Bitcoin “Failed” as a Currency So Far, Says Bank of England Governor

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Bank of England (BoE) governor Mark Carney recently argued that bitcoin has, so far, “failed” to be a legitimate currency measured by standard benchmarks, as it neither a store of value nor a useful medium of exchange. While speaking at a private event at London’s Regent’s University, the central banker told students that bitcoin fails … Continued

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Japanese Crypto Exchanges Tap Star Power for Marketing Arms Race

Japanese Crypto Exchanges Tap Star Power for Marketing Arms Race

Japanese cryptocurrency exchanges have been very active in advertising their services. Several exchanges including Bitflyer, DMM Bitcoin, Tech Bureau’s Zaif and the hacked exchange Coincheck have been tapping into star power and launching TV commercials with original music.

Also read: Indians Look to Buy Bitcoin Overseas as Regulations Tighten

Japanese Exchanges’ TV Commercials

Japanese Crypto Exchanges Tap Star Power for Marketing Arms Race
Actress in Zaif’s commercials.

Japanese cryptocurrency exchanges have been actively advertising their businesses. Last week, Tech Bureau’s Zaif exchange joined Bitflyer, DMM Bitcoin, Bitrade, and Coincheck in tapping into Japan’s star power to promote its services.

According to CM Soken Consulting, a commercial researcher operated by Tokyo Kikaku Co, “the presence of TV commercials by cryptocurrency exchanges has significantly increased in the past year,” Japan Times reported. “Between Dec. 20 to Jan. 19, TV ads by Coincheck and Bitflyer were aired 819 times in the Kanto region, comparable to major firms such as Toyota Motor Corp, NTT Docomo Inc, and Mcdonald’s Japan.”

Japanese Crypto Exchanges Tap Star Power for Marketing Arms Race
Actress in DMM Bitcoin’s commercials.

The news outlet also pointed out that a huge billboard for “DMM Bitcoin featuring a Japanese celebrity coated in gold” is prominently displayed in Shibuya, one of the busiest and most famous shopping districts in Tokyo. “When I was in London I would see ads all over Facebook, but never on TV or in the streets like this,” a 20-year-old British tourist admitted as he stood beneath the billboard.

Kenji Harashima, a senior researcher specializing in financial technologies for the Mizuho Research Institute, was quoted:

Japanese exchanges are the most active in the world. Not only is this the result of tight regulations in China and South Korea, it is also because you can use leverage to make investments.

DMM Bitcoin, Bitflyer and Coincheck “have all advertised on web platforms such as Youtube, Facebook, and Instagram. These same exchanges have also aired TV commercials,” the publication added.

Tech Bureau’s Zaif

Last week, Tech Bureau which operates Zaif crypto exchange started broadcasting a commercial nationwide featuring Japanese actress, model, and singer Ayame Goriki. According to her Wikipedia page, she has been in 37 TV series and has appeared in 7 movies.

The 1-minute commercial also features an original song loosely translated as “Zaif for bitcoin” by a band called “Kaneko Mari & Zaif 2 Da Moon.” Zaif says that the nationwide promotion is aimed at increasing service awareness as well as “improving the image of the industry as a whole.”

Bitflyer

Japan’s largest cryptocurrency exchange by volume, Bitflyer, was the first to run TV commercials at the end of April of last year, according to Japan Times. At the time, the Japanese government had just legalized bitcoin as a legal method of payment.

Bitflyer hired Japanese actress and model Riko Narumi to be the company’s spokesmodel and appear in its commercials.

DMM Bitcoin

Japanese Crypto Exchanges Tap Star Power for Marketing Arms Race
DMM FX commercial featuring Laura.

DMM Group started advertising for its bitcoin exchange at the start of the year. The company launched a crypto exchange under the brand name DMM Bitcoin in January which supports 7 cryptocurrencies. Recently, it also launched a mining farm and a showroom in Kanazawa City, Ishikawa Prefecture, Japan.

DMM Bitcoin’s commercials feature an actress and model known as Laura and another actress called Rika Nakagawa. Laura has also been in other DMM Group’s commercials including those for the company’s foreign exchange arm, DMM FX.

Too Much Ad Spending?

Bittrade and Coincheck crypto exchanges have tapped into star power to advertise their businesses. Bittrade hired Japanese actress Ruriko Kojima to be its face. Coincheck hired popular local comedian Tetsuro Degawa. However, Coincheck’s ads were removed following the hack that cost the exchange 58 billion yen worth of NEM.

“Coincheck executives have admitted that they might have put more priority on attracting customers with ads rather than enhancing security,” Japan Times wrote and quoted SBI Holdings’ CEO Yoshitaka Kitao saying:

The thing that makes me the most angry is that they spent money on commercials that should have been spent on their systems.

The Japan Cryptocurrency Business Association (JCBA), an industry group with over 150 members including Coincheck, has requested its members to “advertise responsibly.”

What do you think of Japanese crypto exchanges’ advertising strategies? Which ads do you like most? Let us know in the comments section below.


Images courtesy of Shutterstock, Zaif, Bitflyer, and DMM Bitcoin.


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Israel Tax Authority: Bitcoin is Property, Not Currency

Israel Tax Authority: Bitcoin is Property, Not Currency

Israel Tax Authority issued a professional circular on February 19 (4 Adar 5768), clarifying the country’s tax policy on cryptocurrencies in general and bitcoin in particular. “Bitcoin and its like” are discussed in what’s referred to as a “final circular” on crypto and value-added tax (VAT) along with capital gains.

Also read: Switzerland Enacts ICO Guidelines

Israel VAT Good News on Crypto

“The Tax Authority’s position, which was expressed in the past, is [bitcoin is] a property, not a currency,” the Israeli agency clarified upfront. Israel is the economic jewel of Southwest Asia, routinely ranking alongside countries many multiples its size in terms of innovation and output. Punching above its weight in cryptocurrency as well, the country has grappled with bitcoin since at least 2013 in one form or another. Openness to the decentralized currency idea extends all the way to its current Prime Minister. Its tax policy might be not only a regional trendsetter but a world model.

Going forward, “For purposes of income tax – in accordance with the circular, a distributed means of payment is an asset, and therefore a person whose activity as aforesaid does not reach a business is only entitled to capital gains tax and the person whose activity in the field reaches a business (trade in a distributed method of payment and / Such a measure), tax will be paid as any business activity,” the circular noted, suggesting it was speaking to the Israel Securities Authority (ISA) policy as well.  

Value-added tax (VAT) in Israel is applied to most goods and services at the 17% mark, and electronic accounting for VAT is regulated by law in the country. As such, “a distributed means of payment is an intangible asset, and therefore anyone whose activity in the field is for investment purposes only, which does not reach a business, is not liable for VAT,” which leaves the average Israeli investor be, at least on that score.  

“A dealer whose receipts are accepted by means of a distributed payment method will be paid VAT according to his business activity,” however, “regardless of the manner of receipt, so that as a rule, VAT will not be paid; A person whose activity in a distributed means of payment reaches a business (from such trade) shall be classified as a financial institution; And those whose activities are mining, will be classified as a dealer for VAT purposes,” the agency explained.

Israel Tax Authority: Bitcoin is Property, Not Currency

Because bitcoin is an asset, property, it is subject to Israeli capital gains, which range to a high of 25 percent. Miners, if the implications remain, seem to be stuck with the worst of it, as they’re not only to pay capital gains but also VAT, which could boost their tax bill to some 42%.

What do you think about the Israeli plan? Let us know in the comments section.


Images courtesy of Pixabay.


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Rural Russia Prepares to Attract Crypto Loans

Rural Russia Prepares to Attract Crypto Loans

A proposal was presented at the Russian Expert Council for Non-Bank Credit Organizations to allow rural businesses in the country to receive crypto loans to attract funds from abroad. The chairman of the council, a State Duma member, is asking rural credit cooperatives to study and educate rural residents on cryptocurrency.

Also read: Indians Look to Buy Bitcoin Overseas as Regulations Tighten

Proposal to Allow Crypto-Loans

Rural Russia Prepares to Attract Crypto Loans
Alexei Lazutin.

At the meeting of the Expert Council for Non-Bank Credit Organizations, the chairman of the Council of the National Association of Pawn Shops, Alexei Lazutin, proposed allowing microcredit organizations to issue loans in cryptocurrency.

Citing that “Today there are companies that are starting to issue loans secured by cryptocurrencies,” he was quoted by the Russian Parliamentary newspaper:

If we establish and implement such mechanisms that will allow us to receive crypto-loans from credit institutions, this will help to attract money to the development of the village from abroad, thereby contributing to the development of the Russian economy as a whole.

Rural Credit Coops Asked to Study Crypto

Rural Russia Prepares to Attract Crypto Loans
Evgeny Shulepov.

In response to Lazutin’s proposal, the chairman of the aforementioned expert council who is also a member of the State Duma of the Russian Federation, Evgeny Shulepov, said “Rural credit cooperatives need to master blockchain and cryptocurrencies in order to be in the trend,” the Parliamentary newspaper reported.

Rural credit cooperatives in Russia are voluntary, non-profit associations, providing services to preserve the personal savings of members through the issuance of affordable loans. Members are both depositors and creditors. These coops have Rural Russia Prepares to Attract Crypto Loansbeen successfully established in a number of Russian regions including Volgograd, Rostov, Kaluga, Penza, Leningrad, Perm, Tomsk, Tyumen, Nizhny Novgorod, Yaroslavl regions, and the Republic of Dagestan.

Shulepov was quoted saying, “We will ask the rural credit cooperatives to study what blockchain is and what the general trends in this area are, to think about how to train the villagers in these technologies.” The publication elaborated:

Shulepov suggested that villagers study cryptocurrency.

Currently, Russia has no cryptocurrency regulation. However, the Ministry of Finance has published a draft bill and is working with the central bank and the State Duma on the details of the bill including mining and initial coin offerings (ICOs).

What do you think of this plan for rural Russian businesses to attract crypto loans? Let us know in the comments section below.


Images courtesy of Shutterstock, National Association of Pawn Shops, and Parliamentary newspaper.


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Spain Mulls Tax Breaks for Blockchain and Crypto Firms

Spain Mulls Tax Breaks for Blockchain and Crypto Firms

Proposals to introduce tax exemptions for companies using blockchain technologies and cryptocurrency have been put on the table in Spain. The ruling People’s Party is preparing new legislation that will also offer incentives to entrepreneurs raising funds through ICOs. If lawmakers adopt the amendments, investors will not be required to report crypto assets under certain threshold.

Also read: Malta to Give “Peace of Mind” to Crypto Companies

In Spain’s Interest

Teodoro Garcia Egea, a deputy from Prime Minister Mariano Rajoy’s party who is working on the bill, thinks that it is in Spain’s interest to attract companies using blockchains. He insists “the technology is a driver for business” in industries such as finance, health and education. “We hope to get the legislation ready this year”, the lawmaker told Bloomberg, pointing out that the level of digitalization will be key for Spanish companies.

Spain Mulls Tax Breaks for Blockchain and Crypto Firms

The People’s Party intends to seek experts’ advice to finalize and push through the legislation in parliament. The ruling majority will also study developments in other countries that have advanced further in adopting their legal frameworks. Switzerland was mentioned as an example in that respect. The Alpine country has already become a leader in Europe, after establishing a Crypto Valley in Zug and enacting guidelines on initial coin offerings (ICOs).

The authors of the bill are considering proposals to entice businessmen to use blockchain for crowd fundraising through ICOs. The draft also introduces tax breaks for small companies specializing in sectors such as 3D printing or data processing. According to Garcia Egea, these incentives will be offered as rebates.

The new legislation may also include a threshold below which entrepreneurs would not be required to report a cryptocurrency investment. Authorities are working on provisions to protect crypto investors. They will be prepared by Spain’s markets and securities regulator. “We want to set up Europe’s safest framework to invest in ICOs” the Spanish deputy said.

Impossible to Explain Without Bitcoin

In a post published on his website in December, Teodoro Garcia Egea attempted to win support for his ideas by educating the public about blockchain technology. He compares it to the institution of the public notary. “A notary is a highly qualified and independent professional, who provides guarantees for security and legality”, the lawmaker notes. In Internet, these characteristics can be attributed to blockchains, he says.

Spain Mulls Tax Breaks for Blockchain and Crypto Firms

The blockchain technology does not replace the notary, but provides reliability, transparency and traceability for contracts between individuals beyond what notaries can do, Garcia Egea writes. Blockchains do not replace the services of legal professionals. From regulatory point of view, the blockchain technology is not a threat but a great opportunity to do a better job, the lawmaker says.

Garcia Egea also points out how difficult it is to explain what exactly blockchain is, what its applications are, and what problems it can solve. “We cannot explain this new set of tools without making a reference to bitcoin” the deputy says. Who would argue with that?

Do you think Spain will follow in the footsteps of Switzerland in regards to regulating bitcoin and the blockchain sector? Tell us in the comments section below.


Images courtesy of Shutterstock, Twitter.


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Bitcoin Price Analysis: Bitcoin Tests Pivotal Resistance Levels Following Strong Rally

Bitcoin Price Analysis

After a strong rally from the $6,000s, bitcoin ultimately saw a near 100% growth in market value as it now sits atop its rally in the low $11,000s. Currently, the market is testing well-known, strong resistance levels and is seeing quite turbulent shakeouts and rallies as it decides what the next market move will be. On a macro view, we can see that bitcoin is testing the strength of the daily 50 EMA:

fig1Figure 1: BTC-USD, Daily Candles, Macro Trend

The red square at the top of the trend represents a macro distribution trading range that ultimately led to the decline in value of the last couple months. At the time of this article, we are currently testing the lower boundary of this trading range:

fig2Figure 2: BTC-USD, 4-Hour Candles, Retest of Distribution Trading Range

In a typical markdown phase of a market cycle, it is quite common for a distribution trading range to break down through the bottom, see a strong drop in price, and then see a rally that leads to a retest of the lower limits of the prior distribution trading range.

The markdown from the top of the market cycle has been well defined by the red, dotted channel sloping downward in the image above. This current rally has the price pushing beyond the limits of the channel and shows a break of the current downward trend.

One thing that should be noted however is that a breakdown of a downward trend doesn’t necessarily mean that it will become an uptrend. It’s entirely possible that a break from the downward trend could lead into a consolidation period that yields a new downward trend — we’ve seen this time and time again.

At the time of this article we are currently seeing turbulent swings in price as the market decides what its next move will be. At the top of this rally from $6,000 to the $11,000s, we see a trading range starting to form:

fig3Figure 3: BTC-USD, 30min Candles, Possible Trading Range

A bullish case for this trading range could be considered if we manage to break above it and find support on the top of the trading range. This sign of support would be a bullish signal to the market that we are no longer interested in lower values and that the market is ready to continue its markup campaign.

However, if we break above this trading range and fall back inside the trading range, it would be a very bearish sign that the we are actually forming another distribution trading range, indicating that the top of the current rally is over. At that point we could expect to begin a new markdown campaign in the following days and weeks.

Thus, this current resistance level is pivotal and will serve to mark either the end of the uptrend or the beginning of an even stronger move to higher values.

Summary:

  1. Bitcoin has seen a strong rally since it bottomed out around $6,000.
  2. Currently, it is finding turbulent market activity as it tests well-known and established resistance levels.
  3. If we manage to find support on the trading range outlined in Figure 3, this will be a strong indication of a continuation to higher highs. However, if pushing upward we don’t find support on the top of the trading range and manage to fall back inside the trading range, this is a strong bearish signal that a potential markdown in price is in store in the next few days and weeks.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


This article originally appeared on Bitcoin Magazine.

Bitcoiner Faces Charges After Selling BTC to an Undercover Cop

Bitcoiner Faces Charges After Selling BTC to an Undercover Cop

On February 9, 2018, officials from U.S. Immigration and Customs Enforcement (ICE), the investigative arm of the Department of Homeland Security, arrested Morgan Rockcoons (aka “Morgan Rockwell” or “Metaballo”), CEO at Bitcoin, Inc. and an entrepreneur behind several other bitcoin startups, at his home in Las Vegas, Nevada.

Rockcoons was charged with money laundering and operating an unlicensed money transmitting business, according to court records.

According to those same records, in Southern California, between December 30, 2016 and January 8, 2017, Rockcoons allegedly exchanged around 10 bitcoin (worth around $9,200, at the time) for $14,500 in cash with an undercover law officer. That officer allegedly told Rockcoons in advance that the cash came from the manufacture and distribution of “hash oil,” which contains tetrahydrocannabinol, a controlled substance at the federal level.

Money laundering happens when a person takes ill-gotten money and turns it into “clean” money that cannot easily be tracked back to its source. Thus, if Rockcoons knew the cash was dirty, but traded it for bitcoin anyway, that would constitute money laundering.

Rockcoons was also allegedly operating an unlicensed money-transmitting business in Southern  California “from a date unknown” through August 30, 2017. Money transmitters are required to register with the Financial Crimes Enforcement Network (FinCEN).

The warrant for the arrest was issued by the Chief Magistrate for the Southern District of California on November 8, 2017, which indicates it may have taken authorities three months to track down Rockcoons, possibly because he moved out of the original jurisdiction.  

A Different Story

In private messages with Bitcoin Magazine and a series of public tweets, Rockcoons, who is actively seeking donations to pay for his legal fees, which he expects to be between $150,000 - $300,000, tells a different story than what is reflected in court records.

Where the court document says that the the cash given to him was already dirty, he claims that bitcoin he sold to the buyer became dirty after it left his hands.

“Someone bought a machine that makes cannabis oil with the BTC they purchased from me,” he said to Bitcoin Magazine. “I guess I'm not allowed to sell Bitcoin as a U.S. citizen for cash especially if [responsibility for] what people do with that money lies on me.”

In communication with Bitcoin Magazine, Rockcoons said that the buyer told him via text message that the bitcoins would be used to buy a “medical hash machine.”

He added, “Buying equipment in California is not illegal especially medical equipment in a medical State that's been a medical state for 25 years. [A] controlled substance does not have anything to do with the equipment because CBD oil can be extracted from Cannabis and that doesn't have anything to do with Tetra Hydro cannabinol.”

Both Rockcoons’ tweets and his subsequent communication with Bitcoin Magazine seemed to imply, initially, that he had no idea he was selling bitcoin to a law enforcement officer.

According to Rockcoons, the exchange took place in November 2016 (not the first week of January, as listed in court records) while he was living in Northern California (not Southern California, as the records state).

Rockcoons said the buyer found him through LocalBitcoins, an online platform that facilitates direct selling of bitcoin. A user can register as a seller on the platform and be contacted by interested parties. Transactions are done in person or via online banking.

Rockcoons claimed on Twitter that he received $9,200 for the bitcoin, though court records allege the law officer gave him $14,500. Rockoons later told Bitcoin Magazine that he specified to the buyer he wanted less than $10,000, but the buyer insisted on sending him $14,500.

“They tried to entrap me,” Rockcoons told Bitcoin Magazine. “I asked for only less than $10,000, they sent me $14500 [or] refused to send anything and then I sent under $10,000 [worth of bitcoin] to follow the law.”


After agreeing to the terms of the sale online, Rockcoons claims he received a cash payment. He described this payment, in his communication with Bitcoin Magazine, as being received in an envelope sent through the mail. He has not replied to requests for clarification as to whether or not he met with the buyer in person, though he did say that he and the buyer communicated via text messages.


At the time of the exchange, he was camping in the Mendocino National Forest, where he was living in a tent and working on a new project, a voice-operated Bitcoin wallet. Rockcoons said he had been living in the Northern California wilderness since 2015; however, fire and floods were making it increasingly difficult to survive in the area. After another fire ravaged the land, he said he needed cash for evacuation emergencies.

“I was living like a mountain man, so I didn’t really need money but eventually I needed to buy food so I decided to sell some coin; when someone asked me to buy some I usually just always turn it down but I needed cash to eat,” he told Bitcoin Magazine.

He claims the fires were what eventually forced him to move back to Nevada.

Time in Jail

After his arrest in Las Vegas on Friday, February 9, 2018, Rockcoons was locked up over the weekend in Henderson Detention Center in Clark County, Nevada, for three days. He pled not guilty at a Federal Court hearing on February 12, 2018, and was then sent to Clark County Detention Center for two more days for an unrelated charge of failure to appear on a traffic ticket.

“I was in jail for five days with some of the scariest humans on Earth,” he said. “But I [taught] most of them how Bitcoin works, so it was worth it.”   

In his series of ongoing tweets since his release from jail on February 14, 2018, Rockcoons has been portraying the charges against him as an attack on Bitcoin.

It's not my mess, it's everyone on Earths [sic] battle now or you can kiss your access to BTC goodbye,” he wrote in one tweet.

This is a attempt to redefine the regulation and the law,” he told Bitcoin Magazine.

“Bitcoin is my religion,” he wrote in another tweet. “God says I can use bitcoin everyday.”

Rockcoons is also claiming he was targeted due to his relationship with the state and the federal government and his Bitcoin-related startups.

He is looking to others to join the “battle” with him, and he is even asking the the Bitcoin Foundation, a non-profit organization that supports Bitcoin adoption and education, to cover 15 bitcoin (worth around $150,000) of his legal costs.

“It seems to me the Bitcoin Foundation has been absent from the Bitcoin Community during troubling times, this would be a good opportunity to show face and show the community that you're here for all of us," he tweeted.


Rockcoons’ arraignment is on February 22, 2018 at the San Diego Superior Court in California. He has hired Las Vegas criminal attorneys David Chesnoff and Richard Schonfeld to represent him. He says he plans to pay them in bitcoin.


(Note: Shortly before publishing this article, Rockcoons blocked the writer from viewing his Twitter account.)

This article originally appeared on Bitcoin Magazine.

Open Source Community KDE Receives $200,000 in Bitcoin from The Pineapple fund

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Today open-source community KDE received $200,000 from The Pineapple Fund. KDE is an open-source community that creates free software for both desktop and portable systems. For Linux systems, KDE is well-known for its Plasma desktop and applications including Dolphin file manager and Kontact – a personal information suite. The software is used by millions of

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Bitcoin Price Watch – BTC/USD Breaks $11,000 Barrier

Bitcoin Price Watch

Bitcoin broke through the $11,000 barrier today for the first time since January, hitting a high of $12,500 at one point. It is trading at around $11,071 as of noon EST.

Bitcoin’s Recovery Continues

Following last week’s run that took BTC past the $10,000 mark and saw the digital coin’s value recover by nearly 30% during that span, the price recovery continued today, with BTC now sitting above $11,000 and looking to surge even higher.

Overall, the price actions over the past two weeks have been favorable to Bitcoin investors. It seems that fears ...

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HashChain Technology Acquires Blockchain Company NODE40

HashChain Mining Operation Acquires NODE40 Blockchain Technology Company

HashChain Technology Inc. (HashChain) has acquired the blockchain technology company NODE40 for $8 million USD and 3,144,134 common shares of stock in HashChain (TSXV: KASH) (OTCQB: HSSHF).

HashChain is a Canadian-based crypto-mining company that currently operates 100 Dash mining rigs and is in the process of setting up nearly 4,000 more to mine bitcoin. By locating in Canada, they are able to take advantage of both the very low electrical rates for power and the cool climate for data center cooling.

Having recently gone public on the TSX Venture Exchange, the company was looking to diversify their business beyond crypto-mining and have now acquired NODE40, a company that develops Software as a Service (SaaS) products related to cryptocurrency.

HashChain CEO and Founder Patrick Gray said, “The acquisition of the NODE40 Business is an important next step of creating a global blockchain technology company."

On the hardware and mining side, NODE40 runs a managed service for running your own Dash masternode. Masternodes get paid 45 percent of the monthly block reward as incentive for providing services to the network.

On the software side, NODE40 provides the SaaS product NODE40 Balance (Balance), which determines accurate valuations for each input/output involved in a user’s transaction by using cryptocurrency transaction history and analyzing the blockchain. Once a value is assigned to each transaction, then Balance will report the users’ current total asset value, income and any realized gains or loses.

"Cryptocurrency accounting and reporting for tax purposes is a major concern in the industry at the moment,” said Gray. “The recent Coinbase subpoena from the IRS highlights the significant need for the software developed by NODE40."

The acquisition was finalized on February 15, 2018.

This article originally appeared on Bitcoin Magazine.

Op-ed: How Decentralized Protocols Are Threatening Traditional Business Models

Op-ed: How Decentralized Protocols Are Threatening Traditional Business Models

Corporates, suits and CEOs of traditional companies beware: decentralized protocols powered by blockchain technology are redefining your traditional business models, and you should be worried. Business models of the future are not created equal, and they certainly don’t play by the same rules. In the Venn Diagram of traditional business and decentralized protocols, there are a few overlaps and many differences.

Traditional Businesses vs. Decentralized Protocols

Boiled down to the most simple terms, all traditional businesses are organizations that charge customers a certain price (usually denoted in fiat currency) in exchange for a certain product or service. Starbucks charges $3.28 for a quad, grande, decaf Americano. Netflix charges a monthly $10.99 for unlimited Nicolas Cage streaming. Lover’s charges $20 to “spice things up” in the bedroom.

Ultimately, all traditional businesses –– no matter the product or service –– are driven by the quest for profit. Business owners are incentivized to reduce costs, increase efficiencies and scale carefully to maximize cash flows for shareholders.

The key stakeholders of traditional business are customers, business owners/employees and business financiers.

A decentralized protocol powered by blockchain technology is a network — a network framed by cryptography, distributed ledger technology, decentralization and consensus methods –– but a network nonetheless. The networks created by decentralized protocols aren’t structured like the networks created by any traditional business model.

Decentralized protocols aren’t driven by the need to create future cash flows for shareholders. Instead, they are programmed to facilitate commercial interactions between humans in a frictionless manner. A protocol’s incentives are aligned to benefit users and to achieve the smallest margins possible.

The key stakeholders of decentralized protocols are customers, protocol “community maintainers” and (occasionally) protocol financiers.

Customers

Customers benefit from the traditional business they choose to interact with. For a price specified by the business (in fiat currency), they are entitled to a product or service.

Similarly, customers benefit from the protocol they choose to interact with. For a price specified by the protocol, they are entitled to a product or service.

Generally, protocols are powered by utility tokens. For example, the fictional Planes Protocol facilitates coast-to-coast trips in a Tesla-of-the-skies (electric planes) for 1 PLN token. The PLN token is a medium-of-exchange. Nick, a businessman from Seattle, must pay 1 PLN token for a flight from Seattle to Miami. The plane operator is entitled to 99 percent of the PLN token fee and the Planes Protocol claims the other 1 percent.

Business Owners and Employees

Traditional business owners and employees must be compensated for their work. After all, there is a price to pay for food, water and shelter. Business owners pay themselves with portions of their revenue and pay their employees salaries for their work.

Because protocols are decentralized, the concept of “business owner” does not apply. Instead, protocols are cultivated by those designated as “community maintainers.” Whether the protocol founder is designated as the “community maintainer” is up to the community.

Protocols can facilitate commercial interactions between humans “at cost,” as long as they are generating enough in network fees to cover all required upkeep costs. For example, these can include a centralized unit to guarantee customer satisfaction and hiring of developers, project managers or anyone else necessary to keep the network alive and well. Therefore, a protocol’s margins can be much lower than that of a traditional business.

If a “greedy” protocol is programmed with transaction fees that are unreasonably high, anyone can “fork” the protocol (by using a modified copy of the original open-source code) and create a competing network with lower transaction fees. This will continue until price reaches a near-free equilibrium.

Protocol founders can reward themselves with a certain percentage of all tokens ever minted for creating the protocol; similarly, “community maintainers” are rewarded for their efforts via the protocol’s tokens on an ongoing, salary-style basis. These tokens usually have a related fiat value and can be redeemed on publicly traded exchanges.

Side note: Utility tokens are not a panacea. They face various problems such as publicly traded speculation and token velocity. A utopian, token-centric future will not happen overnight. There is much work to do.

Business Financiers

Many business owners or entrepreneurs traditionally rely on risk-tolerant financiers with capital. In the 1500s, enterprising trade voyagers relied on wealthy financiers to support their journeys. If trade voyagers were successful, financiers earned the lion’s share of the voyagers’ profits.

In 2018, Silicon Valley startup founders relinquish equity/control over their company to venture capitalists (modern day trade financiers) in exchange for seed funding. If startups are successful, venture capitalists earn a return proportional to their shares of the company.

It is important to note that capitalism and traditional business models work well. There are millions of happy customers across a variety of industries. But, in some cases, decentralized protocols provide cheaper access to products or services and better-aligned incentives for all stakeholders.

Founders of protocols have flexibility. Because they are creating a new network powered by utility tokens, they can afford to bypass traditional debt/equity financing.

While 16th century merchants and past Silicon Valley founders played by the rules of their financiers, founders of decentralized protocols are freed from this sort of pressure. Protocols can crowdfund capital by pre-selling their protocol’s utility tokens to accredited VCs and, in some cases, to the general public. Protocols can also give discounted tokens to developers for their skills.

Key Takeaway: Traditional businesses and protocols are not created equal. And decentralized protocols certainly don’t play by the same rules as traditional businesses.

Shifting the Value Paradigm

So, what might value creation in the future even look like? And how does a legacy business survive the decentralized future?

Corporate decision-makers must recognize and understand that:

  • This is a true instance of the often-overlooked “past performance is no guarantee of future results.” Traditional business models cannot be confused with or compared to protocols of the future.
  • Decentralized protocols of the Web 3.0 will not automatically dethrone legacy businesses. And, in some cases, traditional business would not benefit from decentralization. Protocols will not gain the necessary network effects for widespread adoption unless their value proposition is an order of magnitude better than current business models.
  • If your corporation operates on the basis of artificial scarcity or “middlemen economics,” you’re ripe for disruption.

Most decentralized protocols still require certain aspects of centralization to guarantee customer satisfaction. Sorry, libertarians, but certain things must maintain a degree of centralization.

Practical Example: Uber vs. Ride, a Fictional, Decentralized Ride-Sharing Protocol.

In 2018, Uber has 3 key competitive advantages in the ride-sharing market:

  1. Legacy Network: ~ 40 million total monthly, active riders; ~ 1.5 million total drivers
  2. Customer Satisfaction Guarantee: a centralized company able to provide riders/drivers with personalized troubleshooting. For example, when a driver complains that a college student threw up in his Uber, the centralized Uber troubleshooting authority reprimands the rider in the form of a citation and makes the driver whole.
  3. Brand Name Recognition: Uber has achieved ultimate “verb” status. On par with “Googling” something.

However, in 5–20 years, Ride will inevitably come along and attempt to win over Uber’s users and drivers. Ride won’t be structured like Uber’s traditional business model. Its goal won’t be to create future cash flows for Ride shareholders. Instead, the protocol will focus on facilitating transactions between riders and drivers in a frictionless, decentralized manner. Ride’s incentives will be aligned to benefit riders and drivers.

Because Ride isn’t driven by the quest for profit, it doesn’t have to charge drivers ~20 percent for each ride. Instead, they can charge users/drivers fractional transaction fees (by means of the RIDE utility token) for interacting with the protocol. These transaction fees are used to maintain and secure the Ride protocol.

The Ride protocol will raise money by pre-selling their utility tokens via decentralized crowdfunding. The protocol will provide an order of magnitude improvement over Uber’s network, executed by the right team and the right investors. Because of this, Ride will amass a significant network effect, user base and brand name recognition. Of course, the Ride protocol will likely still have aspects of centralization to provide customer satisfaction.

So, How Can Companies Like Uber Survive in 2025?

There are two options:

  1. “Reverse ICO,” or create a decentralized protocol for the service you provide.
  2. Slowly go bankrupt as market share is taken away by your competitors, who are decentralized protocols.

Decentralization will be just one of many difficult topics to bring up at a board meeting. After all, artificial intelligence and automation are advancing every year. Shrinking margins, employee layoffs and re-trainings are also implicit with decentralization. (Maybe it’s best to recruit your interns to volunteer this information to the board, in case this inevitability isn’t well-received by your shareholders.)

Legacy companies are presented with an incredible opportunity to participate in the next evolution of business models and commercial interactions between people. Choose to embrace the future or fall as a victim to social darwinism: the choice is up to you.

This is an opinion piece by Erik Kuebler. The views expressed are his own and do not necessarily reflect those of BTC Media or Bitcoin Magazine.

This article originally appeared on Bitcoin Magazine.

Join me for an evening of crypto with writers Paul Vigna and Michael Casey

 Next week I’m pleased to announce that I’m going to have Paul Vigna and Michael Casey, authors of The Truth Machine, on stage with me at Knotel, a co-working and event space in Manhattan. I’d love for you to come. You can RSVP here. It’s happening on February 28 at 7pm and it will feature a 35-minute talk with two of the top writers in crypto. These guys literally wrote… Read More

Sidechains: Why These Researchers Think They Solved a Key Piece of the Puzzle

Sidechains and Why These Researchers Think They Solved a Key Piece of the Puzzle

New blockchains are born all the time. Bitcoin was the lone blockchain for years, but now there are hundreds. The problem is, if you want to use the features offered on another blockchain, you have to buy the tokens for that other blockchain.

But all that may soon change. One developing technology called sidechains promises to make it easier to move tokens across blockchains and, as a result, open the doors to a world of possibilities, including building bridges to the legacy financial systems of banks.

In October 2017, Aggelos Kiayias, professor at the University of Edinburgh and chief scientist at blockchain research and development company IOHK; Andrew Miller, professor at the University of Illinois at Urbana-Champaign; and Dionysis Zindros, researcher at the University of Athens, released the paper “Non-Interactive Proofs of Proof-of-Work” (NiPoPoW), introducing a critical piece to the sidechains puzzle that had been missing for three years. This is the story of how they got there.

But, first, what exactly is a sidechain?    

Same Coin, Different Blockchain

A sidechain is a technology that allows you to move your tokens from one blockchain to another, use them on that other blockchain and then move them back at a later point in time, without the need for a third party.  

In the past, the parent blockchain has typically been Bitcoin, but a parent chain could be any blockchain. Also, when a token moves to another blockchain, it should maintain its same value. In other words, a bitcoin on an Ethereum sidechain would remain a bitcoin.  

The biggest advantage of sidechains is that they would allow users to access a host of new services. For instance, you could move bitcoin to another blockchain to take advantage of privacy features, faster transaction speeds and smart contracts.  

Sidechains have other uses, too. A sidechain could offer a more secure way to upgrade a protocol, or it could serve as a type of security firewall, so that in the event of a catastrophic disaster on a sidechain, the main chain would remain unaffected. “It is a kind of limited liability,” said Zindros in a video explaining how the technology works.

Finally, if banks were to create their own private blockchain networks, sidechains could enable communications with those networks, allowing users to issue and track shares, bonds and other assets.

Early Conversations

Early dialogue about sidechains first appeared in Bitcoin chat rooms around 2012, when Bitcoin Core developers were thinking of ways to safely upgrade the Bitcoin protocol.

One idea was for a “one-way peg,” where users could move bitcoin to a separate blockchain to test out a new client; however, once those assets were moved, they could not be moved back to the main chain.  

“I was thinking of this as a software engineering tool that could be used to make widespread changes,” Adam Back, now CEO at blockchain development company Blockstream, said in an interview with Bitcoin Magazine. “You could say, we are going to make a new version [of Bitcoin], and we think it will be ready in a year, but in the meantime, you can opt in early and test it.”

According to Back, sometime in the following year, on the Bitcoin IRC channel, Bitcoin Core developer Greg Maxwell suggested an idea for a “two-way peg,” where value could be transferred to the alternative chain and then back to Bitcoin at a later point.

A two-way peg addressed another growing concern at the time. Alternative coins, like Litecoin and Namecoin, were becoming increasingly popular. The fear was these “altcoins” would dilute the value of bitcoin. It made sense, Bitcoin Core developers thought, to keep bitcoin as a type of reserve currency, and relegate new features to sidechains. That way, “if you wanted to use a different feature, you wouldn’t have to buy a speculative asset,” said Back.

To turn the concept of sidechains into a reality, Back along with Maxwell and a few other Bitcoin Core developers formed Blockstream in 2014. In October that year, the group released “Enabling Blockchain Innovations with Pegged Sidechains,” a paper describing sidechains at a high level. Miller appears as a co-author on that paper as well.

How Sidechains Work

One important component of sidechains is a simplified payment verification (SPV) proof that shows that tokens have been locked up on one chain so validators can safely unlock an equivalent value on the alternative chain. But to work for sidechains, an SPV proof has to be small enough to fit into a single coinbase transaction, the transaction that rewards a miner with new coins. (Not to be confused with the company Coinbase.)

At the time the Blockstream researchers released their paper, they knew they needed a compressed SPV proof to get sidechains to work, but they had not yet developed the cryptography behind it. So they outlined general, high-level ideas.

The Blockstream paper describes two types of two-way pegs: a symmetric two-way peg, where both chains are independent with their own mining; and an asymmetric two-way peg, where sidechain miners are full validators of the parent chain.

In a symmetric two-way peg, a user sends her bitcoins to a special address. Doing so locks up the funds on the Bitcoin blockchain. That output remains locked for a contest period of maybe six blocks (one hour) to confirm the transaction has gone through, and then an SPV proof is created to send to the sidechain.

At that point, a corresponding transaction appears on the sidechain with the SPV proof, verifying that money has been locked up on the Bitcoin blockchain, and then coins with the same value of account are unlocked on the sidechain.

Coins are spent and change hands and, at a later point, are sent back to the main chain. When the coins are returned to the main chain, the process repeats. They are sent to a locked output on the sidechain, a waiting period goes by, and an SPV proof is created and sent back to the main blockchain to unlock coins on the main chain.  

In an asymmetric two-way peg, the process is slightly different. The transfer from the parent chain to the sidechain does not require an SPV proof, because validators on the sidechain are also aware of the state of the parent chain. An SPV proof is still needed, however, when the coins are returned to the parent chain.

The Search for a Compact Proof

In a sidechain, a compact SPV proof needs to contain a compressed version of all the block headers in the chain where funds are locked up from the genesis block through the contest period, as well as transaction data and some other data. In this way, an SPV proof can also be thought of as a “proof of proof-of-work” for a particular output.

Inspiration for the compact SPV proof comes from a linked-list-like structure known as a “skip list” developed 25 years ago. In applying this structure to a compact SPV proof, the trick was in finding a way to skip block headers while still maintaining a high level of security so that an adversary would not be able to fake a proof.

In working through the problem, Blockstream showed an early draft of its sidechains paper to Miller, who had been mulling over compact SPVs for a few years already.

In August 2012, in a post on a BitcoinTalk forum titled “The High-Value-Hash Highway,” Miller described an idea for a “merkle skip list” that a Bitcoin light client could use to quickly determine the longest chain and begin using it. In that post, he described the significance of the data structure as “absolutely staggering.”

When Miller read through the Blockstream draft, he spotted a vulnerability in the compact SPV proof described in the paper. Discussions ensued, but they “couldn’t find a way to solve that problem without compromising efficiency,” Miller said.

Miller’s non-trivial contributions to the Blockstream paper ended up being a few paragraphs in Appendix B that describe the challenges in creating a compact SPV proof.

It should “be possible to greatly compress a list of headers while still proving the same amount of work,” the section reads, but “optimising these tradeoffs and formalising the security guarantees is out of scope for this paper and the topic of ongoing work.”

That ongoing work remained stuck for three years.

Compact SPV

During that ensuing time, researchers at IOHK began taking a more serious interest in sidechains. Plans were taking shape for Cardano, a new proof-of-stake blockchain that IOHK had been contracted to build.

Cardano would consist of two layers: a settlement layer, launched in September 2017, where the money supply would be kept, and a smart contract layer. Those two layers would be two sidechain-enabled blockchains. In this way, the settlement could remain simple and secure from any attacks that might occur on the smart contract layer. But if IOHK was to get Cardano to work as intended, it needed to solve sidechains.

In February 2016, Kiayias, then a professor at the University of Athens, and two of his students, Nikolaos Lamprou and Aikaterini-Panagiota Stouka, released “Proofs of Proofs of Work with Sublinear Complexity” (PoPoW).

The paper was the first to formally address a compact SPV proof. Only, the proof described in the paper was interactive; whereas, to work for sidechains, it needed to be non-interactive.

In an interactive proof, the prover and the verifier enter into a back-and-forth conversation, meaning there could be more than one round of messaging. In contrast, a non-interactive proof would be a simple, short string of text that would fit neatly into a single transaction on the blockchain.

The PoPoW paper was presented at BITCOIN’16, a workshop affiliated with the International Financial Cryptography Association’s (IFCA) Financial Cryptography and Data Security conference. Miller, who was at the conference, approached Kiayias and shared an idea for making the protocol non-interactive.

It was a “nice observation,” Kiayias told Bitcoin Magazine, but making the proof secure was “not obvious at all” and would require significant work.

Zindros, who had just started working on his PhD under Kiayias, was also at the conference, and he needed a topic for his thesis. Kiayias saw a good fit, “so we pressed on, the three of us, and adapted the PoPoW protocol and its proof of security to the non-interactive setting,” Kiayias said.

In October 2016, Kiayias officially joined IOHK, and a year later, Kiayias, Miller and Zindros released “Non-Interactive Proofs of Proof-of-Work,” introducing a compact SPV proof five years after sidechains had first been talked about on Bitcoin forums.

“If it were interactive, I don’t know if it would have worked; with a non-interactive proof, it is really smooth,” Zindros told Bitcoin Magazine.

More Work to Be Done

Even with NiPoPoW, sidechains are still not fully specified. Several questions remain, including, how small can the proofs be made? After a transaction is locked up on one chain, how much time needs to pass before it can be spent on the other? And, will it be possible to move a token from a sidechain directly to another sidechain?

“A lot of theory still needs to be defined,” IOHK CEO Charles Hoskinson said in speaking to Bitcoin Magazine.

Also, while NiPoPoW is designed to work for proof-of-work blockchains, some believe that if blockchains are to take their place in the world on a grand scale, the future rests in proof-of-stake protocols like Ouroboros, Algorand or Snow White, which promise to be more energy-efficient than Bitcoin.

In particular, if Cardano, which is based on Ouroboros, is to work according to plan, IOHK researchers still need to discover a non-interactive proof of proof-of-stake (NiPoPoS).

Hoskinson is confident. “We can definitely do that,” he said. “We can definitely have a NiPoPoS. The question is how many megabytes or kilobytes is it going to be? Can we bring it down to 100 KB? That is really the question.”

This article originally appeared on Bitcoin Magazine.

Revenues of Cryptocurrency Exchanges in South Korea Up 88-Fold

Revenues of Cryptocurrency Exchanges in South Korea Up 88-Fold

According to recent data collected by the South Korean government, the accumulated commission income of the country’s 30 cryptocurrency exchanges last year was 87.5 times that of the previous year. The vast increase in income and crypto transactions was largely contributed by the newcomer exchange backed by Kakao Corp.

Also read: Indians Look to Buy Bitcoin Overseas as Regulations Tighten

Crypto Exchanges Made 700 Billion Won

Revenues of Cryptocurrency Exchanges in South Korea Up 88-FoldThe commission revenues of South Korean cryptocurrency exchanges collectively increased approximately 87.5 times last year compared to the previous year, local media reported.

The data, published on Sunday, “was collected with the help of the government, [and] was estimated based on sales of commissions and the local price of bitcoin released by each operator,” Yonhap wrote, further elaborating:

According to the data released by Rep. Park Kwang-on of the ruling Democratic Party, accumulated commission-related sales of some 30 cryptocurrency exchange operators are presumed to have reached 700 billion won [~USD$658 million] as of the end of last year, compared with an estimated amount of 8 billion won as of the end of 2016.

Park added that, based on the same method of calculation, the estimated commission income for cryptocurrency exchanges in 2015 was 3.2 billion won, Kyeonggi Daily noted.

Korea’s Top Crypto Exchanges

South Korea has four major cryptocurrency exchanges: Upbit, Bithumb, Coinone, and Korbit.

Revenues of Cryptocurrency Exchanges in South Korea Up 88-FoldAccording to Representative Park, Upbit is now the largest crypto exchange in the country with a market share of 52.9%, based on data over 6 days of last week. The Kakao-backed cryptocurrency exchange is estimated to have collected 194.3 billion won in commission sales last year. “The analysis also reflected the fact that the number of virtual currency transactions has doubled since last October when Upbit began operations,” Kyeonggi Daily added.

During the same time period, Bithumb had approximately 32.7% of the market share, while Coinone had 8.3% and Korbit had 6.2%. The estimated sales of the three exchanges were 317.7 billion won, 78.1 billion won, and 67 billion won respectively, the publication conveyed.

According to Coinmarketcap, Upbit is currently the third largest cryptocurrency exchange globally. Its 24-hour trading volume is USD $1.3 billion at the time of this writing, while Bithumb’s volume is approximately $1.1 billion.

Taxation Coming Soon

The Korean regulators are currently working on how to tax cryptocurrency exchanges as well as crypto trading.

In answering the people’s petition regarding unfair cryptocurrency regulations, Hong Nam-ki, Minister of the Office for Government Policy Coordination (OPC), confirmed that the Korean Ministry of Strategy and Finance is working on cryptocurrency taxation.

“Tax should be paid if income exists,” he asserted, adding that various ministries are examining other countries’ approaches to taxing cryptocurrencies. “So, I think that it would be possible to get some information on the virtual currency taxation system soon,” he emphasized.

How much do you think South Korean exchanges will grow this year? Let us know in the comments section below.


Images courtesy of Shutterstock.


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The post Revenues of Cryptocurrency Exchanges in South Korea Up 88-Fold appeared first on Bitcoin News.

Multi-Asset Edge Wallet Goes Live with Bitcoin Cash

Edge Wallet Goes Live, Includes Bitcoin Cash

2018 might be a breakout year for cryptocurrency wallets. The Bitcoin.com wallet is set to reach 2,000,000 downloads soon and has integrated Shapeshift into its platform. More recently, San Diego-based Edge released its wallet from a three month long beta, going fully live 15 February, providing what it claims is “a private, secure, open-source, and easy to use multi-asset wallet.”  

Also read: Switzerland Enacts ICO Guidelines

Edge Wallet is Live

“​After over a year of intense development and over three months in a limited release beta, our highly anticipated multi-asset wallet is now available for all to use,” deservedly excited Edge CEO Paul Puey announced.

Most bitcoiners recognize Edge already as Airbitz, a popular wallet and bitcoin directory created in 2014. By 2015, the company had “packaged up the tools that make the Airbitz Wallet awesome into a software development kit (SDK) that developers could use for their own applications. Our ‘Edge Security’ SDK has since been integrated into top-tier blockchain projects such as Augur, Wings, and Openledger.” That SDK reliance caused the company to focus more on security, and by Fall of last year it announced the name and emphasis change.

Edge Wallet Goes Live, Includes Bitcoin Cash

Mr. Puey is a well-known institution himself within the ecosystem, and is typically a top speaker at cryptocurrency conferences around the world. Wallets are a sincere key to cryptocurrency adoption, and he views his company’s efforts as a way to simplify user experience while maintaining security. And with user holdings very often in the many thousands of dollars/fiat, confidence in the storage platform is really everything.

Nicehash, Parity, and to a degree the exchange Coincheck are all recent glaring examples of costs involved in not having the security side of hot, even multi-sig, wallets down. “Edge is an integration of three core offerings: a hyper-secure and private personal vault, a friendly usable interface for blockchain networks and services, and a single sign-on solution for decentralized applications,” Mr. Puey insists.   

More Wallets Doing More

To that end, Airbitz/Edge has a stellar security record. Edge will have native support for bitcoin cash, wings tokens, ether, bitcoin core, litecoin, dash, and augur REP. “We’re also the only multi-asset mobile wallet that allows users to manually add ERC-20 tokens that we don’t natively support,” alongside including “support for Segregated Witness (SegWit) transactions for both Bitcoin AND Litecoin,” a feature bitcoin core supporters have been advocating. In addition, and like the Bitcoin.com Wallet, Edge has “tightly integrated support for Shapeshift! This will allow users to seamlessly convert funds between the various digital assets and tokens we support.”

Edge Wallet Goes Live, Includes Bitcoin Cash
Paul Puey

Their roadmap includes incorporating some of the very user-friendly Airbitz wallet features, “such as fiat exchanges and mobile top-ups.” The company’s hope is with Edge, “a hypothetical user with no digital asset of any kind will be able to download our application for free on iOS or Android, exchange their fiat for Bitcoin, Shapeshift their Bitcoin into Ether and Augur REP, and finally use our wallet to login into Augur- a decentralized application. Within Augur the user will see and transact with the same Ether and REP that they hold in their Edge Wallet,” for example.

It is an exciting time for the cryptocurrency ecosystem with regard to wallet technological advancements, as a great many high quality platforms are increasing user autonomy while helping to further decentralize the community.

What wallet are you using? Let us know in the comments section.


Images courtesy of Pixabay, Edge


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Indians Look to Buy Bitcoin Overseas as Regulations Tighten

Indians Look to Buy Bitcoin Overseas As Regulations Tighten

As cryptocurrency regulations start to pile up in India, a new trend is emerging for Indians to acquire cryptocurrencies from abroad, such as from relatives or friends with overseas accounts.

Also read: Japan Cracks Down on Foreign ICO Agency Operating Without License

Increased Regulations

Indians Look to Buy Bitcoin Overseas As Regulations TightenThe Indian government has recently intensified its efforts to strengthen the country’s regulations on cryptocurrencies, promising that a regulatory framework for them will be announced soon. Earlier this month, the Indian tax authority issued notices to 100,000 crypto traders asking them to pay taxes.

The Blockchain and Cryptocurrency Committee (BACC), an industry group whose members include 7 cryptocurrency exchanges, is considering several initiatives, such as creating a database of crypto users and transactions, to comply with the government’s mandates. The Times of India elaborated:

With Indian exchanges like Unocoin, Zebpay, Coinsecure, keen on increasing regulation and scrutiny into transactions, bitcoin aficionados say buying from US exchanges is a more popular alternative for purchases.

Indians Look to Buy Bitcoin Overseas As Regulations TightenAs regulations tighten in India, bitcoin “enthusiasts are now tapping into their own NRI [non-resident Indian] network of friends and family members,” the news outlet added.

L R Dinesh is a bitcoiner who buys expensive items using bitcoin on overseas online sites. He told the publication, “For the online tech community, there are some who receive bitcoins as payment for gadget and video game reviews. But for regular purchases, one has to get a relative or friend with an overseas account to send over bitcoins.”

Better Privacy

Indians Look to Buy Bitcoin Overseas As Regulations TightenDana L Coe, the CEO of bitcoin hardware wallet Bitlox, believes that one of the main attractions of bitcoin is privacy, the news outlet conveyed.

He explained, “If you are purchasing a particular medicine and someone collects the data and sells it to a pharmaceutical company — these companies can use sets of such demographic information to increase prices.” Furthermore, he noted, “Differential pricing, blanket invasion of privacy cannot happen if one uses anonymous and private payments,” adding:

People would want to shield their payments from the government, corporates or even their own families. With big data and consumer tracking websites, the need for privacy is heightened.

Better Security

Indians Look to Buy Bitcoin Overseas As Regulations TightenThe advanced security on purchases made with bitcoin is another major incentive for Indians, the publication added. “The requirement of Aadhaar is a dampener,” Dinesh asserted, referring to the 12-digit unique identity number issued to all Indian residents based on their biometric and demographic data. “The community of techies, bloggers and geeks are quite antipathic to the continuous stem of leaks and insecurities reported with Aadhaar,” he emphasized, noting that “To try and unite bitcoins with compliance is going to keep real bitcoin miners away from Indian exchanges.”

Damodharan Sampathkumar of Renovite Technologies was quoted:

In India, RBI has mandated two-factor authentication for all online transactions. But outside of India, only single-factor authentication is required. So when it comes to using one’s credit or debit card to buy products on overseas sites one also runs the risk of compromising sensitive financial data and hacks. So using bitcoins would add one layer of security.

What do you think of Indians buying bitcoin overseas? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post Indians Look to Buy Bitcoin Overseas as Regulations Tighten appeared first on Bitcoin News.