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PayPal Is Seeking Faster Crypto Payments Tech
PayPal is eyeing a way to boost the speed of cryptocurrency payments, a newly-released patent filing shows.
An application for an “Expedited Virtual Currency Transaction System” published on March 1 by the U.S. Patent and Trademark Office (USPTO) details a method by which private keys – the strings of numbers and letters used to transact or otherwise control one’s cryptocurrency holdings – are swapped from a buyer to a seller behind the scenes.
The aim of the concept is to narrow the amount of time it takes for payments to go through between a consumer and a merchant, avoiding the process of sending a transaction and waiting for it to be included in the next block on the network. To do this, PayPal proposed a way to create secondary wallets with their own unique private keys for buyers and sellers. The system would transfer private keys corresponding to an exact amount of any given cryptocurrency.
As the filing explains:
“The systems and methods of the present disclosure practically eliminate the amount of time the payee must wait to be sure they will receive a virtual currency payment in a virtual currency transaction by transferring to the payee private keys that are included in virtual currency wallets that are associated with predefined amounts of virtual currency that equal a payment amount identified in the virtual currency transaction.”
The submission is a notable one, coming years after PayPal announced partnerships with several bitcoin payment processors that allowed merchants to accept the cryptocurrency through the company’s Payments Hub starting in 2014.
PayPal co-founder Peter Thiel is also reportedly invested heavily in bitcoin via Founders Fund, the VC firm he co-founded.
PayPal image via Tero Vesalainen / Shutterstock
8 Ways Telegram Thinks Its Own ICO Could Go Wrong
If Telegram’s ambitious blockchain project fails, investors can’t say they weren’t warned.
Along with the white paper and technical documents, prospective buyers in what could be one of the largest-ever initial coin offerings (ICOs) have received a nine-page memorandum spelling out the risks of buying the tokens. For investors in traditional markets, such a litany of dangers is a familiar sight – the documents list almost every conceivable thing that could go wrong.
But the Telegram document, a copy of which was obtained by CoinDesk, is striking because the company isn’t offering equity. Instead, the tokens would be used for payments between users and to access various services on the proposed Telegram Open Network, once it is built.
The document may have been written out of an abundance of caution, considering the size of Telegram’s initial coin offering (ICO) – potentially $2.5 billion.
As such, CoinDesk has outlined some of the most salient hazards listed in the document, which has the lawyerly title “Certain Risks Associated with the Purchase, Sale and Use of Grams.”
1. ‘Uncertain regulation’
Anyone who’s been following initial coin offerings knows that there are a lot of question marks about what regulators might do. As the document states, “It is difficult to predict how or whether governmental authorities will regulate such technologies.”
A government could impose liquidity requirements on Telegram or find that grams are a regulated equity, requiring registration, the document warns. If regulation in one place became too onerous, Telegram might exit the country or even shut the project down, it says.
On the other hand, Viktor Mangazeev, CEO of blockchain fantasy sports platform MyDFS, says Telegram may have a regulatory edge over rival messaging platforms that makes it uniquely suited to do a fundraiser like this.
There’s a few messaging apps that are larger than Telegram, but the leaders, Facebook Messenger and WhatsApp, are based in the U.S., which has been hesitant about cryptocurrency. WeChat is another dominant platform, but its home, China, has recently turned hostile to crypto.
Of the popular messengers outside those two countries, “Telegram is the most technologically promising of them,” Mangazeev contended.
(Telegram’s headquarters location is hard to pin down. Its SEC filing is under “Ton Issuer,” based in the Virgin Islands. Telegram itself is currently based in London, according to Crunchbase.)
2. ‘Legal and Regulatory Factors’
“The TON Blockchain will operate in a new and developing legal and regulatory environment. There is no established body of law or court decisions concerning blockchain and smart contracts,” the document says.
It goes on to describe how licenses might be necessary, including crypto-specific ones governments might invent after the token sale but before the TON blockchain goes live.
3. ‘Government and private actions’
Perhaps most disconcerting for a project like Telegram’s, U.S. regulators are far more likely to regulate by way of enforcement actions early on, because cases take less time than promulgating new rules.
Joe Dipasquale of Bitbull Capital, a crypto fund of funds, told CoinDesk he has not invested in grams, and is concerned it will show up on the SEC’s radar.
“I expect the SEC to pay careful attention to TON given that it’s expected to be the largest ICO, and participants in this ICO should be aware of this,” he wrote in an email.
The company is using a simple agreement for future tokens (SAFT) structure for this sale. The SAFT was conceived as a way to do ICOs without running afoul of U.S. securities laws. But if the SEC decided it didn’t like SAFTs, that could be a problem for the largest ICOs.
4. ‘Development and launch of TON’
The paper says, “Telegram may not retain the services of developers with the technical skills and expertise needed to successfully develop the TON Blockchain and progress it to a successful launch.”
Luckily for investors, Telegram has written in a refund provision for investors. That said, the company also reserves for itself the right to spend the money on all kinds of things.
5. ‘Risks inherent to blockchains’
The document delineates risks inherent to open blockchains. These include the possibility of mistakes in the code.
Quantum computing could break all the encryption. Later on, as major changes are needed, nodes may not move to make them and the system could break down.
6. ‘Integrating TON and Telegram’
The popularity of this offering is no doubt driven by Telegram’s large and active user base. If for some reason the team fails to integrate the TON blockchain with the mobile messenger, the document says, “adoption of grams as a form of currency within Telegram Messenger’s existing ecosystem may be more limited than anticipated.”
To say the least; it’s hard to see many people adopting a utility token that doesn’t, um, have utility. But this risk seems like one of the more improbable ones, given the number of apps out there that are integrated with blockchains.
7. ‘Issuer and use of funds’
Telegram doesn’t have any restrictions on how it uses the funds, so even if it fails to build TON and it needs to terminate the contract with the token buyers, it may not have any money left to distribute back to holders of grams when that happens.
This lack of restriction allows Telegram to use funds raised to shore up the messaging app, even if it never delivers the blockchain, said Anton Rozenberg, the former chief technical officer of VKontakte, the Russian Facebook equivalent which Durov founded before he started Telegram.
“They spend all the money to buy servers for 10 years out, for example,” Rozenberg.
So, while that may be cold comfort for the investors in the ICO, Telegram’s continued relevance seems all but guaranteed at this point.
8. ‘Blockchain and crypto might never catch on’
Lumping a few of the document’s headings together here. Don’t call them FUD; it is true that any of the above could happen.
Notably, Telegram’s risks document doesn’t list one of its most significant threats, that of Google or Apple’s removal of its mobile app from their respective stores.
Gurinovich described this by writing:
“Worst-case scenario is also possible – if the Telegram app is removed from Apple Store and Google Play, just because these companies don’t approve when they are not involved in financial transactions … there’s no court in the world which can help to get back the audience.”
Still, Mike Burov, CEO of Cindicator, a decentralized market analytics platform, told CoinDesk that people are investing in Telegram because they believe it will lift the whole industry.
“It will be an absolute breakthrough for the market, that will bring a lot of attention to it. So it’s their way to invest in the idea of ‘trust in crypto, trust in decentralization.’ It’s their investment in the ecosystem.”
App image via Shutterstock
Written by CoinDesk.com
$500 Million Has Been Mistakenly Sent to Ethereum’s Genesis Address
The Genesis Address That Keeps on Getting
Atheism and tech-savviness are synonymous, yet when it comes to cryptocurrencies, the religious undertones are strong. From the schisms caused by hard forks to the opposing dogma espoused by big and little blockers, crypto is basically god for geeks. As news.Bitcoin.com previously reported, people have been sending BTC to bitcoin’s genesis address for years as a way of acknowledging Satoshi. They’ve also been doing the same with Ethereum’s genesis address, not to acknowledge the genius of Vitalik Buterin and co, but simply due to user error.
0x0000000000000000000000000000000000000000 is an easy address to remember. It’s also an easy one to enter by mistake. All it takes is one fat finger on the zero button and your ERC20 tokens are winging their way to an address where they are destined to remain for all eternity. It doesn’t help that some wallets used to default to this address until they’d been configured. “Is there any way to get the golem I sent to [the genesis address] back?” asks one Reddit user. “I was transfering my tokens from my ethereum wallet to my ledger nano s and forgot to input an address before hitting send. Ethereum wallet apparently sends to [the genesis address] as a default. Has this happened to anyone else?”
Some of the tokens locked inside ethereum’s genesis address
A Token Offering to the Ethereum Gods
Another anguished user claims to have sent their entire savings of 1,493 ETH there in error. In total, the genesis address has received over 750 transactions in three years, and today holds over 7,000 ETH, worth $6 million, and more than 200 ERC20 tokens worth a staggering $517 million. While some of these tokens were airdrops deliberately sent to public ETH addresses, many more were transferred there by mistake. In its earliest days, the address was mostly sent ether, including transactions of 100 ETH at a time, back when the cryptocurrency was cheap. Then, as ethereum projects began to take off, the stream of ETH gave way to ERC20 tokens.
Today, that address holds 33,000 Aeternity, almost half a million BAT, 9.5 million Bytom, 750,000 Golem, and many more. While the BTC sent to bitcoin’s genesis block are believed to be irretrievable due to a combination of its architecture and Satoshi’s disappearance, that’s not the case with ethereum. Provided the project’s founders still have access to the private key for this address, it should be possible to set up a smart contract that automatically returns anything sent to it. Until such a time, the genesis address will continue to absorb tokens on a regular basis, much to the anguish of their unwitting senders.
Written by CoinDesk.com
New Malaysian Cryptocurrency Regulation Come Into Effect
New Malaysian AML/CFT Guidelines for Cryptocurrencies Aim to “Increase […] Transparency”
Bank Negara Malaysia’s stated policy objective is to “ensure that effective measures are in place against money laundering and terrorism financing risks associated with the use of digital currencies,” in addition to “increas[ing] the transparency of digital currency activities in Malaysia.”
The new policy guidelines assert that “Promoting greater transparency in the use of digital currencies serves to protect the integrity of the financial system and strengthen incentives to prevent their abuse for illegal activities”
The legislation came into effect on February 27th, with Bank Negara Malaysia stating that it “[took] into account feedback received during the public consultation period on the exposure draft released on 14 December 2017.” The bank added that the feedback it received “mainly focused on the obligations imposed on digital currency exchangers, including businesses providing intermediary services involving cryptocurrencies.”
Malaysian Cryptocurrency Exchanges to Implement KYC Requirements
The policy document states that Malaysian cryptocurrency exchanges “are required to conduct customer due diligence on all customers and the persons conducting the transaction when the reporting institution establishes business relationship with customer and when the reporting institutions have any suspicion of money laundering or terrorism financing.”
The regulations mandate that Malaysian virtual currency exchanges collect the full name, address, and date of birth of all customers, in addition to ID documentation. The policy document also states that “any person offering services to exchange digital currencies either from or to fiat money, or from or to another digital currency is subject to obligations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001″.
Bank Negara Malaysia reaffirmed that virtual currencies are not recognized as legal tender in Malaysia. As such, the bank stated that “digital currency businesses are not covered by prudential and market conduct standards […] applicable to financial institutions regulated by” Bank Negara Malaysia.