Monthly Archives: August 2018

Draft Proposal from EU Official Proposes ICO Regulations

Initial coin offerings (ICOs) could be receiving acknowledgment toward a legitimized future, according to a draft report on regulations from the European Parliament.

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published a draft report that offers insights to new regulatory frameworks for crowdfunding; interestingly, ICOs received a notable mention.

Bullish backing

According to the draft, while the proposed amendments to crowdfunding regulations don’t entirely meet all the requirements to sufficiently regulate ICOs, the report positively writes that “it takes a much-needed step towards imposing standards and protections in place for what is an excellent funding stream for tech start”.

Ashley Fox, an MEP representing the UK who spearheaded the draft, has been somewhat bullish on blockchain since 2016. After a Blockchain Conference and Expo held at the European Parliament, ECON voted against “hasty regulatory steps” due to the lack of understanding what blockchain can do.

Fox was quoted saying, “There is a consensus in the Parliament, that policymakers should be careful not to regulate the technology out of existence.”

His proposals now indicate that a better understanding of the space has been achieved to some degree, and now appropriate inroads towards regulating token sales with a proper legal framework are underway.

Right direction

The proposal offers a solution to the notoriously fraudulent waters of the ICO markets, and also opens up the chance for ICOs to prove their worth. The paper writes, “At present initial coin offerings are operating in an unregulated space and consumers are at risk from fraudulent activity taking place in this market. This Regulation gives the opportunity to ICOs that want to prove their legitimacy to comply with the requirements of this regulation.”

The new rules proposed state that crowdfunding service providers “should be permitted to raise capital through their platforms using certain cryptocurrencies”. Furthermore, the report details that the newly proposed regulation applies only to public sales which raise less than EUR 8 million.

Positive proposal

There is an emphasis on the need for regulation in this space and once this regulation is implemented, it will generate a new level of protection for the crypto-community, which could generate positive world-views of the nascent industry and boost it as a whole.

The draft proposal, however, is not binding nor is it final. Fox acknowledges that there will need to be changes made should the proposal be put into an official motion.


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Ethereum Founder and Coinbase CEO See Positive Growth in Crypto

Joe Lubin, co-founder of Ethereum, has commented that the fall in recent cryptocurrency prices is no constraint to future positive market growth.

The comments were made in an interview with Bloomberg yesterday when the ConsenSys CEO indicated that the big picture was the relevant factor for investors, and not to focus on “pimples on a chart” as he put it, referring the peaks and troughs of Bitcoin prices.

He spoke of the “bubble” factor, suggesting that each of the six major events has always bought a surge of activity. He argues:

“…we build more fundamental infrastructure, we see a correction, and the potential gets even more impressive… I absolutely expect that there is a strong correlation between the rise in price and the growth of fundamental infrastructure in the ecosystem and the growth of development in the ecosystem. We are probably two orders of magnitude bigger as a developer community than we were eight or ten months ago.”

The current market trend should be expected, Lubin suggests. He argues that much of the current volatility has to be put down to investor speculation rather than flaws in the underlying technology, suggesting that cryptocurrencies were very much still on the right positive trajectory. Regarding his own case as a CEO, he said:

“So we can look at the price and make growth plans and projections, and we’re still on track, basically. So this is not unexpected.”

Lubin added that each value surge over the past years indicated that the current situation is just like the last “six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening”.

In other news, Coinbase CEO Brian Armstrong has revealed that the company signed up 50,000 new customers a day last year and on Tuesday reflected Lubin’s view that the general trend is positive, suggesting:

“This technology is going through a series of bubbles and corrections, and each time it does that, it’s at a new plateau… People’s expectations are all over the map, but real-world adoption has been going up.”

At time of press, Bitcoin is currently trading at USD 6,429, up 6.47% on 24-hr trading. Ethereum is trading at USD 285, up by 6.93% on 24-hr trade.


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Jamaica Stock Exchange to Offer Cryptocurrency

The Jamaica Stock Exchange (JSE) announced on 14 August 2018 that it will begin offering cryptocurrencies for trading by the end of 2018.

The JSE has signed a memorandum of understanding (MoU) with blockchain and crypto firm Blockstation, who will be developing a digital assets platform for JSE. It will create the cryptocurrency side of the platform, while the JSE will integrate their infrastructure into the platform. Apparently, Blockstation has already been developing this crypto trading platform for the JSE for the past six months.

Most importantly, this new crypto platform will be completely regulated with the same laws used to run the JSE, making the crypto investments safe for institutional investors. This could be a way for institutional investors to buy crypto, which is something much desired in the crypto space now that the US Securities and Exchange Commission (SEC) has not be approved any Bitcoin exchange-traded funds (ETF). A Bitcoin ETF would have paved the way for institutional investment into Bitcoin.

There is some speculation that the JSE will launch its own cryptocurrency and this could become a major asset, similar to how Binance Token (BNB) has become a major cryptocurrency as a utility token on the Binance exchange.

Blockstation co-founder and chief architect Jai Waterman, says, “Our mission is to provide a secure method of trading cryptocurrencies with broker-dealers and stock exchanges. We’re providing the stock exchange the technology for a broker-dealer network and repository, so that from end-to-end, their life cycle of trading – just like with securities – they can do the exact same thing with blockchain and cryptocurrencies.”


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Bitcoin Volume Surpasses OTC Gold Market

Financial researcher Nic Carter has run the numbers and found that Bitcoin volume has surpassed the over the counter (OTC) gold market so far in 2018. The OTC gold market is on track to settle USD 446 billion of transactions in 2018 while the Bitcoin market is on track to have a volume of USD 1.38 trillion in 2018, using simple extrapolation.

So, not only has Bitcoin’s volume surpassed the global OTC gold market, it has surpassed it by about 200%. This is a good indicator that Bitcoin has become a major asset class.

Conservatively, (adjusted estimates), Bitcoin has settled $848b this year, and is on track to settle $1.38T. Bitcoin, it appears, has quietly surpassed the OTC gold market in settlement volumes.

— nic carter (@nic__carter) August 12, 2018

Carter used gold clearing statistics from the London Bullion Market (LBMA) which includes HSBC, ICBC Standard Bank, JP Morgan, Scotiabank, and UBS to arrive at the USD 446 billion OTC volume projection for 2018. In general, gold OTC volume is less than USD 30 billion per month, and silver OTC volume is less than USD 5 billion per month. According to CoinMarketCap, Bitcoin has a volume of USD 136 billion in the past month, and this does not include derivatives exchanges like BitMEX which actually have nearly as much volume as all the Bitcoin spot markets combined.

There is a caveat to this since total gold volume might be far higher than OTC markets due to paper gold. On markets like COMEX, paper gold is issued, which can be redeemed for the actual precious metal stored in a vault. However, there is only a tiny fraction of actual reserves in the vault backing the paper gold. There are many different estimates for the ratio of paper to metal stored in the vault, ranging from a 100 to 1 ratio all the way up to 1,000 to 1. Regardless of the exact number, the point here is most gold trading is done with derivatives that aren’t truly gold. This has saturated its market price and forced it to be far lower than it should be.

When it comes down to it, OTC gold market volume represents the true volume of physical trading, and Bitcoin has far surpassed it. This means there are more demand and activity associated with Bitcoin than physical gold.

As written in a previous article on Bitcoin News, Bitcoin is better than gold as a currency since it is far more liquid and far more secure. This makes Bitcoin much better for international commerce and finance than gold. It appears the market agrees with this, based on the global data.


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Bitcoin News Radio Show, 14th August 2018

Listen to the 14 August 2018 Bitcoin News Radio Show below.

On this edition of the show, we start with a Bitcoin market update. We primarily focus on how Bitcoin and gold are going to be the best money alternatives as fiat currency inevitably collapses, but Bitcoin is far better than gold due to its liquidity and fixed supply. We also discuss how Square Cash has launched Bitcoin services across the United States, and how the Jamaican Stock Exchange will soon be listing cryptocurrency.

Follow the Bitcoin News Radio Show on AnchorSpotifyGoogle PodcastsStitcherRadio PublicPocket Casts, and Breaker. We broadcast a new episode every day, covering the most important topics in the crypto, Bitcoin, and blockchain world!


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South Korea Plans Special Crypto Zone Status for Jeju Island

The South Korean island of Jeju sees itself as a potential crypto haven and has requested that the government allows it special crypto zone status.

The island’s governor made the request at a meeting with Kim Dong-yeon, Korea’s finance minister and deputy prime minister for the economy, and other government officials in an attempt to place the island at the forefront of South Korea’s crypto economy.

Jeju Province, officially Jeju Self-Governing Province, is one of the nine provinces of South Korea. According to Wikipedia, the province is situated on and conterminous with the nation’s largest island of Jeju, formerly transliterated as Cheju, Cheju Do, etc., or known as Quelpart to Europeans.

Governor Won Hee-ryong proposes making the island a hub for the development of blockchain and cryptocurrency technology and has requested that the South Korean government form a panel of specialists to plan a strategy to boost its blockchain profile. At a meeting last week, the governor commented:

“For Korea to become a leader rather than a consumer of this new global industry, we need to quickly allow [the operation of] blockchain and cryptocurrency [firms].”

The request comes on the heels of a statement by central government on Monday that it plans to spend USD 4.4 million on eight tech sectors it regards as critical, citing self-driving cars and smart factories, with an emphasis on blockchain, big data, and artificial intelligence. This spending could increase to KRW 10 trillion over the next five years according to Kim Dong-yeon. If these reports are accurate, then the government would need to train 10,000 specialists to service these new projects.

The ministry said, “The measures will help facilitate the platform economy, which in turn will help speed up innovative growth.”

It appears that the request by Jeju may not be an accident coming so quickly after the government statement of extra funds targeting new technology. Governor Won’s desire to create “Jeju Free International City” is very much in keeping with the government’s drive towards regulating blockchain so that becomes fit for purpose, freeing up current restrictions.

Moves towards deregulating ICOs in South Korea is never far from the crypto news in the Asian techno hub, with announcements in June that Korea’s Financial Convergence Association had plans to build its own blockchain hub.

A startup fund is planned for the end of 2018 with Seoul talking the talk, promising that it plans to use “drastic measures to ease regulations that have been blocking new industries and technologies from moving forward”.


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India Investigates Replacing Smart Travel Cards with Crypto Tokens

The Indian government is currently in the midst of reviewing the viability of substituting smart travel cards for its own central-bank issued crypto tokens.

A senior official from the country’s finance ministry and a member of the committee undertaking applicability research for the crypto token said that the committee is currently researching the use of a custom blockchain-backed crypto token to replace smart cards in the public sector, such as the metro card.

Also in the private sector, they are looking to include the tokens in such areas as air mile loyalty programs where they cannot be converted back into fiat money, he said.

The Inter-Ministerial Committee (IMC) was first established early last year by the Ministry of Finance and constitutes members from India’s taxation authority and India’s Department of Economic Affairs (DoEA), as well as representatives from India’s central bank, the State Bank of India, and several other government departments.

The IMC has also been charged with producing a regulatory road map for the cryptocurrency space and is responsible for determining the usability of crypto tokens in the public sector, partly by studying international and governmental policies and legal framework regarding cryptocurrency.

The committee has been requested to find specific measures used by governments to curb money laundering activities via crypto.

India’s own crypto token

As reported by Bitcoin News on Monday, the Indian government is in the midst of implementing a crypto token specifically for financial transactions, stressing this as different to cryptocurrencies which are currently all banned in the country.

The tokens would differ specifically from cryptocurrencies as they would be a means of executing financial transactions exclusively in India.

The president of the Digital Lenders Association of India detailed that people would have to pay for these tokens with physical money should they be instituted, removing any impact on the country’s monetary policy.


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Venezuela Central Crypto Bank Next as IMF Predicts Million Percent Hyperinflation

It has been reported that there are new plans afoot for a Venezuelan central bank cryptocurrency along with a “superior court to the Supreme Court of Justice”.

According to Venezuela National Constituent Assembly member Hermann Escarra, the government is preparing to change the constitution to allow for the new crypto bank.

Venezuela’s crisis has steadily worsened as a result of lower oil prices, corruption, and a mismanaged socialist system, experiencing all but a total collapse of the economy, public services, security, and healthcare. In February, Venezuela launched its own Petro cryptocurrency backed by the country’s oil reserves.

Shopping bags made of the national currency the bolivar (VEF) are now being made in order to transport the notes, and a cup of coffee costs around VEF 2.2 million (around USD 0.50 at black market rates). For the same price, you can fill a small SUV with petrol almost 9,000 times.

The government continues to print money at an alarming rate with a current inflation rate of over 25,000%. The IMF predicts hyperinflation in Venezuela will reach a staggering one million per cent by the end of this year at the current rate, although this has been refuted as ludicrous by some economists. Economic meltdown and a recent assassination attempt on President Maduro just this weekend continue to paint a grim future for the South American oil-rich giant.

It is uncertain if a cryptocurrency-based central bank can do anything to help to at least alleviate some of the country’s extreme financial problems, particularly as the Petro has so far made little impact. It looks very much as though Venezuela has reached the “try anything” stage. Nonetheless, Escarra divulged the latest plan on Thursday:

“The National Constituent Assembly of Venezuela… is preparing a reform to the Constitution that would include a central bank for crypto-assets and a superior court to the Supreme Court of Justice… the draft changes to the Constitution will be presented in 35 days to the board of the Constituent Assembly.”

Maduro’s new “Bolivar Soberano” which is linked to the Petro is also ready for release on 20 August.


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Law Expert Advocates for Blockchain Use in Legal System

In an article for Lawyer Monthly, legal technology expert Paul Sachs advocated for the use of blockchain in the legal system and court proceedings, focusing on the UK in his discussion.

Sachs preceded his in-depth analysis of how blockchain could be utilized by stating a necessity for substance to be included in the growing discussion around the technology’s potential use cases; his analysis does just this.

Increased security

The most significant contribution of blockchain in law, as Sachs sees, it is the potential it has in transforming security and protecting evidence during a trial. He notes that the UK courts are currently going through a GBP 1 billion modernization effort partially focused on digitizing processes to increase work efficiency.

For courts to move away from paper, instituting new technology poses a risk, especially in that digital evidence can be altered. Sachs writes that particularly when there is a long time between the original submission and the court date, data must be provably fully compliant with security and business processes.

The solution: an immutable network of evidence that can be presented in a courtroom with no questions as to the authenticity of the data. These are the strongest features of blockchain by design.

Blockchain may be a public artifact, Sachs discusses, but legal evidence would not be revealed to the public, merely IDs and hash codes. He writes: ”In this way, it becomes an incorruptible digital ledger.” Each transaction of the evidence would be recorded on the blockchain, while the evidence itself would remain completely private.

This removes the opportunity for any wrongdoers to forge documents or edit photographs once the evidence has been uploaded to the blockchain. It also could be just the beginning of further innovation in the legal sector with security now guaranteed, as Sachs outlines.

Blockchain in the UK

Sachs’ vision for blockchain in the legal system may well be established given the UK Financial Conduct Authority’s (FCA) blockchain bullishness. It recently announced the establishment of a collaborative entity, the Global Financial Innovation Network (GFIN), to pursue innovations.

The network’s purpose is founded on the concept of establishing a global blockchain knowledge-sharing “sandbox”.

The Bank of England has also nearly finalized its Proof of Concept (PoC) project that is looking to establish a Real Time Gross Settlement (RTGS) service to meet new financial challenges emerging from the changing landscape.


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The Implications of Bitcoin’s Blockchain Growth

Bitcoin is based on a blockchain, which is a string of blocks, where each block includes numerous transactions. The total size of the blockchain is inexorably growing, and this has implications for the future of running Bitcoin nodes. Currently, the Bitcoin blockchain is 178.8 GB in size as of this writing on 14 August 2018, a size so large that it is difficult to download and a significant obstacle towards running a full Bitcoin node.

Catching up to block size

Each Bitcoin block originally had a hard cap of 1 MB but this was changed when Segregated Witness (SegWit) was implemented. Now, Bitcoin blocks can be up to 1.2 MB on average and rarely 2 MB or slightly more. On average, there is a new Bitcoin block every 10 minutes, which adds up to 144 MB of new data added to the blockchain every day. This equals almost exactly 1 GB of data being added to the blockchain every week, which is similar to the size of a movie download. Every month, 4 GB of data is added to the blockchain and every year this is 52.5 GB of data. These numbers assume an average of 1 MB per block, which may be an underestimate due to SegWit. However, empty and partially-filled blocks are a common occurrence, so choosing 1 MB is probably better than performing calculations with 1.2 MB.

Up until 2015, less than this amount was being added to the blockchain every year, since there was less data being used for transactions than the maximum capacity of blocks on average. However, since 2015, Bitcoin has been filling up blocks consistently, and this will likely continue since Bitcoin is becoming even more popular as time progresses.

There are many computers with 100 GB of data storage or less and for these computers, running a full Bitcoin node is already impossible. In order to run a full Bitcoin node and therefore make the Bitcoin network healthier by actively participating in broadcasting data to users, a computer must have a full and current version of the blockchain. Most high-end computers have 1 TB of storage, which is 1,000 GB, and these computers will be able to download the entire Bitcoin blockchain for more than a decade. Hard drive sizes on high-end computers will likely continue to increase, so there should always be a suitable computer for people wanting to run a Bitcoin node.

Fewer full nodes?

However, the biggest problem as the Bitcoin blockchain grows is the time it takes to download the whole blockchain. It already takes weeks and even months with a good internet connection, making it unfeasible for most Bitcoin users to download the Bitcoin blockchain and run a full node. Equivalently, this situation makes it unfeasible for most Bitcoin users to use the Bitcoin Core wallet software.

Currently there are 9,637 full Bitcoin nodes in the world, and this number has been declining since March 2018 from a peak near 10,500. This is a very small amount of nodes compared to the number of Bitcoin users in the world and in the futurem as Bitcoin’s blockchain grows, it will be progressively more difficult for the number of nodes to increase since the time to download the blockchain will get even longer.

Unfortunately, fewer nodes means the Bitcoin network is less healthy. It also means that there are less people running a full version of Bitcoin and choosing online wallets, which are far less secure and increases risk across the Bitcoin world. Due to the nature of Bitcoin, in that it requires a full blockchain history to function, this problem may only be fixable with faster internet and computers that have more storage.

Current mitigations include running a full node in “pruned” mode, currently allowing a storage space below 10 GB. Depending on the version and client, the Bitcoin blockchain could also be faster to download via torrenting.


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