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INSTITUTION

TD Ameritrade and Virtu Make Investment into Cryptocurrency Exchange

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If you haven’t heard of TD Ameritrade or Virtu

TD Ameritrade is a US-based brokerage firm. The company provides online investing services to retail and institutional investors and has more than 11 million customers that carry over $1.1 trillion in assets.

Virtu is a lesser-known financial institution. Operating out of New York City, Virtu uses technology to deliver liquidity to global markets and also offers trading solutions to its clients. The company is one of the largest high-frequency trading and market making firms in the world. Currently, Virtu has a market capitalization of almost $4 billion.

Proud new owners of a crypto exchange

On Wednesday, it was released that TD Ameritrade and Virtu teamed up to invest in a US-based cryptocurrency exchange called ErisX. Alongside TD Ameritrade and Virtu are CBOE Global Markets and Digital Currency Group, a digital asset investment firm managed by Barry Silbert. Altogether, ErisX has a backing from some significant players in the traditional finance space.

What makes ErisX special

ErisX was established back in 2010 as a traditional futures market. Now, it is reshaping itself as a cryptocurrency exchange.

At launch, ErisX will only list crypto derivatives. Eventually, however, the exchange will list spot trading (think normal crypto trading, buy/sell) and Bitcoin futures contracts. Unlike CME and CBOE’s futures contracts, ErisX’s futures contracts will be settled in actual Bitcoin, rather than cash.

ErisX has a primary focus on institutions. The exchange’s new investors should give the exchange credibility with other financial institutions, however, it won’t be easy since ErisX will have to compete with other exchanges like Bakkt and Coinbase for that much desired institutional money.


TECH

IBM Claims that Bitcoin’s Proof-of-Work Protocol can be Made More Efficient

Bitcoin’s massive energy consumption

Bitcoin uses what is known as a proof-of-work (PoW) protocol to verify its ledger. While the PoW protocol keeps the network secure, it consumes a lot of energy in the form of computing power.

Critics slam Bitcoin for its impact on the environment. Bitcoin mining is said to consume 1% of all of the energy consumption in the world or rather, as much as New York City in a day.

Even as the price has declined, the number of miners and hash rate has grown and is expected to continue to in the future.

IBM thinks PoW can be improved

IBM recently released a blog detailing its research into using blockchain in Internet of Things (IoT) devices. The company believes that implementing a decentralized network can make IoT devices more efficient.

IBM toyed with Bitcoin’s proof-of-work protocol to create its own and developed an analytical system to “optimally cluster the IoT devices into separate blockchains, or sub-blockchains”. According to tests performed by IBM, its new PoW protocol was able to scale better and be more efficient than Bitcoin’s PoW protocol.