to delegating AVAX tokens.
Those who want to run their own dedicated validators on Avalanche will be able to do so using our Participate product. Coinbase Cloud’s staking infrastructure is built to the highest security standards and offers 99% uptime guarantee, making it easy for anyone to spin up a validator in just a few steps — no coding required.
Empowering developers to build the next big Avalanche project
Coinbase Wallet SDK empowers developers to expand their app’s reach to millions of Coinbase users, providing easy access to the Avalanche ecosystem via Coinbase Wallet. Coinbase Wallet offers users built-in fiat onramps to buy AVAX from Coinbase, providing users an easy start with Avalanche.
Coinbase Wallet offers first-class support for Avalanche C-Chain and the Fuji testnet, as well as EVM-compatible subnets, ensuring that any EVM-compatible application runs seamlessly and reliably through Coinbase Wallet. The integration can be completed in minutes, with only a few lines of code. Developers can view Coinbase Wallet SDK documentation on the Coinbase Cloud website.
In addition, we are building our Query & Transact infrastructure to empower developers to easily access data from the Avalanche blockchain. Having an easy way to access data and submit transactions is the most fundamental step to building dapps such as wallets, exchanges, data aggregators, and blockchain analytics solutions. With Query & Transact, developers have reliable read/write access to data with a 99.9% uptime guarantee.
Once available, developers can also easily customize their Query & Transact read/write infrastructure via the Coinbase Cloud web interface to meet their needs. Using our web interface, developers can configure who can access the node infrastructure, and distribute their nodes across four geographic regions and two cloud providers to serve traffic globally with low latencies.
With Query & Transact and the Wallet SDK, Avalanche developers have a comprehensive suite of solutions to build and grow their crypto products.
“We couldn’t be more excited to work with the Avalanche team to empower builders and participants. Avalanche is contributing to building a more vibrant and accessible Web3 economy, and we are looking forward to working with them to help the network grow and scale.” — Joe Lallouz, head of product at Coinbase Cloud
“We are thrilled to be working with Coinbase Cloud. The Coinbase Cloud team offers the technical expertise, security best practices, and deep understanding of protocols that will make them one of the important contributors to Avalanche. We are excited for what’s to come and to build the Web3 future with Coinbase Cloud.” — Jay Kurahashi-Sofue, VP of Marketing at Ava Labs
Connect with Coinbase Cloud at the Avalanche Summit
Builders and participants can connect with Coinbase Cloud during the Avalanche Summit. Meet our team at the Coinbase Cloud booth at the Eco-Dome. In addition, we are hosting workshops for builders interested in growing the adoption of their product via the Wallet SDK. Catch us on March 26, 6–7 pm GMT+1 for a hands-on session (see the agenda for more detail).
To discover more about Coinbase Cloud solutions and services, visit: https://www.coinbase.com/cloud
Coinbase, a US-listed cryptocurrency exchange
Cryptocurrency Exchange
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world.
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world. Read this Term, has announced on Thursday that it added support for Solana on an initial phase. That said, users can now handle their Solana (SOL), and Solana tokens (SPL) alongside their tokens held on all of Wallet extension’s supported networks.
“Today’s update makes it easier to keep track of all your crypto across an ever-growing range of supported networks, without the need to manage multiple wallet apps. However, this launch is just the beginning — Coinbase Wallet plans to further integrate with the Solana ecosystem, including the ability for users to connect to Solana dapps, and the ability to view and manage their Solana NFTs directly within their Coinbase Wallet extension,” Coinbase noted in a statement published via its website.
Coinbase Wallet’s extension has support for other networks like Ethereum, Avalanche, Polygon, BNB Chain, among others. With the new support of Solana, the US-listed firm aims to unlock more of Web3 ‘without needing to manage multiple wallets.’
Solana Blockchain in Figures
It has been reported that over the past year, the blockchain
Blockchain
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term Solana has been growing the fastest, with a total locked value of over $7.35B and over 1,400 projects launched covering DeFi, NFTs, and Web3.
Until now, those interested in exploring the Solana ecosystem or holding SOL and SPL tokens had to create yet another crypto wallet, manage an additional app or browser extension, and keep track of their assets across multiple platforms. From now on, users of the Coinbase Wallet extension can store, send, and receive SOL and all of its SPL tokens.
“We want to empower millions of people to seamlessly participate in the exciting world of dapps and the larger crypto ecosystem. With its low fees and fast transaction times, Solana makes the world of crypto accessible to even more people and is a great introduction to web3,” Adam Zadikoff, Senior Product Manager at Coinbase, pointed out.
Coinbase, a US-listed cryptocurrency exchange
Cryptocurrency Exchange
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world.
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world. Read this Term, has announced on Thursday that it added support for Solana on an initial phase. That said, users can now handle their Solana (SOL), and Solana tokens (SPL) alongside their tokens held on all of Wallet extension’s supported networks.
“Today’s update makes it easier to keep track of all your crypto across an ever-growing range of supported networks, without the need to manage multiple wallet apps. However, this launch is just the beginning — Coinbase Wallet plans to further integrate with the Solana ecosystem, including the ability for users to connect to Solana dapps, and the ability to view and manage their Solana NFTs directly within their Coinbase Wallet extension,” Coinbase noted in a statement published via its website.
Coinbase Wallet’s extension has support for other networks like Ethereum, Avalanche, Polygon, BNB Chain, among others. With the new support of Solana, the US-listed firm aims to unlock more of Web3 ‘without needing to manage multiple wallets.’
Solana Blockchain in Figures
It has been reported that over the past year, the blockchain
Blockchain
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term Solana has been growing the fastest, with a total locked value of over $7.35B and over 1,400 projects launched covering DeFi, NFTs, and Web3.
Until now, those interested in exploring the Solana ecosystem or holding SOL and SPL tokens had to create yet another crypto wallet, manage an additional app or browser extension, and keep track of their assets across multiple platforms. From now on, users of the Coinbase Wallet extension can store, send, and receive SOL and all of its SPL tokens.
“We want to empower millions of people to seamlessly participate in the exciting world of dapps and the larger crypto ecosystem. With its low fees and fast transaction times, Solana makes the world of crypto accessible to even more people and is a great introduction to web3,” Adam Zadikoff, Senior Product Manager at Coinbase, pointed out.
Coinbase Wallet browser extension now offers support for sending, receiving, and storing Solana and SPL tokens
By Adam Zadikoff, Senior Product Manager
Making web3 more user-friendly means more ways to interact and connect with dapps across a wide range of blockchains and networks. Today, we’re introducing our initial phase of support for Solana. Users can now manage their Solana (SOL) and Solana tokens (SPL) alongside their tokens held on all of Coinbase Wallet extension’s supported networks, including Ethereum, Avalanche, Polygon, BNB Chain, and many more. This allows users to unlock more of web3 without needing to manage multiple wallets.
Over the past year, there has been an explosion of interest in web3 and decentralized applications, including NFTs and decentralized finance (DeFi). One of the blockchain networks that has seen a surge in usage is Solana, which has built a vibrant community of both developers and users along the way.
Today’s update makes it easier to keep track of all your crypto across an ever-growing range of supported networks, without the need to manage multiple wallet apps. However, this launch is just the beginning — Coinbase Wallet plans to further integrate with the Solana ecosystem, including the ability for users to connect to Solana dapps, and the ability to view and manage their Solana NFTs directly within their Coinbase Wallet extension.
Over the past year, there has been a surge in interest and usage of blockchain networks. While this has resulted in exciting new projects, ecosystems, and communities, it has also revealed scaling issues that have the potential to leave users with high network fees (or “gas”) and long transaction processing times.
Many users have been looking for networks that are optimized for scale, offering low-cost transactions and fast transaction times. One of the fastest-growing blockchains over the past year has been Solana, which now has over $7.35B in total locked value (TLV) and more than 1,400 projects launched, spanning DeFi, NFTs, and web3. It is home to a number of well-known NFT projects including the Degenerate Apes collection, and DeFi protocols including the decentralized exchange, Serum.
Up until now, users who wanted to explore the Solana ecosystem or hold SOL and SPL tokens had to create yet another crypto wallet, manage an additional app or browser extension, and keep track of their assets across multiple surfaces. Starting today, Coinbase Wallet extension users can store, send, and receive Solana (SOL) and all of its SPL tokens alongside all of their EVM-compatible assets, including tokens held on Ethereum, Avalanche, Polygon, BNB Chain, and many more.
If you already have a Solana wallet, such as Phantom or Solflare, it’s quick and easy to import your existing Solana self-custody wallet into Coinbase Wallet. All you’ll need is the latest Coinbase Wallet desktop extension and your Solana wallet’s recovery phrase. You can read our step-by-step instructions on the Wallet extension guide for more information.
If you don’t already have a Solana wallet, the Coinbase Wallet extension will automatically create one for you. And with recently launched Coinbase Pay, it’s easier than ever to add SOL to your Coinbase Wallet extension — you can safely and securely transfer SOL you already hold in your Coinbase account to your Coinbase Wallet, or buy SOL using your stored payment methods.
Today’s release makes SOL and SPL tokens available on the browser extension. This means that if you use Coinbase Wallet on both mobile and desktop, you’ll only see the SOL and SPL tokens that are in your wallet when using Coinbase Wallet extension. You will not be able to see them in the Coinbase Wallet mobile app, however your tokens are safely stored in your wallet.
How to import an existing Solana-based wallet into Coinbase Wallet
We want to empower millions of people to seamlessly participate in the exciting world of dapps and the larger crypto ecosystem. With its low fees and fast transaction times, Solana makes the world of crypto accessible to even more people and is a great introduction to web3.
Today’s launch is just the beginning of Coinbase Wallet and the Solana ecosystem coming together. In the coming months, we’ll be adding support for Solana NFTs and the ability for you to connect your wallet to Solana dapps to interact with everything the Solana ecosystem has to offer.
You can experience the latest enhancements for yourself by downloading Coinbase Wallet’s browser extension for free from the Chrome Web Store. Make sure to follow us on Twitter @CoinbaseWallet for the latest Wallet-related news and product announcements.
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Information is provided for informational purposes only and is not investment advice. This is not a recommendation to buy or sell a particular digital asset. Coinbase Wallet is a self-custody wallet providing software services subject to Coinbase Wallet Terms of Service and Privacy Policy. Coinbase Wallet is distinct from Coinbase.com, and private keys for Coinbase Wallet are stored directly by the user and not by Coinbase. Fees may apply. You do not need a Coinbase.com account to use Coinbase Wallet.
Examining crypto’s usage in Ukraine, sanctions, and the Biden Executive Order
Around the Block from Coinbase Ventures sheds light on key trends in crypto. Written by Connor Dempsey
There’s a gravitational shift taking place within our industry. Since Russia’s shocking invasion of Ukraine, crypto has been:
used to crowdfund tens of millions for the Ukrainian defense
incorrectly speculated as a viable avenue for the Russian government to evade sanctions
the focus of a historic Executive Order put forward by the Biden administration
At this point, one thing is clear: this technology is a major emerging force in the geopolitical landscape. In this edition of Around The Block, we examine crypto in a geopolitical context, along with the difficult questions the world is asking.
An email address for money
In the aftermath of Russia’s attack on Ukraine, crypto’s power for coordinating economic activity was put on full display once the official Ukrainian twitter account tweeted out a plea for aid, accompanied with two long strings of letters and digits.
These long strings of characters were the Bitcoin and Ethereum addresses of the Ukrainian government, and the tweet represents the first time a nation state has ever sought aid directly in crypto. At a time when the Ukrainian government and banking sites were being flooded with DDoS (denial of service) attacks, and crowdfunding platforms were deplatforming organizations raising aid for Ukraine, the utility of permissionless, borderless networks for sending money was vividly illustrated.
At this time of writing, the Ukrainian government has collected over $50M in Bitcoin, ETH, ERC-20 stablecoins, and in other assets like DOT, DAI, and even Dogecoin.
The Ukrainian government has said that it has been using the funds to buy military supplies including bullet-proof vests, drones, gasoline, and night vision goggles. What’s more interesting is that 40% of suppliers have accepted payment in crypto.
Many have pointed out the oddity of private citizens from around the world essentially crowdfunding a war effort. Yet another sign of just how unprecedented all of this is.
NFTs enter the fold
Fungible crypto assets weren’t the only donations to pour into the Ukrainian government’s crypto wallet. NFT enthusiasts also answered the call, donating over 200 pieces of digital art work and even ENS addresses. Most notably, a rare CryptoPunk worth an estimated $200,000 was donated.
What’s interesting is that since the ownership provenance of the CryptoPunk will forever be associated with the defense of Ukraine, this added historical significance could raise its value over the long term.
The NFT aid didn’t stop there, as they were also combined with another crypto primitive to support the defense of Ukraine: DAOs.
UkraineDAO
Decentralized autonomous organizations were cast into the limelight last year after ConstitutionDAO crowdsourced $40M in under a week in a bid to buy one of the original copies of the US Constitution. While the bid ultimately failed, it underscored the power that these software enabled organizations have for coordinating economic activity at the speed of the internet.
After a Ukrainian NGO (non-government organization) supporting the war effort called Come Back Alive was de-platformed from crowdfunding platform Patreon for supporting military activity, they also turned to crypto. Shortly thereafter, UkraineDAO was created to help support this NGO.
The DAO minted a 1:1 NFT of the Ukrainian flag and put it up on PartyBid, which allows groups to pool funds to buy NFTs. In essence, the DAO created its own NFT, crowdsourced as much money as they could to buy it from themselves and then donated the proceeds to Come Back Alive. All told, they raised $6.7M. They also distributed commemorative “valueless” tokens called LOVE to those who donated.
Crypto on the main stage
Between the Ukrainian government and various NGOs, over $80M and counting in aid has been raised. While in the grand scheme of things this amount is a nominal sum not likely to turn the tides of war, it’s also far from insignificant. The sum represents over 20% of the $350M pledged by the Biden administration and is a powerful display of the promise that decentralized, borderless money holds.
Slowmist, where we’re pulling this data, also noted that when you factor in other organizations and cryptocurrencies they’re not tracking, the full figure is likely over $100M. The Giving Block, for example, raised over $2.3M in crypto donations for over 20 non-profits supporting Ukrainian relief.
Beyond support of the Ukrainian government and organizations, crypto has also proven useful for individual Ukrainians affected by the crisis. One Ukrainian who fled to Kazakhstan reported that he lost access to his savings and that his credit cards were no longer functioning, leaving crypto as his only financial life raft: yet another example of the utility of permissionless finance.
At their core, Bitcoin, Ethereum, and the like are neutral technologies that anyone with an internet connection can use. While we celebrate the use of these neutral technologies to help a nation defend itself against a foreign invader and as a lifeline for refugees, it also begs the question: what about their use by those on the other side of the conflict? Principally, the Russian government.
The burning question
Western governments responded to Russian aggression with unprecedented sanctions against the Russian government. This coincided with widespread narratives surrounding the potential for cryptocurrencies to be used to circumvent those very sanctions.
Before we examine the fact or fiction behind these claims, it helps to understand what these sanctions entail.
Russian sanctions
Since Russia invaded Ukraine, governments around the world, including the U.S., have imposed sanctions targeting the Central Bank of Russia, major Russian commercial banks and companies, Vladimir Putin, Russian elites, among others. In aggregate, these sanctions cut targeted individuals and entities off from international banking and in many instances, freezes their assets.
Among the most substantial sanctions imposed was kicking major Russian banks out of SWIFT, which is the financial network used by over 11,000 banks and institutions to move trillions of dollars across borders. This severely limits Russia’s ability to receive payments for oil and gas: their main export. For context, when Iranian banks were banned from SWIFT in 2012, and sanctions were imposed on Iranian oil purchasers, Iran lost nearly half of its oil export revenue and 30% of its foreign trade.
The most drastic sanction is from the US, UK, and EU banning transactions with the Russian Central Bank. The Russian Central Bank holds roughly $630B in the form of the world’s major reserve currencies — the dollar, euro, pound, yuan — as well as 2,300 tons of gold. With this sanction, Russia suddenly has no one to sell its reserves to, rendering its entire stockpile useless.
Is crypto their answer?
We’ve seen public speculation on how crypto could be used to evade those sanctions. However, that speculation has been unfounded as the crypto market is simply not large enough to help Russia meaningfully circumvent them.
Consider the Russian Central Bank’s $630B in immobilized assets. That’s 80% of Bitcoin’s market cap and larger than the rest of the crypto market put together. Converting that much fiat into crypto would take 5–10x the total daily traded volume of all digital assets, so the liquidity just isn’t there.
Additionally, as our Chief Legal Officer previously pointed out, trying to obscure large transactions using open and transparent crypto technology would be far more difficult than other established methods (e.g., using fiat, art, gold, or other assets).
The Biden Executive Order
As crypto played a significant role in the defense of Ukraine, it was also cast into the fore of the American political system. Late last week, the Biden Administration published its long awaited Executive Order on digital asset regulation.
The Executive Order simply directed federal agencies to study the benefits and risks of digital assets, as opposed to putting any immediate legislation into action. On one hand, many were pleasantly surprised with the optimistic tone of the EO, as it acknowledged crypto and Web3 technologies as critical for the future of U.S. national economic competitiveness. On the other, the report focused more on the potential risks of crypto rather than its societal benefits.
The EO calls on a total of 23 federal government agencies, organizations, and White House Offices to assemble huge reports on the risks stemming from crypto. This outsized focus on risk, when compared to past EOs, has caused some people to worry that the Biden Administration doesn’t fully recognize the power and potential of digital assets, even as that power is being plainly demonstrated on the world stage.
While the EO may have felt like a milestone, it is ultimately the start of a long road ahead. One in which the whole of the US government will finally seek to fully understand the importance of this technology. It is critical that the government fully explores not only the risks, but also the benefits that digital assets bring, with enough transparency to allow the public to weigh-in on a federal approach to regulation.
Ultimately, this presents a tremendous opportunity for the industry to engage with regulators about how to best embrace the transformational nature of crypto and Web3 technologies.
Closing thought
To sum it all up, regardless of how you feel about crypto’s application in funding a war effort or the increased attention it’s receiving from the most powerful government in the world, it’s apparent that we’ve entered uncharted territory: this next phase of crypto adoption will look drastically different from the last.
ATB Podcast: Crypto’s Role in the Ukraine Crisis with Elliptic’s Dr. Tom Robinson
