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Exclusive: How a Local Startup Was Instrumental in Pakistan’s Decision to Legalize Crypto

How a Local Startup Was Instrumental in Pakistan's Decision to Legalize Crypto (2)

Pakistan’s own national celebrity and humanitarian Wakar Zaka has told Bitcoin News that his project, TenUp, played a key role in both informing the government about the technology and rousing a significant pressure group among the country’s population in favor of cryptocurrency legalization.

Pakistan’s Finance Minister Asad Umar has issued a recommendation to legalize cryptocurrency trading and business in the country. Around 5,000 digital currency exchanges are to be registered, while the cryptocurrencies will be classified as “investments” and net gains will be subject to taxation as per the US’s standard.

The State Bank of Pakistan (SBP) banned cryptocurrencies in April last year, so observers are asking, why the policy U-turn now?

Bitcoin News caught up with Zaka where he explained the vital role his own cryptocurrency project TenUp had in influencing the government’s decision.

TenUp was actually a test case to use and present to the government to show how cryptocurrency work… the government was very humble and up for the technology so I knew that I had a chance.”

Zaka has been in contact with Finance Minister Umar for a while now and his relationship with the country’s top government officials including the prime minister meant he knew they would be a careful audience for his ideas.

The new cryptocurrency legislation is still in a “recommended” stage but should be rolled out by 20 July given its strong support from the finance minister who has assured there will be a focus on know-your-customer (KYC) and anti-money laundering (AML) policies when it becomes legal to trade. It is particularly exciting news as it will be the first time Pakistan is taking the lead in technology, particularly among its neighboring countries, Zaka noted.

The government task force

He is currently working closely alongside the new government-imposed task force devoted to ensuring the cryptocurrency legalization is rolled out responsibly and practically.

”The task force is taking contributions directly from us; basically, it’s us behind all the decisions. They will send us messages and ask us about stuff. I have full faith in the new government. The president of Pakistan is educated about the technology and is pro-blockchain. He is the first national leader in the region to be this outspoken in favor of it. He explains the technology in the common man’s language- that’s a very good sign for us.”

The task force is made up of ”tech-savvy guys” there to create appropriate legislation. Zaka has been showing them videos and presentations and sharing information about the TenUp project.

On the task force’s agenda is mainly how cryptocurrency will be traced and how to appropriately license come 5,00 exchanges to operate. There will also be a special investigation team set up for initial coin offerings (ICOs).

Zaka’s next ambition is to help launch a state-issued cryptocurrency for Pakistan; he has been using Venezuela and Iran as examples for the government to look into. But the Pakistani state is still in need of some convincing that it is the best decision. Zaka argues, however, that a government-issued cryptocurrency could be a way to bring in revenue from across the globe.

”Pakistan should hold its own ICO because the president has good credibility all around the world, better than Venezuela for sure. The entire world would look into it.”

He has high hopes and expectations that the G20 held in Osaka, Japan in June will be a big turning point for how cryptocurrencies are perceived on the international stage. ”India will definitely follow us in legalization,” Zaka predicted, ”we will see that in a month or so.”

Legalizing cryptocurrency will of course usher in some macroeconomic changes for the country, allowing much of the vast number of unbanked people in Pakistan access to personal accounts. New businesses and the technology sector would also flourish, perhaps even bring the ”tech revolution” Wakar predicts.

Celebrity for the good and bad

Zaka has happily used his celebrity status and huge fan following to share the message and educate people on cryptocurrencies. ”It was very difficult to make them understand how cryptocurrency can work and can eliminate money laundering for example,” he acknowledged.

”Everyone in my region, in India and Pakistan, thought this was a tool for money laundering. I have been education fans for about six months. There has never been another case of a celebrity with a big fan following promoting cryptocurrency properly. When a celebrity starts promoting it, their fans will follow it. Those fans become an army and then they start pushing the government. If other celebrities in India or Nepal start speaking up about it, I think people will definitely start to understand.”

Pakistani celebrities have historically tended to protest against religions such as Islam and build popular movements behind these ideologies so Zaka’s actions were quite unpredicted.

The problem, of course, comes when celebrities such as Floyd Mayweather throw their weight behind token projects that prove to be multilevel marketing or Ponzi schemes. These cases bothered the Pakistani government, of course, and Zaka made it clear he was not in conversation with the government for personal financial benefits by promoting his own cryptocurrency project, TenUp.

”In every region of the world celebrities should use their fame to help people not just to promote themselves. If you have fame you have responsibility. Celebrities in Nepal and India should look at the bigger picture.”

”I’m very happy the government has made the decision to legalize cryptocurrency and its a very big thing for our country,” Zaka finished.

 

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George Samman Exclusive: Global Inequalities Created Need for Alternative Financial Solutions

Exclusive: Global Inequalities Created Need for Alternative Financial Solutions

Barely a decade after the last global economic crisis of 2008, economic pessimists continue to predict another impending crash on a global scale, brought on by the persisting inequalities in financial systems around the world.

Bitcoin News caught up with prominent cryptocurrency advisor, investor, and author George Samman to explore how a move towards full decentralization in the blockchain sector would be possible, why things may be looking better for the market in 2019, and why algorithmic stablecoins may be the real future of money.

George Samman has a versatile role in the blockchain industry and is currently running a proof of concept with the development team and holds the role of technical advisor for a project that is currently still in stealth mode. He is also working on a tokenomics and government model with another project, alongside his continued role as an advisor to blockchain companies. Samman often co-authors cryptocurrency reports and writes on his blog, with most of his work focusing on market trends and strategy as well as collaborating with teams on blockchain architecture and design.  

Moving towards full decentralization

As increasing numbers of institutional investors enter into digital currency, centralized exchanges like Coinbase and Binance are scooping up more traders through the promise of convenience. But many in the cryptocurrency community are concerned that centralized forces are beginning to play a major role. Samman firmly believes, however, that the future of cryptocurrency is bound to be more decentralized. This can not happen all at once though he said, pointing out that decentralization needs to be staged and it is not something you can start off with fully.

On the journey to total decentralization, Samman explained that there are trade-offs and in order to have real use cases and adoption emerge most systems will be- and are being designed to- gradually get to fully decentralized systems.

But the author had another note to add, linking the failings of the current global political system to the cause in the rise in popularity of decentralized models:

”I think the era of centralized systems is coming to an end. I don’t think it matters whether institutions come or not, the long arc of history is veering towards decentralization and I believe people are waking up to this now. Global inequality has reached levels where alternative financial systems are desperately needed. Riots and populism are the beginning of the end of centralized forms of governance as they have existed and centralized forms of money.”

Market performance

The shadow of 2018’s bad market year is still at the forefront of many investors’ minds, with nothing that looks too promising on the horizon for 2019. Samman explained what he believes went so wrong last year, pinning it down to overzealous investors and initial coin offerings.

”For me, the bull markets time ran out which ended with an irrational exuberance and market caps reaching unrealistic levels. Too much money was raised at crazy valuations  and one of the functions of bear markets is to always punish that and purge out the good projects from the bad and that’s where we are now.”

He has hopes that these negative factors have largely passed, saying the ”downside [this year] is limited”. Lots of poor projects are failing and real use cases and projects that have been working hard are going live; he pointed to these as encouraging signs. Breaking down what to expect in 2019 further, he continued: ”You also have some signs of institutional money coming in, ie Fidelity Custody and Bakkt launching. I think we can expect a long drawn out year of boring price action where lots of things are happening under the surface.  Volumes have dried up and stealth accumulation is happening.”

Samman advised investors to look out for interoperability solutions like Cosmos (a decentralized network of independent parallel blockchains)and Polkadot (a heterogeneous multi‑chain technology), saying they will ”be big deal and bring crypto to the next level”. And watch out for Bitcoin’s trading volume starting to rise again, as it could be one of the first telltale signs of the next bull market.

But for 2019, Samman really hopes to see big, solution-finding projects work and benefit from some type of adoption. As for what industry blockchain will conquer next, ”what hasn’t it conquered already?” he jokes.

The future of money

Samman’s hopes for decentralized currency are high and he has faith in their ability to replace fiat currency. He explained, ”I think the future is money systems which are not government owned, these will take many shapes and forms as we move through a giant experimentation phase but ultimately I believe some will emerge as the decentralized central banks for the internet.” The vision is for digitally native internet technologies to power the decentralized web.

But centralized currency is here to stay for a while, at least until algorithmic and cryptocurrency backed stablecoins prove they can remain stable to their namesake while maintaining the demand side. There is also the possibility that if a new bull market emerges, a lot of these stablecoins will lose value as traders and speculators use them to purchase cryptocurrency and don’t want to be “locked-up”.

That may not be a bad thing, however, as Samman explained: ”This actually would be a best-case scenario as it would be like Quantitative Easing for the crypto markets as there are billions of dollars locked up in stablecoins which could move the market much much higher.”

He recently worked as the lead author on the State of Stablecoins 2019 Report in which he explored in more depth why he believes stablecoins will evolve past the asset-backed subcategory dominant today, to be replaced by crypto-collateralized and algorithmic stable coins. Primarily, it goes back to his lack of faith in fiat currencies and his belief that an alternative form of currency will prevail.

To read more about George Sammans work and views, visit his website, LinkedIn or Twitter

 

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Crypto360 Exclusive: Inheritance, Custody – Crypto Deserves Same Protection as Traditional Assets

Crypto360 Exclusive: Inheritance, Custody – Crypto Deserves Same Protection as Traditional Assets

As the blockchain and cryptocurrency industries mature, firms are beginning to use the technologies to create increasingly sophisticated alternatives to mainstream financial services. Beyond cryptocurrency exchanges, startups have created solutions for cryptocurrency loan services and futures trading, with many expected to see a Bitcoin exchange-traded fund in action later this year.

Based in Italy, Crypto360 is one such company offering an innovative finance solution as a digital currency custody provider. The project has two main selling points: 1) it offers a legally compliant platform to administer digital currency inheritance and 2) it provides a custody solution suitable for institutional and retail traders alike.

Ivan Rossi, who works at the company’s front desk, told Bitcoin News:

”We want to give to cryptocurrencies the same protection that traditional assets have on the hereditary front, and we do it in a different way from the competitors without taking possession of the asset.”

Crypto360’s founders claim they were ”not amazed” by other custody solution providers in the market but appreciated that these alternatives confirmed that custody is valid if integrated with the possibility for assets to be handed down in the face of decisive events.

Contractual and conditional custody on the go

The firm provides an ”ad hoc solution” for institutional investors, offering them different contractual conditions from that of other investors. 

A major group of users is expected to be those looking for a way to manage their cryptocurrency for inheritance with full legal compliance. Rossi explained, ”It is compatible with local tax laws because cryptocurrencies are not yet included as goods in the hereditary asset. The Crypto360 service has been conceived as an encrypted custody of private keys and the aspect of succession is an integrative character that makes its sphere of application complete.”

As well as inheritance, clients can assign a designated beneficiary to assume funds in the event of a particular incident that is contractually identified. 

The platform does save a copy of clients passwords but this is protected by a double level of encryption and stored in protected archives. If somehow the account was accessed fraudulently, any request to redeem funds in the account would be met with a request to verify the individual’s identity.

Rossi told Bitcoin News that the security process on Crypto 360 means the usual storage precautions needed to protect your private key does not apply. ”Clients can pin their password up on the wall or store it freely on multiple clouds. He could adopt any duplication and storage solution without countermeasures for the secret protection of the data, all in order to prevent its loss and without the fear that someone can use it,” he explained.

Because Crypto360 securely stores an encrypted copy of clients’ security details, if you lose your password through your own negligence you have not lost access to your account. As the company’s white paper cites, in 2017, as much as 23% of mined Bitcoins had been lost forever due to human error, so this is a way to help prevent client holdings from joining that statistic.

Security is, however, still a huge issue for cryptocurrency traders as compromised exchanges continue to make the headlines. Most recently it was revealed QuadrigaCX was given another 45-day extension for creditor protection, meaning any clients who lost money when the exchange lost control of USD 134 million in cryptocurrency will be unable to begin legal proceedings against the exchange during this time period. The exchange claims it lost control of the funds when its founder, who had sole control of the funds, died suddenly without passing on the private keys.

Rossi stated that Crypto 360 offers a different service to that of cryptocurrency exchanges, also operating with a unique security protocol which means incidents such as that experienced by QuadrigaCX would not happen on their platform. He added, ”It is important for users in the crypto world to understand that it is not safe to hold cryptocurrencies within exchanges. They are at risk of hacking and in the absence of countermeasures aimed at protecting the loss of access to funds, customers will lose their cryptocurrencies.”

How popular will crypto custodial services be?

It is no secret that cryptocurrency prices are not having their best moment. The success of projects such as Crypto360 is dependent on a large enough demand for its services, something directly correlated to the popularity of cryptocurrency and largely market prices also.

As the firm sees it, as the market matures there is a natural selection of projects as there was last year, but it is unlikely that performance similar to that of 2018 are repeated. ”Our vision on the market remains optimistic and we assume that it is a trend that is constantly growing, but in a more natural way that allows it to be consolidated,’ Rossi told Bitcoin News. 

Crypto360 also faces the potential problem of competition as more blockchain firms emerge to offer similar cryptocurrency solutions. Being one of the very first players, however, they are confident they will stay at the top of the game.

”We pride ourselves on being the first to think of a custody solution that keeps the clients’ funds private. It is very likely that the next competitors will be the banks, which as they currently do with the other assets, will keep the cryptocurrencies coming directly into possession,” Rossi affirmed. 

The prediction that 2019 will be the year of the cryptocurrency institutional investor had perhaps the largest consensus of all the year’s forecasts. In Rossi’s view, the time has already arrived: “[Custody soloutions] are a need very felt by the market and there are already large institutions ready to enter this business.”

 

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State of Stablecoins 2019 Report: ”A Giant Educational Resource”

State of Stablecoins 2019 Report: ''A Giant Educational Resource''

Published today, 20 February 2019, a new report into the state of stablecoins shows the most popular blockchains they have been built upon, their most popular use cases and how the companies behind them view regulations.

The findings of the State of Stablecoins 2019 Report have been compiled from responses to a survey that was issued to all companies that are actively working on stablecoin projects. Over 40 of these companies responded to this request, with the report notably boasting contributions from emerging thought leaders in the industry such as Nevin Freeman, CEO of Reserve, Jonas Karlberg, CEO of AmaZix, and Michel Rauchs of the University of Cambridge.

Bitcoin News also caught up with the lead author of the report, blockchain analyst George Samman , who shared just how important he believes stablecoins will be for the future of money.

Key findings

Note: These responses pertain to 38 tabulated surveys. Some participants declined to answer certain questions; these responses are not included.

  • 68.4% (26) of the stable coins were built on the Ethereum blockchain, Stellar was the second most popular choice with 7.9 % (3) choosing its native blockchain.
  • 52.6% (20) aimed to be a currency, store of value, or medium of exchange.
  • Transparency was the top factor influencing market confidence, claimed 34.2% (13) of respondents.
  • 36.8% (14) viewed the related industry regulations favorably.

While acting like a currency, store of value, or medium of exchange was the most popular target use for the surveyed stablecoin companies, other projects said they were looking to offer a variety of alternative financial services, including the provision of a credit or loan facility, trading facility wage options and facilitating gold trading.

One in three of the surveyed participants regarded regulations favorably, with some saying they believe stablecoins will likely be viewed more favorable than conventional cryptocurrencies in this regard. A number of the companies had already successfully achieved a fully compliant status, although 13.2% (5) had an unfavorable view of regulations altogether, saying self-governance and complete decentralization where crucial for the nascent industry. A common view between these groups, however, was the need for clarity in regulatory oversight

The report takes several examples of failing fiat currency, focusing on the cases of Venezuela and Angola, to highlight why stablecoins can take their place as a successful alternative to the failings of monetary policy. 5 main factors are given to illustrate the weaknesses of fiat not only in these cases but with government-issued currencies on a macro scale: 1) it is backed by nothing, 2) there is a centralized authority controlling interest rates and the money supply, 3)unsustainable global debt levels, 4) unfunded liabilities and 5) military spending.

The paper also acknowledges several of the weaknesses attributed to the different categories of stablecoins. IOU insurance, or real asset-backed stablecoins, require a third-party custodian to secure the physical reserves, also requiring strong regulatory oversight to ensure transparency. Crypto-collateralized stablecoins can have high volatility, with their longevity dependent on the performance of said cryptocurrency. They are also vulnerable to hacks as the collateral rests on the blockchain. Seigniorage shares, or non-collateralised stablecoins, remain highly controversial, with the highest vulnerability to cryptocurrency market crashes, with liquidation not possible during these periods.

Stablecoins: taking over money as it stands today

First setting up the context of the report with a brief history of money and why it has become an unstable concept for many regions, the report continues on to discuss the retaliatory rise of cryptocurrency and stablecoins, noting the different types of stablecoins and how the space is developing. Many of the projects that are building different categories of stablecoins are surmised, with much of the content collected from the surveys cited within the report.

Sammon relayed to Bitcoin News largely optimistic feedback regarding stablecoins from the contributing sources, saying many were “intrigued with the concept”.

When asked why it is so important to better understand stablecoins, the author responded:

“Money systems are broken in many parts of the world. Many governments have lost control of their monetary policy and it has destabilized countries and reduced their wealth… Inflation and hyperinflation are more common than people think and having a stable and transparent money option can solve a lot of problems for those afflicted by bad monetary policy.”

Sammon believes this failure of the state has given non-government issued currency and stablecoins the ideal opportunity to offer an alternative solution.

Although there has been a great interest in stablecoins in the past year with several dedicated reports already having been published, Sammon says the addition of a questionnaire involving 40 companies in the industry is something unique this report can claim.

“It becomes a giant educational resource for anyone interested in money and why stable coins are an evolution of money,” he told Bitcoin News.

Samman thinks that stablecoins will evolve past the asset-backed subcategory dominant today, primarily because many of these are backed by fiat which are themselves inherently unstable, with most fiat currencies failing to last beyond thirty years. Instead, crypto-collateralized and algorithmic stable coins may well prove to be the bigger innovations in the field, competing to become the decentralized banks for the internet.

“Personally, I feel these projects and the ones that aren’t tied to traditional financial institutions hold the most promise”, said Samman.

 

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Coinfloor to Launch Derivative Crypto Futures Amid Tough Market

coinfloor derivative crypto futures markets bitcoinnews

Top UK cryptocurrency exchange Coinfloor has told Bloomberg, that it is venturing into the derivatives market despite the seemingly poor market outlook and fierce competition in the futures market, with physically-delivered Bitcoin futures the new emerging derivatives for the asset class.

The CoinfloorEX spinoff of the Coinfloor cryptocurrency exchange will be offering the new physical Bitcoin futures services to sophisticated Asian traders. Meanwhile, it has been renamed to Coin Futures and Lending Exchange (CoinFLEX) for this purpose.

According to the CEO of CoinFLEX Mark Lamb, who is also a co-founder of Coinfloor, “bear cycles in crypto can go on a long time, but ultimately it’s an asset class which is one of the most fascinating, volatile, which is great for traders”. Lamb also downplayed the current market condition, confident that crypto will someday become globally accepted, saying that “it has the potential to be one of the major currencies in the world”.

CoinFLEX will have its base in Hong Kong. The proposed derivatives will include physical futures for Bitcoin, Bitcoin Cash, and Ethereum with leveraging of up to 20 times. Comparatively, top cryptocurrency exchange BitMex, also having a sizeable market in Hong Kong, will be a competitor as it also offers leverage of up to 100 times on some of its contracts. However, CoinFLEX has the advantage of physical delivery as against cash settlements that are prone to manipulation.

Prominent crypto movers have been named as members of a consortium owning the project, including Roger Ver, Mike Komaransky and Trading Technologies International Inc. Meanwhile, Coinfloor is also reported to be retaining an equity stake in the new venture.

It would seem that the market for institutional investors is constantly being expanded with multiple derivative options. “Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery,” said Lamb.

Last year, talks about the proposed Bakkt platform – an Intercontinental Exchange (ICE) project – constantly drove up the expectations of cryptocurrency holders and investors. Its recent announcement included a successful seed round funding of over USD 182 million, and a scheduled launch early this year, however, the date “will be amended pursuant to the CFTC’s process and timeline”.

Another derivative platform, ErisX, recently reeled in USD 27.5 million from Fidelity Investments, Nasdaq Ventures, and other investors during a seed funding round. It is also waiting for approval from financial regulators before launching this year.

Recently, the Japanese financial regulator hinted on the possibility of the launch of exchange-traded funds (ETF) that will be based on the new asset class.

 

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Anniversary Report: Bitcoin 10 Years on in Venezuela, South America

venezuela, bitcoin, cryptocurrency

In a Bitcoin News exclusive with the founder of crypto-backed non-profit Bitcoin Venezuela, Randy Brito shared how Bitcoin has evolved over the last decade in South America to become an increasingly popular tool for freelance workers to sell their services on the global market in the absence of access to payment systems such as PayPal. Brito also discussed his own humanitarian work done to promote Bitcoin adoption in Venezuela, the trajectory of Bitcoin in the next 10 years, and why he would like to see developers work on real use cases for cryptocurrency rather than on cryptokitties. 

Bitcoin’s 10-Year Journey

After researching Bitcoin in Venezuela since 2011, Brito has seen a significant shift in the number of local users and people even aware of Bitcoin. Back then, he jokes, there were only 10 people talking about it in the country and they were not even trading. In 2012, a small number of traders emerged with some grouped on the Colombian border, alongside Bitcoin mining which is gaining a strong following as well.

”It took 2 or 3 years more in 2014, 2015 for regular people to see how it could be used in Venezuela where electricity prices are very low. The first 5 or 6 years of Bitcoin’s existence in Venezuela was mostly unknown- only people with very technical knowledge or really inside the scene from the beginning were actually using Bitcoin for something,” Brito told Bitcoin News.

After 2015, the cryptocurrency was more common to see around, he said, with a growing movement surrounding it because of how it was utilized in relation to the riots in this period. Brito’s own non-profit Bitcoin Venezuela used cryptocurrency at this time to send food and medicine to protesters and street rioters. ”2015 was when most people started learning about it, after one year or so of using it to help people in the streets and even assist others leaving the country,” he shared.

Venezuelans line up at the Bitcoin Venezuela soup kitchen

A queue at Bitcoin Venezuala’s soup kitchen

Many South American countries are without access to major online payment systems such as PayPal and Venmo, so one of the primary use cases for Bitcoin has been as a way to receive international payments, with freelancers and entrepreneurs seeing an opportunity to develop their own business models around cryptocurrency acceptance.

”Argentina, for example, is known for having professional tech freelancers working in design and consultancy. Most of them used to work receiving international wire transfers or through Western Union but, there were capital controls imposed on foreign exchanges for a couple of years, meaning Bitcoin became an increasingly popular option to receive payments.”

In Venezuela, the foreign exchange controls which are meant to prop up the local Boliver currency have been running for not 2 or 3, but 14 years.

In other South American countries such as Bolivia and Chile, they also have restricted access to online payment systems as providers such as PayPal do not accept local documentation as a means of verifying the identity of the account holder. Bitcoin is being used more regularly in the region because of this limitation of financial services that operate in the continent.

A lack of real Bitcoin users

In Venezuela, Brito says, Bitcoin is not actually being used as a medium for exchange on the street. ”Even if you have smartphone and BTC wallet and try to pay for something, it’s almost impossible. Even places that say they accept cryptocurrency there is usually someone there like the owner of the store who needs to be there to accept it personally.”

Citing a report from Russia Today, he says journalists went to popular food chains in Venezuela that advertise to accept Dash but when they got there and asked to pay with the cryptocurrency, the employees said it was not possible because the owner was not there.

Brito partly attributes the lack of Bitcoin-accepting merchants to government persecution against anyone accepting currency that is not the local Bolivar: ”Even though for the last few months you are allowed to accept any other foreign currency as payment, you are obligated to do it at the exchange rate they impose, something not beneficial for the store. If they take dollars, for example, at the imposed rates they will lose money.”

Another problem for adoption is that people need smartphones, realistically running on the latest software update which most Bitcoin wallets require for security purposes. And if you are spotted with a USD200, USD300 phone, Brito says you are putting yourself at risk of mugging or even being killed on the streets of Venezuela.

Data released by the country’s national telecom providers showed that there are only 11.9 million devices in Venezuela, a country with a population of 30 million people. Currency controls mean this number is dropping even further because no one is importing smartphones into the country to sell, meaning the ones in circulation are often unbranded or not up to date. ”Most of them run on old, modified versions of Android designed for Chinese models, copies of other brands,” Brito says, not devices capable of supporting secure cryptocurrency wallets.

After a lot of hard work collaborators have completed the creation of the two water wells we’ve donated to a soup kitchen & an elderly center in #Venezuela. Kids & old ppl now have permanent access to water. Thanks!

Now let’s get em food!

DM if you’d like to help us help others pic.twitter.com/BkTlcAQixJ

— Bitcoin Venezuela ⚡ (@btcven) November 7, 2018

 

The Next Decade for Bitcoin

When will Venezuela even hit the bottom on security, connection, smartphones? Right now, some cities are completely disconnected from any communication system, some going without access to calls, SMS, text, 3G or even cable internet, staying weeks like this without connection to anywhere outside the city.

”If you get into that situation, there is no way you can pay with Bitcoin. What’s happening now is that cables, antennas, and wires are getting stolen by people who want to sell the copper of the cables. This is happing more regularly; it’s pretty common to see people getting beaten after getting caught stealing cables, even beaten to death by people angry that they are disconnecting them from the rest of the world. It’s happening more regularly, even daily.”

Brito is working on a mesh network of devices that would be affordable for Venezuelan citizens, with the software able to be installed in repurposed devices already existing in the country. Antennas or routers already in homes but lack connection to services such as the internet, or physical devices with restricted services could be repurposed and have the new software downloaded that would allow them to connect to each other and communicate via encrypted text messages, as well as facilitate Bitcoin transactions.

”They don’t need any other connection if the device is running the mesh software; they can connect and can transmit both messages and Bitcoin. Any device can have the software installed and is capable of connecting to others up to 5 km away, but with bigger, repurposed antennas that are basically abandoned because of the lack of service, they can be repurposed to make the range longer.”

Brito’s idea is the number of devices running will be so many, that they will be able to connect to each other in small towns and cities, while the big ones can be connected to one another via radio which can go up to 20 km distance: ”You will be able to deploy an alternative to the internet and other communication systems, capable of broadcasting Bitcoin transactions approved on the network even if there is no internet connection at all.”

Bigger devices will work basically as small computers, keeping connected and up to date with the Bitcoin blockchain through satellite. People inside the mesh will be able to see if transactions have been added to the network and approved.

Brito has not been to Venezuela since 2008 and knows he would probably get arrested if he did. He expects the government to try and restrict his mesh network concept, even as it tries to scale back internet use.

”You have to be careful about using, say a USD 1,000 dollar antenna to strengthen the network not only because it will likely get stolen, but people can also track it and get to your house, small affordable DIY devices are much more practical. They are more difficult to shut down or crack down on. Hopefully, there will be so many devices communicating with each other they will be impossible to shut down.”

Money, Brito notes, is a monopoly of the state in every country. Bitcoin takes that power out of the government and gives it to anyone capable of running a node. ”We are basically trying to achieve the same. Just like a Bitcoin node, you will be a node inside a mesh,” he says.

a Turpial 🐦 (ESP32 LoRa) could connect to another one to join the mesh up to 3km-4km distance (~1.8 miles) in the open. You could switch antennas

A phone could only make it up to ~50m (~0.031 miles)

We’ll be making tests in the coming days, stay tuned!https://t.co/gKr1gJxMHu pic.twitter.com/8O7sMPO8Yf

— Bitcoin Venezuela ⚡ (@btcven) December 28, 2018

 

Hopes for 2019

Next year, Brito says he would like to see more people transacting in Bitcoin with each other in Venezuela, but that opportunity is not yet in the hands of the local people.

”If developers actually want to see adoption they should put an effort into making the wallets more accessible to those not part of the first world, those that don’t have access to smartphones at all. I would like to see developers pay more attention to what is actually needed in some places not things like cryptokitties which only end up with one thousand users globally while we have people that are not even capable of transacting or communicating with families in other countries.”

Brito concluded by sharing hopes that more people in the Bitcoin industry will focus on humanitarian efforts: ”I would like to see real use cases for actually helping people, making their lives better. I do think there are ways to do it and it’s not that costly. Bitcoin is capable of working in the worst of places, and I would like to see the resilience of it and how it can circumvent all kinds of censorship.”

To learn more about Bitcoin Venezuela or to make a donation, visit the website or follow them on Twitter.

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Enter the Lamborghini Raffle for 0.00057 BTC While Helping Charity

Enter the Lamborghini Raffle for 0.00057 BTC While Helping Charity

Dunstan Low is giving people the chance to win a Lamborghini for just EUR 2, around BTC 0.00057, by taking part in his raffle. Not only that, the winner will be able to donate 2% of the funds raised to a local charity of their choice.

Yes, the Lamborghini is a nod to every cryptocurrency investor’s infamous dream. ”It’s a lighthearted way to get started,” Low told Bitcoin News, saying it’s important for him to establish trust with cryptocurrency users before he tackles more difficult issues through his raffles, which he certainly intends to.

”There are a lot of house raffles with more difficult stories and unfortunate circumstances that I want to help in the future, but feel that we need to establish trust in the first instance,” he said.

Why offer a crypto payment option?

Participants can enter the raffle using Bitcoin, Litecoin and Ripple among other cryptocurrency options. After following the digital currency revolution for several years, the idea of taking power away from institutions and giving it back to the people very much appealed to Low.

”I’m actively involved in developing a few business models that build on the raffle concept more like a decentralized method of crowdfunding that focuses on the social role and circular economies. At this point, the raffle model shares ideas with these broader and more ethos based works whilst providing a fun and new opportunity for people,” he explained.

Given this framing, a cryptocurrency raffle is Low’s ideal scenario. While there are plans to add fiat payment support, he would prefer to avoid traditional models and existing banking infrastructure as much as he can.

The website enlists payment gateway Coingate to facilitate transactions, which Low says has proven easy compared with standard payment providers.  He noted ”I would highly recommend the option, it’s just so revolutionary and gives you a fuzzy feeling when a payment arrives and it hasn’t touched a bank.”

Participants can also check the website for details on how to enter the raffle for free by post.

Provably fair, how?

Several questions have been raised over how it can be proven to be a completely fair raffle. The draw of Low’s last raffle (detailed below) was conducted by a Google random number generator on a random journalist phone, with the button pressed by a solicitor while around 30 journalists filmed the moment.

”We are currently looking at how to translate this into a provably fair draw using the blockchain, my developer is looking at the requirements and if we can make this happen. If not, we are happy at this point to use a solicitor or Gambling commission approved vendor, but blockchain is much more exciting and independent, so research is underway.”

Crypto charity

Low’s perspective is that cryptocurrency could be a great way to reduce costs and create transparency in the charity sector, generally benefiting any good causes.

But more than that he believes cryptocurrency can provide much more robust and scalable solutions to solve broader problems in terms of social wellbeing, healthcare, housing, income, and innovation. ”I honestly believe that new economies can and will be built on the utility of cryptocurrencies with social ROI and crowdfunding as a core part of the model for democracy and economic growth,” he said.

The winner gets to choose the charity this time around, but Low has plans to bypass charities in future ventures, donating instead directly to communities that help promote redevelopment and growth.
Look out for more raffles from Low in the future, as he hopes to make them a regular occurrence. He told Bitcoin News: ”Hopefully we can start small and build up to holding regular raffles with a broad range of prizes from small items up to private islands, every Bitcoiner needs one with their Lambo! But seriously, we hope to scale up and reduce our overhead and create a new method to help as many good causes as possible and to eventually build outwards into potentially more interesting and nuanced models.”
As he puts it, raffles are a good way to attract people to donate for good causes that may not be on their radar in a way that direct charity donations can not, even if people are just participating because they want the Lambo.

How it all started

In 2017 bankruptcy fears and the refusal for a new mortgage led Low to raffle off his home at GBP 2 a ticket. Maybe not the first option for most, Low devised the plan while faced with around GBP 4000 in monthly expenses with no income, and to top it off a GBP 250 per month mortgage payment increase when he requested a better deal from the bank.

Low and his wife spent at least two years struggling to sell their house, even at one point listing the sale in Bitcoin to attract more buyers. ”I was lucky enough not to be divorced by my understanding wife” he joked.

When his wife found out about the mortgage increase she insisted they hand back keys to the house. While agreeing with her at the time, Low took the next two days to concoct a plan for the raffle in secret, identifying where previous raffles had faced troubles and how they could be avoided. Noting that raffles have often found themselves foul of gambling commission guidelines which are ambiguous enough to easily create delays, legal threats and cast doubt on the operation, Low realized that by offering free entry as an option to participants he would not be subject to the regulations.

”I decided to run with this idea, thinking how great it would be that anyone could afford to enter and therefore anyone had the chance to win the house,” he explained.

After sending a press release to a local news outlet, he was thrilled to receive a response just one hour later telling him they would come to the house to look around. An article was posted on the same day, and GBP 2,000 worth of entry fees for the raffle were collected. ”I was amazed,” he said.

The following day the Daily Mail picked up the story and things really sped up; ”whilst eating our dinner at the local supermarket my phone started to go insane. I logged into analytics and there were thousands of users on the site and money was rolling in at the rate of around GBP 300 a minute. Over the course of that day, we had over GBP 103,000 worth of entries, it was absolutely unexpected.”

Over the next three weeks or so they collected around GBP 375,000 until trouble reappeared.
”Having used PayPal as a payment provider, obviously against their terms of service, the dreaded risk came true: they noticed the raffle and got very cold feet. Six weeks of negotiations later and I managed to persuade PayPal that this was a genuine cause and we were indeed in arrears and would lose our house. They in their goodwill allowed us to run with strict guidelines and restrictions in place, however, by this point, all momentum had been killed.”
 
Taking a step back, Low created postcards reading ”win a house” and unsuccessfully tried handing them out to the disinterested people of Manchester.
 
Luck fell on them, however, in the form of a young reporter striking up a conversation with Low regarding drug use in the city. Sharing with her his postcard, the following story brought in another GBP 400,000: ”fate really helped us that day.”
Fast forward six months and they hit their target, got featured on the BBC One Show, handed the house off to raffle winner Marie Segar, and donated GBP 3 0,000 to St Johns Hospice in Lancaster and GBP 10,000 to NYAS in Birkenhead, both UK based charities.
”So we beat the bank and kickstarted a small raffle revolution, around 50 raffles around the world followed and I have been asked to raffle around 500 million pounds worth of property from portfolios of houses, private islands, castles, and luxury cars,” Low shared.

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What is the Insurance Protocol for a Decentralized Exchange?

As experts predict, the next Bitcoin bull run will be prompted by an influx of institutional investors. Blockchain companies are fighting to create the best custodial solutions that will entice these investors into this new asset class. One thing is certain, what they are looking for is insurance to cover their assets, just like what is obtainable in mainstream finance.

The cryptocurrency insurance industry is quickly growing, yet there is a substantial lack of transparency over who is insured, to what extent, and by whom. Estimates put the total amount of available cryptocurrency insurance at USD 6 billion; not a lot when considering that the top three exchanges handle over USD 1 billion in trades a day, let alone the total market cap of around USD 140 billion.

Bitcoin News spoke with Derek Jones, co-founder of new decentralized cryptocurrency exchange UnitedCoin. Like every insurance policyholder it seems, there was a lot of information that non-disclosure agreements kept him from sharing. He could not for one, share who his insurance provider is or whether they had previously paid out claims for cryptocurrency exchanges.

Jones was able to explain how exactly UnitedCoin’s insurance policy works, which is particularly valuable information in understanding how peer-to-peer transactions can be covered by insurance policies.

“We insure all the investments that are in hot wallets. The way the exchange works is that 98% of funds are actually in cold storage and the 2% of funds that are actually in hot wallets are completely insured,” Jones explained to Bitcoin News. The hot wallets are insured up to USD 100 million, but they are looking to increase this amount. With the current insurance policy model and its limitations, cold storage is the only way that they can right now guarantee security for investors.

While Jones admittedly did not know of any insurance policies that have been paid out to any cryptocurrency exchange after a hack, apparently, the majority of companies that suffered security breaches did not have cold storage practices in place, which he says is one of the larger issues that jeopardizes security.

As a victim of the Cryptsy exchange hack, Jones’ view is that nobody should invest in a cryptocurrency exchange that does not have insurance.  ”To be honest, I don’t know why you would use an exchange that is not insured unless you are very comfortable with the fact that you could lose all your money.”

UnitedCoin also has FDIC insurance in the US which covers fiat currency, and insured accounts in Europe. The cryptocurrency is stored in cold storage and whenever there are transactions taking place on the platform, the money that is being sent back and forth is in a token form. That tokenization is what represents all of the actual transactions. However, when someone wants to withdraw funds, it is taken from the cold storage.

Jones’ father’s former bank holds the record in the US for a newly formed bank reaching USD one billion in assets the fastest. The record when he started was five years, and they achieved it in 18 months.

Influenced by some of his policies that did not only insure profits but also reduced fees for users, Jones was inspired to create a new revenue model for his exchange. ”With crypto, I saw that there was something else we can do. Because transactions create a lot of revenue for you as a company, people who are supporting the network should benefit from that revenue. We take 20% of those net revenues each month and divide it amongst members.”

He noted that this is similar to the actions of American Express.

The platform’s native token UNIT launches with the IMO, an initial members launch. Potential members are required to go through a know-your-customer (KYC) process to register.

 

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MEP Eva Kaili: ICOs Needed When Banks Overregulate

Member of the European Parliament (MEP) Eva Kaili has revealed that a report on initial coin offerings (ICOs) was being prepared for the European Parliament that would promote their use as a crowdfunding tool.

”We really need [ICOs] when banks are overregulated and projects need liquidity… we must try not to overregulate them and stop innovation,” she said. MEP Kaili made this statement during her keynote address at the ongoing Decentralized 2018 blockchain conference in Athens, Greece.

Following up with Bitcoin News at the conference, she reported that the Parliament had recently facilitated the release of EUR 700 million for startup projects that can show they provide ”great solutions” with blockchain.

However, she did acknowledge the number of scams that certainly exist within the ICO market but believes these can be avoided by properly analyzing the white paper: ”I have seen people buy for the hype but on the white paper, it states they own nothing… Fraud is fraud. We don’t need regulation to stop that.”

MEP Kaili also told Bitcoin News that she believes European countries like France and Malta have the most progressive and effective blockchain legislation, while others beyond Europe are emerging as strong contenders for leadership in the industry.

She said that through her travels, she has seen France impose itself as a significant leader in blockchain regulation, with the country ”trying to proceed very fast”. Malta is also producing progressive legislation, she added. Outside of Europe, both Barbados and Singapore are leading the way, as well as Switzerland which she described as ”a staple one; it has always been very fast in the financial sector to adapt to the changes”.

Discussing her recent legislative work, MEP Kaili that she has just finished the Blockchain Resolution – a work in progress since 2015 when she first became aware and interested in the technology. She pushed for the resolution in the European Parliment after becoming concerned with potential resistance to blockchain from ”the systems that failed us”, referencing the financial systems that contributed to the 2008 economic crisis and her home country of Greece’s own economic turbulence.

Now, Kaili’s efforts are focused on creating non-restrictive regulation for artificial intelligence (AI). She spoke about the potential of blockchain and AI synergy, to which she declared, ”I think will be very exciting.”

On blockchain, she noted that “It can solve problems but not all the problems, I would say it is more of a philosophy”, citing that there were still issues regarding scalability, energy efficiency, and the protection of data, although believes they will be “figured out quite soon”.

The Greek MEP was the keynote speaker at Decentralized 2018 hosted by the University of Nicosia. It ends tomorrow on 16 November 2018.

 

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Brazilian Presidential Candidate Addresses Need for Bitcoin Regulation

Brazilian presidential candidate João Goulart Filho from the Partido Pátria Livre (PPL) party recently gave an interview to local blockchain media outlet Criptomoedas Fácil where he discussed the necessity of regulations for the country’s growing cryptocurrency industry.

Filho said that he and his party are ”following with caution” the recent movement in the cryptocurrency market, mentioning the price collapse in January of this year that saw Bitcoin lose nearly half of its value. As they educate themselves more on the specifics, they hope to be able to provide much-needed and well-informed regulation for Brazil.

PPL, he said, is also examining the experiences that other countries have had with cryptocurrencies in order to see which methods of regulation have been necessary and most effective.

”There is no regulation in the country for the Bitcoin market or any other cryptocurrency except Bill number 2003 has been in existence in the Chamber of Deputies since 2015,” he told the reporter, adding that through monitoring the market they hope to gather more elements that can contribute to the most appropriate format of regulation.

Brazil is now the fourth largest Bitcoin market in terms of volume traded… [A regulatory] bill is being discussed in the Chamber of Deputies,” he concluded.

On blockchain

Filho was also asked his position on developing technologies, including blockchain, artificial intelligence and the Internet of Things (IoT), to which he responded that he had a ”visceral commitment” to their development and their ability to meet the increasing needs of the population.

”The digitization of the productive processes, although in its embryonic phase, is an integral part of the technological development,” he explained. According to the presidential candidate, there are 193 startups in Brazil that work with these emerging technologies.

PPL describe themselves as a scientific socialist party and Filho has proposed progressive investment policies to promote the Ministry of Science, Technology, Innovation and Communications as well as private technology companies, including reversing the National Fund for Scientific and Technological Development’s budget cut from 2014.

 

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