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Updated: 17 min 44 sec ago

Report Alleges North Korean Hacking Group’s Involvement in Phishing scam

5 hours 23 min ago

According to a report by the US cybersecurity firm SecureWorks released on December 15, 2017, Lazarus, the North Korean hacking group, may be plotting to launch a widespread attack targeting top personalities in the cryptocurrency ecosystem. At this time, it appears as if the payload will be delivered through authentic-looking emails loaded with attachments containing malware, but that may change in the near future. In general, malware-laden emails are not rare and typically known as phishing attempts.

SecureWorks said that it had been monitoring one such phishing attempt in October 2017 when a group of malicious emails was sent out, containing a compromised link for a job application at a London-based cryptocurrency company. If an unsuspecting user clicked on such a link, malware would be downloaded and installed on their computer, giving the hackers full control and the ability to upload a copy of their data.

SecureWorks’ Counter Threat Unit (CTU) went on to state that with the rising prices of major cryptocurrencies, it is likely that North Korean interest in them is at an all-time high and any related activities will not cease anytime soon.

Lazarus, the hacking group in question, is suspected of being responsible for several major cybercrime incidents, including the infamous 2014 Sony hack, that was rumored to be spurred by the release of “The Interview,” a film depicting North Korean leader Kim Jong-un.

Given that the average North Korean citizen has no real access to the internet, it has been long speculated that Lazarus maintains deep ties with the North Korean government. Furthermore, it may not be outlandish for them to be colluding, especially since the regime has shown a tendency to spy on other countries, among other clandestine activities.

A recent report from a South Korean spy agency also revealed North Korea’s possible involvement in several intrusions affecting cryptocurrency exchanges throughout 2017. An estimated $7 million worth of bitcoin and ether have been siphoned off as a result of these hacks. In addition to that, over 30,000 South Korean identities were also stolen, leading further credence to the theory that North Korea hackers could be responsible.

South Korea currently accounts for a large percentage of the global cryptocurrency trading volume. At the time of writing, Bithumb, the country’s largest cryptocurrency exchange, accounts for seven to eight percent of all bitcoin trades within the past 24 hours. Compared to exchanges that offer services to Americans, such as Coinbase’s GDAX, Bithumb’s trade volume is significantly higher and almost double at times. When you combine the geographical proximity and resulting political tension between the two Korean nations, the motivation for these hacks becomes evident.

Surprisingly, North Korean involvement in bitcoin goes back several years, even as early as 2013 when IP addresses belonging to computers linked to previous cyber attacks were discovered experimenting with the cryptocurrency. A SecureWorks spokesperson stated that a more detailed, full-fledged report would be published by the company at a later date. Hopefully, we will then be able to estimate better just how much influence North Korea has over the cryptocurrency market.

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The European Union Formulate Strict Cryptocurrency Regulations To Deter Terrorism Sponsorship

6 hours 43 min ago

Cryptocurrencies provide an exciting and easy way to carry out financial transactions, due to their ability to offer cheaper money transfers, speed, pseudo-anonymity, and the elimination of third-party interference.EU Regulates Cryptocurrencies

While many Bitcoin skeptics have condemned cryptocurrencies in recent times, citing the fact that gangsters, terrorists and drug lords have used cryptocurrencies to aid their illegal activities, the price of the digital currency and by extension alt-coins have been steadily rising over the years. At press time, the price of bitcoin is at $19,519, with a market cap of over $300 billion.

The European Union has placed stricter rules and regulations to govern crypto exchanges and Fintech companies in Europe. The idea of banning cryptocurrencies outright flies in the face of the positive innovations the promising technology has introduced.

Ultimately, the EU hopes to weed out the handful of bad actors in the space, or at least reduce their ability to manipulate digital money in their favor. Specifically, these new rules will go a long way in expelling criminals who engage in acts of money laundering and terrorism funded by cryptocurrency.

In practice, this will revolve around a handful of guidelines that provide greater transparency in the sector. For one, crypto exchanges must conduct correct KYC (Know Your Customer) operations to identify and document all entrees to the marketplace. Companies must also adhere to higher standards of transparency and be prepared to unveil themselves to government bodies.

The most significant clause of these updated regulations is the ability for federal investigators to access information provided by major crypto firms.

The new regulations clauses have been well received by some in the cryptocurrency and government ecosystem while others expressed their reservations.

According to Reuters, Europe’s Justice Commissioner, Vero Jourova said, “Today’s agreement will bring more transparency to improve the prevention of money laundering and to cut off terrorist financing.”

Transparency international also applauded the development but noted that some limitations still exist. The rights group hinted that it is essential for members of the public to have access to information about beneficiaries of trusts and similar arrangements.

In another development, European Union lawmaker Dutch Green Judith Sargentini has made it known that some EU member nations have opposed the new regulations citing concerns the rules might adversely affect their countries economies.

Sargentini declared that countries like Britain, Malta, Cyprus, Luxembourg, and Ireland do not support the new development.

The Need For Change

The European Commission inspired these regulations, and the rules have been in the works since after the 2015 and 2016 Paris and Brussels terrorist attacks as investigators claim that bitcoin and other alt-coins were being used to fund terrorism.

The new EU Cryptocurrency rules also help in combating the menace of money laundering. All member states of the European Union and EU Legislators are expected to adopt these regulations, which will in turn formally establish the rules into laws in the next 18 months.

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Critics Condemn Bitcoin’s Electricity Consumption, But it’s a Nonissue

8 hours 43 min ago

Bitcoin’s electricity consumption has become the target of criticism recently, and some reports by the mainstream media have claimed that the cryptocurrency may contribute to climate change in the long-term because of its excessive use of energy.

Years of Attacks

Since its launch in 2009, various critics and the members of popular media have attempted to condemn bitcoin to deliberately degrade its reputation and mislead the public about the different values of the digital currency.

Bankers have stated that bitcoin is a scam, central banks have claimed that the digital currency operates as a money laundering tool, and lately, some media outlets have been recycling the recent narrative that its production consumes too much energy.

As crypto-security and expert Andreas Antonopoulos previously explained, Bitcoin miners and mining center operators have continuously relied on renewable energy in regions where various sources of clean energy are abundant. The move into these areas comes primarily from the fact that electricity generated and supplied by state-run energy grids force miners out. The cost to run a mining operation under national banners significantly increases the operating expenses of cryptocurrency mining companies.

Over the past few years, mining centers have relocated to regions like the mountainous region of Northwest China, Norway, Chile, and Eastern Europe to capitalize on colder climates and cheap renewable energy produced by solar panels, wind turbines, and hydroelectric power plants.

In some countries like Chile and China, for instance, electricity generated from massive solar power plants are so abundant that the two countries have relied on clean energy to power cities for long periods of time.

In June, Climate Action, a partner of UN Environment, revealed that the Qinghai Province, located in Northwest China, has run on 100 percent renewable energy for an entire week. Several cities in Chile have also run on clean energy for a whole year, for 365 days straight.

“The trial – which ran from [June 17] to [June 23] – saw the entire province generate all of its power needs with clean energy sources, including solar, wind and hydropower. The trial in the Qinghai Province – which has a population of around [six] million people – was designed to prove that fossil fuels will not be required in the future, according to local reports,” read the report from Climate Action.

Most mining centers prefer to utilize clean energy and renewable energy sources for two significant reasons: dependence on local energy grid operators provide authorities the power to shut down Bitcoin mining centers at their demand, and usage of non-renewable electricity drastically increases operating costs of mining centers.

On November 14, CnLedger, a trusted cryptocurrency news source in China, reported that the Sichuan Electric Power Company had issued a false statement that the use of electricity to produce bitcoin is illegal. The head of the company immediately followed up that it does not have the authority to determine whether Bitcoin mining is illicit or not. But, the initial report from the group triggered a series of rumors on a potential mining ban by the Chinese government.

“A county electric power company in Sichuan, CN, released a notice to local hydro-power station: as bitcoin mining is illegal, all stations should stop producing bitcoins. Or they are no longer allowed to be connected to the grid. However, head of the company clarified to Caixin today that the notice was made in a hurry; it is not their role to determine whether bitcoin mining is against the law. The company is not yet connected to a national grid, and relies on local stations to get electricity,” CnLedger translated a report from Caixin, a state-owned news publication.

Given that dependence on grid operators and local authorities for the supply of electricity could very likely lead to business disruption and unstable operations, mining centers have started to relocate and utilize clean energy to produce bitcoin.

The post Critics Condemn Bitcoin’s Electricity Consumption, But it’s a Nonissue appeared first on BTCMANAGER.

India Turns Attention to Bitcoin Exchanges to Investigate Tax Evasion

11 hours 13 min ago

On December 13, 2017, the Indian income-tax department reportedly conducted surveys at bitcoin exchanges across the country to assess the risk of individuals who may have evaded taxes.

Surveying Indian Exchanges

Typically such surveys are conducted by the department without prior warning and include relatively extensive scrutiny of the assessee’s account books and related assets. According to a spokesperson, exchanges from Mumbai, Pune, Bengaluru, Delhi, Hyderabad, and Gurugram were surveyed.

None of the significant cryptocurrency exchanges in India have since commented on this report, with the sole exception of Coinome, a relatively new exchange. The Chief Operating Officer of which denied knowledge of any such survey.

Considering that the Income Tax department currently seems to be targeting virtual currency profits from before March 2017, that statement does start to make sense, given that Coinome was only recently launched in November 2017.

Global Attention and Tax Concerns

Bitcoin aided tax evasion and money laundering have been two major concerns for tax authorities around the world for quite some time now. But with the cryptocurrency’s seventeen-fold price jump in 2017, many countries are now coming down hard on the digital currency market.

For instance, In September 2017, China banned Initial Coin Offerings (ICOs) and forced exchanges operating within the country to cease operations effective immediately. Other countries were a little more moderate in their approach, but almost all of them have warned investors that their bitcoin profits will be taxable.

According to CoinMarketCap, bitcoin is currently at just under $17,000, with a market capitalization of around $280 billion, exceeding that of every other digital currency by a sizable margin. It also accounts for a large chunk of the combined cryptocurrency market cap at approximately $519 billion.

Despite the Indian income tax department’s crackdown on tax evasion in the cryptocurrency market, the country’s central bank, Reserve Bank of India (RBI), continues to maintain its long-standing silence on the legal state of virtual currencies. It remains evident, however, through numerous related press releases and announcements, that the Indian government remains skeptical of the decentralized and unregulated nature of cryptocurrencies.

India’s Relationship with Cryptocurrencies

On December 5, 2017, a press release by the RBI cautioned the public against the “Potential financial, operational, legal, customer protection, and security-related risks,” emanating from the cryptocurrency ecosystem. This announcement is nothing new for the central bank. Throughout 2017, the RBI has emphasized that it does not recognize bitcoin or other digital currencies as legal tender and has continually discouraged its use for transactions.

In the absence of a proper framework detailing the legality and taxation of digital assets, investors have very little information to go on at the time of filing their taxes. However, if Zebpay, one of India’s most popular Bitcoin exchanges, is to be believed, profits from cryptocurrency investments are to be recognized as capital gains.

In India, capital gains accrued within the first three years of purchase are classified as “Short-term,” whereas any duration over that would be subject to a lower tax percentage, because of the “Long-term” categorization.

Interestingly, in September 2017, a report emerged claiming that the RBI was looking to launch a state-backed digital currency to compete with the likes of bitcoin. A similar enterprise, dubbed “Crypto-Ruble,” was announced by Russia in October 2017. Since India’s banknote demonetization in 2016, the government has been encouraging digital transactions over cash usage, likely because the tax authority can easily monitor the former.

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Philanthropist Couple Donates Hundreds of Thousands in Bitcoin Gains to Cancer Research

13 hours 13 min ago

Jeff Hammerbacher and Halle Tecco bought bitcoin in 2013 as an early leap of faith, and then largely forgot about it; until now.

The couple are investors in the fields of health and technology, often pegging winners before the prices surge. One of these investments was Facebook, of which Hammerbacher was an early employee.

Halle Tecco is one of the founders of Rock Health, as well as one of the investors in the company. Very knowledgeable about health and biomedicine, she is an advisor to the Boston Children’s Hospital and Harvard Medical School of Biomedical Informatics.

When Hammerbacher and Tecco bought into bitcoin in 2013, it was worth no more than $800. Fast forward four years to December 2017 and the price of bitcoin has risen to over $18,000.

Although the benevolent couple wishes not to divulge the exact amount of their initial investment, they confirmed that it is now worth hundreds of thousands of dollars.

Instead of keeping it to themselves, they have mutually decided to donate it all to cancer research; more specifically, MUSC Hollings Cancer Center, which is the only cancer center in North Carolina that is designated by the National Cancer Institute.

It is clear that cancer and associated research is a cause especially close to Tecco’s heart, having dealt with many people affected by the condition.

They have left the decision of how to process the funds in the hands of the hospital. The investment was initially made through the Grayscale Bitcoin Investment Trust, which still holds the funds to this day.

It would be at the hospital’s discretion when or whether they wish to convert the donation into US dollars, as the cryptocurrency appears to have a future of continued growth ahead of it.

When asked about their motivation behind the donation, they answered that they hope to inspire others to do the same thing.

“The investor community that has benefited from the bitcoin craze should use this foresight (and luck!) to help others,” said Tecco to CNBC in a text message. “We hope we are just the first,” she added with optimism.

The pair of angel investors have created an investment fund of their own, called Techammer. The combination of their names in the company name is a testament to their belief in the project and the personal dedication that they have poured into it.

There is much to be gained from the story of Tecco and Hammerbacher, as they both began their working careers as grocery-store cashiers. Through a shared dream, unwavering dedication and a drive to spread positivity, they help like-minded people to “better the lives of everyday Americans.”

The generous contribution of Tecco and Hammerbacher is not the only good that cryptocurrency is doing in communities around the world.

It has also been described as a “game-changer for those in extreme poverty,” helping the poor to uplift themselves through cryptocurrency investing

In a recent Forbes article, Nikolai Kuznetsov also shared this vision of blockchain bringing an end to poverty, primarily through financial inclusion.

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New Progress on Casper: “Replacing PoW Completely is the next step”

Sat, 12/16/2017 - 17:00

On December 13, a video concerning the progress regarding Casper, Ethereum’s next big update, surfaced online revealing some promising new information regarding the status of the upgrade.

The video, titled “[Updated] Ethereum PoS: Casper FFG In Depth],” talks about the current state of Ethereum, what Casper would change in Ethereum, and how it would benefit the network.

Further along in the video, around the 57-minute mark, Karl Floersch, an Ethereum researcher, talks about a slide called “Next Steps.”

On this slide, he talks about papers that both specify as well as justify Casper and its implications on the Ethereum network. Furthermore, he says that the first full implementation of Casper is “basically done,” which could see the Casper technology being deployed soon on a public testnet or in isolated sandboxes.

Thirdly, Floersch says a preliminary Capser testnet, or a “testnet testnet” as he calls it, is on the way, and that replacing Proof of Work (PoW) entirely is the next step in the roadmap for the team to achieve.

Casper is to be deployed in phases, with phase one implementing Proof of Stake (PoS), as a layer on top of PoW. This phase has already been completed, with the final version of Casper soon having Ethereum rely on PoS to secure the network entirely.

The move will help reduce the economic waste of PoW, as well as bring finality, or a guarantee that history will not be changed, every 50 blocks (or one epoch).

The people working on Casper want to make sure that it is airtight before releasing it to the public, considering the countless tokens and projects that rely on Ethereum’s blockchain as their backbone. Breaking Ethereum would not only affect their immediate community but also all the innovate startups and ICO’s launching from the blockchain network as well.

Despite the security issues surrounding Parity during November, which allows clients to quickly and securely interact with the Ethereum blockchain, the price has continued skyrocketing as the video was posted online, with ether currently hovering above $680. The altcoin reached an new all-time high on December 14, at $745.00 on the Bitstamp exchange.

Following the release of Casper which will not only provide better security at a lower cost compared to the current PoW method being used, further use of Ethereum as both of a currency and as a blockchain should ensue, making Ethereum that much more valuable. It’ll surely be interesting to see price movement of ether in 2018.

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Opioid Merchant’s Seized Bitcoin Now Worth Over $8.5 Million; Prosecutors Scramble To Sell

Sat, 12/16/2017 - 15:45

After the dramatic rise in BTC-USD, a stash of bitcoin seized from an opioid dealer on the dark net has climbed from a value of $500,000 to $8.5 million, with US prosecutors looking to sell the confiscated cryptocurrency to net a nice profit for the state.

The dark net is the underworld of the World Wide Web. Content and websites on the dark net can only be accessed using a hidden service browser, like Tor. The level of encryption and anonymity offered consequently makes it a haven for criminals, including opioid dealers and sellers of all kinds of restricted goods.

Gone To The Moon

Bitcoin, the world’s most valuable cryptocurrency, has seen an exponential rise in its market price since the beginning of 2017 when it hit $2000 for the first time. Bitcoin was released in 2009 by an anonymous cryptographer, and offers its users a fast, pseudonymous and cheap form of sending and receiving money from all over the world, using blockchain technology.

Just like in real life, a good thing also has its bad side. The high value of bitcoin and ease of use as a payment method has attracted bad actors who use the cryptocurrency for the purposes of money laundering, among other things.

According to CNBC, a United States citizen named Aaron Shamo was arrested in November 2016 in connection with the illegal sales of drugs containing fentanyl on the dark net. On November 3, 2016, the price of bitcoin on Bitstamp was only $727 and about $500,000 worth of the cryptocurrency was seized from the accused drug dealer. Fast forward to late 2017, at the time of writing, the bitcoin price has hit the $18,000 region, taking the value of Shamo’s confiscated bitcoin value to over $8.5 million.

Bitcoin For Sale

The Utah-based U.S officials prosecuting Shamo’s case are planning to sell the $8.5 million or so worth of bitcoin seized from the accused opioid dealer. A spokeswoman for the Utah attorney’s office, Melodie Rydalch declared that:

“For federal prosecutors in Utah, sales of seized assets like cars are routine, but bitcoin is new territory. The proceeds of the bitcoin sale will be held until the case is resolved, and then decisions will be made about where the money goes.”

In the U.S, it is the norm for the proceeds from seized assets to go to the agency that championed the investigation, in this case, The Drug Enforcement Administration.

Shamo’s case is ranked among the most significant drug busts in the United States. It is important to note that a lump sum of $1 million was also recovered from the accused, which he tried to hide by stuffing the dollar bills into trash bags.

Aaron Shamo has pleaded not guilty to charges which include money laundering, possession of fentanyl amongst other charges.

Billionaire Tim Draper picked up around 30,000 bitcoin in an auction held by the U.S. Marshal Service. The confiscated cryptocurrency in this case was seized from the infamous Silk Road marketplace.

With the continuous surge in the price of bitcoin, and cryptocurrencies in general, criminals and bad actors will always be looking for ways to use these assets in aiding their illegal operations, while the government will always be looking to line their pockets. So it may be too brash to assume cryptocurrencies will allow criminals to hide completely. The incentive to catch criminals (and seize their cryptographic money) is strong due to the fact that these forms of money are appreciating at a rapid rate.

The post Opioid Merchant’s Seized Bitcoin Now Worth Over $8.5 Million; Prosecutors Scramble To Sell appeared first on BTCMANAGER.

The Grassroots Redistribution Scheme of Bitcoin

Sat, 12/16/2017 - 14:35

The onset of the information age has come to a fore in bitcoin. The cryptocurrency forges together the pieces of financial instability with humanity’s inevitable move to the technologically fantastic. Naturally, this comes with more than a handful of shifts in thinking, particularly when it comes to redistribution mechanisms.  

A Genuine Response to a Real Problem

The first line of the Bitcoin Blockchain is the title of an article from The Times on January 3, 2009. It reads, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” and rings faintly of the revolution that spectators have been crying out since Bitcoin’s inception.

In many ways, they would be right too. Although the technology underpinning the cryptocurrency has several applications, it was inherently a financial instrument. What’s more, this instrument was birthed at a point in history when it could be best received; the information age.

Those unfamiliar with the economic crisis that shattered our faith in economic systems should take the time to read up on the subject. Not only was it preventable, but it was a harsh lesson in finance for citizens and politicians alike. If we take the bailout measures as an example, we stumble upon a fundamental economic principle.

The ways in which government bodies bailed out banks and prevented a more severe collapse is called quantitative easing. In short, this is the process in which a central bank increases the money supply in the market to promote liquidity in the market. By taking bank’s ‘toxic’ assets onto the central bank’s balance sheet, they effectively gifted them a fresh start. The huge injection of liquidity has gone into assets before the money has trickled down into the wider economy; amounting to the largest wealth transfer in human history. In essence, central banks simply created more money and gave it to those defined as in “most need.”

In some cases, it is argued to be necessary and important, but in others, leads to severe inflation, inequality and a misallocation of capital that will take a while for the economy to readjust to. It is along these lines that we begin seeing bifurcation along not just economic lines, but also political ones.

Interestingly, bitcoin provides another solution. This solution is also quite the opposite to our respective government’s responses to the Global Financial Crisis nine years ago. Much like quantitative easing, bitcoin is one big experiment, but instead of diluting the existing money supply, it provides a new form of honest money that is not subject to the whims of a policymaker’s discretion. Bitcoin may also be a significant answer considering the way humanity is being changed via its relationship with technology.

Bottom-up Economics

Newly inducted billionaires, futures trading, and shady Initial Coin Offerings have strangely identified digital currencies this year.

In between all this are the stories of people losing swaths of bitcoin from simple operational error. In its current state, a sender could lose a small fortune if they are not careful between an “f” and an “F.”

If someone had only joined the conversation in 2017, they could assume two things. First, there is a lot of money in this space, but perhaps not quite revolutionary or at least not enough to topple the American dollar.

Second, the intellectual barrier seems a bit higher than opening a bank. This barrier is made all the more difficult to overcome when fraud seems to be running rampant.

But these points are just the flavor of 2017. Next year already promises smoother sailing with regulators, politicians, and popular culture finally wrapping their minds around this budding technology. The swindlers will be weeded out, and the eliminating functions of a free market will dispel of agents that do not serve its tenants.

Yet, please do not forget this; bitcoin is still in early days. The final expression of digital currency is still far out on the horizon. However, we can unfurl its potential by first gaining a grip on what makes it tick.

The real substance of the matter comes in how bitcoin is fundamentally upending the way we construct value, as well as empowering individuals. When people question what bitcoin bases its values on, please fire back the same question regarding any fiat currency.

In addressing the second point, perhaps it takes a bit more time and care than opening a bank account, but bitcoin turns individuals into their own bank.

At base, bitcoin hopes to eliminate third parties, and some government bodies have already iterated their genuine fear. The fear comes from the fact that there is now an innovation which empowers individuals to take personal responsibility for their financial security. Insofar as libertarian thinkers have huddled around the idea should prove its liberating effects.

On the other end of fear, there has already been real examples of hope displayed in the most disarrayed of countries. In nations where people weigh their money instead of counting it, the digital store of value is keeping families alive.

In Zimbabwe, where citizens point to a wheelbarrow when asked for their wallet due to the negative effects of quantitative easing, the deflationary cryptocurrency is making massive strides.

The applications even extend to the country’s responsible for the massive bank bailouts. Here we begin marching toward the characteristics of our current financial climate.

Attending to a Generation in Constant Catch-Up

Millennial generations in the US are reporting sentiments of financial instability and not having the tools to patch things up.

The LA Times reported the findings of a study that found members of the millennial generation incapable of replicating their parents’ quality of life. Researchers at Harvard, Stanford, and UC Berkeley found that:

“Children born in 1940 had a 92 percent chance of taking home more income than their parents, the research shows. By contrast, someone born in 1984, who is 32 years old today, has just a 50 percent likelihood of making more than his or her parents. Put another way; only about half of 30-something Americans earn more than their parents.”

It thus comes as no surprise that many are turning to cryptocurrencies in building their wealth. The access to entry is relatively simple, and the massive gains from little input are indeed enticing. More importantly, this form of money caters to a demographic that is hyper-familiar with life online.

Ultimately the rise of cryptocurrencies has answered a fundamental question forged in the heart of modern culture. Our staggering loss of trust in financial institutions was first met with despair as options outside of these systems were limited. But the induction of a form of value that can be transferred digitally, without intermediaries, is philosophically satisfying. The question remains, though, as to how bitcoin plans to turn theory into practice.

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Will A Bitcoin Collapse Have Any Spillover Effect On The Stock Market?

Sat, 12/16/2017 - 12:30

As the price of bitcoin continues to hit new highs, reaching as far as $17,500 at the time of writing, mainstream market forecasters are taking a serious look at the possible risks it poses to the stock market.

Bitcoin Crash Fallout

Their primary worry is that the impact of a crash in the digital currency’s price could spill over to the broader market as well.

Bitcoin is the most popular and widely circulated cryptocurrency in the world today. It started the year with a bang by surpassing $1,000 for the first time since late 2013. But even then most investors would probably find it hard to believe if someone told them that bitcoin’s dollar valuation would increase by a whopping 1,653 percent in less than 12 months. 

While many early investors are rejoicing bitcoin’s unprecedented rise, skeptics are worried that it is only going through what they call a “bubble” that will inevitably burst sooner or later. A bitcoin bubble is one reason why many major financial institutions across the globe are reluctant to invest in virtual currencies.

And now adding more to those worries, some forecasters are predicting that a burst in value will cause collateral damage in the stock market. Among these forecasters is Nuveen Asset Management’s Bob Doll.

According to Doll, the spillover effect is unavoidable even though bitcoin is not accounted for in his official 2018 stock market predictions.

“It’s sort of been until recently pretty isolated. We can’t have a conversation without bitcoin showing up,” he said in a conversation with CNBC‘s “Trading Nation.”

“Somebody will get scared if bitcoin drops by 30 percent in a short period of time.”

He further stated that the longer bitcoin’s wild run continues, the worse the impact of its fall will be for the stock market. Doll said “jitters” will be created “even though the fundamental overflow is pretty nonexistent.”

Note that Doll is not the only analyst to have predicted this so-called spillover effect. Torsten Slok, Deutsche Bank’s Chief International Economist, made a similar remark last week when he prophesized that a crash in bitcoin’s price could severely affect the broader market in 2018.

Slok included the possible threat from bitcoin in a list of 30 market risks that could adversely affect growth in 2018. The list, which he has shared with many global publications, ranks the widely-speculated impending bitcoin crash as the thirteenth highest risk.  

However, not everyone seems to agree with these worrying forecasts. According to Capital Economics, a bitcoin collapse is unlikely to have much impact on other segments of the capital market or the economy. It argues that despite the mind-boggling numbers of its bull run, bitcoin’s strategic reach, for now, is meager.

It further states that even if bitcoin prices dropped to zero in the near future, the loss would be equivalent to a fall of only 0.6 percent in US equity prices.

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Munchee ICO Terminated by the SEC

Sat, 12/16/2017 - 11:30

Quickly following the SEC’s statement regarding ICOs (Initial Coin Offerings) and cryptocurrencies, the regulator shut down Munchee’s token sale, which raised $15 million. The company received their cease and desist from the SEC on December 11, with all $15 million being returned to their respective investors.

Munchee looks to roll out a decentralized blockchain-based food review and social platform, and while the website is operational, even already having an app downloadable for iOS devices on the App Store, any information regarding the token sale is no longer accesssible from their website.

While Munchee classified the MUN as a “utility” token, meaning it would be used primarily within their ecosystem and not used to fund operations, a Howey Test, a Supreme Court finding that classifies anything with an expectation of return to be an investment vehicle, led the SEC to discover Munchee was auctioning a security. SEC Chairman Jay Clayton says in his public statement regarding cryptocurrencies and Initial Coin Offerings:

“Merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security.  Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to contain the hallmarks of a security under U.S. law.”

To this date, no ICOs have been approved by the SEC. Furthermore, the SEC has not given permission for the listing or trading of any exchange-traded products that hold cryptocurrencies, or any other assets linked to crypto.

ICOs have quickly become the de facto standard when it comes to raising funds for a new innovating project in the cryptocurrency sphere. And while Clayton does not deny the effectiveness of entrepreneurs raising funds through this method, any offering of securities needs to come with the right disclaimers, he writes;

“I believe that initial coin offerings, whether they represent offerings of securities or not, can be effective ways for entrepreneurs and others to raise funding, including for innovative projects. However, any such activity that involves an offering of securities must be accompanied by the important disclosures, processes and other investor protections that our securities laws require.”

Moving forward, it will be even harder to US-based participants to contribute to any new ICO’s, or Token Generation Events, as some projects are now calling their crowd sales. Participants outside of the United States are unaffected, as the SEC only operates within the USA’s jurisdiction, but the SEC’s actions here may set a precedence that countries around the world may follow.

Tone Vays, a notable critic of ICOs, said on Jimmy Song’s Off Chain that he expects the SEC to continue to go after the “low hanging fruit,” namely ICOs showing clear signs of misconduct such as Munchee. He also asserted that the regulatory agencies are looking to catch the bigger operations out eventually, like Ethereum.

In October, the regulatory authorities took down another ICO claiming to offer the “First Ever Cryptocurrency Backed by Real Estate.” The SEC charged Maksim Zaslavskiy of REcoin with violations of the antifraud and registration provisions of the federal securities laws as well as a complete barring from participation in any future participation in ICOs.

As more institutional investors are looking to enter into bitcoin and the cryptocurrency sphere, the SEC must provide the same amount of investor protection they are accustomed to in other markets. While the SEC did not ban ICO’s, the legal red tape projects must now get through to penetrate the US market will leave many US-based participants sitting out on many innovative projects.

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Bitcoin Price Eyes $21,404.66 Ahead of CME Futures Launch

Sat, 12/16/2017 - 10:30

The price of bitcoin broke to a fresh all-time high on December 16, as the market anticipates the launch of futures from the CME, following on from the CBOE’s launch last week. Bitcoin now exceeds $18,000 on the Bitstamp exchange and the cryptocurrency could easily make it to $20,000 in the upcoming days.

The launch of the futures contracts for bitcoin by the CME will attract more investors into the space and legitimize the cryptocurrency. There have been some changes over the past few weeks; initially the CME sought a margin collateral of 27 percent, but this has been upped to 43 percent ahead of their launch.

On December 18, TD Ameritrade will being to allow their clients to trade bitcoin futures, as reported by Bloomberg. JB Mackenzie, managing director for futures trading at the firm said, “Right now we are taking the same approach we did with the Cboe product, to wait and see how it goes. We want to watch that market open and become an orderly marketplace and see who the participants are in that marketplace. This is the same process we use with any new product. We want to see how the market reacts.”

The price action for BTC-USD on the daily timeframe is shown below. On December 15, the market closed above the fractal high at $17,428.42, suggesting bullish momentum will begin to intensify. Moreover, a close higher than $17,428.42 on December 16 will give further confirmation; we anticipate a long-term drift toward the Fibonacci extension level at $21,404.66, where this zone will provide some strong resistance. Therefore, we look to buy on December 16’s close with a take profit near $21,404.56.

BTC-USD (Bitstamp, Daily)

On the 4-hour timeframe, we see that a bullish saucer signal is in the making. The Awesome Oscillator has turned green in the most recent 4-hour trading session after remaining red in color for four trading sessions. Therefore, a break of the high of the current 4-hour candlestick in the following sessions will give an entry into a long position.

BTC-USD (Bitstamp, 4-hour)

The Fibonacci extension levels suggests immediate resistance just under $19,000, at $18,986.86, with further resistance at $20,319.62. Support is seen at the first Fibonacci extension level at $17,654.19.

The chart below shows the 4-hour timeframe along with the linear regression indicator for 89 periods back. The price action is currently in the middle of the channel and suggests the market will head toward the upper standard deviation bound, near $20,000, in the next couple of days. Those in long positions on BTC-USD should look to take profit near the upper channel of the indicator, as financial time series have the property of mean reversion – that is the price of bitcoin will tend to return to the mean value (the middle line of the channel).

Therefore, we expect bullish momentum to push BTC-USD away from the mean, which it is very close to currently, and test the upper limits near $20,000.

BTC-USD (Bitstamp, 4-hour)

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Can Blockchain Publishing Liberate Chinese Content Producers?

Sat, 12/16/2017 - 09:30

Content producers in China face strict regulation and censorship. Blockchain-based content distribution systems may help online creators have more control over sharing their work, but may also bring about new government guidelines.

Chinese Tradition of Online Censorship

In China, internet access and online material are regulated by what is colloquially called the “Great Firewall.” For example, most Chinese citizens cannot regularly access social media sites or those of international organizations, like Amnesty International, without a virtual private network (VPN). In October 2017, before the start of The Communist Party Congress, when new political leaders are announced, the government cracked down on VPN use and ordered Apple to remove VPNs from its Chinese app store. Meanwhile, Chinese censors scoured the web, removing any negative or disrespectful content directed toward authority figures.

In September 2016, the government released its new “Administrative Regulations for Online Publishing Services,” which controls content from both domestic and foreign sources. Most online media including images, text, video and any related databases must be approved by the State Administration of Press, Publication, Radio, Film, and Television. Article three of these rules states that as well as following all regulations, publishers must “Persist in the orientation of serving the people and serving Socialism, persist in the progressive orientation of advanced Socialist culture, [and] carry forward the Socialist core value view.” Moreover, anyone producing content must register with an approved service provider that is also responsible for censorship.

Can Blockchain Liberate Chinese Creators?

While China outlawed ICOs (initial coin offerings) in September 2017, it has not turned against blockchain technology altogether; Director General of the Research Institute of the People’s Bank of China Sun Guofeng describes it as a “good technology.” The blockchain is a distributed computer network that connects users directly rather than through a centralized hub or authority.

“[The ICO ban] should not prevent relevant financial technology companies, industry bodies and other technology firms from continuing their research into blockchain technology,” said Guofeng.

A 2017 WEF survey of 800 executives found 58 percent believe up to 10 percent of the global GDP (gross domestic product) will soon be stored with blockchain technology.

“In essence, the blockchain is a shared, programmable, cryptographically secure and therefore trusted ledger, which no single user controls and which can be inspected by anyone,” says Klaus Schwab, Founder and Executive Chairman of the World Economic Forum (WEF). 

Matej Michalko, Founder and President of DECENT, an open source blockchain content distribution platform, hopes blockchain can serve and liberate people in China who produce online media. “Blockchain has the potential to transform the online media and publishing industry by cutting out middleman controls, simplifying distribution, dramatically reducing cost and allowing artists/authors direct control over their creations,” he says. DECENT operates out of Switzerland, Armenia, Slovakia, and China.

Because publishers on blockchain can easily connect with peers and their audience, they may be able to use it to evade portions of China’s publishing regulation structure. They can share their work quickly and securely and receive payment directly. However, the government could also likely create new rules to police this type of virtual self-publishing and adapt blockchain technology for its own surveillance and regulatory purposes.

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A Bitcoin Whitepaper Braille Version has Finally Been Made Available

Sat, 12/16/2017 - 08:30

Bitcoin is a digital currency designed for everyone. It was designed for people all around the world to use it freely with no restraints. In 2008, Satoshi Nakamoto released the whitepaper ‘Bitcoin: A Peer-to-Peer Electronic Cash system.’ Soon after its release, the whitepaper was translated into numerous languages and is available for free online; now there is an effort underway to produce the documents in tactile form.

Bitcoin always had its inclusive side, and since its inception, it saw no differences between users. Then the community became concerned about the topic of accessibility. Three years ago an appeal for a response was made in a popular forum by Michael Staffen, a Bitcoin enthusiast who was suffering cancer. The disease had left him functionally blind. So he was appealing to the community to do something about the lack of accessibility to people who were visually handicapped.

Staffen wrote:

“This is making me very annoyed as I am a Bitcoin supporter and I have acquired my own bitcoin I just can’t goddamn use them without getting help from someone else. Multibit Is a java based wallet and as such, could have easily been made accessible if the Java accessibility JDK were included from the start. If we want Bitcoin to truly be successful, this has to be dealt with.”

Now, after Michael Staffen’s request, and thanks to the generous support of the Bitcoin community, a Braille version of the original whitepaper is now available. A few months ago, Adam Newbold, a community member, started a crowdfunding project with the intent to bring forth a Braille version of the Satoshi Nakamoto Whitepaper.

Adam Newbold stated:

“Bitcoin is about openness and equality. Everyone should have equal access to the technology and all information related to it, regardless of disability.”

Even though Adam is not visually impaired, he became passionate about the project and invested a lot of efforts in bringing attention to Mr. Staffen’s concerns. The project more than doubled its original fundraising goal and soon brought in over 0.22 BTC, or approximately $4,000, at the current price.

Newbold detailed:

“Think about the issues of someone with very little vision or none at all. Relying on audio interface is not feasible. Between homophones, for instance, the word ‘nose,’ someone might capture that as ‘knows.’ It’s really important for the software to account for every possible facet of the blind experience.”

Adam contracted the American Printing House (APH) for the Blind to do the transcription, which you can pre-order now for free. The raw files by the APH are planned to be released, which can be used in conjunction with Braille translation software such as Duxbury. Back in November, the American Printing House completed the transcription and tactile drawing work, and the whitepaper was sent to the production floor. Newbold then signed a final authorization to produce the first 50 ordered copies. Newbold also made a copy of the transcription on the project’s repository

The first copies of the Braille Bitcoin whitepaper are now finished, and physical copies are now in hand. The project creator is currently in the process of gathering shipping supplies, and everyone who ordered a copy should soon receive it. You can obtain a free copy of the Bitcoin Whitepaper, complete with tactile diagrams, from the project’s GitHub repo.

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Blockchain Platform Waves To Form New Self-Regulatory Body For Blockchain and ICO Industry

Sat, 12/16/2017 - 05:05

A new self-regulatory body will soon set standards for the blockchain and ICO industry. Founded by blockchain platform Waves, the new outfit aims to provide an array of services in areas such as legal, tax and accounting, business due diligence, and KYC for emerging companies in the domain.

The organization is being set up as an association, and its members will include the likes of the ICO Governance Foundation, Deloitte CIS, Ethereum Competencies Center, and others. In July 2017, Waves partnered with Deloitte CIS and launched their USD fiat gateway.

Waves has chosen Switzerland as the headquarters for this self-regulatory body.

The Blockchain platform made the announcement in a blog post earlier this week. In it, Waves outlined that the new regulatory body is open to all crypto market leaders including professional services firms, blockchain platforms, ICO platforms, and notable individuals associated with the industry.

Settling the Wild West

The lack of a regulatory body to oversee ICOs has manifested a kind-of free-for-all environment where it is not uncommon to see scammers duping investors and stealing their funds. As a failsafe measure, the Securities and Exchanges Commission (SEC) in the US has proposed enacting stringent regulations to prevent misadventures by fraudsters.

The federal body is preparing the legal ground to initiate action against fraudulent ICOs and those avoiding the securities laws in place.

In the wake of an impending crackdown, it is vital that all bodies linked to the crypto world pull their act together and formulate a strategy to ensure that they meet with any new regulatory framework introduced by the SEC. And this legitimization is precisely where Waves wants to make a difference with its proposed self-regulatory body.

Waves also urges all stakeholders to have a positive outlook toward self-regulation in the sector rather than resisting it. CEO and founder of Waves Platform, Alexander Ivanov, explained his company’s perspective on the subject:

“Regulation is clearly an emerging phenomenon and concern in the crypto space. If certain jurisdictions have not yet announced their intentions, then it’s only a matter of time. Waves has always been clear that regulation — the right kind of regulation — is a good thing for the crypto space. We have also been clear that we want to be a part of that emerging dialogue. We want a seat at the table to be able to shape the future of regulation in the ICO and blockchain space.”

Waves also stated that the association will be blockchain-agnostic and it will collaborate with the ICO Governances Foundation and others to provide best business practices for token sales across platforms.

Overall, the support for the initiative so far has been overwhelming. Waves will spend the next two months registering the association in Switzerland and forming executive bodies to look after the process. The proposed industry standards are expected to be finalized sometime in January 2018.

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Could a Bitcoin Crash Harm Global Markets in 2018?

Fri, 12/15/2017 - 17:15

The price of bitcoin keeps rising. At the time of writing bitcoin has surged to just under $19,000 and then back down again to around $17,000. This kind of volatility has sparked investment across the globe, and with it a lot of hype speculating where the potential cap of the cryptocurrency will be.

Due to this, certain economists are a bit worried.

Torsten Slok, Deutsche Bank’s Chief International Economist, is one of these figures. He recently sent out a list to his clients of 30 different market risks for 2018 which could impact global market growth in an adverse fashion. The list has been made public on a few different sites, such as Bloomberg, and ranks a bitcoin crash very high up the list at number 13.

There are a couple things to note about this list if it is of major concern to any speculators out there.

First off, yes, there is a large amount of hype going into bitcoin’s current inflation. Is it over-inflated yet? That is quite hard to say but as the price goes up, and people fuel the hype, there will be a risk for that type of bubble to pop.

However, the current total market value of all cryptocurrencies sits at right around $400 billion. The U.S. housing market, whose crash brought down markets back in 2008, is estimated at nearly $30 trillion. That is multiple orders of magnitude larger than bitcoin’s value.

Beyond this, it is not like bitcoin is located all within a single country’s economy; bitcoin users are spread all across the globe. This seriously lessens the blow of the currency crashing, but even without that fact the value of the currency in general is but a fraction of the much larger and precarious markets.

So, even in the case of a full on bitcoin crash it would be quite unlikely to bring down markets on its own.

For an interesting comparison, Bitcoin ranks higher on this list than housing bubbles bursting in multiple countries including China and Canada, impacts of the UK’s Brexit, a nuclear-armed North Korea, or the potential indictment of a sitting US President due to the Mueller investigations.

The bitcoin bubble is indeed interesting, but let’s not let the hype expand itself beyond the price of the currency. Bitcoin has the potential to be economically important, but currently it just doesn’t have the weight to effect global markets. Maybe in a few years as cryptocurrencies continue to grow, then Mr. Slok can have something to worry about.

This seems to be another case of an economist outweighing the risks involved with new technologies that they don’t fully understand. The bubble may pop, there’s no arguing that fact, but the global damage will be negligible.

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You Can’t Bury Bitcoins in the Backyard Says Houston Chronicle Author

Fri, 12/15/2017 - 16:15

“Never invest in a business you do not understand.” That’s the opener to an article that appeared on the Houston Chronicle on December 12. The article, titled “Bitcoins offer virtual wealth but very real risk” by author Chris Tomlinson details a number of reasons why he feels investors should stay far, far away from bitcoin and other cryptocurrencies. But how much truth is in this article, and how much of it is just fear mongering?

“If Something Appears [too] Good to be True, it Probably Is.”

This piece of advice has held true for generations. It is a maxim that can be applied to Ponzi schemes, lottery scams, and Nigerian e-mail scams. But is bitcoin “too good to be true?” According to Tomlinson, yes, bitcoin is too good to be true and should be avoided. Specifically, Tomlinson says that if you follow this sage advice, then “you’ll stay far, far away from cryptocurrencies like bitcoin.”

Tomlinson’s first claim is that “strings of computer code will never become a true currency.” While this assertion is debatable, to say the least, let’s move on to why he feels this way.

Tomlinson states that because the US dollar is released by the Federal Reserve (a private bank, which may prioritize vested interests and not the public at large) at a variable rate, and can take money off the market if necessary, it is intrinsically superior. Bitcoin, on the other hand, releases units onto the market at a set rate that cannot be manually adjusted. Furthur, he makes the classic claim that bitcoin is not “backed” by anything.

Backed by Nothing

Let us unpack these statements for a moment. The private Federal Reserve bank was created at the end of 1913. $1 in 1913 dollars would be worth just about $25 in purchasing power today. That means in just over a hundred years, the US dollar has faced an inflation of 2,391 percent. US dollars and essentially all fiat currencies are designed to drop in value over time. The only way to protect yourself from inflation is to rely on the banking industry to give you a pittance in interest, or the stock market which has its own fluctuations and risks.

Source: Zerohedge

In 1971, the US dollar became a true fiat currency, meaning that it was no longer “backed” by anything. So by Tomlinson’s own definition, fiat currency, which is also backed by nothing, and can be printed at any rate that a private bank chooses and consequently inflates by orders of magnitude over time, is somehow better than bitcoin.

With this in mind, let us keep moving forward. Tomlinson then makes several technical errors, demonstrating a lack of understanding of how Bitcoin works. He makes two such errors, specifically “Bitcoins only exist on the shared ledger, where hackers can and have stolen it…” and “you can’t bury bitcoins in the backyard.”

The cryptocurrency has never been stolen directly from the Bitcoin ledger, which has so far proven to be completely impossible. Perhaps someday this might happen, but so far all theft of bitcoin has been a result of hacking an intermediary like an exchange, or through phishing or other social engineering forms of theft; not because of the protocol.

Second, you can bury bitcoin in your backyard. A laminated and properly stored paper wallet could easily accomplish this. Granted, Tomlinson was only making this claim in an attempt to bolster his argument that bitcoin, unlike gold or dollars, isn’t “real.” However, it demonstrates that Tomlinson again does not fully understand the technology or principles that Bitcoin operates on.

Bitcoin: Speculators Heaven

The article concludes with a section on the rampant speculation that bitcoin is seeing. This is really the only part that Tomlinson gets right. Bitcoin absolutely sees a large amount of speculative activity. But does this make the cryptocurrency dangerous, and something that should be absolutely avoided?

This is up to the individual investor. Members of the Bitcoin community have an oft-repeated maxim of their own; only invest what you are willing to lose. Bitcoin may be $17,000 one day, but it could very well be $1,000 the next. Since bitcoin and other cryptocurrencies are an entirely new asset class, we cannot reasonably expect to understand the valuation of something that has existed for less than a decade. We also cannot expect to compare its market behavior to an asset like gold or dollars.

While Tomlinson may not fully understand the technology or even the philosophy behind Bitcoin, he does have one good point. One should always approach a new investment with great caution. One should also not invest in something they do not understand. If an individual wants to invest in bitcoin, they should absolutely take the time to understand it before getting their feet wet.

The same is true for you, Mr. Tomlinson. One should understand Bitcoin before they declare it nonsense.

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How Amazon Could Topple Bitcoin

Fri, 12/15/2017 - 15:15

It would be an understatement to say that bitcoin has risen exponentially over the last two years. In 2017, it has shot up from just under $1,000 to $17,644 as of December 15, 2017; and it’s lightning-speed ascent has not gone unnoticed.

“The Amazon Effect”

Previously utilized only by financial experts, crooks, and dreamers, the digital currency has now become a global household name.

With the chances of it suddenly imploding seeming less likely to many, there remain a few key threats that could change the trajectory of bitcoin.

Amazon is the world’s largest online retailer, with net revenue of almost $136 billion in 2016. The multinational e-commerce company is responsible for close to 50 percent of online purchases in America.

Amazon’s success lies not only in their being able to cut out many brick and mortar stores, but also through their affiliate sales and self-produced electronic devices.

Despite their considerable influence over the global market, the company has chosen not to add cryptocurrency as an approved payment method; at least not to date.

The only method for clients to make Amazon purchases with bitcoin is by using third-party gift cards. One such company is Gyft, a firm which provides gift cards for Amazon, eBay and Best Buy (among others), and accepts bitcoin as a payment method.

What Would Happen if Amazon Were to Start Accepting Bitcoin?

One of the most significant hurdles bitcoin faces is crossing the chasm between investment vehicle and currency.

In the last six months, the value of the digital currency has appreciated so much that people are “hodling” their coins in the expectation that their bitcoin will be worth more in the (near) future.

The way of thinking outlined above poses a problem as bitcoin’s value is currently linked purely to its demand, which in turn is connected backed to its value.

This principle founds widespread belief that it is a bubble; as its value is not linked to anything other than itself. Should it begin to be more widely used as a currency, its value would be tied to purchasing power, which is far more stable.

Amazon’s integration of bitcoin would thus become a critical factor in this change of mind and usage.

What is Stopping Amazon from Accepting Bitcoin?

Although there are no official statements from the American online marketplace, one would assume that one of the main reasons for hesitation is the number of transactions that can be processed by bitcoin every second.

On average, the cryptocurrency can only process seven transactions per second, which falls desperately short of Amazon’s 600 operations per second during their peak periods.

Comparatively, Ethereum processes 15 transactions per second, with Ripple touching 1,500 per second.

From these figures, it is clear that bitcoin is not a viable payment method for Amazon, which is not good news for the leading digital currency.

Should Amazon choose to partner with a different cryptocurrency, it would likely cause a spike in the interest of that currency, possibly drawing attention further away from bitcoin.

Possibility of Future Cryptocurrency Payments

On October 31, 2017, Amazon appeared to have purchased three crypto-related domains; and it had nothing to do with Halloween.,, and were all new registrations; a possible sign that the leading e-commerce site is considering cryptocurrency payments in their future.

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Learn Ethereum Solidity Programming Now with Free Site CryptoZombies

Fri, 12/15/2017 - 14:05

Ever wanted to learn Ethereum Solidity programming? Have you dreamed of becoming an Ethereum developer, and make your own smart contracts and Dapps? Dream no longer, as Loom Network has just released a fun and creative new learning platform called CryptoZombies. Learn all about the basics of Solidity through the guided development of an Ethereum-powered zombie game!

What is CryptoZombies?

Much like other gamified software development platforms like Codecademy and CodeCombat, CryptoZombies is a guided experience that covers all the basics of Solidity development. The first lesson of the program covers basic contract setup, data structures, variables, arrays, and events. While you probably will not come out of the experience one as a “Solidity developer” as the site promises, you will certainly leave knowing more than you did when you started.

Who is it for?

CryptoZombies is a guided experience, but it is not designed for those who are completely new to programming. The site recommends that you at least have a basic understanding of one other programming language. The code used in lesson one greatly resembles Java, C++, or C# code, so experience in one of these should help.

Problems and pitfalls

While the site design is fairly well laid out and lesson are for the most part intuitive, the lessons are still not perfect just yet. Some of the explanations are not fully clear, and in some cases seem misleading on purpose.

In the section that covers mathematical operations, the text explains that Solidity can perform addition like 1+1, multiplication like 2*2, and exponent operations like 10^16. If you enter 10^16 in the code editor, however, you will be faced with a bright red error message. What you should have done, apparently, is enter 10 ** 16, much like in Python or other languages. This is explained in a little code box, but they should have just said, exponent functions are written like this; 10 ** 16 and forgone using the ^ symbol at all.

While minor, these kind of vague instructions appear a few different times, and the onus is on the ‘player’ to understand these points. Whether this was intentional or not is unclear.

During the section describing arrays, a confusing array of language make deciphering the instructions particularly difficult. Though not impossible to solve, better wording should be employed in later versions to make this clearer.

Future Development

At present, CryptoZombies only has one lesson available (made up of 15 chapters), and it should take under an hour to complete. If the player is someone who knows nothing of any other programming language, they will need to complete several hours of study in JavaScript, Python, or a C variant.

The company behind CryptoZombies, Loom, stated that new lessons will come out every one or two weeks until the project is complete. The completed project should guide the user through the creation of an entire zombie game from start to finish.

To summarize, if you are looking for a fun and guided introduction to Solidity, and you have some programming experience already, give CryptoZombies a try. It is free, fun, and easy to get into.


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Do you Really Own your CryptoKittie?

Fri, 12/15/2017 - 12:15

CryptoKitties is the latest obsession in the crypto space. Reminiscent of the Beanie Baby craze in the 90’s, users can sell these Ethereum-based virtual cats for eye-watering amounts. While many are making money from the craze, there are some questions over the ownership status of the digital assets.

Unlease the Kittens

In early December, the Ethereum-based, virtual pets known as CryptoKitties were unleashed on the world and many in the cryptocurrency community pounced on the opportunity to own these digital assets. Cats with rare attributes are worth more, and the endeavor is similar to cryptocurrency trading; but without charts and technical analysis, users have to utilize their intuition to profit from the breeding and sale of the kitties.

For instance, The Verge reported that one man based in Texas has made more than $40,000 by buying, breeding and selling CryptoKitties. By spending 30 ether on the game in total, and accounting for his losses and gains, he now has 90 ether worth of the virtual pets. For him, the virtual pets are another way of holding ether, but explains it could be highly risky:

“As if crypto weren’t speculative enough, this is extremely risky. I’m debating whether or not this is going to be around in two weeks. Or maybe it’s just getting started since it plays into that kitschy collectible toy culture that’s been going on for decades.”

The game was so popular it even slowed the Ethereum network to a halt and highlighted the urgent need for scaling solutions. The network is still very slow at the time of writing, affecting several games based on Ethereum have already been in the works, such as EtherPlay, but it seems CryptoKitties achieved an ideal mix of gaming and digital assets on the blockchain.

Apples and Oranges

But do the owners own the CryptoKitties? One lawyer, Greg McMullen, explored this question in a Medium post dated December 14. Once you pay in ether, the blockchain entry containing the cat’s DNA is transferred to you. The DNA is combined with graphic elements to form your CryptoKittie. But, it turns out you just own the ‘DNA,’ a string of random numbers and letters.

McMullen compares baseball cards and CryptoKitties. Since the company behind the virtual pets, AxoinZen, states in their Terms of Use that they solely own the rights to the graphics used in the make-up of each kitten, they differ somewhat from traditional collectibles.

Terms of Use

While with a baseball card, you will always own the image, with CryptoKitties it is a different story; AxiomZen owns the all of the artwork, so owning a virtual pet does not give you the rights to the artwork. You need written permission from AxiomZen to use the artwork, and the company is not obliged to give it to you. Therefore, the durability of these Ethereum-based assets is questionable.

At least if Topps goes out of business, your baseball card remains durable. The point is the rights you have to physical property are not translated to the digital property of the kitties.

So the critical difference between a CryptoKittie and a baseball card is that the manufacturer of baseball cards cannot come into your house and change the image on the card. Your Babe Ruth baseball card will always have a picture of Babe Ruth, whereas, with CryptoKitties, there is the possibility that AxiomZen can change the artwork. Alternatively, if they go out of business, there are no guarantees that you will have rights to any of the unique aesthetics of the kittens.

Of course, the lawyer stated that he is not under the impression AxiomZen are going to sabotage your virtual litter but is merely making it clear that the ownership of the digital kittens lies firmly in the hands of a centralized entity.

What you do own is the DNA, which is just a string on the Ethereum blockchain. While the legal team at AxiomZen were setting the company up for branding and merchandise, McMullen said a bit of creative legal drafting could allow owners to be truly in control:

“But in blockchain world, if Axiom Zen wants us to truly own our Kitties, a bit of creative legal drafting could make it happen. Contracts could change the default to make CryptoKitties just like baseball cards. One easy fix would be to change the terms to grant you a limited license to use the specific arrangement of graphic elements defined by your Kitty’s DNA.”

While the law doesn’t recognize digital property in the same way as physical property, it will catch up one day. A careful combination of law and technology is needed, according to McMullen, to bring actual digital ownership to people today. Peter Van Valkenburgh also sheds some light on the legal perspective of CryptoKitties, arguing there is good news for the owners, as the digital assets are not considered securities.

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Why are there Discrepancies Between Cryptcurrency Exchange Prices?

Fri, 12/15/2017 - 11:10

With more users creating their first accounts on exchanges like Kraken, Bitfinex, and Bitstamp, or more likely downloading Coinbase, which hit the number one spot on the App Store, they quickly realize there is a massive discrepancy between exchanges.

Explaining a Valley of Difference

Not a couple cents, like it may be at competing gas stations, but sometimes differences in excess of $100.

For example, when litecoin recently surged over $300, GDAX reported litecoin briefly breaking past $400, while other exchanges announced prices in the $350-$370 range.

More extreme would be with bitcoin. A quick peek at a couple of exchanges show differences of several hundred for the BTC/USD ratio, according to the list of exchanges on CoinMarketCap. At the time of writing, Bitfinex is currently trading Bitcoin at $16,416, while Bithumb, is trading it at $17,048.10, a difference of over $600.

Why is there such a discrepancy between different exchanges? There are a couple of reasons behind this characteristic seen in cryptocurrency markets. More importantly, is the fact that traditional trading markets do not experience these distinctions in value.

One of the biggest reasons is the difference in liquidity. Different exchanges handle different amounts of volume, meaning that each exchange has varying amounts of demand and supply for bitcoin, ether, litecoin, and other coins that an individual exchange supports.

Because of basic supply and demand, when a bitcoin surge or any other cryptocurrency occurs, that demand will affect exchanges differently. The larger exchanges with more liquidity will not witness as much price movement as the some of the smaller, and more illiquid exchanges.

The same happens if the opposite occurs: if bitcoin suddenly becomes bearish, larger exchanges will have smaller price drops compared to the lesser known exchanges.

Another fundamental reason for the price differences is the lack of an efficient price discovery mechanism. The “correct” price for a bitcoin, bitecoin, ether, or any other cryptocurrency is still, for the most part, dictated by public sentiment and large traders known as “whales.” Since pricing is still largely speculative, and exchanges can be heavily influenced by one or two deep pockets, this further contributes to the inconsistency in price for exchanges.

Thirdly, prices between exchanges can differ due to demand for cryptocurrency being different in that region. In the past, Asian Bitcoin markets would dominate and be accountable for most of bitcoin’s trading volume, leading to Chinese exchanges trading at prices slightly higher than their US and European based counterparts. We can see this fact when using my example of Bitfinex, a US-based exchange, and Bithumb, a Russian based exchange. By this logic, one could conclude demand for cryptocurrency is higher in the United States than in Russia.

Arbitrage, or buying one asset at a low price and selling somewhere else for a higher price, is still quite challenging to pull off in practice. With the current state of Bitcoin’s transaction networks as well as the accompanying fees, the inefficiency of the market would quickly eat into your margin of profit.

Perhaps as Bitcoin infrastructure improves, the viability of this would improve, but so would the margins, leaving opportunistic traders with a Catch 22.

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