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Overstock, First to Pay Tax in Ohio Using Bitcoin

Overstock, First to Pay Tax in Ohio Using Bitcoin

As the tax season approaches, popular US-based online retailer Overstock has said in a press release on 3 January that it will be the first US company to pay some of its Commercial Activities Tax (CAT) to the Ohio State in Bitcoin.

According to the press release, the payment will be done through the “state’s new cryptocurrency taxpayer platform,,” following an announcement made by the State of Ohio last year that it will begin accepting tax payments in Bitcoin.

Overstock CEO and founder Patrick M. Byrne takes a positive stance with the government in ushering the era of smart technologies like the blockchain along with trust package. He said: “We have long thought that thoughtful governmental adoption of emerging technologies such as cryptocurrencies (when accompanied by non-restrictive legislation over these technologies) is the best way to ensure the US does not lose our place at the forefront of the ever-advancing global economy.”

Ohio Treasurer Josh Mandel commended the efforts of the retail giant to adapt quickly to the emerging markets being created by cryptocurrencies, saying that “their embrace of blockchain technology was ahead of its time.”

The State of Ohio is the first in the US to consider Bitcoin for tax payment. The OhioCrypto platform was launched in November last year. The office of the Ohio Treasurer will receive the US dollar equivalent of the Bitcoin through cryptocurrency gateway BitPay.

OhioCrypto offers businesses the opportunity to pay their taxes in cryptocurrency at a relatively cheaper transaction fee when compared with credit card transaction fee of 2.5 percent.

The history of Overstock is filled with consolidated efforts towards blockchain and cryptocurrency dominance, with partnership and publicly trading stocks issued through the blockchain in the wake of its blockchain adoption in 2014. At the time when it was just Bitcoin, a few Bitcoin alternatives, and initiator of smart contracts Ethereum. It began accepting Bitcoin as a payment option alongside MasterCard and PayPal.

While the Overstock company is scheduled to be sold next month, the blockchain-based business subsidiary Medici Ventures will remain active. More so, its security trading platform tZERO was regarded as one of the overachieving cryptocurrency projects last year after Chinese private equity firm GSR Capital showed interest in the project.

Ohio sits on the crypto-friendly list with its blockchain hub and enthusiasts pooling resources to fund startups. Now with the OhioCrypto tax payment platform, it stands on par with many other jurisdictions seeking worldwide Bitcoin adoption.


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New Mastercard Patent Claims Crypto Transaction Anonymity

New Mastercard Patent Claims Crypto Transaction Anonymity

A patent application published today by the US Patent and Trademark Office shows that US credit card giant Mastercard claims that it has now found a way of keeping cryptocurrency transactions anonymous.

The patent claims that Mastercard’s system can mask both the point of origin and the number of transactions on the blockchain by using an intermediate address which will interact with the public key.

Once the transaction is stored, a whole new transaction and a digital signature are generated using a private key. The data, which includes the destination address and payment total, is then forwarded instead of the original. This method, according to Mastercard’s patent application, “would result in showing the user only transferring funds to and receiving funds from a small number of addresses that are also involved in a significantly large volume of transactions with various other users, thereby rendering the data innocuous.”

Mastercard has admitted that, despite its earlier condemnation of Bitcoin and past criticism of cryptocurrency’s viability as a payment system, the blockchain is increasingly being employed by users “flocking to various digital currencies”. Mastercard has clearly seen a developing market for supporting users who use cryptocurrency “for the anonymity that blockchain transactions can provide”. It adds:

“…it is often extremely difficult to identify the user behind a blockchain address, meaning that an individual can transfer or receive funds utilizing a blockchain while keeping a high level of anonymity.”

But it goes on to note that most blockchain ledgers are not anonymous and that currently transactions can be identified by using public data.

“For instance, such data may, as it is accumulated and analyzed, eventually reveal the user behind a wallet or at least provide information about them… However, the existing communications and attribution structure of blockchain technology such as Bitcoin require identification of where the transactions are emanating and terminating, in order to maintain the ledger.”

Until now, privacy coins like Monero and Zcash have incorporated features to hide their users’ transaction information, but not without gaining attention from the US Department of Homeland Security, which is continually developing new ways on keeping tabs on cryptocurrency transactions in its fight against money laundering.

This new patent offering ID anonymity is one that may not be welcomed by government law enforcement agencies but might encourage crypto users towards Mastercard; clearly the aim of the patent.


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Bitcoin Set to Overtake Mastercard’s Daily Transfer Total

Bitcoin’s daily transaction volume stands at around USD 8 billion, closing in on that of multinational financial services corporation Mastercard’s total of USD 12 billion per day.

Mastercard, the world’s second-largest credit card network released its Q3 financial report on the 30th October showing a USD 4.4 trillion processed so far this year.

Bitcoin clears an average of 272,000 transactions per day totaling USD 8.14 billion-  that is 11,333 transactions every hour.

Admittedly, it is difficult to pull a direct comparison of the two payment processing networks as Bitcoin handles more transaction types than Mastercard (as such seen in exchange transfers). For Bitcoin to handle similar numbers is a huge significance for its nearly 10-year history, meanwhile, Mastercard has been around for over two decades.

What is notably different in the patterns of payments between the two is the disparity in transaction totals. Mastercard handles a far greater number of transactions and is the preferred choice for daily payments, while cryptocurrencies are still seen by many as either a store of value, for cross-border payments or for larger payments.

It is these larger, international payments which the data indicates Bitcoin and other cryptocurrencies prove their real value over legacy systems, being often faster, cheaper and easier for both parties.

In proof of this, leading cryptocurrency exchange Binance made a cross-border payment of USD 600 million in BTC accruing just USD 7 fees. The traditional banking sector may collect close to USD 10,000 in fees alongside strenuous identification checks, verification and approval periods, all-consuming a lot of time and creating a lot of paperwork.

A future where daily payments are completed using cryptocurrencies should not be quickly dismissed, that is indeed what the Lightning Network and other projects are currently focused on. However, merchant adoption remains a crucial element to this milestone success.


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New Google Ad Takes Dig at Power-Hungry Crypto

Google hardly improved its relationship with the crypto community after its earlier ban on advertising this year, despite a recent partial climbdown but now, the media giant seems to have shown its true colors in advertising of its own.

The initial June ban was introduced according to Google to “protect” customers, including advertising for ICO, crypto wallets, exchanges, and cryptocurrency trading advice. At the time of the ban, a Google spokesman commented that:

“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution.”

Google has clearly got a problem with crypto, as its latest piece of advertising clearly telegraphs. An ad for its new Call Screen phone service, designed to allow people to interact with callers before picking up, has one character asking another if he’s “going to live that (crypto) lie?”.

The ad refers to one character’s overblown electricity bill with the provider suggesting “cryptocurrency mining [takes] a lot of energy,” a clear reference to an ongoing argument that claims that the crypto industry is draining energy due to its high power requirement; an argument which is equally disputed by some experts.

This week Google also put another spanner in the works with Berkshire Hathaway chief executive Warren Buffett, JP Morgan Chase boss Jamie Dimon and Mastercard CEO Ajay Banga all being listed on the site as “CEOs of bitcoin”. It’s a well-known fact in the crypto community, that far from being connected with crypto, the three have all spoken out against Bitcoin and cryptocurrencies in the past and rarely express positive views about the industry as a whole. Google’s response to the error came quickly:

“Entities in the Knowledge Graph and associations between them are automatically generated based on available information on the web… It’s not always perfect, and when we’re made aware of incorrect associations, we work to fix the error.”


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Mastercard Secures Multi-Currency Blockchain Patent

Multinational financial services corporation Mastercard has won patent rights to a blockchain partitioning method that would make storing multiple forms of cryptocurrency on a singular blockchain possible.

Why is this so significant?

As explained in Mastercard’s application, all established blockchain systems require each block to maintain data of the same format, type, and sometimes size. This is what makes blockchains incapable of supporting different cryptocurrencies or combining permissioned and open access data on the same chain.

Operating multiple blockchains at once to manage this data uses what is described in the document as a ”significant” amount of resources and computing power.

Mastercard’s application

What Mastercard proposes in its patent filing, is a blockchain that can be divided into a plurality of separate sects that manage these opposing data sets, dubbed ”subnets”. The document notes that the transaction records of each of the subnets are capable of differing in format and allowing different cryptocurrencies to be transacted.

Each completed block would be stamped with a hash code that applies to all of the transactions. This new blockchain system is described by Mastercard as ”more robust” with a ”greater utility” than those currently being utilized.

Its implication

One of the issues pointed to in the debate over how to expand cryptocurrency users is the need to improve accessibility and ease of use. If different cryptocurrencies can be transacted on a singular blockchain, more investors may be encouraged to purchase a variety of tokens, as one specific token no longer requires as many areas in which it can be used.

The issue of this fragmented ecosystem has been discussed by the Vice President of Cobinhood, Hsuan Lee. With so many blockchains established with no protocol to communicate with each other, their overall effectiveness suffers. He framed the predicament in terms of social media: ”Can you imagine using Facebook if you only have five friends on the platform? It’s not very useful.”

The US Patent and Trademark Office published the approved application from Mastercard Tuesday. It was first filed in July 2016.


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Mastercard Considers Blockchain for Point-to-Point Payments

Credit card giant Mastercard is lining up for blockchain as it files patents to improve the tracking of consumer payments.

The company has expressed that “point-to-point” transactions could be registered efficiently as they are processed using DLT. In line with this patent, other filings remain ongoing. The US Patent and Trademark Office has an outstanding application filed last year entitled ‘Method and system for recording point to point transaction processing’.

Mastercard has made a very clear distinction between blockchain technologies, however, labeling the latter as “junk” in previous comments. In a recent comment, Mastercard stated:

The use of digital ledgers, such as blockchains, may further facilitate the services provided by such a platform, by enabling data to be stored clearly and in a format that is easily auditable by participating entities. In cases where ledgers like blockchains are used, the leaders may be provided even more benefits as they may be immutable and resistant to tampering, which may further increase the reliability of such data.”

Back in 2016, Mastercard released some preliminary APIs: Blockchain Core API, Smart Contracts API and Fast Pay Network API. The implementation of blockchain technology is set to change the way in which consumers pay for goods and services. Mastercard, like Santander with its blockchain phone app, will be working alongside San Fransisco-based technology firm Ripple to realize its blockchain future.

Another significant patent filed by Mastercard which came to light only recently shows the company’s intent to pursue the viability of blockchain technology. Titled ‘Method And System For Payment Card Verification Via Blockchain’, the patent described a fully functional system that could replace physical credit cards. The patent was originally filed in December 2016 but only became visible to the public earlier this year in June.

American Express also has no intention of being left behind in the blockchain race as these patents wait for approval, continuing to look at ways of incorporating the new technology into its own business model. It has a current patent awaiting approval for offering customer-specific types of rewards including points, a virtual currency, or specific items tied to a product.


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Bitcoin Could Be Death Blow for Credit Card Use

The use of digital currency could pose a real threat to credit card companies by pushing down their often exorbitant fees or even by driving some out of business.

Even cash is making a comeback in some areas as the public becomes increasingly tired of hearing of credit card companies’ huge profits on the back of poor quality service and high fees passed on to the customer.

As an illustration of this frustration, recent system crashes by both Mastercard and Visa recently brought a flood of complaints from Bitcoin loyalists. At the time, Financial Times reported that regulators were “already intensifying their scrutiny of apparent fragilities in the payments system”.

With growing competition across the retail sector, alarm bells should be ringing for the likes of Visa, Mastercard and Amex. Bitcoin is already beginning to look like an obvious replacement, shredding credit card fees and offering quick and transparent payment solutions. Ian DeMartino writes in ‘The Bitcoin Guidebook: How To Obtain, Invest, And Spend The World’s First Decentralized Cryptocurrency‘ that merchants also need to wake up:

“From a merchant perspective, Bitcoin has the advantage of not having large fees from credit card companies that cut into profits… For merchants with small profit margins, that fee could be up half or more of their profits for each credit card transaction.”

As well as a boon to the merchant’s business, power can be shifted away from corporations with ungainly profits back into the hands of those who need the service: the consumers. Kris Marszalek, co-founder and CEO of, sees the current financial climate as perfect timing for a major change in perception by both merchant and consumer, arguing:

“The banking and payment sector is ripe for disruption… The entire credit card business model is focused on wringing money out of people who can’t afford credit card debt: late fees, penalties and high-interest rates.”

The opportunities for simple cryptocurrency payments outside of the credit card system are endless, whether it be payment by fingerprint recognition linked a crypto wallet or a linked crypto debit card. As Arran Stewart, co-owner and CVO of points out, all that’s stopping this becoming a reality for the general public as a whole is the stability of the cryptocurrency market. This he suggests, “will come in time and as transaction volumes continue to increase”.

Jonah Lehrer, author of ‘How We Decide‘, is not so certain, claiming that people are attached to their credit cards:

“When you buy something with cash, the purchase involves an actual loss — your wallet is literally lighter. Credit cards, however, make the transaction abstract, so that you don’t really feel the downside of spending money.”

Fair comment, but until now the world has lived with a card versus cash scenario. With digital currencies, this is set to change.


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Bitcoin Transaction Volume Surpasses Discover, Briefly Surpassed PayPal

A crypto analyst on Twitter named Yassine Elmandjra posted some interesting charts which show the growth of Bitcoin’s USD transaction volume throughout the years, showing that Bitcoin has surpassed Discover, a major credit card, and PayPal.

A brief initial fact check on this analysis finds that Bitcoin does appear to have processed more USD transaction volume than Discover. However, while briefly having more volume than PayPal, it probably has not surpassed it on average.

Look 👀 at the transaction *value*, NOT the transaction *volume*. $3-4 B worth of bitcoin has been transacted daily in the last year. At ~ $1.3T annually, Bitcoin’s base layer transactional value is within an order of magnitude away from Visa’s.

— Yassine Elmandjra (@yassineARK) August 22, 2018

Before 2017, Bitcoin’s daily transaction volume was USD 100 million and even lower, and in 2017 Bitcoin’s USD transaction volume skyrocketed as Bitcoin’s price went up by an order of magnitude. In December 2017 and January 2018, Bitcoin volumes exceeded USD 5 billion on some days and averaged USD 4 billion for about a month. However, as Bitcoin’s price crashed downwards throughout 2018, so did its USD transaction volume. During the summer months of 2018, Bitcoin’s transaction volume averaged USD 500 million with some days as high as USD 1 billion, still far higher than before 2017.

This is far lower than Bitcoin’s exchange volume which is more than USD 4 billion per day on spot markets and perhaps double that when including derivatives markets like BitMEX and the futures in Chicago. Bitcoin exchange trading occurs off chain and isn’t being used for payments for goods or services. This article is specifically trying to explore Bitcoin’s real transaction volume for goods and services.

At the least, in 2018 Bitcoin’s transaction volume is USD 500 million a day, which would yield USD 182.5 billion of Bitcoin transactions per year. That is the most conservative estimate. This exceeds Discover, a major credit card, which in the most recent quarter had a volume of USD 36.3 billion which yields USD 145.2 billion per year, slightly more than the USD 128 billion in Elmandjra’s chart. The fact that Bitcoin has more transaction volume than a credit card like Discover is a major milestone.

As far as the claim that Bitcoin has more transaction volume than PayPal, that isn’t quite true. During the month when Bitcoin had daily transaction volumes of USD 4 billion, it likely did exceed PayPal. In the most recent quarter, PayPal had a transaction volume of USD 139.4 billion, translating to about USD 1.5 billion per day or USD 558 billion per year. At the current average transaction volume of USD 500 million per day, which is a rough estimate, PayPal is far ahead of Bitcoin.

When averaging in the rally of late 2017 and the high transaction volumes of early 2018, perhaps Bitcoin could be considered on par with PayPal, depending on which estimate used but saying Bitcoin exceeds PayPal’s transaction volume seems to be an overstatement. On the other hand, it seems Bitcoin is poised to overtake PayPal again the next time there is a major rally.

As Elmandjra concludes, Bitcoin is still way behind the biggest payment services in the world, Visa, MasterCard, and China’s UnionPay which each transact many trillions of USD per year. It will probably take another order of magnitude price rally for Bitcoin to get to Visa’s level without considering adoption growth.


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Mastercard CEO Calls Cryptocurrencies “Junk” on US Visit

The war of words between the major credit card companies and cryptocurrency users seems to have stepped up another gear over the weekend with the latest slant by a top Mastercard CEO.

During the “New India Lecture” at the Indian Consulate in the US this week, Mastercard’s CEO, Ajay Banga, went on full attack against cryptocurrency calling it “junk”. During his time on stage where he was taking questions from the audience on crypto trade, he went on to say that such an “anonymized” form of currency with such wild fluctuations in the market couldn’t be regarded as a medium of exchange.

The lecture was organized as part of a series hosted by the Consulate in tandem with the US-India Strategic Partnership Forum (USISPF)

Banga wasted little time explaining that cryptocurrencies were responsible for more than 95 percent of illegal online transactions on the dark web.

Bitcoin has been the target of constant attacks, increasing in prominence in the media and popular press, particularly in 2017 when the value of the flagship cryptocurrency soared to USD 20,000 at end of the year. Voices in the financial sector have been more than ready to denounce Bitcoin and proclaim its demise.

In January of this year, a prominent study revealed that less than 1% of Bitcoin transactions was used for illicit activities, disproving one of the many myths surrounding Bitcoin’s prominence in illegal use. Yaya Fanusie, director of analysis for the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance (CSIF), conducted the study which was called ‘Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency Services‘.

The condemnation was flying in the other direction last week when Mastercard services completely crashed out for the day, giving cryptocurrency users plenty of opportunities to remind the credit card giant why so many people started using Bitcoin in the first place. One suggestion reminded  Mastercard that a blockchain based system would solve such issues.

It appears that Mastercard is slowly taking that route as evidenced by the array of blockchain-related patents that they have acquired in an effort show more innovation regarding payments. Also, back in 2016, Mastercard released some preliminary APIs, Blockchain Core API, Smart Contracts API and a Fast Pay Network API.

Their latest patent filed recently would digitize credit cards and store them on a blockchain. The patent application is titled ‘Method And System For Payment Card Verification Via Blockchain’.

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Nordic-Baltic Region Scoops up $6.3B of Europe’s Fintech Business

According to a MagnaCarta, Fintech Mundi and Mastercard report, fintech companies are continuing to thrive in Scandinavia and also in the Baltic regions, writes Fintech Schweiz Digital Finance News.

They are reported to have created half of the industries main players in Europe to date and those firms seeking fintech partnerships is far higher than the overall 2017 European average in these regions.

At the forefront of these successes are Swedish online payment platforms Klarna and iZettle and Estonian money transfer program TransferWise which has now relocated to the UK. These three companies are reputed to have a cumulative worth of USD 6.3 billion.

Susanne Hannestead CEO of Fintech Mundi and co-author of the research explains:

“The Nordic and Baltic markets already have an incredible track record of building fintech companies having created regional successes that have gone on to become global winners, like Spotify and Zwipe.”

Its reported that there are over 500 fintech companies across the Baltic and in Scandinavia and banks are showing increased interest seeing that costing and effectiveness can be a factor of collaboration in this financial sector.

Mastercard has been a major driver of fintech in the region having recently launched its Lighthouse Development Program in partnership with NFT Ventures in the region. The project has been set up in order to trawl the sector for prospective startups and develop new technologies.

Mats Taraldsson, the head of digital business development and fintech partnerships of Mastercard Nordics and Baltics, claims that collaboration is the key to success and finding the right fintech and startup mix to deliver customer needs:

“…working together with startups and fintech is essential to meet the future needs of consumers, merchants, and governments. We have been committed to fintechs for many years, fostering partnerships with pioneers who have grown into global brands.”

The Nordic Fintech Disruptors Report 2018 does highlight some problems though, regardless of the regions capturing the larger chunk of Europe’s fintech business, suggesting that the region still lacks regulation and supervision, particularly at local levels. In fact, 45% of respondents agreed that Nordic and Baltic fintech companies needed greater support in this area. Hannestad, also co-author of the research explained:

“A more joined-up approach to fintech, and the factors that influence successful innovation between the markets governments and regulators, however, would create new opportunities for growth and productivity and ensure the region is the best place in Europe to build the next generation of fintech giants.”


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