Ethereum co-founder Vitalik Buterin has left VC firm Fenbushi Capital
Vitalik Buterin, the high-profile co-founder of Ethereum, has quietly left China-based investment firm Fenbushi Capital, TechCrunch understands.
Fenbushi was founded in 2015 and its $50 million fund was one of the first to actively put capital into blockchain companies through seed investments and participation in ICOs. As one of the most visible funds, it picked up stakes in dozens of firms no doubt helped by its connection to Buterin, who is synonymous with Ethereum.
Buterin was never full-time as he juggled the role with his work for the Ethereum Foundation. He is still listed as a general partner on the firm’s website, but he confirmed to TechCrunch that he is no longer involved full-time. He will, however, retain a role as an advisor.
Fenbushi did not respond to a request for comment.
In a lengthy statement released to TechCrunch, Buterin explained that he plans to spend more time ensuring that Ethereum fulfills its potential as a platform.
2017 really has been the year where hype in crypto, including financial hype and social hype in general has far exceeded the reality of what existing blockchain systems can offer. There is a lot of attention, and a lot of eager expectation, but as far as reality goes the practical usability of blockchains has in some cases even regressed due to rising transaction fees.
I expect 2018, at least within the Ethereum space that I’m best able to speak about, will be the year of action. It will be the year where all of the ideas around scalability, Plasma, proof-of-stake, and privacy that we have painstakingly worked on and refined over the last four years are finally going to turn into real, live working code that you can play around in a highly mature form in some cases on testnets, and in some key cases even on the public mainnet. Everyone in the Ethereum space recognizes that the world is watching, and we are ready to deliver.
His departure from Fenbushi will not be a huge surprise to those working in the blockchain space, or indeed anyone who follows Buterin on Twitter.
In recent months, Buterin has implored the community to develop product rather than navel gaze as the price of Ether, the Ethereum Foundation’s token, has soared. Ether broke the $1,000 mark for the first time on January 4 2018, up massively from less than $10 per token one year previous.
That, like the rise of bitcoin and other cryptocurrencies, has created incredible wealth for early backers, but also concern that rising transaction fees may stifle innovation. The bottom line, though, is that there is little in the way of product in the market, as Buterin has said numerous times.
The Ethereum co-creator even threatened to leave the community in late December over its obsession with memes and material goods.
It’s unclear how much Buterin profited from Fenbushi’s deals, but as a co-founder of Ethereum he is clearly independently wealthy — in digital terms — although his exact holdings today are unknown. Recently, he announced plans to donate the tokens given to him for advising Omise Go and Kyber Network to charities and/or to fund Ethereum infrastructure. Buterin also said he had “sent a bunch of fiat”-based donations to the Against Malaria Fund and GiveDirectly.
Away from money, for the past year Buterin has been busy with a series of projects aimed at scaling Ethereum, and in particular the volume of transactions that its blockchain can handle. That’s seen as critical if the project is to live up to its potential and match existing global systems like Visa.
Buterin is working on Plasma.io with Joseph Poon, the author of the Lightning Network for Bitcoin, and is involved in Sharding and Casper which are two other technologies designed to tackle the scalability problem. Raiden Network is also another notable effort in the space.
Buterin’s departure is likely to be a huge blow for Fenbushi. There’s little doubt that having the ‘face of Ethereum’ on your website is good for business, especially in the highly competitive investment space. A cynical onlooker might conclude that is the reason Fenbushi has kept his name. That said, Fenbushi’s longevity in the space has made it a name within the crypto community worldwide, now it’ll have to do that independently.
Written by Techcrunch
China’s Shutdown Of Bitcoin Miners Isn’t Just About Electricity
China’s government is planning to shut down Bitcoin miners in its latest crackdown on the cryptocurrency. The Leading Group of Internet Financial Risks Remediation has requested that local governments make an “orderly exit” from the industry. China produces the most Bitcoin in the world using Bitcoin mining , which involves an energy intensive process of solving complex math problems to add transactions to the Blockchain, a public ledger. But the crackdown is about more than the high levels of energy required to mine Bitcoin.
Not just about the electricity
China is planning to limit electricity to Bitcoin miners, and government bodies have expressed concern about energy usage. Bitcoin mining is estimated to use up to 4 gigawatts of electricity, equivalent to three nuclear reactors’ production levels.
However, this move isn’t just about the electricity. In fact, it is telling that it was China’s central bank that met on the issue of Bitcoin mining, underscoring the fact that the issue is not only, or even primarily, an energy issue. It’s about clamping down on perceived risks of the cryptocurrency, which regulators have associated with malicious acts like fraud and money laundering. Authorities have already cracked down on thousands of criminal cases associated with alternative cryptocurrencies, including Onecoin and Ticcoin. These cryptocurrencies were viewed as Ponzi schemes used to raise illicit funds. Later, officials shut down cryptocurrency exchanges and banned fundraising through initial coin offerings (ICOs). On Monday, it was reported that Chinese authorities would block cryptocurrency platforms that permit centralized trading.
Cracking down on fraud and money laundering alone does not appear to be the way China is addressing risks associated with Bitcoin, however. Authorities are going after the industry more broadly. This may be because China has enough financial risks to regulate at the moment, and it is at capacity, or it could be that officials really do view Bitcoin as insufficiently transparent to represent an appropriate means of exchange or store of value.
Alternatives to mining in China
Chinese Bitcoin mining companies may be out of luck doing business in a favorable environment. To combat this, some companies have already moved operations overseas. Most recently, Bitmain Technologies set up a subsidiary in Switzerland, which will extend its branches, currently in Amsterdam, Hong Kong, Tel Aviv, Qingdao, Chengdu, Shanghai and Shenzhen. Bitcoin miners have also been attracted to the Canadian province of Québec for its advertised cheap electricity. However, other companies may be forced to shut down. Moving abroad is likely to result in higher energy costs, which can dramatically reduce profit margins gained from mining.
Make no mistake, the energy issue is a problem. Some Bitcoin enthusiasts have argued that Bitcoin mining must switch to renewable energy. This makes sense, not only for countries like China that have previously relied on coal powered energy, but for the world as it experiences climate change. I would even argue that the mining process should be altered so that it doesn’t rely on enormous amounts of energy. This would require replacing computing power and its accompanying high energy usage with another barrier to entry, such as ownership of a specific technology.
The most critical aspect to address for China, however, is criminal activity. Unfortunately, it is not known what percentage of cryptocurrency activity is associated with fraud or other crimes as parties remain unknown by name. It seems likely, from my perspective, that Bitcoin would be used most efficiently for larger scale crimes in which quick conversion to a fiat currency is not essential. This is because cash can simply be used for petty or pedestrian crimes. For larger scale crimes paid in Bitcoin, rapid money laundering remains a challenge, since converting Bitcoin to cash requires the registration of an identity and makes it easier to find criminals. No matter the type of criminal activity, however, it must be controlled.
While cryptocurrencies were meant to be stateless, there is no avoiding the hand of the state in quashing criminal activity. China and other countries should set up regulations for Bitcoin to reduce crime. Bitcoin expert Professor Olivier Scaillet of the University of Geneva agrees, stating, “if you regulate the use of bitcoin in terms of acceptance as a mean of payment, it is a way to limit its criminal use.” There is no need to believe that the main issue with Bitcoin mining is the electricity cost, we know it is about the larger issue of fraud and other illicit activities. Therefore it makes sense to end the worst practices rather than all practices in this area.
Written by Forbes
The Futility of Government Bans – Bitcoin Always Finds a Way
Cryptocurrencies have been threatened at one point or another by nearly every country on the planet. Rarely does a government venture beyond rhetoric. Those resorting to crackdowns are often met with greater public appetite for decentralized virtual money, making all that initial fuss an exercise in futility. Be they communist strongholds or liberal democracies, bitcoin cannot be stopped.
Government Threats Met with Pushback
In response to a recent Republic of Korea (ROK) bureaucrat’s statement, causing mainstream media to roar about a “ban” on bitcoin, the South Korean street riled to virtual barricades. Citizens flooded petition signatures to the President. Social media contained oceans of angry comments demanding the offending minister’s sacking. The pressure grew so intense, agencies within the same government began contradicting one another, ending with an official presidential announcement no “ban” was forthcoming. Sensing a political market opening, normally reticent ROK politicians jumped on the bandwagon to defend cryptocurrency legitimacy.
The above is something like a rare historical scientific control with regard to just why bitcoin and cryptocurrencies cannot be banned. For our purposes, ROK’s geographical juxtaposition and its post-war politics fit comfortably beside its northern neighbor, Democratic People’s Republic of Korea (DPRK), North Korea. The two nations share a peninsula, a people, and a history, ripe for an organic experiment in prohibition.
Cryptocurrency probably made its way to DPRK through its wealthier brethren, and perhaps even China in bitcoin’s early years. Obviously, DPRK has a “ban” on bitcoin, de facto. Yet cryptocurrencies are still an issue for the country, something it must address, a problem some reports have as the regime tacitly embracing, and likely as a way around sanctions. Arguably the most closed country in the world is being confronted by a new monetary reality, which illustrates bitcoin’s inherent power under the most extreme of circumstances.
Pronouncement after pronouncement, rule changes, fines, bank harassment, appeals for international cooperation, taxes, emergency measures, the liberal democracy of ROK has been very busy. To be sure, the last round of news from South Korean regulators brought about double digit dips in bitcoin’s price, domestically and internationally. But even that appears to be temporary as markets see bitcoin retain relative price resiliency.
A Dozen Countries are Experimenting with Bans
The side-by-side control of having a hermit kingdom and republican democracy both grapple with bitcoin yields insight into what sort of prohibition is possible, and what is even meant by the word “ban.” Bitcoin cannot be banned in the ultimate sense, as it resembles the character of pushing on a sturdy balloon. Push it down on one side, and it grows on the other.
Of the 195 countries of the world, 12 have openly tried to ban bitcoin and crypto at various levels: Brazil, Indonesia, China, Vietnam, Israel, Morocco, Bolivia, Algeria, Ecuador, Kyrgyz Republic, Bangladesh, and Nepal.
However, that list is misleading. Not all governments have banned cryptocurrency in the same way. Israel, for example, has effectively prevented crypo stocks from being listed on its indices and aided the practice of its banks not allowing bitcoin business accounts. Yet its prime minister has made positive comments, and still another regulator has advocated making Israel a welcoming environment for bitcoin.
It’s worth pointing out Israel is a representative democracy, one of the only in Southwest Asia. The Israeli street is passionate about cryptocurrency and its potential, and, like South Korea, has the electoral ability to influence outcomes should regulators overplay their hand.
Wealthy Will Not Allow Ban
Charles Hugh Smith argued crypto prohibition won’t happen due to the influence of wealthy investors using it as a store of value unable to be monkeyed with by politicians. His point at once affirms and jettisons the democratic thesis, as it all comes down to levers of power. The same way assets such as housing are owned and closely guarded, Mr. Smith postulates, bitcoin will be protected even more. Wealthy holders have gone to great lengths already to keep the currency away from governments.
For South American countries such as Brazil, Bolivia, and Ecuador, the challenges are both political and economic when it comes to prohibition. Each has versions of command economies, and nationalist fervor is easily whipped up when supposed threats are made against their respective currencies, and bitcoin can certainly represent that. However, even where economic expression is limited and politics are a crazy mix of bureaus and committees, crypto has found a way through. Its popularity grows in Latin America.
The remaining half, from China to Nepal, have almost no tradition of what anyone would ever call democracy, though in some cases governments have pulled back and allowed their populace more expression in personal economic matters. That too is debatable. For odious governments such as Nepal, cracks are appearing. Smartphone adoption continues apace, as does internet access generally. Add to those its young population, some 40 percent under 20 years, and there’s a recipe for crypto.
Prohibition, in the sense Mr. Smith might be thinking, almost always only impacts those without the means to subvert laws. That’s not as true when it comes to cryptocurrency. Whatever else its positives, all anyone needs is a $20 Android phone and they’re immediately able to participate in a huge transfer of wealth. Governments can shut down websites; they can arrest exchange owners; they can make onboarding hell; they can tax it as capital gains. Governments cannot stop an idea whose time has come.
Do you think bitcoin can be banned? Let us know in the comments section below.
Images courtesy of Pixabay.
Written by Bitcoin.com
France Appoints a Cryptocurrency ‘Mission Leader’
Week after week regulators and governments have been announcing plans to regulate digital currencies like bitcoin. This week in France on January 15 the Minister of the Economy Bruno Le Maire announced his decision to create a “digital currencies mission” and a working group that will work towards regulating cryptocurrencies. In addition to the digital currency objectives, Le Maire appointed the former Bank of France (BOF) deputy governor, Jean-Pierre Landau, as the new working groups leader.
A New Cryptocurrency Mission Will Begin In France Dedicated to Regulatory Action
Last Spring many bitcoin proponents thought French politicians and regulators might favor cryptocurrencies after the left-leaning president of France, Emmanuel Macron, was elected and photographed brandishing a Ledger hardware wallet. Now the Minister of the Economy Bruno Le Maire says the country is creating a working group led by the former BOF deputy governor that will study digital currencies while also proposing regulatory standards.
“We want a stable economy: we reject the risks of speculation and the possible financial diversions linked to bitcoin,” explains the Minister of the Economy Monday morning. “I asked the Argentine G20 members to take up this issue and I have now entrusted Jean-Pierre Landau, the former deputy governor of the Banque de France, to complete a mission concerning cryptocurrencies.”
Jean-Pierre Landau’s mission will be responsible for proposing guidelines on the evolution of regulations and to better control development and prevent their use for the purpose of tax evasion, money laundering or for financing criminal activities and terrorism.
Jean-Pierre Landau: Bitcoins Are the Tulips of Modern Times
The Minister of the Economy’s choice in picking Jean-Pierre Landau goes alongside the authorities’ concerns about illegal activities tied to digital currencies. The former BOF deputy governor Landau has displayed his distaste for bitcoin publicly writing an opinion piece for the Financial Times in 2014. The editorial called, “Beware the mania for Bitcoin, the tulip of the 21st century” explains that Landau believes bitcoin is very much like the tulip mania that supposedly took place decades ago. Further cryptocurrencies like bitcoin are only attractive to criminals the BOF executive details.
“The currency is at present attractive for two reasons — One is anonymity, which makes it suitable for tax evasion and money laundering — This will not last; authorities are already wising up.
The other is pure speculation, and bitcoins are the tulips of modern times — The mania is not yet over, but the longer it lasts, the more investors are likely to be burnt.
France has a pretty active bitcoin community and they may not appreciate the newly appointed cryptocurrency mission commander. The nation is home to La Maison du Bitcoin (The Bitcoin House), the company Ledger Wallet’s headquarters, and a plaza called La Cercle du Bitcoin (Bitcoin Boulevard) with over 25 merchants who accept bitcoin.
What do you think about France appointing Jean-Pierre Landau as it’s cryptocurrency mission leader? Do you think his past opinions will affect the currency’s regulation going forward? Let us know what you think in the comments below.