No, ‘Litecoin Cash’ Isn’t Bitcoin Cash All Over Again
“Be careful out there!”
So tweeted litecoin creator Charlie Lee in response to the launch of litecoin cash, a cryptocurrency that’s expected to spin off from his project, the fifth largest cryptocurrency by total value, next weekend, taking its code and transaction history with it. Always outspoken, Lee went on to call the project a “scam,” warning users: “Don’t fall for it.”
His harsh comments might come as a surprise since litecoin cash’s developers admit they have no ties to the official litecoin project and don’t particularly see it as a competitor.
Much the same as other projects “forking” to create a new cryptocurrency, litecoin cash’s developers claim they simply want to use an existing codebase to create a newer and better form of online exchange. Also, by changing litecoin’s underlying mining algorithm to the one bitcoin uses, they argue litecoin cash will bring new life to old, abandoned mining equipment in a kind of strange recycling attempt.
But while developers claim that’s the motivation, users seem mostly interested in the “free” money.
Already, an influx of buyers on more consumer-friendly exchanges is driving the price of litecoin to notable highs, in part because, due to the mechanics of the fork, any user who owns litecoin at the time of the fork will immediately have a portion of litecoin cash.
Bolstering this view is the name “litecoin cash,” an obvious reference to the successful fork bitcoin cash, the profitable project that sparked the wave of forks carrying into 2018.
And litecoin cash’s lead developer Tanner, who did not give his full name, admits the project named it as such to draw more attention.
He told CoinDesk:
“Community engagement is the key to success for any coin. I think that, ‘Hey, you already own this, why not check out what we’re doing?’ is a good jumping off point for people.”
By doing so, Tanner told CoinDesk litecoin cash hopes to use the free coin giveaway as a springboard to create a network faster than bitcoin, with lower transaction times.
And in this way, the two “cash” projects are different. While bitcoin cash rallied support from those who had a competing technical vision, litecoin cash doesn’t appear to have the same strong ideological roots.
To start, bitcoin cash arguably had more on the line since it was created as the culmination of years of debate in the bitcoin community.
Last summer, bitcoin cash users and miners were effectively pioneers in the forking world – they didn’t know if they would create a coin that people would actually want to use. While they didn’t replace bitcoin, as their developers hoped, they rallied together a community, and today they’re the fourth most valuable cryptocurrency by market cap, appealing to users who support their unique technical roadmap.
Litecoin cash doesn’t have a similar history and traction leading up to it. So, litecoiners like Lee doubt litecoin cash serves the same purpose as bitcoin cash as a way of settling an argument.
Litecoin cash hasn’t made any such claims either, but Lee worries that even though litecoin cash doesn’t claim to be associated with litecoin, it will confuse users anyway.
Lee told CoinDesk:
“It confuses people into thinking litecoin is splitting. The litecoin community has no interest in splitting. It’s just some people trying to make a quick buck. And calling it litecoin gives them some legitimacy.”
Lee said he’s witnessed no debate in the litecoin community, not over litecoin’s mining algorithm, sha256, the feature litecoin cash plans to implement. “No one wants to fork litecoin to sha256. That’s pretty stupid,” he said.
“Yes, I can understand that confusion. I can also understand people who are yelling ‘scam,'” Tanner said. “I think [Lee]’s absolutely right to stick to his guns and protect his project and community. I don’t expect him to change his mind about us but hope that if anything he’ll eventually recognize that we’re trying to teach people to be safe.”
Meanwhile, most users seem interested in it for the free money.
As one user put it in the litecoin cash Telegram chat group: “We want the fork for free coins which potentially may be real or scam.”
But Lee’s comments are part of a larger pushback against forks.
One big reason, as he alluded to, is brand confusion. Bitcoin forks are already taking the name “bitcoin” along with them, despite not having any association with the “real” or most widely-known bitcoin project.
One developer recently even suggested suing any project that takes the bitcoin name to “mitigate confusion” for new users. This idea proved very unpopular, but it shows the general skepticism in forks, and how developers have zero control over the situation due to the nature of open-source.
Litecoin cash argues they’re using the litecoin prefix simply because it’s just become common practice of late. “Anyone who’s paid attention through the bitcoin forking period hears ‘litecoin cash’ and instantly understands that it’s a fork of litecoin,” Tanner said.
“I can’t deny it also appealed to our sense of humor to poke the wasp’s nest with our naming choice,” he added.
And it’s perhaps working since litecoin cash has been able to draw a lot of recent media attention.
That said, Tanner argues the project seeks to stand out from litecoin forks that he thinks will inevitable follow: “There will be forks that follow us, who do seek to confuse you, and do seek to scam you.”
Still, Lee remains unconvinced litecoin cash has any merits, concluding:
“In my mind, it’s just a scam and it hurts litecoin.”
Litecoin bitcoin image via Shutterstock
Written by CoinDesk.com
Five Siberian Power Plants Attracting Crypto Miners With Surplus Electricity
Five Power Plant Sites
Russian energy company En+ Group is actively preparing to offer electricity to cryptocurrency miners at some of its power plants, Vedomosti reported on Wednesday.
En+ CEO Maxim Sokov was quoted saying, “We are talking about five sites.” They are in the Irkutsk Oblast, a federal subject of Russia, located in southeastern Siberia. Two sites are near the town of Ust-Ilimskin, one is near the city of Bratsk, and the other two are near the city of Irkutsk.
Near Ust-Ilimsk, on the Angara River, En+ has a hydropower power plant (HPP) with a capacity of 3,840 MW and a coal-fired combined heat and power plant (CHP) with a capacity of 525 MW.
Near Bratsk, “En + has a hydroelectric power plant with a capacity of 4,500 MW,” the publication noted.
Near Irkutsk, which is also the administrative center of Irkutsk Oblast, “there are two sites: a hydroelectric power plant with a capacity of 662 MW and a [coal-fired] combined heat and power plant with a capacity of 655 MW,” the news outlet detailed.
En+ said the cold climate of the region around the three areas and the availability of cheap electricity make the condition attractive for cryptocurrency mining.
Attracting Crypto Miners
Sokov revealed that En+ is currently negotiating with several investors, “including international ones – Chinese and American,” for “the construction of mining farms that will act as consumers of electricity,” Ria Novosti described, adding:
En+ will offer miners to build farms to produce cryptocurrencies next to En+ power plants in Irkutsk, Bratsk, and Ust-Ilimsk.
The CEO emphasized that his company will benefit from attracting miners from China, where strict prohibitive regulation is now in force.
According to Vedomosti, the total demand for power supplies from cryptocurrency miners could reach 100 MW for En+ Group in 2018, and the group could earn about 980 million rubles (~USD$17.2 million). Natalia Porokhova, Head of Research and Forecasting Group at ACRA estimates that each “100 MW can bring En+ from 10 to 15 million dollars,” the news outlet added.
While Russian aluminum producer Rusal, which En+ has a controlling stake in, is currently the main user of the company’s hydropower, En+ believes that it could use up excess capacity and diversify its customer base by offering electricity supplies to crypto miners.
Cryptocurrency mining is currently unregulated in Russia. However, the regulators are drafting a bill for its regulation. Earlier this month, the Bank of Russia said that it will allow crypto mining in the country but proposes that miners sell their coins overseas.
Written by Bitcoin.com
As Bitcoin Soars, So Do Coinbase Customer Complaints
It was around midnight, January 31, when K. received an email from Coinbase containing a 1099 tax form. That was strange enough – K. certainly didn’t expect a cryptocurrency exchange to be a conduit for government documents.
Then K. looked at how much Coinbase said he owed money on: $2.4 million.
“I initially freaked out, considering I’ve probably put in a max of $8,000 into Coinbase and somehow I may be liable for millions?” K. said in an online chat with CoinDesk.
The next business day, K. called Coinbase customer support, only to have a representative tell him he couldn’t answer the details on the phone, and to email the company instead.
Which he did, only to get a formulaic response showing the IRS guidance to Coinbase.
To this day, K says he has no idea where the $2.4 million figure came from. He says he is too busy to jump through more hoops with the largest exchange in the U.S., and that he feels safe in the knowledge that he doesn’t have to pay taxes on $2.4 million in earnings, since they don’t exist.
More users, more problems
K. is far from alone in wrestling with an apparent misfire from Coinbase.
In recent weeks, complaints have been piling up on a Reddit page dedicated to the company. The issues mentioned are wide-ranging: missing wires, unreleased bitcoin, disabled accounts.
The top posts on the page over the past month look like this:
A representative for Coinbase, Stephanie Kendall, said the company was unable to comment on the complaints.
Stepping back, as crypto values spiked during the recent run-up, several major exchanges heaved under the weight of new demand. Kraken, the third-largest exchange in the world, suffered an outage earlier this year that was supposed to take two hours but ended up lasting two days as it upgraded its system.
Bitfinex also suffered a malfunction late last year due to a denial-of-service attack.
But perhaps above all others, user growth at Coinbase has gone gangbusters. The userbase has more than doubled since 2016 to more than 10 million customers today, according to spokeswoman Kendall. The company now employs about 200 people, she said.
Service at the exchange had already begun showing signs of strain when the company announced in August it had raised $100 million, and said some of the new funding would go toward alleviating customer service pressure. Late last month, it hired a new vice president of operations and technology, Tina Bhatnager, to oversee customer support. It also appointed Dan Romero with the title of general manager of Coinbase, in a blog with the headline: “Customer support: failure is not an option.”
But the complaints are still coming in fast and furious.
Perhaps most distressingly, a number of Coinbase users recently reported unauthorized charges to their linked bank accounts. In some cases, these charges, which duplicated previous legitimate withdrawals, completely drained customers’ funds and left them owing their banks hefty overdraft fees.
And now, perhaps sensing a weakness, formidable new competitors are encroaching on Coinbase’s retail turf: the stock brokerage platform Robinhood, which now has 1 million crypto users; and Square, which now allows buying and selling bitcoin through the Square Cash app.
For now, though, there remains the question of what to do if you’re impacted.
Coinbase user Suzepo, who lives in Italy, says it took him three tries over the course of a month for his verification deposits to go through. It was apparently only after he added the name of his bank that it went through; there were apparently no instructions on Coinbase’s part that this was necessary.
He said that in his attempts to reach Coinbase, he didn’t get a single response until the very end of his ordeal. While he appreciates that there was no delayed purchases, and immediate fund input, he ultimately felt frustrated by the support assistance, or lack thereof.
“No response from the support team, customers left alone to deal with their own issues and that big [verification] transfer burden,” he says.
Reddit user crypt_iss complained about a botched transaction in a post that was heavily upvoted on Coinbase’s subreddit. As of last week, he said he has “technically withdrawn” the amount but it is still not in his Coinbase vault. Yet Coinbase shows the transaction as completed in one location and pending in another, he says.
“No one from help desk has called, it is only email messages. If this post would not had risen to top here, even this would not had happened. I really cannot believe they have such poor handling of so many parts. Move fast and break things culture I guess,” he said.
Sergej Kotliar, the CEO of crypto mobile phone card provider Bitrefill, told CoinDesk he had no reason to believe the users’ complaints weren’t legitimate.
Making a stink on social media “is a good way to get helped, and people who are missing tens of thousands of dollars can get pretty upset,” he said.
Kotliar also said he doubted the complaints were being astroturfed, i.e. orchestrated by competitors to sow doubts about Coinbase.
“Who would be their rivals? This is growing pains,” he said. “They really grew very big.”
Coinbase image via Shutterstock
Written By CoinDesk
Spanish Government Eyes Tax Benefits for Crypto Companies
Spain’s ruling political party is reportedly drafting legislation that it hopes will help woo cryptocurrency and blockchain companies to the country.
According to Bloomberg, the People’s Party of Spain is eyeing the move as part of a package that would be focused on firms working with new technologies like 3-D printers.
Yet according to lawmaker Teodoro Garcia Egea, who spoke to the news service, the bill could ultimately include provisions that aim to attract companies that are looking to sell tokens via initial coin offerings. The bill may also specify a threshold below which cryptocurrency investments would not have to be reported for tax purposes.
“We hope to get the legislation ready this year,” Garcia Ega commented.
The People’s Party is also encouraging lawmakers to hear testimony from blockchain experts on the matter, and it intends to review regulatory measures that other countries such as Switzerland are developing or have already implemented. Egea told Bloomberg Politics that the technology is good for Spain because it spurs work in other sectors like education, finance and health.
The legislation may also be focused in part on encouraging investment in token sales, according to Garcia Egea.
“We want to set up Europe’s safest framework to invest in ICOs,” he was quoted as saying.
Spain is far from alone in drafting blockchain-related legislation. Gibraltar, a U.K. overseas territory, intends to solidify its position on ICOs this month.
Written by CoinDesk.com