Category: Bitcoin

Bitcoin Price Brushes Aside Child Abuse Report, Nears $9,000

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On Tuesday evening, bitcoin’s price rose above $9,000 for the first time in a week regardless of reports that its blockchain contains links to child abuse imagery. Researchers from the RWTH Aachen University, Germany discovered 1,600 files that were currently stored in the bitcoin blockchain. At least eight of the files contained sexual content including two with 274 links to child abuse imagery and one that looked like an image of the same. Also among these files were 142 that contained links to dark web services.

The blockchain, which is essentially a transaction ledger distributed and stored on many different computers was designed to be immutable so as to guarantee the integrity of information. This is how all decentralized digital currencies work. As such, the information cannot be altered – at least not yet. The only alternative to would be a consensus among the network’s users to use a new version – also called a “fork” – of the blockchain instead of the original one. However, bitcoin is yet to experience this.

The Implications

Some blockchains, such as the one powering bitcoin, which is probably the oldest, can contain all sorts of information fragments some of which may be illegal in certain jurisdictions. Since the information cannot be deleted, everyone that has a copy of the blockchain is essentially breaking the law.

It came as no surprise that the blockchain would undoubtedly cause trouble with laws in certain jurisdictions. The European data protection laws, for instance, say that people must be given the liberty of having their personal data amended or deleted regardless of where it is stored. Public cryptographic keys and transactions which are regularly stored on blockchains are basically personal data – and since the blockchain does not allow these to be altered, it is a breach of that particular law.

“Our analysis shows that certain content, e.g., illegal pornography, can render the mere possession of a blockchain illegal,” the German researchers explained. “Although court rulings do not yet exist, legislative texts from countries such as Germany, the UK, or the USA suggest that illegal content such as [child abuse imagery] can make the blockchain illegal to possess for all users. This especially endangers the multi-billion dollar markets powering cryptocurrencies such as bitcoin.”

This is quite serious, isn’t it? But, how is bitcoin braving it? Well, while the research report highlights the importance of addressing the possibility of unintended data insertion in future blockchain designs in order to protect users accordingly, it is also important to note that the existing bitcoin blockchain design troubles do not affect casual users of the cryptocurrency.

Jeff Garzik, a bitcoin core developer explains that the unintended information on the network is not even accessible directly since it has to be decoded first. This does not also apply to users who download fragments of the blockchain such as those who are just doing Bitcoin transactions.

Bitcoin Mining Has Just Been Banned in Small New York Town

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Plattsburgh, a small lakeside town in northeastern New York has banned the establishment of new bitcoin mining firms for the next year and a half citing the fact that the miners have been exploiting its low-cost electricity. This comes at about the same time that the New York public utilities arm gave a ruling that allowed the municipal power authorities to charge higher electricity rates for cryptocurrency miners.

The town which is quite close to the Canadian border put the one and a half year moratorium on cryptocurrency mining in a bid to preserve its natural resources, the health of its residents as well as the “character and direction” of the city. Thus, for the next 18 months, the city will not be considering any new applications for commercial cryptocurrency mining. Breaking this rule will attract a fine amounting to $1,000 daily for the period that the moratorium is violated.

“It is the purpose of this Local Law to facilitate the adoption of land use and zoning and/or municipal lighting department regulations to protect and enhance the City’s natural, historic, cultural and electrical resources,” Plattsburgh officials said after holding a public hearing on the matter Thursday.

Cryptocurrency mining is the process by which mining firms or individuals get paid with cryptocurrencies for running complex mathematical equations on high-powered computers in order to confirm the validity of transactions. This process needs enormous computing power and thus is very energy-intensive hence miners will almost naturally be drawn to areas with significantly lower electricity costs. Thanks to its hydropower plants and the subsidies that some of the municipal power authorities allow on the electricity, some parts of New York are able to offer electricity rates that are as competitive as the Chinese bitcoin mining market. Furthermore, the naturally lower temperatures in the state also significantly reduce the cost of cooling facilities at the mining firms.

It Is a Positive Move, Some Agree

While this might not be a favourable ruling for cryptocurrency miners, one local bitcoin mining operation, Plattsburgh BTC, has expressed its support for the ruling. David Bowman, the founder and CEO of the bitcoin mining firm said in an email that the move was a positive one for both the city of Plattsburgh and crypto mining as a whole.

“We will be actively working with the city right away to find solutions that work in all of our interests, like possibly shutting off the machines if we are in danger of going over the city’s quota, looking into energy recapture as a way to heat buildings,” he added. “Anything is on the table.”

India Can’t Regulate Bitcoin, Says Former Indian Bureaucrat

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India has been struggling with regulating cryptocurrencies for quite some time now mostly because of the strong aversion the governments has towards digital currencies but they are yet to ban any. Now, a former Indian top finance ministry official insists that bitcoin, as well as other cryptocurrencies, should be completely banned in the country.

Shaktikanta Das, who is a former secretary of economic affairs, believes that regulating bitcoin is going to be quite tough and thus the only feasible alternative would be to outlaw their use. Das headed the Indian government’s first panel that was set up in April 2017 in a bid to understand and recommend necessary regulations pertaining to cryptocurrencies. Currently, Das is a member of the 15th finance commission which has been tasked with reviewing the financial situation of the present government.

“Let us accept that it would not be possible to regulate it effectively. Because they will do transactions from their houses. You cannot enter every home to check what transactions are going on. So, I think this is a serious challenge, and this should not be allowed at all,” Das said.

The Indian government’s aversion to cryptocurrencies can be traced back to 2013 when the Reserve Bank of India (RBI) warned its customers against the potential security threats that were associated with digital currencies. Despite this, and multiple other warnings from the country’s ministry of finance and the RBI that followed since then, cryptocurrencies have grown in popularity even among people who were considered to be “conservative” Indian investors.

Why Das’ Opinion Matters

Shaktikanta Das has held a number of key positions in India’s ministry of finance including being the head of the departments of economic affairs and revenue. He has also served as a board member of the Indian market regulator Securities and Exchange Board of India and the Reserve Bank of India – both institutions play a monumental role in the drafting of cryptocurrency regulations in India.

Das argues that since the Reserve Bank of India is the only institution allowed to issue currency in India, cryptocurrencies are essentially illegal. He further pointed out that cryptocurrencies are paralleling present financial frameworks without any backing from legal provisions.

“There is the danger of cryptocurrencies leading to money laundering, terror financing, and unaccounted transactions. It will pose a serious threat to the financial stability not only of India, and in fact more, in the case of the developed world,” he added. “It’s a serious challenge and threat to global financial stability.”

Crypto Prices Drop Amidst Trader Suspicion of Binance Hack

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The major cryptocurrencies on Wednesday experienced sharp price drops as reports of system errors at Binance, a renowned crypto exchange, got many investors into a bit of a panic. At the same time, digital currency traders also had to digest reports that major United States regulators are demanding for the registration of all cryptocurrency exchanges.

Binance is considered to be one of the biggest exchanges in the world – CoinMarketCap reports that it is one of the top 4 biggest exchanges for the most popular cryptocurrencies in terms of the traded volumes. Prior to the Wednesday crash, a number of users noticed something highly unusual with Viacoin – that is, a huge increase in buy orders for the cryptocurrency after which its market capitalization jumped from $64 million to $159 million in just a few moments. A probe into the matter revealed that there were lots of unauthorized sell orders going around.

“We are investigating reports of some users having issues with their funds. Our team is aware and investigating the issue as we speak,” the Binance team wrote on Reddit. “As of this moment, the only confirmed victims have registered API keys (to use with trading bots or otherwise). There is no evidence of the Binance platform being compromised.”

Binance later announced that it had halted withdrawals so as to look into what the company referred to as “unauthorized market sells.” The company further stated that there was no evidence that the platform had been compromised at the time.

The impact the alleged Binance hack has had on the market is quite significant. 360 Blockchain USA president, Jeff Koyen pointed out the concerns surrounding Binance resulted in the plunge of the prices of bitcoin and several other digital currencies as well.

“All of crypto is getting battered right now, based on fears that Binance was hacked,” Koyen stated.

SEC Crackdown Played a Role

A number of market analysts have also pointed the price drops to the United States Securities and Exchange Commission’s (SEC) recent decision to subpoena a number of firms that either deal in cryptocurrencies, or are associated with them. A large number of the subpoenas were specifically sent to companies that are selling digital token through Initial Coin Offerings (ICOs).

Bitcoin Nears Regulatory Crackdown, Says Bank of England

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The Bank of England has issued a warning stating that bitcoin is headed towards a regulatory crackdown – it also pointed out that “inherently risky” cryptocurrencies are failing to fulfil their most basic function as a store of value. The banks’ governor, Governor Mark Carney, in a speech and interview that were held on Friday, tore into bitcoin. In his words, the world’s most popular decentralized digital currency is on the verge of a “pretty brutal reckoning.”

His remarks extended beyond bitcoin as an individual asset and included cryptocurrencies as a whole, which he also thinks have “all the hallmarks of a bubble. And normally they end with a pretty brutal reckoning.” Carney’s most significant concern was however portrayed by his call to have the “anarchy” of cryptocurrencies being utilized as a medium of exchange for criminal activities brought to an end. He said that it was about time that relevant authorities worked towards a framework to “regulate elements of the crypto-asset ecosystem to combat illicit activities”.

There are already a number of efforts around the world that are geared towards bringing bitcoin under the control of governments and central banks especially due to the prevailing fears that bitcoin users are likely to lose their money due to market manipulation. On the same note, there have been even more efforts directed towards curbing the use of cryptocurrencies for criminal activities such as drug dealing, money laundering and even financing terrorism.

In the run to Christmas in 2017, bitcoin soared very close to the $20,000 mark before plunging back by more than half at the beginning of the year. It has however recovered to $11,000 but there is still a ton of uncertainty plaguing the digital currency.

“Authorities are rightly concerned that given their inefficiency and anonymity, one of the main reasons for their use is to shield illicit activities. This cannot be condoned. Anarchy may reign on the dark web, but in the UK it’s just a song that your parents used to listen to,” Carney said in the speech.

Will Everything Be Put Under Scrutiny?

Staunch believers in the bitcoin dream have maintained that the underlying technology of most, if not all, cryptocurrencies will certainly revolutionize the existing financial systems and in the process make everyday payments not only cheaper but also easier than they seem to be at the moment.

Carney clarified on this particular issue saying that the bank would still study, explicitly, the use of the distributed ledger technology that powers cryptocurrencies. He concluded that, as much as cryptocurrencies “do not appear to pose material risks to financial stability,” the situation is bound to shift as more people become aware of them.

Circle’s Latest Acquisition Could Make It A Financial Giant

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Circle, a renowned financial services firm that specializes in cryptocurrencies and related mobile payments, yesterday (February 26th) announced that it would be purchasing the cryptocurrency exchange known as Poloniex. The exchange has been operational since 2014 and was at one time considered to be one of the biggest exchanges in the market. Even though a lot of competition has sprung, Poloniex remains to be among the top 20 largest cryptocurrency exchanges by trading volume. According to Fortune, Circle will be parting with $400 million or thereabouts for the acquisition – this move effectively makes Circle one of the most influential and largest companies in the industry.

In an official statement following the announcement, Poloniex said that its teams would be strengthened by the operational and customer support resources from Circle that will help them to scale effectively henceforth.

We recognize that our extraordinary growth these past few years has not come without some growing pains for our users. We look forward to bringing Circle’s experience to increase the scalability and reliability of our platform and operations. – Poloniex.

Circle’s history is quite interesting. It was first pitched as a bitcoin company that intended to make bitcoin more accessible – something along the lines of being the PayPal for bitcoin where the users could buy and sell bitcoin quickly and easily in the simplest way possible. Later, the company went ahead to dub itself as a social payment company, a Venmo competitor. However, the company eventually got back into the cryptocurrency game full swing with Circle Pay.

Circle Pay is Circle’s peer-to-peer payment service that is now one of the companies more critical efforts. Circle also runs an over-the-counter trading desk for large crypto exchanges and investors known as Circle Trade. Circle Trade essentially fosters liquidity between cryptocurrencies and a number of fiat currencies. It also powers Circle Pay. Fortune reveals that Circle Trade manages $2 billion in monthly transactions and it generated close to $60 million in revenue in a span of just three months.

A Timely Expansion?

Now, Circle is expanding its portfolio of products with an easy-to-use investment app called Circle Invest that will mostly cater to people who want to start buying digital currencies. Ultimately, having a cryptocurrency exchange of its own would be great for Circle and this is where Poloniex comes in. Circle intends to build on the work that had already been done by the Poloniex team with the end goal being to push it past being “an exchange for only crypto assets.”

“We envision a robust multi-sided distributed marketplace that can host tokens which represent everything of value: physical goods, fundraising and equity, real estate, creative productions such as works of art, music, and literature, service leases and time-based rentals, credit, futures, and more,” Circle co-founders Jeremy Allaire and Sean Neville wrote.

Poloniex assured its users that there would be no disruption of the services the exchange offers during the transition. All the updates that will be made in the course of the transition will be done in the background and will be geared towards optimizing user experience, security as well as the overall performance of the exchange.

UK MPs Launch Inquiry into Cryptocurrencies and Blockchain

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The United Kingdom Treasury yesterday announced that it would be launching an inquiry into bitcoin and other cryptocurrencies as well as the underlying blockchain technology. The investigation will involve MPs who will be investigating whether bitcoin and altcoin technologies pose a risk to central banking – the investigation is largely considered to be a forewarning for an inevitable attempt to crackdown on cryptocurrencies. Whichever way this will play out is another story altogether.

The probe expects to draw out a distinct conclusion that outlines both the benefits and the risks that come with cryptocurrencies – this will be prerequisite to talks on how it should be regulated in the long run.

To put everything into perspective, the chair of the Treasury Committee, Nicky Morgan pointed out that “People are becoming increasingly aware of cryptocurrencies such as bitcoin, but they may not be aware that they are currently unregulated in the UK, and there is no protection for individual investors.”

The Treasury Committee’s probe follows the great deal of attention that cryptocurrencies, especially bitcoin, have been attracting in the past year. The situation seems to have gotten out of hand with the increased volatility of some of the cryptocurrencies’ prices fluctuating wildly in very short periods of time and experts failing to agree on the causes or even on predictions for the future prices or value for said cryptocurrencies. The Treasury Committee, therefore, intends to study how overseas governments have gone about the issue and pick out a few points from them.

South Korea, for instance, recently introduced new regulations that restricted people from anonymous cryptocurrency trading in a bid to protect investors in the country from scams. This particular move seems to be the focal point of the Treasury Committee’s yet to be unveiled regulation-based effort with Ms. Morgan clarifying that ‘the inquiry will explore how to achieve a balance between regulating digital currencies to provide adequate protection for consumers and businesses whilst not stifling innovation.’

“We will also examine the potential benefits of cryptocurrencies and the technology underpinning them, how they can create innovative opportunities, and to what extent they could disrupt the economy and replace traditional means of payment,” Ms. Morgan continued.

Could Bitcoin’s Bounce Back to $10,000 Bring New Buyers?

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Yesterday (Thursday, February 15th), bitcoin rose above the $10,000 mark, surpassing a critical level thanks to stronger trader sentiment. On the CoinDesk Bitcoin Price Index (BPI), the digital currency soared to as high as $10,218. This consequentially made the bitcoin market, which is the largest digital currency market by capitalization, go up by more than 70 percent after a recent low of less than $6,000.

“Hitting $10k demonstrates the renewed energy in the crypto market, as it shakes off some of the volatility from the start of the year,” stated Iqbal Gandham, the UK Managing Director of eToro, a social trading platform.

In general, the cryptocurrency market has experienced wide-spread fluctuations in the last couple of months following speculations and rumors of a number of regulatory developments pertaining to how these digital assets are going to be handled. However, in sentiment driven markets, such as the bitcoin’s, key price levels changes like the bitcoin’s rise to $10,000 appears to attract new buyers who in turn help the price. Bitcoin’s recovery can also be attributed to statements from certain regulators which have gone a long way to alleviate fears of possible severe crackdowns which is a huge motivational factor for new buyers.

For the UK-based eToro social trading platform, user growth decelerated towards the end of January. This was at about the same time that bitcoin’s price started taking some rather significant hits. The rate of withdrawals, on the other hand, has not increased which implies that users were not selling out their bitcoin and that the demand for new customers could have contributed to the previous gains.

Investors Still Down $60 Billion in 2018

While bitcoin’s recovery should be a slice of hope for everyone in the community, investors who bought into the cryptocurrency at the beginning of the year will still have to brave a stormy period. The digital currency kicked off the year at $14,000, down from the $20,000 all-time high of December 2017. As such, since the year began, its market cap is still down by approximately $60 billion.

 

Cryptocurrency Mining Creates Huge Energy Demand in Iceland

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This year Iceland is likely to use more energy in mining digital currencies than what it will use to power homes in the country. Considering the large amounts of electric energy required by computers to mine the precious bitcoins, many prominent cryptocurrency mining companies have found Iceland to be the perfect spot for their operations thanks to the countries abundant geothermal and hydroelectric power plants. With this development, the current energy consumption by virtual currency mining companies is expected to double to 100 megawatts this year which is significantly higher than what all the island nation’s households will use collectively.

There are other factors that have attracted miners to the country. The first is that the companies do not need to pay taxes but given the buzz that their power consumption has been attracting, this will definitely not last long. Other important attractions for cryptocurrency mining companies is the natural cooling available for computer servers as well as the quite competitive prices for the available renewable energy. Obviously, this soaring demand for energy is a culmination of the equally soaring cost of digital currencies and Iceland seems to be the go-to place for companies that are seeking to optimize costs or get away from oppressive laws such as the ones in China following the crackdown on mining companies and ICOs.

As mentioned earlier, mining companies being exempted from taxes does not sit well with everyone in the country. Smari McCarthy, a lawmaker for Iceland’s Pirate Party has made the first step by proposing that the profits amassed by bitcoin miners should be taxed.

“Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government,” McCarthy said. “These companies are not doing that and we might want to ask ourselves whether they should. We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation. That can’t be good.”

Why It Is Not Yet Time to Give Up on Bitcoin and Crypto

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Bitcoin and the crypto-world as a whole are in a frenzy that has undoubtedly attracted a lot of speculation as to whether they are still worth pursuing. Bitcoin’s price, for instance, has been quite elusive – the cryptocurrency has already significantly plunged in value from an initial high of over $17,000 to just about $8,000. These fluctuations have been enough to make a number of interested parties throw in the towel. Well, that is probably a wise option especially if one cannot sustain this kind of endeavor, both financially and mentally. However, if you consider the bigger picture, it is quite evident that many more factors contribute to the complex cryptocurrency ecosystem. These range from regulation, comments from prominent people and even mere talk about regulation, all of which certainly affect prices in one way or the other.

The wild ride that the bitcoin community has been taken through is undoubtedly a justifiable reason for speculation. Apparently, most of the issues that are affecting the price of bitcoin are necessary developments that are expected to make it stable in the long run. So, why do you need to hold on a little?

Fraud Is Being Stamped Out!

Naturally, cryptocurrencies were bound to attract some negative attention, particularly from some fraudulent ICOs. The numbers are rather worrying in this sense considering that about 14 to 30 percent of existing ICOs are likely to be scams. The Securities and Exchange Commission has taken notice of the ICOs too and necessary steps have been taken by the chairman to warn investors about the risks involved. This is, obviously, a good thing but it has certainly contributed to the plunge in bitcoin’s price. Still, the bigger picture here is more important – once these regulations and protections become clear, it will actually allow bitcoin and other cryptocurrencies to thrive.

Facebook Pushes the Unfriend Button on Cryptocurrencies

You have to understand this if you are going to make an informed decision regarding crypto. First, in this age where social media is a force that influences almost everything in the world, crypto-fraudsters could definitely not let the opportunity cruise by. Advertisements about cryptocurrencies are quite common on the internet and a majority of them are actually used to bait unsuspecting victims who are lured in by the prospects of getting “crypto rich”.

Credit Cards Are Not Accepted

Big banks have made it quite clear that investors should never put their big bitcoin purchases on plastic. Citing the volatility and risk involved in such endeavors it is rather obvious that bitcoin investors should never contemplate risking money that they cannot afford to lose

All these steps have also been contributing to making exchanges safer since they are at the center of all this. Bitcoin and cryptocurrencies will rise again, but before it gets stable, buckle up for the storm that awaits.