Crypto’s Too Expensive? Binance Sent $600 Million in Bitcoin for Just $7

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Crypto exchange Binance has been moving bitcoin funds to cold storage the past couple of days, and, of course, such large transfers don’t go unnoticed.

Two transactions destined for Binance’s cold wallet come to the fore and demonstrate both the power and irony of the blockchain. A transaction in block 550211 was a transfer of just over $1 million. For this transaction, Binance paid just over $8 in fees. The “high” amount of the fee is probably a matter of convenience, as the transaction was not particularly large at just 1550 bytes.

The other transaction, first flagged by Antoine Le Calvez of CoinMetrics.io,  is more notable for its size — $600 million at the time it was sent, making it the largest unspent transaction output existing today — but also illustrates the irony of Bitcoin transactions, whose fees are not based on the amount transacted but instead the amount of computer resources required to store the information. This second transaction, made in block 550155 several hours earlier, comprised 5981 bytes yet cost the giant exchange just over $7.

Source: blockchain.com

Other factors, such as network activity, apply to transaction fee calculations.

Contrast With Traditional Transaction Movement

It should first be noted that there is no banking product with the same security as a cold storage wallet. A cold storage wallet is one that is not connected to the blockchain via the internet. With appropriate security hygiene, it can amount to having direct access to your personal fortune with no middlemen.

It would take days or weeks to find out the cost of moving funds between bank accounts from various banks, and banks are in particular not the best thing to compare Bitcoin with, it being primarily a remittance tool. Nonetheless, it is known that interbank fees generally run in the neighborhood of 4 percent or more, supposing the funds were being moved internationally. Domestically there would still be fees, which would depend very much on the bank being used.

Banks using Ripple‘s enterprise DLT products and other blockchain technologies might be able to reduce the cost significantly. Likewise, one-time deposits and other deals can be made with banks when moving this amount of funds. But this is cold storage, after all – funds that Binance will later probably need access to. The notion of paying any more than necessary fees for access or movement, and being reliant on external forces, is antithetical to the business of being a cryptocurrency exchange.

Which is to say, Binance is engaging in money transfers that wouldn’t have been possible in a previous era in order to facilitate a business model that wouldn’t have been possible in a previous era, all at a cost that would have been unimaginably low in a previous era.

We find it helpful to compare the cost of these transactions with a service like PayPal instead. While it’s unlikely that Binance would work with PayPal or that PayPal would work with transactions of this size, it’s useful to compare the value of Bitcoin to other remittance models. According to Salescalc.com, which specializes in such data, a fee of $17,400,000.30 would be incurred moving $600M to the PayPal account of the “cold storage steward” in the theoretical case of a PayPal model. PayPal does not charge fees for moving funds to bank accounts, but there is an associated delay when using traditional banking models.

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Crypto Exchange Huobi Dismisses 6 of Its 10 Employees in Brazil: Report

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Major cryptocurrency exchange Huobi has recently dismissed 60% of its workforce in Brazil, a country it entered a few months ago. While the motive behind the move is currently unclear, competition in the country could be the culprit.

According to local news outlet Portal do Bitcoin, Huobi Brazil’s CEO Frank Tao confirmed over the phone that 6 of the exchange’s 10 employees in the country have been dismissed. They were warned in late October and early November that their contracts wouldn’t be renewed.

Per the report, one ex-employee that asked not to be identified claimed most of those that abandoned the workforce were hired as freelancers, and that management and operations-related positions that were most affected. The source reportedly added:

“I was surprised at the dismissal. It was nothing about the market. Probably an external factor. In September the team was closed. By October, they decided not to continue with their local operations. It was an order that came from the head office.”

Tao reportedly didn’t offer the news outlet any additional comments regarding the move. According to Portal do Bitcoin, he argued he was in a meeting at the time, and never picked up the phone again. The motives behind Huobi’s decision are currently unclear.

As CCN covered, the popular cryptocurrency exchange entered the South American country back in May of this year. At the time, reports revealed it was marketing its platform in Brazil, and was attempting to recruit regional staff.

Some in the country believed the exchange was going to force local exchanges to step up their game thanks to the massive liquidity of its international platform. Per the local news outlet’s report, however, it never added fiat currency trading pairs and, presumably, ended up falling behind.

Notably, Brazil’s largest cryptocurrency exchange, Mercado Bitcoin, fired “at least” 20 of its employees last month, in a move the exchange claimed to be making as it was focusing on “professionalization, better governance, and more agility in customer service.” In both cases, the employees that were let go hadn’t been working at the exchanges for a long time.

Brazil’s biggest investment firm, XP Investimentos, also launched a cryptocurrency exchange in the country this year, called XDEX. While it does offer fiat trading pairs, it doesn’t let users deposit or withdraw bitcoin. So far it appears to be healthy, as it has even launched its own mobile app.

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Has Crypto Exchange KuCoin Proven its Legitimacy by Raising $20 Million?

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Singapore-based KuCoin, a major crypto exchange with an active and loyal user base, has secured $20 million in a funding round led by $20 billion venture capital firm IDG.

Michael Gan, the CEO of KuCoin, wrote, “Today, we are thrilled to announce that we have closed our Series A Round of Funding, raising $20 million (USD) from IDG Capital, Matrix Partners and Neo Global Capital,” adding that the investment will allow KuCoin to continue to grow rapidly in the years to come.

“We are extremely excited and appreciative for the opportunity to be partnered with such highly respected investors. It is not only an endorsement of our achievements so far, but also a chance for KuCoin to achieve further success in the future.”

Past Allegations Regarding KuCoin

In August, Jackson Wong, a journalist based in Hong Kong, reported that the Hong Kong offices of KuCoin are empty and that the listed company address on the official website of KuCoin had not been occupied by the exchange for at least two years.

At the time, KuCoin responded to the report of Wong, explaining that KuCoin operates several subsidiaries in many countries including Hong Kong, Singapore, the Philippines, and Thailand, with more than 300 employees.

“There have been rumors that KuCoin’s central office in Hong Kong is empty. In fact, KuCoin’s public address in Hong Kong is merely a mailing address of one of KuCoin’s many subsidiary companies. KuCoin Headquarters is in Singapore. KuCoin has always been a global firm, with over 300 employees and four major offices in China, the Philippines, Singapore, and Thailand,” KuCoin team said in a statement released on the KuCoin subreddit.

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However, despite the clarification offered by KuCoin to justify its deserted Hong Kong office, investors in the cryptocurrency community continued to question the solvency and legitimacy of the exchange’s operations.

Less than three months after the controversial incident, KuCoin secured a high profile funding round from one of the largest venture capital firms in Asia. The exchange’s CEO Michael Gan noted that the exchange had faced hardships and challenges over the past several months, but its active user base and partners have continuously allowed the platform to grow.

With the newly obtained capital, KuCoin is expected to release a new version of the platform called KuCoin 2.0 and expand its operations throughout Asia and other major markets to grow the business.

Crucially, Gan emphasized that the investment from IDG Capital will allow the company to improve its customer service and begin to offer concierge-level customer services in the short-term, competing against exchanges like Bithumb and Upbit in South Korea that offer walk-in services to newcomers in the cryptocurrency exchange market.

“Based on our newly-formed partnership, we are aiming to take further steps to make KuCoin the best exchange available. This will be done by bringing the KuCoin Platform 2.0 online, expanding to more markets, offering concierge-level customer services, and improving our capacity for researching and nurturing blockchain talents.”

KuCoin Can Move On

With sufficient capital to aggressively expand internationally and world-class venture capital firms as its partners, KuCoin has shrugged off its past allegations and has vowed to compete in the highly competitive cryptocurrency exchange market.

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