All posts by Satoshi Bitcoin

Canada: TD Bank Bans Credit Card Purchases of Crypto Following Global Trend

Canada: TD Bank Bans Credit Card Purchases of Crypto Following Global Trend

Following in the footsteps of several major banks globally, the Toronto-Dominion Bank (TD), one of the largest banks in North America, announced  in an email statement to customers on Friday, Feb. 23, that it is banning the purchase of cryptocurrency with credit cards, local journal The Globe and Mail reports.

A representative of TD, the first major Canadian bank to enact such a ban, said that the bank regularly evaluates its policies and security measures “in order to serve and protect our customers, as well as the bank.”

TD’s move is part of a larger global trend of banks banning customers from credit card purchases of cryptocurrency. The wave of bans was initiated by US giants J.P. Morgan Chase, Bank of America, and Citigroup on Feb. 3, and followed by the largest bank in the UK, Lloyds Banking Group, Feb. 5, and Virgin Money in Australia, South Africa, and the UK on Feb. 6. Last week, Citibank India went ahead with banning both credit and debit cards for crypto purchases.

According to The Globe and Mail on Feb. 23, the Royal Bank of Canada made of point of stating that it does allow both debit and credit card purchases of cryptocurrency, but it warns its customers about high volatility risks which “could expose them to substantially higher debt levels than they are able to repay.”

In a contrasting move for the local industry, on Feb. 13, a Canadian stock exchange announced that it will soon launch its own Blockchain-based securities clearing and settlement platform that help companies raise funds via fully regulated security tokens issued by the exchange.

Published at Sat, 24 Feb 2018 22:05:30 +0000

Bitcoin Regulation

Overstock CEO Puts ‘Millions Of Dollars’ Into Unknown Coin, Compares To Bitcoin

Overstock CEO Puts ‘Millions Of Dollars’ Into Unknown Coin, Compares To Bitcoin

Patrick Byrne, the CEO of Overstock, which was the first major retailer to accept Bitcoin (BTC) back in 2014, has said that he is “not really interested in cryptocurrencies per se,” but revealed a little-known Blockchain project his company has invested “millions of dollars” into in an interview with Business Insider Friday, Feb. 23.

When asked if he’s interested in “everything cryptocurrency” or “really interested in the Blockchain [sic]”, Byrne prefaced his answer by saying he is “really letting something big out of the bag”,  going on to reveal both Overstock’s and his personal interest in a virtually unknown Blockchain project called Ravencoin, which launched very quietly on Jan. 3, 2018.

The Ravencoin project’s single blog post, published Nov. 1, 2017, opens with a sentence designed to peak the interest of a Game of Thrones-loving crypto investor:

“In the fictional world of Westeros, ravens are used as messengers who carry statements of truth.”

The post goes on to describe Ravencoin as “a use case specific Blockchain, designed to efficiently handle one specific function: the transfer of assets from one party to another.”

Ravencoin was first mentioned on Bitcointalk.org on Jan. 14, 2018 in a post that described its Jan. 3 launch as containing “very little info regarding the future of the project,” but that “since then, several community members have learned that there is an active development team on this coin.”

Byrne told Business Insider that Overstock has put “millions of dollars into teams” for Ravencoin, stating confidently, “[w]e think this coin actually has quite a future.” Byrne then compared Ravencoin to leading cryptocurrency Bitcoin, saying:

“It’s Bitcoin, but a thousand times more energy efficient.”

In his interview with Business Insider, Byrne follows the project’s 4-page whitepaper in identifying the problem of the rising expenses of BTC mining and its centralization around ASIC production and cheap electricity. Byrnes claims that Ravencoin solves said problems by being “ASIC resistant” and “redemocratiz[ing] mining,” going on to describe the current concentration of industrial-level mining in China:

“Anyone can download this software, and you don’t have an advantage by having this big mining warehouse in China.”

A four day old post on the /r/cryptocurrency sub-Reddit titled “What are your thoughts on Ravencoin?” further highlights the relatively unknown status of the project:

“This coin is very new and also implements a brand new algorithm, X16R. Surprised that there’s not a single mention of it in this subreddit, even though thousands of miners are already mining this coin. Is it being kept secret to keep mining difficulty down?”

Only one person has responded so far, the day it was posted, saying: “Never heard of it until now.”

Byrne also told Business Insider that because Overstock was the first major corporation to accept BTC as far back as 2014, the company deserves credit for keeping Bitcoin relevant: “I like to think that we saved that community [Bitcoin] about five years in their adoption cycle.”

In early January of this year, a glitch with Overstock’s payment system inadvertently allowed customers to pay with Bitcoin and Bitcoin Cash (BCH) interchangeably for a three-week window before the mistake was caught, charging customers in BTC or BCH at a 1:1 ratio and thus giving BCH holders a massive, unintentional discount.

Published at Sat, 24 Feb 2018 19:38:29 +0000

Bitcoin

Lights, Camera, Crypto: Advertising Campaigns For New Money

Lights, Camera, Crypto: Advertising Campaigns For New Money

The meteoric rise of Bitcoin’s value in 2017 was enough to bring it into mainstream consciousness – but people are clamoring to get on the Blockchain and cryptocurrency train.

That has culminated in a number of weird and wonderful advertising campaigns, featuring some interesting celebrities and big businesses, all vying to promote and capitalize on the crypto craze that is sweeping the world.

Early adopters of Bitcoin have become prominent figures in the industry, but actors, musicians and scamsters have all played their part in a fascinating few years of marketing and advertising drives in the space.

Star power

For decades, actors and musicians have been used to promote a number of goods and services. The tobacco industry is famous for this- using movie stars to promote smoking in popular movies for decades.

It’s safe to say we’ve seen it all. Celebrities from all walks of life have been linked with Bitcoin and cryptocurrencies for years.

Matrix star Keanu Reeves narrated ‘Deep Web,’ a documentary exploring the murky world of the dark web.

World-renowned footballer Lio Messi was used to endorse a company producing Blockchain hardware, while flamboyant boxer Floyd Mayweather entered the fray with an Ethereum-based ICO last year, and Luis Suarez was also linked with the very same project.

Rapper 50 Cent reportedly made over $7 mln in Bitcoin, having accepted payment in the cryptocurrency for his 2014 album Animal Ambition. He flaunted his millions last month, having hodled his Bitcoin stash for four years before cashing out.

American football fans were also subjected to a Bitcoin-futures advert by brokerage firm TD Ameritrade during the NFL half time break. It featured singer Lionel Richie promoting 24-hour trading on the platform.  

Trade selected securities all night long

Image source: Ispot.tv

Some celebrities have been involved in perplexing cryptocurrency projects. On Feb. 20, American actor Steven Seagal shared a post on Twitter announcing himself as the brand ambassador for Bitcoiin2Gen (B2G), which ironically is an Ethereum-based ICO claiming to be the second generation version of Bitcoin.

Official Ambassador

Image source: Bitcoiin.com

A number of exchanges and media outlets have already dubbed the project a scam.

Japanese put crypto on TV

Japan has a voracious cryptocurrency market which has led to some pretty spectacular, and typically Japanese showbiz acts.

Japanese showbiz act

Image source: Agence France-presse

The Virtual Currency Girls are a Japanese pop group that have been spreading the cryptocurrency gospel through song and dance. The Japanese Pop group got plenty of attention when it was formed. Each of the singers takes the identity of popular cryptocurrencies like Bitcoin and Ethereum- and the group’s lead singer 19-year-old Rara Naruse says that was a strategic move:

“We have carefully selected a handful of currencies that are sure to exist in the future in order to broaden the public’s understanding of them using entertainment as our medium.”

The cryptocurrency boom hasn’t stopped there, with local news outlets highlighting a swathe of exchanges running TV commercials on local channels. According to Japan Times, Japan’s biggest exchange BitFlyer was the first to air a crypto TV commercial in April 2017, while other followed suit over the next few months. BitFlyer and embattled exchange Coincheck ran as many adverts as industrial and commercial giants Toyoto, McDonalds Japan and NTT Docomo.

Exchanges have also gone as far as billboard advertising on busy streets around Japan as seen below.

Advertesement

Credit: Cory Baird/Japan Times

Scamcoins lead to bans on Facebook

While many exchanges are operating legitimate businesses and celebrities are aligning themselves with promising Blockchain and cryptocurrency startups, thousands have been fleeced by a multitude of scams in the crypto space.

A good example is Bitconnect, which had been continually been accused of running a ponzi scheme due to its referral system and lending scheme. The company has shutdown its exchange and lending platform on Jan. 17 and some investors have filed a class action lawsuit to try recover losses in the scheme.

While this is one of the bigger examples of a cryptocurrency scam- the incident has left a bad taste in some people’s mouths.

In a move that was met with apathy from the cryptocurrency community, Facebook announced that it was banning all cryptocurrency advertising on its social media platform.

Facebook’s justification is that it is protecting users from dodgy companies advertising cyptocurrencies and ICOs – making it “harder for scammers to profit.”

To this very end, the move could be understandable and could protect uneducated investors from scams masquerading as cryptocurrency offerings. It does however paint all cryptocurrencies with the same brush, which could have an effect on the way legitimate, regulated exchanges and Blockchain startups advertise in the 21st century.

Social media has reformed advertising with its ability to provide advertisers with incredible accurate target markets. Still besides social media, cryptocurrencies, ICOs and exchanges could benefit from traditional advertising platforms like television, radio and print media.

Published at Sat, 24 Feb 2018 17:42:07 +0000

Bitcoin

USA versus Stetkiw: Is Bitcoin Money?, Detroit – United States

USA versus Stetkiw: Is Bitcoin Money?, Detroit – United States

*** This is Detroit Michigan ***

Both side agreed to change the date to April 23rd, 2018. A hearing on Bitcoin will take place at the Federal Court house in Detroit Michigan. This is a real trial like those on television. It’s not a conference where one can ask questions. Lawyers from both side will argue for real, and the life of a Bitcoin trader will be hanging in the balance.

https://www.courtlistener.com/docket/6182321/united-states-v-stetkiw

This will be a quick hearing where they will give some instructions. Lot of wait time as there is 5 case to get a judge assignment.

Published at Fri, 16 Feb 2018 00:00:00 +0000

Tesla Billionaire Elon Musk Says He Owns $2.5K In BTC, Or ‘Literally Zero Cryptocurrency’

Tesla Billionaire Elon Musk Says He Owns $2.5K In BTC, Or ‘Literally Zero Cryptocurrency’

Elon Musk, the tech billionaire and entrepreneur known for founding and leading Tesla Motors and SpaceX, revealed on Twitter Thursday Feb. 22, how much Bitcoin (BTC) he owns — 0.25 BTC or about $2,478 as of press time, or 0.000012% of his total net worth.

Musk’s cryptocurrency holdings reveal comes after a number of fake accounts posing to be various well-known figures, including Musk, cropped up on Twitter promising crypto donations to those who send them crypto.

On Feb. 22 a Twitter user concerned about the scam accounts asked Musk in a tweet “why is all the spam popping up lately?”

Musk responded that he had already reported the issue to Twitter CEO Jack Dorsey to no avail. Evidently as a way of explaining his surprise at the multiple scams, Musk noted in the same tweet that apart from the 0.25 BTC a friend had given to him “many years ago”, he “literally own[s] zero cryptocurrency.”

The Bitcoin sum he reports to own is indeed an extremely small fraction of Musk’s total net worth, which stands at $21.4 billion as of Feb. 24.

In November 2017, Musk denied rumors suggested by former SpaceX intern Sahil Gupta that Musk was probably Satoshi Nakamoto, the legendary anonymous creator of Bitcoin.

As Cointelegraph reported Feb. 21, a cloud security firm recently reported that Tesla’s non-password protected Amazon Web Service’s (AWS) software container had been hacked to mine cryptocurrency over an as yet unknown period of time.

Published at Sat, 24 Feb 2018 16:26:13 +0000

Bitcoin Scams

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China Mining Co. Bitmain Shows Higher 2017 Profits Than US GPU Giant Nvidia, Report Finds

China Mining Co. Bitmain Shows Higher 2017 Profits Than US GPU Giant Nvidia, Report Finds

Chinese mining hardware giant Bitmain has reportedly made higher profits in 2017 than long time American graphics processing unit (GPU) manufacturer Nvidia, CNBC reported Feb. 23.

CNBC writes that according to a report published Feb. 21 from investment research company Bernstein, the four-year-old Bitmain reportedly made between $3 and $4 billion in operating profit in 2017, whereas Nvidia, founded 24 years ago, made about $3 billion during the same period.  

Bitmain, founded in 2013 by Jihan Wu and Micree Zhan, uses Application-Specific Integrated Circuit (ASIC) cards to mine Bitcoin (BTC), sells ASIC-powered AntMiner BTC mining rigs, and also operates “mining pools”, a system in which cryptocurrency miners share resources and split rewards.

Nvidia-manufactured graphics cards reportedly tend to appeal more to “hobby miners”, who may choose to buy a conventional GPU, rather than investing in a more powerful and expensive ASIC-powered rig, like Bitmain’s AntMiner.

The Bernstein analysis reports that Bitmain holds 70 to 80 percent of the market for Bitcoin miners and ASIC cards, with most of the revenue made from selling the mining rigs, “and, to a much lesser extent, by collecting management fees from the mining pools it operates and renting out the mining power of its mining farms through cloud services.”

The rising price of BTC in 2017 especially has also contributed to Bitmain’s profits, for the Bernstein report writes that, “Bitmain shrewdly adjusts the prices of miners according to bitcoin prices.”

When the price of BTC rose to $20,000 in December 2017, Bernstein reported that the price of Bitmain’s Antminer S9 hit almost $5000.

The Taiwanese manufacturer TSMC that supplies ASIC chips to Bitmain had signed a deal with Samsung in late January of this year. The Bernstein analysts say that Bitmain’s dealings with TSMS “contributed 2 to 3 percent of the chipmaker’s total revenue last year.”

After China’s crackdown on the cryptocurrency industry within the country, including banning both Initial Coin Offerings (ICO) and foreign exchanges, Bitmain has attempted to circumvent regulations by opening mining farms in Canada and Switzerland, a mining pool subsidiary in Israel, and regional headquarter in Singapore, the Bernstein report notes.

Bitmain’s “massive cash position” and the fact that it sells chips to miners, as opposed to mining itself, protects the company from slumps like those earlier this month, when BTC’s price dropped below $7000.

Published at Sat, 24 Feb 2018 13:07:19 +0000

Bitcoin

Will Lightning Help or Hurt Bitcoin Privacy?

Will Lightning Help or Hurt Bitcoin Privacy?

Faster, cheaper bitcoin transactions? Check. But at what cost?

For bitcoin users, many of whom were drawn to cryptocurrency for its promise of financial sovereignty, bitcoin is still synonymous with privacy. But the gap between the vision and the reality, in which user transactions today must be published to a globally distributed ledger, has long been one of the technology’s biggest points of controversy.

“Bitcoin is Twitter for your bank account. Everything is public to everyone,” Ian Miers, the co-founder of the privacy-centric cryptocurrency zcash, told CoinDesk.

Compounding matters, however, is that as bitcoin users get closer to gaining a whole new way to send transactions, powered by an innovation called the Lighting Network, concerns are spreading that privacy could degrade from its already imperfect state.

On the surface, the idea might seem promising – because Lightning payments occur “off-chain,” the information isn’t included in the blockchain that all nodes store.

But while there is no Lightning ledger so to speak, payments in the scheme are still broadcast across nodes within the network. Essentially, to ensure routing is always available, those using Lightning channels need to trust other network users to help relay transactions.

Conceptually, this means that participants within the system could pry on a transaction, or even potentially sell that information to governments or advertisers. This is a risk that’s worsened if the network becomes centralized into a “hub-and-spoke” type structure, where hubs are large, well-known and often-used entities.

“Lightning likely won’t improve privacy, it may make it much worse from an average consumer’s perspective,” Miers added.

And like many, more speculative concerns surrounding the upcoming tech, the risk to user privacy may not be obvious until the network is deployed – an uncertainty that, combined with a wave of efforts on behalf of Lightning developers to include privacy features, has led to mixed sentiments as to what the future of private bitcoin transactions might be.

According to privacy researcher Kristov Atlas, in a worst-case scenario, privacy attackers could “thrive” on hubs “vampirically feeding off” the data as he wrote in a blog post.

However, the upcoming Lightning release does have some privacy features embedded, and there’s reason to believe that developers are at least making advances on the problem.

Onion-routing

To date, the most advanced privacy feature included within Lightning is called “onion routing,” and it’s part of the Basics of Lightning Technology (BOLT), a series of protocols that ensure the multiple iterations of Lightning can interoperate.

In onion routing, payments are passed through multiple channels, and only the minimum of information about that payment is exposed.

For instance, upon receiving an encrypted payment, a node can only know where that payment came from and to what node that payment should be relayed.

According to Olaoluwa Osuntokun, a leading figure in Lightning development who first suggested the scheme on the developer mailing list, the importance of this is that nodes can’t be selective when it comes to what payments they’re willing to take.

“Nodes shouldn’t be able to arbitrarily censor certain payments, or blacklist certain destinations within the channel graph,” Osuntokun explained.

Often compared to the Tor network for its use of onion routing, Lightning has occasionally been celebrated as a darknet for bitcoin payments – however, it’s comparatively untested, and could face some of the problems native to Tor as well.

“Similar to Tor, there exist known possibilities of timing leaks, and also unknown active attacks that may be viable,” Osuntokun said.

And according to some, there’s ways that onion-routing could be manipulated, leading to the loss of privacy, especially in an early Lightning network.

For example, the last node within a route, as well as whoever sent that payment, will know the transaction information, and theoretically, nodes could collude to break privacy, piecing together each layer of the payment in order to create a complete picture.

On top of this, there’s the risk of a “global adversary which is able to instantaneous monitor all channels on the network,” something that the current privacy protocol doesn’t address, Osuntokun continued.

Fixed identifiers

And there’s further defects to privacy on Lightning today as well.

For example, Lightning payments are currently given a fixed identifier that is repeated throughout the entire route. “This means that if an adversary has two non-contiguous nodes on the route, then they can trivially link a payment flow,” Osuntokun said.

That said, Osuntokun assured that there’s ways to correct this in future.

For example, if Schnorr signatures, a scaling method that works by aggregating public keys, are adopted into bitcoin, it could correct this issue in a “simple and attractive” way, Osuntokun said.

Plus, there’s other, “more heavy weight solutions” such as using zero-knowledge to encrypt payments. However, because this encryption device is heavy, it will “significantly increase the amount of data one needs to send in order to complete a payment,” Osuntokun said.

According to Osuntokun, the “lowest hanging fruit” is to obscure this payment identifier with random numbers as the payments pass through the network.

Hub and spoke

Even more speculative risks exist as well, but according to Miers, it’s all highly contingent on the structure that the Lightning network will take.

“Some people think the amount of money you need to lock up in a channel and the costs of running nodes will inevitably lead to centralization,” Miers said. “And then there’s clearly no privacy.”

Because onion routing works by passing payments through multiple nodes, in the case of a highly centralized network, active nodes could have perfect visibility of the payments.

However, Blocksteam engineer Christian Decker told CoinDesk that the development teams are  creating “counter measures” against this risk of centralization.

Programming the system to open channels at random, Lightning “tries to avoid having hubs that can observe traffic,” Decker explained, which has the added benefit of “strengthen[ing] the network as a whole against single points of failure.”

Decker said that this randomness could be extended to how routes are formed on the network, making payment paths less predictable but potentiality increasing fees.

Other researchers maintain the risk involved in maintaining a node with high throughput will stave off the formation of centralized hubs.

Miers concluded:

“We will see which one actually ends up happening.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zcash Company, the for-profit entity that develops the zcash protocol.

Tesla coil image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Published at Sat, 24 Feb 2018 12:00:34 +0000

Features

Regulations And Their Influence On Cryptocurrency Prices

Regulations And Their Influence On Cryptocurrency Prices

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.

2017 saw cryptocurrencies swing wildly in valuations daily. Despite a mostly upward trajectory, the market remains susceptible to unpredictable and sometimes extreme fluctuations in prices.

While some of this volatility can be attributed to how the current cryptocurrency model was conceived—namely its deflationary nature—and the fact that most coins are still viewed mainly as investment and speculative assets, there have been external factors that drive price momentum as well.

The increased spotlight on Bitcoin and its digital contemporaries led the original cryptocurrency to skyrocket in value. This meteoric rise results in widespread market participation, inviting retail investors in droves to the crypto industry. However, it also focused the gaze of governments and international actors on the industry, a factor that has and could still play a large role in this volatility, especially if past regulatory efforts are any indication.

A prominent example of how regulations can lead to unintended consequences in financial markets comes courtesy of the post-crisis Dodd-Frank Act. Due to the restrictions placed on deposit-taking banks, many prominent financial institutions were forced to reduce their market-making activities in certain asset classes to reach higher capital ratios required by the regulations. In effect, the reduction in market-making liquidity harmed the price discovery process. Especially in the bond market, which is not as liquid as foreign exchange or stock markets, it can conceivably result in a snowball effect that amplifies directional price movements instead of reducing overall volatility.

Despite regulators’ best intentions, cryptocurrencies’ values remain heavily tied to speculation and optimism. For this reason, drastic policy changes can have an outsized impact on short-term direction, as several prominent examples revealed over the past year.

Nonetheless, the long-term impact is slightly hazier, as many of these regulations are only months old. Even so, while they could lead to a more stable market in the future, an abundance of questions surrounding the matter shows just how effective regulations will really be, and to what degree they will impact prices in the future.

Why regulations affect prices

The original boom in cryptocurrencies occurred in an unregulated environment. Even as news outlets and investors paid closer attention to the market, regulators and international actors remained largely distant from the action, and prices continued to soar unabated.

Why regulations affect prices

While in 2017 regulatory bodies take their first steps toward reining in the market, the previous near-decade saw cryptocurrencies evolve and grow relatively unrestricted. For regulators, this means attempting to box in a system that grew chaotically mostly by design.

This trend was largely visible thanks to the explosive growth in ICO funding many Blockchain companies attained last year. In 2017 new Blockchain-based companies reach an unheard-of $4 bln in funding even as regulators like the Securities and Exchange Commission began to circle. The capital raising was not without its flaws, with several well-publicized incidents underlining the relative lawlessness of the current model.

Hartej Sawhney – Co-founder of Hosho – a Blockchain and smart contracts auditing and security firm who’ve seen and audited a vast amount of smart contracts noted:

“There is currently no regulatory body that is enforcing standard practices for companies within the Blockchain ecosystem.

The number of successful high-profile attacks and data breaches are also indicative of the security weaknesses that many companies and organizations have, but choose to ignore due to lack of regulation which is a big factor to the volatility of cryptocurrency prices.

Sophisticated projects within the Blockchain ecosystem will only grow a stronger support from investors and exchanges upon the rise of a regulatory environment.

Having clarity on laws is better than none. Gibraltar is a great example of a nation that has made its stance on regulation of the Blockchain space clear, thus companies globally are flocking to incorporate there.”

This ‘wild west’ the cryptocurrency market catalyzed has had a psychological impact on investors. Due to the decentralized nature and lack of power structures inherent in cryptocurrencies, many view regulations as a tactic that could stunt this explosive growth, and reduce the volatility that has been a hallmark of the industry.

Market reaction

The result is a market in which news or speculation of upcoming regulation leads to massive moves in one direction or another, as investors rush to sell off coins or purchase them, creating instability in prices and wild swings in valuations. Bitcoin, for example, lost nearly half of its value as popular exchange Coinbase launched an internal investigation into fraudulent practices and potential market manipulation on their platform.

Market reaction

More recently, prices of most cryptocurrencies dropped significantly after South Korean regulators announced they would ban crypto trading entirely, or at least implement significant controls on the market.

Market reaction

The result was a more than 15% slide in Bitcoin, while Ethereum, Ripple, Litecoin, and most other major cryptocurrencies lost double digits amounts in market capitalization within hours.

But not all regulations result in negative shocks. After the South Korean government changed its tack and sounded a more positive note, cryptocurrencies quickly reversed their slide and generated significant upward momentum.

Even before that, Japan’s public and outward embrace of cryptocurrencies helped push Bitcoin prices to then-historic highs.

Market reaction

After falling to near $3,000 following a Chinese ban on cryptocurrencies in September, prices leapt by 96 percent to $5,855 following the news. The country’s announcement of Bitcoin’s legalization as a payment method drove a new frenzy in Asia to buy cryptocurrencies.

Adv. Aviya Arika, Head of Blockchain Innovation at Porat & Co. Law Firm, who has been dealing with uncertain regulatory environments for a long while, noted:

“Contrary to what your instinct may tell you, regulation actually makes cryptocurrencies prices flourish.

Regulatory uncertainty, as well as outright bans by governments, have proved to be harmful to the crypto markets.

When an investor/user is not sure about how they are going to be taxed when they sell their crypto, or about the mere legitimacy of their use of crypto, they will most likely steer clear of it altogether or just hodl until further notice. These behaviors lead to a bearish market.

However, when regulators shed light on the way they view cryptocurrency, investors and users feel more certain regarding the way they can use crypto, whether it be as a medium of exchange, a financial instrument or any other form.

Generally speaking, I think that as more jurisdictions regulate and clarify legal statuses of cryptocurrencies, crypto markets will become substantially more stable and widely adopted.”

Furthermore, cryptocurrencies’ introduction into mainstream investments has proven uneven at best. When the Chicago Board Options Exchange announced it would start offering Bitcoin futures contracts, trading was halted three times in six days after prices swung too far, triggering alerts and downtime.

Market reaction

Overall, user sentiment still outweighs cryptocurrencies’ abilities to retain value, and the divergence from real-world assets, such as gold, means that speculation and knee-jerk reactions will continue to have an outsized impact on price fluctuations.

The Long-term remains hazy

Even with the increased attention being paid to the sector, cryptocurrencies remain a mystery to many financial observers who attempt to project prices. Despite its nearly 10-year existence, the cryptocurrency industry remains very much in its infancy. Regulators have only recently started to think of ways to restrain some of the more dangerous practices that abound in the market, but have run into challenging headwinds.

Most recognize that blockchain—the underlying technology that supports cryptocurrencies’ many popular features—is a vital component of the future, but regulating the broader market has so far proven to also put a damper on the blockchain sector.

Moreover, ICOs remain a serious concern for governments and regulators considering their high vulnerability to fraud, theft, hacking, and other unethical practices.

The sector’s young age also makes it difficult to measure the long-term impact of regulations. Even after its most violent price swings, Bitcoin prices have self-corrected, as do most other cryptocurrencies. The real effect regulations across the globe will have is becoming clearer, but the picture remains murky.

2018 should be an important measuring stick as to how regulations impact the industry. In the meantime, investors need to always remain vigilant considering more and not less regulation is on the horizon, likely spurring violent reactions in the short-term while rendering long-term investment strategies a haphazard guess at best.

Published at Sat, 24 Feb 2018 07:08:04 +0000

Bitcoin Regulation

The Public Will Decide Cryptocurrencies’ Future: Malaysia’s Central Bank

The Public Will Decide Cryptocurrencies’ Future: Malaysia’s Central Bank

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The head of Malaysia’s central bank has firmly stated that the fate of cryptocurrencies in the country depends on the public adopting them, adding it would neither ban nor recognize cryptocurrency.

Speaking at the 40th-anniversary dinner of the Harvard Business School Alumni Club of Malaysia this month, Bank Negara governor Muhammad Ibrahim had some noteworthy things to say about the future of cryptocurrencies like bitcoin in Malaysian society, according to a report by local portal The Nation.

The central banker, refreshingly, revealed a decidedly free-market stance on cryptocurrencies wherein a hands-off approach would essentially see the public make their own decisions with investments or participation in cryptocurrency markets.

“Basically, we will let the cryptocurrency promoters including bitcoin, Ethereum and ripple to be more transparent, the methods to be more transparent and people behind the scene are to be more transparent too,” the central bank chief stated, hinting at introducing some fundamental guidelines for the cryptocurrency sector to operate in Malaysia.

More pointedly, he added:

“By doing so, the public can decide on its own if they want to invest in cryptocurrencies.”

The central bank governor was quick to stress that the authority would not recognize cryptocurrency as fiat money while notably adding it wouldn’t ban cryptocurrencies in the country either.

The central bank chief also revealed an upcoming concept paper for the public on cryptocurrencies, presumably a detailed report to educate residents of cryptocurrencies. Malaysia’s central bank is already working toward a regulatory framework that will, for instance, deem cryptocurrency exchanges as ‘reporting institutions’ to curb criminal and unlawful activities through cryptocurrencies.

The central baker’s remarks follow similar statements from Malaysia’s deputy finance minister who, in January, confirmed the government would not ban trading of cryptocurrencies.

“It is not the intention of the authorities to ban or put a stop on any innovation that is perceived to be beneficial to the public,” he stated at the time.

Malaysia joins the Philippines, two countries among the world’s fastest growing economies, to take a refreshingly open and even embracive approach to cryptocurrencies in society. After figuring among the earliest countries in the world to mandate regulations for its domestic cryptocurrency industry, the deputy director of the Bangko Sentral ng Pilipinas (BSP) spoke of the convenience of using bitcoin in payments.

The central bank official was speaking in a televised interview in late 2017 when he stated:

“There are risks but essentially, it can be managed. If you want something that is fast, near real-time and convenient then there’s the benefit of using virtual currencies like bitcoin.”

Featured image from Shutterstock.

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Published at Sat, 24 Feb 2018 02:08:23 +0000

Banking