Top Crypto News – 17/04/2018

Tax Time is Here and Lots of Cryptocurrency Holders Don’t Care

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Cryptocurrency Taxes: Not Many People Pay Them

If you’re a cryptocurrency enthusiast then over the past few weeks you’ve probably seen a lot of articles on paying cryptocurrency taxes, how to pay them, and the horror stories involved with those who have to pay taxes on every transaction because — every single one is a taxable event in the U.S. Even though lots of people believe the Internal Revenue Service’s (IRS) classification is unjust by defining cryptocurrencies as a property rather than a currency, people still are forced to pay for their cryptocurrency gains. Just recently there’s been a multitude of reports on cryptocurrency taxation, and some of them explain that a lot of cryptocurrency proponents don’t seem to care about paying their digital asset taxes.

Tax Time is Here and Lots of Cryptocurrency Holders Don't Care
Tomorrow, taxes are due for American citizens, and there’s a good portion of cryptocurrency holders not willing to pay digital currency capital gains.

Jagjit Chawla, the general manager of Credit Karma Tax explained this week that out of 250,000 individuals who claim to hold cryptocurrencies like bitcoin; less than 100 people (0.0004%) reported their gains to the IRS.

“There’s a good chance that the perceived complexities of reporting cryptocurrency gains are pushing filers to wait until the very last minute,” explained Chawla.

Further a recent Pollfish conducted Lendedu survey of 1,000 U.S. residents who own cryptocurrencies revealed that 35.87 percent of respondents answered, “No, I do not plan on reporting gains or losses on my tax return” The news also follows the recent IRS Coinbase investigation that reported on how there are millions of Coinbase customers, but less than 900 individuals per year reported their taxes over the past few years.

Salty Tax Paying Bitcoiners Get Mad at ‘Tax Cheats’

The articles reporting on people not paying their cryptocurrency tax obligations has got a bunch of bitcoin users ‘salty’ this past week. One individual on the Reddit forum /r/bitcoin says that “tax cheats” are smearing the good name of bitcoin owners.

“This is just another way to try and defeat Bitcoin. Nobody likes a tax cheat. Convince the country that BTC holders don’t pay their taxes, and before you know it, you have large numbers of people against them,” explains the post on April 16 the day before tax obligations are due in the U.S.

I personally pay my taxes on BTC. It’s not an anonymous currency, and one day, (the IRS can look back seven years) you may get caught. If regulation forces exchanges to hand over all of their customer data, everyone who didn’t pay will be in for a wild ride.

‘Without Projects That Express Principles, You Have Nothing of What You Want With a Revolution’

However, the individual who wrote that post didn’t get the support he was looking for as many of the comments declared that “taxation is theft.” One person who specifically disliked the phrase ‘tax cheats’ in the post writes:

Even the term ‘tax cheating’ is a fallacy itself, implying people voluntarily agreed being taxed and are backing out of their agreement or smt. If I live in a county where politicians can raise taxes without consulting the parliament or making a referendum who is cheating who? Because I FEEL it’s us the people who are being cheated into paying more taxes.

Another person details their issue with the post, “The financial system now is the problem — My government is a warmongering fascist state — F#&$ paying taxes in this shit hole!

Tax Time is Here and Lots of Cryptocurrency Holders Don't Care
Many cryptocurrency advocates follow Libertarian philosophies which believe that ‘taxation is theft.’

It’s safe to say that cryptocurrencies and taxes are very topical conversations, and the subjects often gets people upset. A large majority of the comments on the ‘tax cheat’ post disagreed with the person who wrote his opinion that tax cheats smeared the reputation of tax-paying citizens. There are a lot of cryptocurrency proponents who are also adamantly against paying taxes, and many of them are vocal about spreading the message that ‘taxation is theft’ over the years.

“Without a big expression of intentionality to what is considered not the ‘polite things to do with bitcoin’ — specifically money laundering, specifically private access to your coin, holding your own keys — without projects that express these principles, you have nothing of what you want with a revolution — This leaves me to proclaim that most people involved with bitcoin were not serious about that in the first place,” Defense Distributed founder Cody Wilson explains in a 2015 interview.

Coinbase Just Bought One of Bitcoin’s Best-Funded Startups

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Cryptocurrency startup Coinbase has announced the acquisition of Earn.com, one of the industry’s best-funded startups.

A statement released on Monday confirms a previous CoinDesk report in which sources said that Coinbase and other potential buyers were in talks to acquire Earn.com, formerly known as 21 Inc.

21 Inc previously ran a bitcoin mining operation, powered by technology from Intel, and later launched its eponymous, developer-focused 21 Bitcoin Computer in 2015. The company was backed by major Silicon Valley investors to the tune of $116 million raised over multiple funding rounds.

The firm rebranded to Earn.com last October in a pivot that saw it launch a social network aimed at incentivizing users to complete tasks in exchange for cryptocurrency rewards.

While Coinbase did not publicly disclose the terms of the deal, a source directly involved in the discussions told CoinDesk previously that the total amount in cash, crypto-assets, stocks and earn-out being pursued at the time could exceed $120 million.

According to a new report from Recode, the Coinbase deal “was slightly more than $100 million. The publication also reported that some of Earn’s existing investors initially balked at the offer.

As part of the acquisition, Balaji Srinivasan, co-founder and CEO of Earn.com, will become Coinbase’s first chief technology officer. The Earn.com team will be integrated with Coinbase’s operations and its existing business will continue, Coinbase said.

The startup said:

“Earn has built a paid email product that is arguably one of the earliest practical blockchain applications to achieve meaningful traction. We will keep Earn’s business running because it’s showing a lot of promise and potential.”

In his new capacity, Srinivasan will help lead the development of the Coinbase platform, and also recruit new cryptocurrency talent.

The news comes just days after another acquisition deal, announced last Friday, which saw Coinbase snap up mobile ethereum wallet Cipher Browser.

Dollars image via Shutterstock
This article has been updated with additional information. 

 

Chilean Cryptocurrency Exchanges Take Banking Blockade to Appeals Court

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Chile’s largest cryptocurrency exchanges, Buda, CryptoMarket (Crypto MKT), and Orionx recently applied to an appeals court to confront a banking blockade they’re currently facing.

As covered by CCN, the cryptocurrency exchanges recently saw Itau Corpbanca, Bank of Nova Scotia, and the state-owned bank Banco del Estado de Chile shutdown their accounts with no proper explanation. At the time, Banco Estado revealed it decided “not operate with companies that are dedicated to the issuance or creation, brokerage, intermediation or serve as a platform for the so-called cryptocurrencies.”

The appeals court agreed to hear the cryptocurrency exchanges, although their bank accounts remain closed. Per Bloomberg, Chile’s financial institutions are seemingly implementing a blanket ban on the cryptocurrency industry, a move that’s worrying crypto enthusiasts.

Guillermo Torrealba, Buda’s chief executive officer, was quoted as saying:

“They’re killing an entire industry. It won’t be possible to buy and sell crypto in a safe business in Chile. We’ll have to go back five years and trade in person. It seems very arbitrary.”

While cryptocurrencies weren’t yet huge in Chile, the market was growing. Buda, Torrealba’s company, traded about $1 million per day before the banks decided to shut down its accounts. According to its CEO, the exchange is self-regulated and uses the same standards the financial industry uses to know its customers. This, he revealed, includes running checks with local and international authorities.

Chilean news outlets are now speculating the blanket ban comes from the government, as Chile’s Financial Stability Council, an organization with representatives from the Finance Ministry, the country’s central bank, and the securities, banks and pension funds regulator, issued a warning on cryptocurrencies on April 5.

While most financial institutions didn’t reply when reached out to, Itau Corpbanca’s chief executive Milton Maluhv stated on March 27 that the bank supports startups and new technologies, but argued the cryptocurrency industry needs more regulation, adding that the “bank is following internal norms to decide on closing individual accounts.”

Torrealba noted that the appeals court may help the cryptocurrency exchanges. As covered, Crypto MKT’s co-founder, Martin Jofré, has stated that with Banco Estado turning its back on the company, it was left with no banking.

Orionx, on the other hand, revealed that users’ funds are “fully backed” and that there is “no risk of insolvency.” It added that it believes the bank’s moves are “incorrect and anti-competitive.”

Featured image from Shutterstock.
Written by CCN.com

Lightning + NFC? The New Plan to Bring Bitcoin to Retail

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Imagine a way to expand bitcoin payments to millions per second. Now, imagine a clunky, command-line interface.

That’s the extent of the divide between the vision enabled by bitcoin’s best-yet scaling solution, the lightning network, and the current state of its design. But while that’s daunting, developers are moving ahead on designs to make the payment system easier to use, with one recently submitting a proposal for connecting lightning with a payment technology that could make it feel as futuristic as it’s touted.

That payment technology, near-field communication, or NFC, would allow a user to pay for an item just by holding their smartphone an inch away from the device it’s paying.

Not a new idea in bitcoin or the payments world at large, NFC-based payments have caught on throughout Asia and Europe – not only on smartphones, but also through chips embedded in payment cards. And while the U.S. might be lagging behind in NFC adoption, bitcoin’s early adopters might just be the right target audience.

As such, the proposal, submitted by developer Igor Cota, looks to standardize a way to connect lightning with NFC.

Invoking the name of his lightning wallet that uses NFC, Presto, Cota told CoinDesk:

“I want the payments to be instant just like with the contactless cards we have here in Europe. A user would simply tap on the payment terminal and presto!”

Further, Cota imagines turning any computer into a lightning point-of-sale terminal through the use of a $29 USB attachment, a route that has proven successful in his early tests.

Replacing QR codes

Given the success, Cota’s proposal is about standardizing what he’s created, adding it to the many other standard rules that describe how each lightning software implementation should operate.

Many bitcoin payments implementations tend to use QR codes – those pixelated-looking black-and-white squares that encode data that can then be scanned and consumed by smartphones. And while Presto supports QR codes alongside NFC, he believes the latter provides a much better experience.

QR codes not only can be a bit finicky, but they also can become “unwieldy,” Cota said, especially when more information is added to them. In this way, merchants won’t be able to add much information such as itemized receipts and coupons to QR codes, he said.

NFC, though, doesn’t have this hurdle.

“I’d like to see a system where the payment terminal sends a nice HTML receipt for the customer – that receipt has, say, a table list of your grocery shopping with subtotal, taxes, grand-total, perhaps a shop logo, some loyalty code or a coupon for future use,” he said.

In Cota’s mind, this would give consumers a more detailed record of their spending habits, empowering them to take even more control of their finances.

“Imagine a wallet that can tell you how much you’ve spent on broccoli last month?” Cota said, adding:

“With crypto you’re always in control, but with these digital receipts you are even more so.”

A bolt of lightning

But first, Cota is trying to get his NFC implementation added to the standards that lightning network developers have established in an effort to make sure all implementations are compatible with each other.

These standards are called “BOLTS,” and Cota believes NFC should be added to BOLT 11, which explains how “invoices” – describing how much a person owes – should be encoded and presented to a user. It’s a similar process to that of the credit card reader at Starbucks showing you that you owe $4.50 for a mocha latte.

For now, BOLT 11 only describes a standard for QR codes.

Already, Cota has come up with a rough standard, putting together a Multipurpose Internet Mail Extensions (MIME) type, which is a format for sending data; an NFC application ID, which indicates the payment method is lightning; and a “very simple protocol to forward socket data.”

Though these pieces weren’t so hard to come up with, Cota said he thinks it’s important to write up a standard, whereby all NFC-enabled point-of-sale devices can accept any NFC-based lightning payment, now to be ahead of the game should NFC-based lightning payments take off.

“For the sake of interoperability, it would be great if we agreed on some standards,” he explained.

And already, most of the public technical feedback has been positive, with Lightning developers ZmnSCPxj and Corné Plooy responding favorably to the proposal on the mailing list.

However, Bitrefill lightning developer Justin Camarena was a bit wishy-washy, telling CoinDesk:

“It’s an obvious way to pay in the future but it seems we’re a bit too early as there are no hardware point-of-sales offering lightning support.”

Still, Cota is plugging away on the next steps to move the project forward.

“As you can see the [Presto user-interface] is not really there yet but I’m working on it,” he said, adding, “What I’m working on at the moment is a protocol that makes sure the NFC payment goes through even in case the paying device is offline.”

Cota plans to submit another pull request for developers to review once this mechanism is finished.

NFC image via Igor Cota
Written by CoinDesk.com

SVK CRYPTO PODCAST 122 – 16/04/2018 – Roundup of NEO Amsterdam!

https://www.podbean.com/media/share/pb-5zbv4-8f6147

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

Follow us on Twitter: https://twitter.com/SVK_Crypto

Visit our website: www.svkcrypto.com

Email us: cstorry@svkcrypto.com

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Top Crypto News – 16/04/2018

Bermuda Reveals Draft Crypto Regulations, Plans to Embrace ICOs

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Bermuda Reveals Regulatory Proposals for Crypto Industry

Bermuda Reveals Draft Crypto Regulations, Plans to Embrace ICOsThe minister of national security, Wayne Caines, described the proposed regulations a “landmark legislation for Bermuda,” adding that “The emergence of new financial products and services created through the use of technology has opened new and exciting opportunities for entrepreneurs and businesses.”

On Thursday, Mr. Caines presented “Bermuda’s fintech strategy” to “more than 150 of Bermuda’s key business partners.” Mr. Caines stated that the government “recognize[s] that there’s significant interest in virtual currencies and blockchain technology,” emphasizing Bermuda’s desire to “become a global leader in the fintech space.”

Crypto Sector to be Encouraged Despite Virtual Currency Not Recognized as Legal Tender

Bermuda Reveals Draft Crypto Regulations, Plans to Embrace ICOsThe consultation paper defines “virtual currency [as] a digital representation of value that can be digitally traded,” adding that “such does not have legal tender status […] in any jurisdiction,” however, fulfills monetary “functions only by agreement within the community of users of the virtual currency.”

Whilst the document notes that “The virtual currency sector is varied in business types,” the major participants are described as being comprised of “ICO issuers,” “virtual currency exchange providers and traders,” “custodial wallet providers,” and “virtual currency miners.”

The proposed framework will require that businesses facilitating the sale of or providing services relating to cryptocurrencies collect and retain key information pertaining to customers, noting that the cryptocurrency sector “presents tremendous risk that requires robust […] Anti-Money Laundering/Anti-Terrorism Financing (AML/ATF) regulation.”

ICOs Subject of Particular Focus

Bermuda Reveals Draft Crypto Regulations, Plans to Embrace ICOsUnder the proposed legislation, “an initial coin offering will be treated as a restricted business activity that will require consent from the minister of finance.” As such, ICO issuers will be required to adhere to specific regulations -the “Companies and Limited Liability Company (Initial Coin Offering) Act – in addition to applying for consent from the finance minister.” Companies applying for consent to conduct an ICO will be required to provide information regarding:

“The company conducting the ICO and the underlying digital asset offered for sale; The development and implementation of any product, service or other project related to the ICO, including timelines for completion; The target amount to be raised through the ICO; Rights, features, functionality and intended transferability of the digital asset offered for sale; The technology to be used and confirmation of the ability of the technical platform to enable the collection, confirmation and storage of purchaser identity information; and compliance and auditing of ICO transactions.”

Mr. Caines stated “By being one of the few countries in the world to specifically regulate ICOs, we believe that the proposed regulatory framework will provide legal certainty to companies looking to conduct ICOs in Bermuda […] Embracing this new world with responsible regulation could lead to the attraction of new companies and capital investment to Bermuda, additional government revenues, new career, employment and training opportunities for Bermudians and the laying of a foundation for a prosperous future for our next generation of Bermudians.”

Written by Bitcoin.com

 

HODL On: In Defense of Bitcoin’s Best Investment Strategy

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In 1987’s Black Monday stock market crash, Sam Walton, the world’s richest man, lost more than half a billion dollars in a few hours.

When reached for comment, Walton said, “It’s paper anyway. As far as I’m concerned we’re focusing totally on the company doing well and taking care of our customers.”

He didn’t care about dollars; he cared about his asset Wal-Mart, and he still owned that.

History of the #HODL

In bitcoin’s volatile and roller coaster past, “HODL” was the meme that bound the cryptocurrency community together. It stood for the proposition that we all believe in the future of bitcoin. It’s both funny and insightful.

Here is the original post by GameKyuubi on a Bitcoin Talk forum (spelling errors and profanity included):

I AM HODLING

I type d that tyitle twice because I knew it was wrong the first time.  Still wrong.  w/e.  GF’s out at a lesbian bar, BTC crashing WHY AM I HOLDING? I’LL TELL YOU WHY.  It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.  Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro.  Likewise the weak hands are like OH NO IT’S GOING DOWN I’M GONNA SELL he he he and then they’re like OH GOD MY ASSHOLE when the SMART traders who KNOW WHAT THE FUCK THEY’RE DOING buy back in but you know what?  I’m not part of that group.  When the traders buy back in I’m already part of the market capital so GUESS WHO YOU’RE CHEATING day traders NOT ME~!  Those taunt threads saying “OHH YOU SHOULD HAVE SOLD” YEAH NO SHIT.  NO SHIT I SHOULD HAVE SOLD.  I SHOULD HAVE SOLD MOMENTS BEFORE EVERY SELL AND BOUGHT MOMENTS BEFORE EVERY BUY BUT YOU KNOW WHAT NOT EVERYBODY IS AS COOL AS YOU.  You only sell in a bear market if you are a good day trader or an illusioned noob.  The people inbetween hold.  In a zero-sum game such as this, traders can only take your money if you sell.

so i’ve had some whiskey

actually on the bottle it’s spelled whisky

w/e

sue me

(But only if it’s payable in BTC)

It was not about bitcoin versus bitcoin cash or 1,000 other cryptocurrencies. It was bitcoin vs. the world and we ALL embraced it.

It only took 11 minutes for this post to become a meme that became the rallying cry for the entire crypto world. We were all on the same rollercoaster ride and GameKyuubi, in the depths of his frustration, had (sort of) elegantly articulated both what it feels like and the best trading strategy for an asset this volatile.

Buy and HODL.

The good traders

GameKyuubi was wrong about only one thing: There aren’t any good traders.

There are lots of us who believe we are good traders. But we aren’t. Of course, some of the loudest voices on Reddit regularly remind us about how well they time the market. Except when they don’t time the market well.

A paper published last October by the Haas School of Business at UC Berkeley entitled “Do Day Traders Rationally Learn About Their Ability?” used nearly 15 years of stock market day trading data to conclude that all day traders are irrational, the vast majority of day traders lose money, and even when day traders are successful, they “irrationally attribute success disproportionately to their ability rather than luck.”

This sounds exactly like the crypto trader. Any post you see mocking HODL is likely someone who thinks they are really smart because they made money by trading crypto last year.

Of course, their success was due to their unique trading ability and not the fact that the entire market rose like a rocket.

HODLing works

Still, empirically, even in volatile assets like bitcoin, carefully choosing an asset and holding long-term positions has proven to offer the best return.

Warren Buffett, the most successful investor of modern times, has often said that he only invests in what he knows. His preferred holding period: forever. With that model, his company, Berkshire Hathaway, has averaged a 19 percent annual return since 1965 which means it has risen more than 1 million percent.

Theoretical models that assume participants know when markets will move against them can offer better returns but, in practice, market movements cannot be reliably predicted so even when people like Bernie Madoff try to make us think that they’ve figured it out, they haven’t.

Long-term investment in quality assets remains the only reliable investment strategy.

Simply put, HODLing works.

More possibilities

For those not interested in limiting their activity to HODLing, there are two new and useful ideas that have begun bouncing around that really do advance cryptocurrencies: #BUIDL and #SPEDN.

BUIDL has been used to help remind us that, in the words of a CypherPunk’s Manifesto, “Cypherpunks write code.” In order for the blockchain to really be useful and valuable, we need to build stuff on it. Watching the price go up and down either as a trader or a HODLer does nothing to make bitcoin work better.

We need to create some of the promised applications that can really change the world. To date, the blockchain community has fallen short in this regard outside of the areas of payments but there are some real wins.

Just this weekend, Voatz, a Medici Ventures portfolio company is running party county convention voting in Utah, state convention voting in Michigan and state primary voting for overseas and military voters in West Virginia, all on a blockchain platform.

Blockchain voting is a simple application, but it is one that can bring a much-needed security and transparency to elections. And we are doing it now.

SPEDN is a nod to the many of us who realize that, for bitcoin to be useful, we need to be able to spend it to buy things. And I mean everything. It really doesn’t matter whether it is through second-layer solutions like lightning or forks like bitcoin cash; we need more ways to use cryptocurrencies in real-world transactions.

A focus here, rather than complaining about HODLers would be helpful. We need many more merchants to accept cryptocurrency before it becomes useful. Options to spend bitcoin remain severely limited in most areas and this will ultimately limit bitcoin’s value.

As for me, I will HODL until I can buy useful stuff and SPEDN.

HODL on

This year has seen intense regulatory pressure on cryptocurrencies and its time we stop pretending that HODL was stupid. It isn’t and it wasn’t. Anyone who doesn’t like the HODL mentality needs to give HODLers something else they can do with their bitcoins.

Trading is no solution for intelligent people. What we need are new ways to use cryptocurrency.

We need BUIDLers and merchants who will let us be SPEDNers.

Hard hats via Shutterstock
Written by Bitcoin.com

 

Samsung Electronics Turns to Blockchain to Track its Global Supply Chains

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Electronics manufacturing giant Samsung is considering a blockchain platform to manage and keep track of shipments of its vast global supply chain network.

In a significant endorsement of blockchain technology, Samsung Electronics – the world’s biggest chipmaker and smartphones manufacturer – is considering a broad implementation of a blockchain ledger platform to track its global shipments.

Speaking to Bloomberg, Song Kwang-woo, blockchain chief at Samsung SDS – the IT subsidiary of the Samsung – revealed that a blockchain system could slash shipping costs by 20 percent.

Notably, the executive also confirmed that SDS is working on developing the blockchain platform for Samsung Electronics, placing it among the earliest global manufacturers to seriously explore the applicability of blockchain technology at such a scale.

SDS has proven experience in implementing blockchain technology for the logistics and shipping industry, successfully concluding a 7-month pilot project to record and track shipping logistics of imports and exports in Korea’s massive shipping industry in December 2017.

Samsung SDS’ Song added:

It will have an enormous impact on the supply chains of manufacturing industries. Blockchain is a core platform to fuel our digital transformation.

The report suggests SDS ‘expects to handle 488,000 tons of air cargo and 1 million 20-foot-equivalent (TEU) shipping units” in 2018. The shipments include everything from flagship Samsung devices like the Galaxy S9 and the upcoming Note 9, as well as OLED displays used by Apple’s iPhoneX, to home electronics and more.

Beyond tracking shipments, a blockchain platform could even reduce the time and ramp up efficiency between product launches and their shipments to end users.

Delivering Blockchain Tech

While details of Samsung Electronics’ foray into using the decentralised technology remain slim for now, Samsung SDS developed and deployed ‘Nexledger’, its own blockchain platform for enterprises and businesses over a year ago.

In May 2017, SDS launched a blockchain pilot for Korea’s shipping industry to track imports and exports of cargo shipments in real-time by leading a consortium that included Korea’s Ministry of Oceans and Fisheries, the Korea Customs Service, technology giant IBM and major freight operator Hyundai Merchant Marine, among others.

Samsung SDS, which is also a member of the Enterprise Ethereum Alliance (EEA), successfully completed its first trial run of a shipment that saw the entire process of a shipment, including booking and delivery, from Korea to China. As mentioned above, SDS concluded its pilot in late 2017 that ultimately aims to process “all exports and imports” in Korea using blockchain.

In November 2017, the metropolitan government of Seoul, South Korea’s capital city, chose Samsung SDS to develop a roadmap and deploy blockchain technology to the city’s entire administration as a means to improve transparency and enhance citizen convenience. Seoul city’s government has previously announced its intention to apply blockchain technology across “the entire municipal administration’ by 2022.

Featured image from Shutterstock.
Written by CCN.com

 

Why Leading Crypto Devs Don’t Work In Silicon Valley

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“If you or your engineer friend is bored at BigTechCo, get in touch.”

The tweet, sent out by Coinbase vice president and general manager Dan Romero, represented a rare request from the San Francisco-based exchange. Despite building on various cryptocurrency protocols for years, it was perhaps the first time the company had signaled it would offer financial support to someone working directly on open-source code.

As such, the tweet drew its fair share of confusion among bitcoin and ethereum’s largely volunteer developers.

That’s not to say that they aren’t interested in taking sponsorships from companies in an effort to make money from their passions – they are. But the trouble is many developers see larger industry startups like Coinbase, which made more than $1 billion in revenue last year, as a prime example of the “big tech companies” that Romero positioned as antagonists.

In fact, some would go so far as to say there’s a quiet struggle being waged in the blockchain industry between the coders who develop these open-source protocols and those who mainly sell related products or services for commercial interest from their corner offices in Silicon Valley.

This was on full display when Bitcoin Core developer Luke Dashjr tweeted a disgruntled reply to Romero after private conversations clarified that the role wouldn’t focus exclusively bitcoin or ethereum, nor would it give developers autonomy to focus on projects they see as beneficial.

Instead, Coinbase executives would be directing the work, potentially requiring the developers work on cryptocurrencies that might run afoul of their own personal tastes. (As an example, in the case of Dashjr, the long-time bitcoin coder, was loathe to devote time to rival bitcoin cash).

Coinbase acknowledges a kind of disconnect, yet thinks the lines between industry and open-source will continue to blur.

“At a high level, we want to invest in supporting open-source communities, because we believe that the future of this industry will be defined more by open source than by enterprises,” Jori Lallo, a software engineer at Coinbase told CoinDesk. “That said, as a fast-growing company we’ve had a lot of things to split our time between, and admittedly we didn’t spend a lot of time on supporting open source in the early days.”

That initial neglect left a lasting impression that has been hard for Coinbase to shrug off.

According to Jeremy Rubin, a Bitcoin Core contributor, Silicon Valley’s culture in general remains at odds with open-source philosophy, in that the former doesn’t give enough credit and support to the broader ecosystem.

Rubin told CoinDesk:

“You see this at a couple different companies but I think they [Coinbase] are one of the most egregious. They’re trying to do better, but they got a ways to go.”

Not enough?

Still, Lallo detailed some of the exchange’s work in reaching out to the open-source developer community that has attempted to shift that perception.

For instance, in mid-March, Coinbase introduced the Coinbase Protocol Team, whose mission it is to contribute to community-led projects, naming payment channels, proof-of-stake blockchains and light clients as some areas of interest, and widely respected bitcoin programmer Jim Posen is a part of the team.

Around the same time, Coinbase announced its Open Source Fund, which donates roughly $25,000 a month to public blockchain projects.

Even Dashjr recognizes that Coinbase’s efforts aren’t “bad” and could even bring to the table some insights that open-source developers may miss, since they don’t interface with the business community quite as much. “It just isn’t the norm or ideal,” Dashjr said.

Others argue, though, that such programs, after years of inaction, aren’t enough, though Rubin said he sees the problem as bigger than any one company.

In Rubin’s view, lucrative blockchain companies could easily donate a few million dollars each in grants and sponsorships for open-source developers. It’s the same argumentopen-source developers have made regarding a whole slew of integral internet protocols that have allowed companies like Google, Facebook and Uber to grow into multi-billion-dollar companies.

“Not only do they not do that [provide generous patronage], but they don’t support a lot of conferences that are really critical to the space. They didn’t support the MIT Bitcoin Expo this year, even though they sent a bunch of recruiters,” Rubin said, adding:

“I don’t think Coinbase really gets open source.”

In addressing the criticisms, Lallo said, “As we grow, expect to see more investments – both in terms of time and money.”

Coinbase also announced in a blog post on Thursday that a new venture capital arm of the company will provide “financing to promising early-stage companies” that “move the space forward in a positive, meaningful way.”

Rethinking the culture

But it might take more than time and money.

According to Christopher Allen, the former principal architect at Blockstream, it’s more about adapting to the culture of open source.

For instance, Blockstream, which funds the work of several developers who solely work on the bitcoin protocol, goes a step further by offering employees individual patent rights for technologies they contribute to, in addition to roughly 20 percent paid leave to work on side projects.

“These types of very progressive attitudes towards open source were a large part of my consideration [in joining Blockstream] because I’ve been working on my own projects for a number of years,” Allen said. “I wanted to be able to continue to work on them without being constrained.”

Joe Lubin, founder of ethereum startup incubator ConsenSys, echoed the importance of this cultural shift toward independence. As such, ConsenSys strives to retain top talent by letting employees choose their own projects and work whenever and from wherever they want.

Tough to retain

Still, many leading blockchain companies struggle to retain talent.

For example, bitcoin security startup BitGo lost Alex Bosworth, a renowned developer who now works on lightning network implementations, in December.

According to Bosworth, the missions of large tech companies, and now large crypto companies, run counter to the ideals of the developers who started developing the protocols to begin with.

“The tech companies are building empires based on locking users into walled gardens and generally not thinking about what is best to progress the needs of the user,” he said. “That’s something that open source software addresses which is pretty inspiring and fulfilling to work on.”

As such, the community has rallied around several initiatives that fund developer work without strings attached.

For instance, several developers CoinDesk spoke to mentioned Chain Code Labs, which sponsors a handful of Bitcoin Core developers at a financial loss through the money the founders, Alex Morcos and Suhas Daftuar made from a previous Wall Street venture. And Allen recently launched the GitHub Blockchain Guild, which aims to create new opportunities to fund contributions to various blockchain projects.

The collaborative, autonomous nature of these initiatives is what makes open-source cryptocurrency developers so drawn to them.

Speaking to the need for the industry to adapt to the open-source culture, Lubin said:

“Nobody works on projects that they don’t care deeply about. An entrepreneur’s freedom to develop their own projects and operational style doesn’t need to change.”

Golden Gate Bridge image via Shutterstock

SVK CRYPTO PODCAST 121 – 13/04/2018 – What is Bitcoin Private?

https://www.podbean.com/media/share/pb-sc5x5-8f33e1

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

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Visit our website: www.svkcrypto.com

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Top Crypto News – 13/04/2018

Kindred Spirits: Why Hardcore Early Adopters Are Dead-Set on Kik’s ICO

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“I’m long-term bullish and short term I have no idea.”

That’s how Fred Wilson, a partner at Union Square Ventures and one of the most widely respected VCs working today, answered a question about the crypto market in general and specifically his outlook for Kin, the soon-to-be launched token created by the messaging app, Kik.

Wilson made the comment in a small event space on Prince Street in Manhattan, sitting in front of 28 people that Kik had flown in from 13 countries (including Japan, India and Australia), and all of whom seemed to be holders of Kik’s ethereum and stellar token.

Kik had brought them together to serve as the first wave of ambassadors for the new token, serving on Reddit, Telegram, Kik groups and anywhere people might want to talk about it.

So, when Wilson expressed that mix of confidence and uncertainty, he wasn’t just giving the latest market’s hot take; he aligned himself with a prevailing sentiment in the room, hope mixed with some confusion. A part of his role there seemed to be to induct Kik’s guests into an ever-widening circle of the true believers backing the new model for monetizing digital experiences enabled by kin.

“I wouldn’t say it was my idea, but I would way I was one of a group of people who collaborated on coming up with it,” Wilson told the room. “Obviously, I think it’s a great idea.”

Wilson spoke during the last fireside chat of the day, in conversation with CoinFund CEO Jake Brukhman.

CoinDesk had been invited to the event to interview Kik CEO Ted Livingston as the the two day event opened. During that conversation, Livingston described himself as a wreck two years ago, as the company lost marketshare to Facebook-owned products.

In Wilson’s telling, he helped bring his fellow investors in the company around to a crypto-led strategy, so that now Livingston could say:

“Our investors are very supportive, but it took us a while to get there.”

Faced with what he saw as the impossibility of monetizing a messaging app with ads amidst the Facebook-Google advertising duopoly, Livingston elaborated, “Our new plan was to develop a new economy around a new currency.”

An economy is, of course, one form a community takes, which helps to explain why Kik has invested in forging bonds between its early advocates, expanding the cadre from that early circle that sold the Kik board to a larger one that can sell lots of people using services online.

Here’s the funny thing about it’s early advocates, though: by and large, they don’t use Kik. During our interview with Livingston, we asked the crowd whether or not they were big Kik users before Kin came along. Only five or six raised their hand.

It’s remarkable because when Kik first unveiled this idea, many people viewed its existing audience as its unfair advantage over potential social crypto competitors.

Livingston volunteered, “Our users of Kik are largely unaware.”

Crypto Summer Camp

Arriving at the gathering on Prince Street felt a little like coming back to summer camp, with lots of people chatting with that peculiar spirit of reunion. Only it wasn’t a reunion – these people hadn’t met face-to-face before, they had spent a lot of time talking online.

And it was clear that certain levels of rapport had been established. This particular hit home during the (not really necessary) ice-breaking round when one community member in particular introduced himself. “Hi, I’m Dillon,” Baltimore’s Dillon King said. Everyone broke into applause. “And I don’t actually look like Yoda.”

Later we would learn that King is one of the most active voices on kin’s Telegram and Reddit channels. “I kind of play the role of the educator,” he told CoinDesk.

King was dressed like a lot of the guys at the gathering (it was very nearly all men), in a purple t-shirt and a black-zippered hoodie, apparently in tribute to Livingston, who wears those two things nearly every day. He said was glad to finally get to meet people from the Kik staff in a setting where they didn’t have to constantly speak as if cameras were rolling he said.

“In general I just wanted to meet everybody,” he explained.

We have known for a long time that people can build real bonds and relationships online as well as offline, but there’s other ways in which online life is not as much like the real world as it could be. And that’s the impetus behind kin: deepening digital reality.

“We want mainstream consumers to use cryptocurrency and we think the hardest problem with that is setting up a system, setting up an economy, in a place where they would actually use it,” Livingston told the room. That place is the internet, buying and selling for purely digital goods and services.

Livingston said they had focused on picking ambassadors who understood that there was a real opportunity in creating entirely digital markets. In fact, he took it so far that he said he hopes to see such robust digital markets that people quit thinking in kin-dollar or kin-yen terms, and instead thinking fiat terms in real life and kin terms online.

Just like people don’t think about exchange rates when they buy lunch from the corner burrito place.

As we spoke to ambassadors on the floor, it was clear that they still had questions about how a stable economy could rest on unstable crypto. “There’s things I don’t understand,” Australia’s Will Gikandi told CoinDesk.

Gikandi took advantage of every Q&A to pepper each speaker with questions. It was clear that he wants to believe it could all work, but he still doesn’t quite see how.

The money

Probably the biggest applause line of the whole day came when Livingston said:

“I’m not in this for a money, though I do think kin is going to be very valuable.”

It helps here to step back and revisit what Livingston believes is so big about the kin idea. He saw himself surrounded by peer companies that had successfully built communities but couldn’t make money. The idea of kin is to create a way for all those companies to monetize without ads or user fees.

Livingston describes that economy as having two pieces: a cryptocurrency and a software platform that can reward developers for creating active markets for that cryptocurrency.

The strangest part of this whole kin idea is that second part, called the Kin Rewards Engine (KRE), controlled by the non-profit Kin Foundation. The idea is that developers will try to build apps that encourage users to exchange kin with each other.

“We don’t want developers to charge consumers,” Livingston said. “We want to set up is what we call a consumer-to-consumer economy.”

So, someone might build an app where users send artists photos and pay them in kin to make drawings of them. The artist would keep all her earnings, but the KRE (which holds 60 percent of the kin that will ever be created) would pay the app’s developer every day relative to the amount of economic activity it created within the whole kin economy.

Wilson said that there’s lots of companies in his portfolio who would probably benefit from jumping on the KRE once its built, but he thinks there’s more opportunity with developers just having their first glimmer of an app idea now.

That said, USV is so convinced that in the future tech companies will earn so much in tokens that its begun negotiating what it calls “token exchange agreements” with the companies it backs. In these agreements, it would have the option to exchange its equity for tokens a company has earned from doing business (not what they generated by issuing them in an ICO).

One member of the audience wanted to know when developers could begin building business models around the KRE?

Livingston wouldn’t commit, but he did give his interlocutor a standard by which to hold him accountable. There’s three ways Kik has to lead, he argued. It has to have a blockchain that can support a million users, it has to have lots of regular consumers actually earning and spending in crypto and it has to have a functional incentives system (like the KRE).

If any other company starts to show traction in any of those three areas, that’s when kin backers should start getting angry.

“Who’s in first place. We have no idea. Nobody knows,” Livingston said, concluding:

“The race hasn’t even started yet.”

Photo of Ted Livingston welcoming kin supporters courtesy of Kik.
Written by CoinDesk.com

Bitcoin in Brief Friday: That Green Candle (Fomonomics)

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Bitcoin Makes a Move

Cryptocurrency Has Already Made You Rich – You Just Didn’t NoticeAfter days of stagnation, bitcoin finally made a move on Thursday and it was a biggie. The largest green candle witnessed in a month, big enough to wipe out a slew of shorts in an instant. When bitcoin wants to it makes like the wind, treating hodlers to all the thrills of riding the world’s giddiest roller coaster. In a single hour, a record $1.2 billion of BTC was traded. Previous bitcoin breakouts have proven to be damp squibs, so while optimism remains, traders aren’t holding their breath.

Altcoin Roundup

Cryptographic researchers claim to have found vulnerabilities in a group of privacy coins that includes zerocoin and PIVX.

Coinsheets writer Dmitriy is tweeting 100 days of shitcoins in which he appraises a bunch of alts in a tweet apiece.

EOS has been one of this week’s big gainers, and is one of the few coins to be up in 2018. A number of reasons have been postulated for its sudden gains including an upcoming airdrop and imminent mainnet launch.

Bitcoin in Brief Friday: That Green Candle

One critic who’s not feeling those EOS vibes is Jackson Palmer, who complained: “People don’t seem to realize that there is no actual EOS “network” that the ERC-20 tokens can be redeemed on. They’re just releasing the code and there will be *multiple* networks/blockchains you can then hopefully redeem some sort of other token on. It won’t be “EOS” though.”

Crypto Scammers Are Getting Smarter

How’s this for an ingenious way to load up on gas?

Bitcoin in Brief Friday: That Green Candle

Bittrex Reopens Registrations

This week Bittrex reopened new user registrations. Then it closed them again after being swamped by demand. And now it’s opened them again, this time for good hopefully.

Finally, crypto has a new word: fomonomics, the art of studying Google search trends to identify when the masses are about to FOMO into bitcoin again.

Written by CoinDesk.com

 

Indian Exchange Coinsecure Claims Insider Job in $3 Million Bitcoin Theft

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Indian bitcoin exchange Coinsecure has disclosed a theft of 438 bitcoins, valued at approx. $3.4 million at press time, from its wallet in what is the country’s biggest cryptocurrency theft to date.

Delhi-based cryptocurrency exchange Coinsecure has accused its own CSO of stealing the coins from the company’s wallet in an FIR (First Information Report) filed with the police on Thursday. In an announcement on its homepage, the exchange said some of its bitcoin funds had “been exposed” and “seem to have been siphoned out to an address” that is beyond its own control.

Coinsecure insists its own systems haven’t been compromised nor hacked. Instead, the exchange points to the unconvincing claim of its CSO, Amitabh Saxena, who contends the theft occurred during a separate “exercise to extract BTG (Bitcoin Gold)” to distribute among its customers.

Coinsecure wrote:

Our CSO, Dr. Amitabh Saxena, was extracting BTG and he claims that funds have been lost in the process during the extraction of the private keys.

According to the police complaint (pinned below), Coinsecure CEO Mohit Kalra, who holds the private keys for the company’s wallets along with the CSO wrote: “On 9th April 2018, we were informed by our CSO, DR. Amitabh Saxena, that 438.318 bitcoins (worth INR 19 Crores – Approx.) were stolen from our company’s bitcoin wallet due to some attack.”

Notably, he added in the complaint:

As the private keys are kept with Dr. Amitabh Saxena, we feel that he is making a false story to divert our attention and he might have a role to play in this entire incident. The incident reported by Dr. Amitabh Saxena does not seem convincing to us.

In a separate statement to the Times of India, the chief executive revealed that the private keys were exported online. “It looks like a crime committed intentionally,” he added. “We have shared our suspicions with the Cyber Cell and contacted specialists to find out the source of the hack and trace the bitcoins.”

Coinsecure recruited Saxena as its Chief Scientific Officer in September 2017, citing credentials as a professor of Computer Science in Australia and previous tenures at Hewlett Packard (HP) and Accenture. “Doc comes with an extremely strong understanding of the crypto space and has a lot of ideas and implementations that he will be bringing to Coinsecure,” the exchange said at the time, pointing to his scientific research articles on the blockchain space.

In his complaint, chief executive Kalra also stressed that the CSO might be a flight-risk, asking the police to seize his passport to keep him from flying out of the country.

Meanwhile, Coinsecure insists it will recover and reimburse customers who have seen their funds stolen.

The exchange said:

Irrespective of funds being recovered, we re-assure all our customers that you will be indemnified from our personal funds.

Written by CCN.com

Beyond Banking: R3 Is Expanding Its Vision for Global Blockchain

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R3 may have started as a consortium of banks looking to use blockchain technology, but it’s broadening its ambitions.

Now a startup whose staff numbers in the hundreds, R3 is proposing its distributed ledger technology platform, known as Corda, be used to link together a wide range of businesses, not just financial ones. The core idea is similar to the one originally pitched: if companies share data and assets with each other on Corda, they can ax duplicative processes and trust that they are all on the same page about who did what.

In an example offered by R3 CTO Richard Gendal Brown, airlines, travel agents and hotels around the world could reach consensus on which plane seats and rooms have been booked, knowing that the data being shared is the same for everyone all the time.

Taking this idea further, R3’s platform lead Mike Hearn claims Corda would power a future “automatable economy” where bots help to run supply chains.

“When we stepped back and looked at what we had built, we saw something that was far more broadly applicable,” Brown told CoinDesk, adding:

“It’s the freedom and power that comes from knowing that what you are looking at either as a human or a business or even some sort of futuristic robot – is not only correct, but it’s current, and it is shared with your counterparts.”

While Brown said Corda has attracted interest from a variety of industries (“people in insurance, people in healthcare, people in government, energy – you name it”), the new positioning of the platform comes at a time when the dust appears to have settled after 2016’s hype about corporations exploring blockchain.

All eyes are now looking for delivery.

Meanwhile, rivals such as the Hyperledger consortium, with the help of IBM, are courting seemingly every sector and business line with some flavor of enterprise blockchain solution.

For R3, it’s a pivotal time, as the startup is finalizing the first commercial distribution of the open-source Corda platform, targeted for the end of the second quarter. This paid product will be widely available to businesses, beyond consortium members.

Open, but private

While R3, one of the first companies to promote the idea of members-only blockchains, is moving toward a more inclusive model, it’s not going whole hog.

Rather, Brown describes the vision as “an open shared network – but still private, secured and permissioned.”

The R3 Corda team were inspired by ethereum’s goal of participants all running the same business logic while getting rid of silos and friction between different applications, he said.

However, the global broadcast design of public blockchain networks, while perhaps necessary in a trustless system like bitcoin, is unpalatable to enterprises.

“My critique of some of the enterprise blockchain platforms is that being originally inspired by a full broadcast system, I would argue that often they share too much,” Brown said.

To address this problem, the governing Corda design sought to minimize the amount of data that has to be shared among participants, while convincing someone that something is true.

Corda will not show data up front, Brown said, but will send a piece of evidence to convince the other parties about a fact or set of facts, regardless of whether it’s to do with banking, hotels or airlines.

‘Demilitarized zone’

Aside from keeping data private within the Corda network, sharing it via the internet presents another, more immediate problem. Most companies have their own highly secured data centers, and run their existing applications on their own infrastructure behind lots of firewalls.

“The data that actually matters, the data that you want to bring into consensus, is hidden deep inside data centers of banks and large firms,” Brown said. “This necessarily involves the opening of connections between these firms and sharing data, over the public internet.”

Simply putting an enterprise blockchain node on the internet, as one would do with a bitcoin or ethereum node, is insufficient at best and possibly hazardous, he said.

“Firstly, it’s nowhere near the corporate data, and second what happens if it gets hacked? That’s a big attack surface.”

To reconcile this, the Corda node, which needs to be close to the systems of the bank or the manufacturer or the airline, runs there on existing servers or on cloud infrastructure owned by that firm, securely managed in a way that these firms know how to do, Brown said.

But a small part of the node that needs to be able to connect to the other firms and receive connections from them has to be visible on the internet.

“We take a tiny bit of the node – we call it the float – and allow it to float out away from the main node and just sit out in the demilitarized zone as they call it,” Brown said.

This piece of the node is “very small, very hardened, very protected,” Brown said, adding:

“That’s the bit that is exposed to the bracing winds of the internet,”

In this way, Corda nodes are connected yet stay protected.

“The main business logic runs where it matters inside the organization and a tiny highly secured piece floats out onto the internet and is responsible for all communication,” Brown said.

‘Working insanely hard’

Ahead of the commercial release of Corda expected this quarter, R3 has just shipped version 3.0 of the free open-source version, which features what Brown calls “wire stability.” This gives developers the same certainty about their data that API stability did for their code.

“One version of a Corda 3 node deployed to a network will be compatible with any future version of Corda, so that you don’t have to upgrade the whole network,” Brown said.

Asked if he has detected any loss of appetite in the enterprise blockchain space, Brown said: “No, not really. Of course you might expect me to say that. But here’s why – because what I see is developers working insanely hard” in response to demand.

“Regarding the commercial version of Corda we are offering, I am being asked every day when is that going to ship,” he added, concluding:

“Maybe this is not visible from the outside, but the people who are preparing to launch major initiatives and go live, they are so heads down on delivery and execution they are not making much noise yet externally.”

R3 office image via CoinDesk.
Written by CoinDesk.com

SVK CRYPTO PODCAST 120 – 12/04/2018 – How much is 1 BTC really worth?

https://www.podbean.com/media/share/pb-zuwfs-8f2562

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

Follow us on Twitter: https://twitter.com/SVK_Crypto

Visit our website: www.svkcrypto.com

Email us: cstorry@svkcrypto.com

Telegram: https://t.me/SVKCrowd

 

Top Crypto News – 12/04/2018

*** HUOBI EVENT ***

SVK CRYPTO WILL BE SPEAKING AT THE LONDON HUBOI EVENT

Date – 17/04/2018

Location – Landing Forty Two, The Leadenhall Building, London EC3V 4AB

Guest Speakers:

Ted Que – Founder of Huobi Labs

Dazhi Quo – Chief Research Fellow in Huobi Academy of Blockchain Application

Shane Kehoe – Co-Founder of SVK Crypto LDN

Sign Up Here – https://meet.huobilondon.com

The Winklevoss Brothers Just Won a Crypto Patent

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A company owned by Cameron and Tyler Winklevoss, founders of the Gemini cryptocurrency exchange, has been granted a patent for a system that seeks to improve the security of digital transactions.

The application was filed in November and granted on Tuesday by the U.S. Patent and Trademark Office (USPTO). It describes a “system, method, and program product for processing secure transactions within a cloud computing system,” with Andrew Laucius, Cem Paya and Eric Winer named as inventors (neither of the Winklevosses is included on the list).

This system uses a combination of common cryptographic techniques, including hash functions and digital signatures. Figures included in the application explain that the system is intended to provide security in a cloud-based digital asset exchange.

And while it doesn’t spell it out directly, the patent’s language suggests that the proposed system could be used within Gemini’s infrastructure.

“The present invention is an improvement to computer security technology. Computer systems to date have been susceptible to attack, whether the introduction of malicious code or the unauthorized access of information, over external data connections, such as the Internet,” the application explains, adding:

“As computing systems increasingly move to distributed computing architectures, such as cloud computing, external data connections are often necessary to the functioning of the computing system.”

Winklevoss IP, LLC, the legal entity that controls the patent, holds a number of trademarks and five patents, including this most recent one.

As CoinDesk has previously reported, the pace of blockchain and cryptocurrency-related patent filings has risen in recent months. One recent patent, awarded to a company belonging to automaker Ford, suggested that the firm is looking at using the technology to facilitate car-to-car transactions.

Lock image via Shutterstock.
Written by CoinDesk.com

Australia Sets Registration Deadline for Cryptocurrency Exchanges

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Newly implemented regulations from Australia’s financial intelligence agency, AUSTRAC, has mandated domestic cryptocurrency exchanges to register with the authority before mid-May 2018.

In an announcement on Wednesday, the Australian Transaction Reports and Analysis Centre (AUSTRAC) reminded cryptocurrency exchange operators of their obligation for compliance with the authority after new regulations effectively kicked in on April 3. The regulatory laws, the first for Australia’s cryptocurrency sector, were fast-tracked after the Australian Senate passed legislation to that effect in late 2017.

“Effective immediately, DCEs (digital currency exchanges) with a business operation located in Australia must now register with AUSTRAC and meet the Government’s AML/CTF compliance and reporting obligations,” the authority said yesterday.

Notably, it added:

There is a transition period until 14 May 2018 to allow current DCE businesses time to register.

The new rules, AUSTRAC says, will empower the agency’s compliance and intelligence capabilities help crypto-exchange operators to introduce systems that minimize money laundering and terrorism financing risks.

Under the terms of their compliance, crypto exchange operators – once registered – will be required to follow know-your-customer (KYC) norms to establish a customer’s identity, monitor transactions and flag suspicious transactions by reporting them to AUSTRAC. Further, all transactions involving cash over AUD$10,000 will also need to be reported.

“AUSTRAC now has increased opportunities to facilitate the sharing of financial intelligence and information relating to the use of digital currencies, such as bitcoin and other cryptocurrencies, with its industry and government partners,” AUSTRAC CEO Nicole Rose stated.

The new reforms have also been generally welcomed and accepted by the domestic cryptocurrency sector, she added, claiming that regulation “will also help strengthen public and consumer confidence in the sector”.

Australia moved to regulate cryptocurrency exchanges under existing AML and CTF laws in August 2017, following the likes of Japan which introduced its own guidelines for the sector last year.

The Asian nation is home to a thriving cryptocurrency ecosystem following the official recognition with a number of mainstream conglomerates and players in traditional finance confidently moving into the cryptocurrency sector. This is particularly evident with online brokerage Monex purchasing Tokyo-based crypto exchange Coincheck for ¥3.6 billion ($33.5 million) this month, despite the exchange suffering a monumental $530 million crypto theft in January.

Featured image from Shutterstock.
Written by CCN.com

 

BitFlyer Exchange Toughens User Verification Amid Watchdog Scrutiny

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BitFlyer, a major Japanese cryptocurrency exchange, announced Thursday that it will toughen its know-your-customer process after reported criticism from the country’s financial regulator.

According to a company announcement, starting from April 26, users registering online will not be able to send cryptocurrency assets or withdraw Japanese yen until their identity and address have been confirmed with the receipt of a postal letter from the exchange.

Similarly, paying for goods with bitcoin through bitFlyer will also be disabled until users have received a letter that confirms they have passed the firm’s verification process.

The revised rule comes as a response to a report by Japanese media outlet Nikkei earlier on Thursday, which indicated that Japan’s Financial Services Agency (FSA) has raised concerns over what it considers a loosely enforced ID verification process on the bitFlyer platform.

Based on Nikkei’s report, the regulator said the cryptocurrency exchange has made it possible for users to start trading immediately after submitting a photocopy of their ID cards, while the platform has yet to fully confirm and verify users’ information. As such, the financial watchdog is concerned that the platform could be used for money laundering activities.

Although it denies being careless in complying with know-your-customer rules, the exchange said it is cooperating with the FSA to strengthen its existing anti-money laundering measures.

The move comes at a time when the Japanese regulator has been scrutinizing domestic cryptocurrency exchanges regarding their anti-money laundering and business registration compliance.

Just yesterday, the FSA issued an administrative penalty that ordered Japanese trading platform Blue Dream, which is still in the application process for business registration with the FSA, to suspend its operations until June 10.

The FSA said the firm had violated customer protection measures by soliciting investors for its own token, “BD Coin,” while not making it known to investors how the price of the token is determined.

The order came just days after the watchdog issued two other administrative penalties last Friday, similarly barring two exchanges from operation for two months.

FSA image via Shutterstock
Written by CoinDesk.com

Philippines Regulator Issues Warning to Cloud Mining Participants
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Philippines Securities and Exchange Commission Issues Warning Against Cloud Mining Operations and Contracts

Philippines Regulator Issues Warning to Cloud Mining ParticipantsThe Philippines financial regulator has issued a warning to cloud mining operations promoting this business model without registering with the SEC. Cloud mining operations involve a contract of pre-purchased hashpower from a remote mining operation, and users buy the contracts for a lifetime or a limited amount of time. Cloud mining users then reap the benefits of the pool’s mining revenue if the operation is profitable and if it is not contracts can break even or suffer from losses. The SEC explains that an initial investigation has shown numerous local and foreign cloud mining companies are soliciting these contracts to citizens residing in the Philippines.

Cloud Mining Operators and Agents Can Face Up to 21 Years in Prison

According to the regulator these contracts promise to pay the investor daily or weekly mining proceeds and these unregistered firms also affiliate commissions for every recruit that registers. Due to this business practice, the SEC states that Under Rule 26.3.5 par. 4 of the 2015 Securities Regulation Code these sales are defined as investment contracts. Using the Howey Test the SEC explains the results confirm that these investments are securities.

“Since this scheme involves the sale of securities to the public, the SRC requires that the said securities offered are duly registered and that the appropriate license and/or permit to sell securities to the public are issued to the corporation and/or its agents, pursuant to the provisions of Section 8 of the SRC,” the Philippines SEC emphasizes.

The warning further states, “Likewise, those who act as salesmen, brokers, dealers or agents of these companies in selling or convincing people to invest in the investment scheme being offered by these cryptocurrency mining companies including solicitations and recruitment through the internet without the necessary license or authority from the Commission may likewise be prosecuted.”

[Offenders] will be held criminally liable under Section 28 of the Securities Regulation Code and penalized with a maximum penalty of twenty-one (21) years of imprisonment or both pursuant to Section 73 of the SRC.

Philippines Regulator Issues Warning to Cloud Mining Participants

The Philippines Regulator Says the General Public Should Stop Investing in These Investment Activities

The regulator implies operations that invite and recruit this type of activity without registration will be penalized in accordance with the Supreme Court decision mandated in 2014. Further, the SEC warns the public to “stop investing” in cloud mining contracts with a statement that highlights it’s warning in capitalized and bold lettering:

In view thereof, the public is hereby advised to STOP INVESTING in these kinds of unregistered investment activity and to take the necessary precautions in dealing with these cloud mining companies.

The Philippines government is not the only group of regulators looking to stop cloud mining operations due to securities laws. Last month news.Bitcoin.com reported on how the Attorney General of South Carolina served a cease and desist order to Genesis Mining. The state of South Carolina has also deemed mining contracts to be securities, and plans to prosecute unregistered entities as well.

Written by Bitcoin.com