Stellar Lumens (XLM) Forum with for newcomers and contributor's rewarded Check here

[Image: shutterstock_631328060-640x360.jpg]

The blockchain company Nchain wants to blaze a path toward creating on-chain solutions to the Bitcoin scaling conundrum, and now they have Jon Matonis at the helm. In a May 1 press release, Nchain announced that Matonis has joined their team as Vice President of Corporate Strategy. 
The press release stated, “Blockchain pioneer Nchain announces the appointment of Bitcoin Foundation Executive Director Jon Matonis as its new Vice President of Corporate Strategy. In this position, Matonis will support Nchain’s business growth by developing commercial relationships, and evaluating opportunities for strategic investments and acquisitions.”
Matonis’ History in the Fintech Space
Jon Matonis
Matonis is known in the cryptocurrency industry as the founding director of the Bitcoin Foundation, which is one of the first organizations dedicated to providing funding for voluntary code developers. The foundation was also geared toward evangelizing Bitcoin and spreading the good word of cryptocurrency across the globe.
Over the years, Matonis has also been a tireless defender and popularizer of Bitcoin. His words have also been published in a variety of digital magazines. According to the press release, his articles have appeared in Forbes, Bitcoin Magazine, American Banker, CoinDesk, Payment Source, and others. Furthermore, Matonis is appreciated for creating the first well regarded Bitcoin Price Index, as well as hosting the largest Bitcoin conference in Amsterdam in 2014.
More impressively, Matonis is recognized as a staunch defender of decentralized solutions for the bitcoin scaling dilemma. He ferociously advocates for solutions that do not compromise the integrity or decentralized nature of the bitcoin protocol. This means his personal values align with Nchain’s position of creating on-chain solutions to the scaling debacle. In one comment Matonis said,
“The gradual elimination of trusted third parties from our economic and legal infrastructures belies a serious and unprecedented reorganisation of many legacy social structures. The winners will be those select individuals and entities that finally liberate themselves from the current centralising, rent-seeking chokepoints. I am excited to work with nChain to support growth of the blockchain ecosystem for everyone’s benefit.”
Nchain Secrecy and the Role of Matonis
Until this press release and another one on April 12, regarding Nchain’s acquisition by High Tech Private Equity Fund, the company has been secretive about their operations. They even disallowed employees to post profile content on Linkedin. They admitted their lack of public activity after asked questions about the specifics of their current projects. They responded,
“Regarding your question below the entire organization [img=300x0][/img]has kept a blanket is secrecy around its entire operation. Staff are not allowed to post on LinkedIn or to even have business cards historically. (This point you could reference). As part of coming out of stealth mode this policy of confidentiality will be considered and modified, however we have yet to determine exactly how.”
However, it appears that Nchain has decided to exit stealth mode by hiring Matonis. This has been seen by some as a well calculated move by the firm. Matonis is an influential public figure in the Bitcoin community. This suggests that Nchain may be preparing to conduct a vigorous public campaign while also competing with blockchain rival companies such as Blockstream and others. It will be interesting to see how Matonis drives Nchain’s corporate strategy policy as Bitcoin’s scalability issues start to become even more inflamed and pronounced.
Do you think Nchain and Matonis can create non-centralized, on-chain solutions to Bitcoin’s scaling issues? Let us know in the comments below. 

Images courtesy of Shutterstock, and Twitter. 

Bitcoin is cool, and you know everyone wants in – even the ones who say they don’t. Show the world how cutting-edge you are with a bitcoin T-shirt, hoodie, bag, key-ring, even a Trezor hardware wallet. Shipping all over the world, quality merchandise and, of course, a payment system that makes people say “wow!”.

Read More Read More, Posted by: sekalitas
[Image: Email.jpg]

Bitcoin startup 21 is making its new '21 Lists' product available to the general public today.
Soft launched in February, the paid email platform enabled users to send surveys, tasks and requests to curated lists of individuals and professionals, incentivizing those actions with small bitcoin payments.
Original users included what 21 described as "famous people", largely VCs backing the firm, including Marc Andreessen and Ben Horowitz.

Starting today, however, anyone can apply to join to create a profile page and join 21 Lists based on their preferred area of expertise.

In a blog post, the firm heralded the move as one that would open the door for users to engage in "microconsulting" – a way to earn additional income by offering their expertise to individuals outside their social network.
The company went on to explain:
"Depending on the selectivity of the list that you gain admission to, the expected income for a given list’s annual stream of microconsulting work should be on the order of $10 to $1,000+ per year."

Further, some lists will be subject to periodic reviews to ensure the quality of responses does not degrade, 21 added. For example, the firm said individuals in lists that target specific digital currency users will periodically ask users to sign transactions to verify that they still qualify to receive tasks in this area.

The move is the latest that finds 21, one of bitcoin's best-funded startups, evolving its offering from a focus on bitcoin mining hardware to one centered on disrupting social media networks through micropayments.

Read More Read More, Posted by: halfgray
[Image: Blockchain-Apps.png]

We have previously discussed the use-cases that are being developed by leveraging blockchain in depth. The year 2015 has undoubtedly seen a heavy spike in investments and hundreds of startups that have cropped up in this space. One major phenomenon was the development of multiple blockchain platforms. Platforms that would enable various third-party projects to leverage the core infrastructure and develop its own product have been mushrooming. While some platforms have started to gain widespread usage, the others are catching up.

Here are some of the notable platforms that we have seen integrations or projects being built:
EthereumRippleEris IndustriesMaidSafeCounterpartyStellar

Here are some of the other platforms that could be paving ways for projects:, Koinify
These blockchain platforms have been utilized by other players either for developing new projects or use-cases. While financial platforms like Ripple and Stellar have majorly seen partners in the integration space (gateways integrating to allow transactions), non-financial use cases have been dominated by Ethereum which has close to 14 different projects that are being run using their platform.
The below figure provides you with a snapshot of various apps/products/integrations that are being done on the core platforms.

Ripple: Ripple is completely focused on its enterprise strategy, helping banks with real time settlement for international payments. In 2015, it has launched 2 new solutions for license Cross-Currency Settlement and FX Market Making. Some of the business that have been utilizing the Ripple Protocol are:
Fidor Bank: Munich-based Fidor Bank AG was the first bank to integrate Ripple protocol to provide faster and affordable money transfer services for its customers.
Other banks joining ripple: Cross River Bank, CBW Bank
Gateway support: XAGATE, Bitstamp, Bluzelle, Ripula, The Rock, Gatehub, Payroutes, eXRP, Tokyo JPY, Exchange Tokyo, Pax Moneta, LakeBTC, SnapSwap, Rippex, Mr. Ripple, Bitso, BTC2Ripple, Digital Gate Japan
Bluzelle and GateHub also provide users a consumer-facing wallet. GateHub would be used by the users of Ripple Trade as Ripple has announced that from January 13, Ripple Trade would be shut down and the users would need to migrate to GateHub which will act as the new trading platform.

Ethereum: Ethereum provides a decentralized platform for building applications. Ethereum has seen the highest number of projects that are being built on a blockchain platform and also has several interesting, emerging use cases. The projects that are being built on Ethereum are:
Augur, Gnosis: Decentralized prediction market
BoardRoom: Blockchain governance platform
Colony: Platform for autonomous blockchain organizations
BlockApps: Tools to build decentralized apps
Airlock: Keyless access protocol for smart property
Provenance: Gather and share information & stories behind products Smart locking and billing for the sharing economy
DigixGlobal: Technology to own gold assets
WeiFund: Crowdfunding platform
Maker: Autonomous bank & market maker
HitFin: OTC derivatives settlement
Solidity: Online compiler
EtherPArty: Smart contract deployment tools

Eris Industries: Eris industries, which was initially built based on the Ethereum code, has reworked and has released its platform for anyone to build and deploy blockchain and smart-contract-based projects. Eris Industries has been supporting projects that are further going to be developing open platforms to develop decentralized applications. Some of the projects being developed on its platform are:
Tendermint: Open-source blockchain platform that can support all blockchain applications, including bitcoin, Ethereum, and ErisDB.
2gather: Decentralized video-sharing service (akin to a decentralized YouTube)
MaidSafe: Provides a distributed platform that enables the creation of applications that help ensure digital privacy, security and freedom for all. One of its projects is SafeCoin, a digital token that ensures rewards for users who provide their resources to the SAFE Network.

Stellar: Provider of a decentralized P2P payment network. Some of the projects and gateways utilizing/integrated on Stellar are:
Wallet: Centaurus (Android), Stellars (iOS), Stargazer (desktop wallet)
Gateways and exchanges integrated: Bittrex, BTC38,, Coinex, Dividend Rippler, Kraken, ANXPRO, Poloniex


Amit is the Co-Founder & Chief Curator of Let's Talk Payments. He has a strong background in strategy and market analysis and has advised dozens of clients (ranging from startups to Fortune 500) in payments, commerce and technology. His vision with LTP is to provide the same level of analytical rigor that analysts put into their work and combine it with Content 2.0 technology to offer unparalleled satisfaction for readers in this space.

If you have any suggestions or questions for the author, please email us at

Read More Read More, Posted by: Grimm

For our first post of Financial Inclusion month at, we are honored to feature Academic Director at both the Lagos Business School and Pan-Atlantic University, Dr. Olayinka David-West. She has over two decades’ experience in the ICT sector and unparalleled understanding and insights of the Nigerian landscape and climate surrounding financial inclusion in the area.

Can you provide us with a brief overview of your background and work at the Lagos Business School?
My journey into the world of computing commenced with a degree in computer science and graduate studies in business systems analysis and design. As a technology worker, I was particularly interested in the design of systems for business rather than just the information and communications technology (ICT). I always believed that the ICTs were not the end in itself. My professional career commenced as a Xenix/Unix systems administrator and gradually became an applications systems tester before moving into research and development (R&D). In my R&D capacity, I explored and experimented possibilities of new technologies and systems and their adoption in the Nigerian business environment. I witnessed the banking technology revolution and rollout of networks and centralized systems to enhance banking operations and service delivery. I witnessed the birth of the internet and internet-based applications and the deployment of end-user computing applications that inspired my interests in financial systems and the adoption and application of ICTs. I joined Lagos Business School (LBS) faculty to demystify complex ICTs and enhance the understanding of systems amongst business leaders and managers as well as explore applications and adoption of ICT in business and society.

What does financial inclusion mean to you? Why is it essential to the next digital financial infrastructure?
Financial inclusion is climax of end-user computing in Nigeria’s financial services industry. Contextually, financial inclusion is achieved when anyone can buy goods and services from market stalls or street hawkers and rural dwellers are financially served in their communities.

You are currently doing a research project at Lagos Business School in conjunction with the Bill and Melinda Gates Foundation. Can you tell us a little about the project and some of the most recent findings or learnings?
Indeed, we are conducting a research project supported by the Bill & Melinda Gates Foundation (BMGF). The 2-year project titled “sustainable business models for delivering digital financial services (DFS) to the unbanked poor in Nigeria” focuses on the supply side of DFS. Last year (year one), we focused on the mobile money operators (MMOs), identifying sustainable business models and other market interventions for enhancing financial inclusion. This year, we are focusing on market-enabling policies to understand legislative and regulatory processes and their impact on DFS.
In 2016, we published the first State of the Market Report providing an overview of the current state of financial inclusion in Nigeria and DFS adoption. The report further provides evidence­-based insights to solving the mobile money conundrum in Nigeria.

[Image: State-of-Market-Report_LBS-e1493209393626.png]

It shows that Nigeria’s underbanked and unbanked citizens are predominantly 35 years of age or younger, with education up to high school level and are either unemployed or low-income earners. The report revealed that inhibitors to DFS adoption include low economic activity amongst the underbanked and unbanked, lack of awareness, product-needs gaps, product complexity, utility cost and usage difficulty.

Using evidence-based analytical approaches to explore consumer data and supplier capabilities in the DFS ecosystem, the report concludes that opportunities for DFS take off where industry players:
  • Build network effects

  • Adopt new business models

  • Alter financial models

  • Develop competencies and capabilities

  • Redefine industry structures

Nigeria initiated a financial inclusion strategy in 2011 aimed at getting 80% of unbanked Nigerians banked. What were some of the shortcomings of the initial approach to accomplish this and how has it changed in the last six years?
Nigeria’s willingness to address financial inclusion dates back over 5 decades though various initiatives ranging from the People’s Bank to microfinance banking. The NFIS strategy and targets are the first commitment to the Maya Declaration. Targets aim at getting 80% of adult Nigerians formally served either by banks, microfinance or other financial institutions and other informal providers. Some shortcomings of the initial approach and changes are tabulated by actor:
[Image: Supplier_Chart.png]

Finally, inadequate above-the-line (ATL) and below-the-line (BTL) marketing strategies failed to build awareness and increase downstream adoption.

What other efforts are currently being put in place by Government and others in Nigeria to drive Financial Inclusion?
In addition to the various regulatory policy frameworks implemented by the CBN, additional efforts by the government to enhance financial inclusion are being made through patronage and increasing the number of financial access points. The Federal Republic of Nigeria is providing access to finance through a social safety net program that provides a monthly stipend to unemployed youths through a conditional cash transfer (CCT) scheme. The adopted store of value of the CCT scheme is bank accounts for individuals on social registers that are also verified using the bank certification numbering (BVN) scheme. The use of bank accounts for which BVN is requisite supports unique identity verification.
An additional intervention recently announced to increase the number of FSPs involves the award of super-agent licenses to subsidiaries of mobile network operator (MNO) companies, subject to no objection by the telecommunications regulator, Nigerian Communications Commission (NCC). As super-agents, existing MNO retail outlets would be able to provide financial services.

With women being one of the largest groups of adults excluded, what initiatives or approaches have you been part of or seen that have helped bring them into the formal financial sector.
The Diamond Bank BETA savings account, launched in partnership with World Women’s Banking (WWB), is targeted at self-employed women (often market traders) who save frequently. In addition to accessing Diamond Bank branches, alternative channels available to BETA account holders are field service agents (BETA friends) who provide periodic convenient financial services at customer business locations (markets) and ATMs.

In your opinion, what are the key variables that still need to be put in place to solve Financial Inclusion in Nigeria?
In addition to the recommendations from our State of Market Report, regulatory and policy consistency is another critical factor that needs to be addressed to solve financial inclusion in Nigeria. For example, the Central Bank initiated the nationwide rollout of the cashless policy on April 1, 2017, that was subsequently reverted in 30 states by April 21, 2017. Other than the operational and technology costs incurred, the optics of this reversal do not connote trust and credibility.

What solutions will you proffer for addressing financial inclusion across Africa and in other parts of the world? What challenges (technical, regulatory, acceptance/adoption etc) still need to be solved in order to provide access to the digital economy for these communities?

With over 2 billion people without access to financial services (financially excluded), unfortunately there is no magic bullet solution. However, with relatively high mobile penetration rates, digital financial services (DFS) offer a viable channel to address financial inclusion in markets with low banking penetration rates. For example, M-Pesa was shut down in South Africa after failing to reach critical mass. 

The under-listed are a few enablers of financial inclusion drawn from different markets:
  • Federal Government support and political will

  • Human centered design (HCD) techniques drawing customer knowledge acquired from market research and customer segmentation studies in the development of appropriate products

  • Contextual and cultural understanding of the customers and their financial services products. In Lesotho for example, financial inclusion is driven by access to insurance as opposed to the traditional bank account or wallet

  • Last mile access through extensive agent networks

  • Flexible/evolutionary regulation that support learning and business development activities
On the issue of challenges, more work needs to be done in the following areas:
  • Technical: I strongly believe the infrastructure needs to more robust, resilient and accessible. For example, some rural areas lack requisite telecommunications infrastructure that inhibits access to DFS. Another technical issue that impacts adoption is related to the deployment of the Unstructured Supplementary Service Data (USSD) communication channel. USSD nuances such as session timeouts and the lack of standardized service codes for financial transactions are prevalent.

  • Regulatory: While the financial systems regulator usually leads regulatory practices, regulation of communications tariffs (USSD sessions), especially for financial services may be required to manage service costs that are ultimately passed onto consumers. This will require cooperation and collaboration amongst participants – regulators and operators. In addition, tariff regulation will dissuade anti-competitive practices in environments where MNOs provide mobile money services.

  • Acceptance/adoption: With a high number of MMO providers, the lack of standards in the deployment of USSD service codes could be perceived as a learning barrier for consumers.

What role should regulatory bodies play (if any) in bringing new digital technologies (i.e. blockchain etc) into mainstream financial services?
In their management of financial systems, regulatory bodies cannot ignore the impact of technology on the businesses within their domains. In financial services, we are gradually seeing the evolution of various Financial technology providers otherwise known as FinTechs! Regulatory bodies have a significant role to play in ensuring consumers are protected; however, with the various unknowns of these new technologies, there needs to be some flexibility in the regulatory approaches – rather than guidelines to regulate immediately, a test and learn approach may be more appropriate. This approach will help regulators better understand the products, services and market impact. In Kenya for example, M-Pesa was unregulated by allowed to operate without any formal regulation. In this period, the regulators and operators were better able to understand the market adoption and build sufficient policies to safeguard the financial system.

Read More Read More, Posted by: Grimm
1 point = $1 USD
Hi Everyone,

Today we are launching the Bug Bounty Program. To review the details of the program, please visit:


Read More Read More, Posted by: briangale
[Image: Hogwarts-Harry-Potter.jpg]

The state of bitcoin today is highly discouraging. Watching grown men hurl insults at each other on Reddit and Twitter is just sad.
When I became involved in 2013, bitcoin's potential seemed endless. It was heralded as a possible solution for micropayments, remittances, microfinance, parking meters, email spam and so on. Many women, myself included, believed in bitcoin as a means to address world problems of poverty by providing access to capital for the remaining three-quarters of the world.

As time passed, I became discouraged that many needed use cases did not come to fruition. Startups attempting to build companies with those business models have died. Anything involving small payments in bitcoin has been mostly eliminated due to high fees.
The most popular use case is as a store of value. It's not to say that isn't useful: in the growing number of countries with devaluating currencies, bitcoin is an attractive alternative. Bitcoin has had an indelible impact as a groundbreaking technology. But it's disheartening that it has stalled in doing more.

There are fundamental issues that will likely never be solved, as evidenced by the two-year debate on how to scale bitcoin. The community is more divisive than ever. I can't help but think part of the reason it's so dysfunctional is because it's devoid of women.
Women (or any rational person) do not want to participate in this dystopian community: it's juvenile and filled with vitriol. Bitcoin desperately needs a Patronus Charm, "a pure, protective magical concentration of happiness and hope.” [1]

My disappointment in bitcoin caused me to look at the blossoming landscape of alternate blockchains: eg litecoin, zcash, monero, ethereum and dash have all grown in market size and popularity.
It's clear that more alternative coins (altcoins) will develop innovative solutions and come to market. This is why MimbleWimble caught my interest.

Starting point
As a brief background, the original MimbleWimble white paper was placed by someone called Tom Elvis Jedusor (Voldemort’s French name in JK Rowling's Harry Potter book series) on a bitcoin research channel in July 2016.

Tom's white paper "Mimblewimble" (a tongue-tying curse used in "The Deathly Hallows") was a blockchain proposal that could theoretically increase privacy, scalability and fungibility. It remained theoretical until recently.
At the end of 2016, someone named Ignotus Peverell (the original owner of the invisibility cloak, if you know your Harry Potter characters) started a Github project called Grin, and began turning the MimbleWimble paper into something real.

Andrew Poelstra, a mathematician at Blockstream, presented on this work in January 2017 at Stanford University’s Blockchain Protocol Analysis and Security Engineering 2017 conference. More recently, Ignotus posted a technical introduction to MimbleWimble and Grin.

It took me a while to wrap my head around MimbleWimble. The more I internalized it, the more hopeful I became that something more magical than bitcoin could appear. I will attempt to explain MimbleWimble and why what it proposes – privacy, freedom of choice, equal access, fungibility, and sustainable growth over time – are so important.

Privacy matters, a lot. One of the most important rights we have is the right to privacy. It’s our right to “keep a domain around us, which includes all those things that are part of us, such as our body, home, property, thoughts, feelings, secrets and identity." [2]

Privacy matters
I consider privacy extremely important.
It's very apparent how valuable it is when you lose it or when someone violates it. In my 20s, I was stalked. A person whom I had met in passing on a military base waited for me after work and surreptitiously followed me home.

He did this for several weeks – all unbeknownst to me – until one day he knocked on my door and told me he had been following me and professed his undying love. I immediately slammed the door and called the local and military police. I lived alone in the woods and was so freaked out that I moved.

Only someone who has been stalked can understand how frightening this experience was. To this day, it affects many of my behaviors to guard my privacy.

Physical trespass of privacy is often preceded by online privacy violations. Recent events, such as Congress granting ISPs (internet service providers) the right to sell your personal information – browsing habits, app usage history, purchasing habits, location data – are very concerning.

As Luke Mulks from Brave elegantly wrote, "[Y]our digital data trail is the evidence of your human presence online. Your data is valuable, private, and most important, it’s yours."

What's available
If we cannot rely on our legislature to protect our constitutional rights (can we rely on them for anything anymore?), technology needs to intercede to make it harder for greedy capitalists to put your privacy up for sale.

Privacy extends to what to share publicly about what we buy or whom we donate to. These transactions should not be open for all to see.
Women, especially those trying to escape repressive social or economic conditions, have a dire need to stay anonymous. That's a fundamental flaw in bitcoin: every transaction and address balance is available for the world to watch and track.

There are some things you can do to hide your transaction, such as tumbling, but you need to go out of your way to use them and they are breakable. Privacy oriented cryptocurrencies like monero and zcash improve privacy significantly.
In monero, the transaction is not natively private, but relies on ring signatures to mask exchanges. Zcash leverages a technology called zk-snarks to build private transactions, which is a huge improvement.
However, it still requires a lot of extra resources to build a confidential transaction, so most users still issue their transactions "in the clear" (clear vs shielded counts).

The big change
MimbleWimble is natively private.
There are no ring signatures or zero-knowledge proofs on top of a transparent bitcoin-like transaction. In a MimbleWimble transaction, all values are fully obscured. There are no reusable or identifiable addresses. Every transaction looks the same to an outside party.
The two properties verified in a MimbleWimble transaction are:
  1. No new money is created
  2. The parties sending money must prove ownership of their keys.

To verify no new money has been created, you must demonstrate that the sum of outputs minus the inputs equals zero. To verify key ownership, the transacting parties must legitimately prove their public and private keys exist to authorize the transaction.
MimbleWimble uses a blinding element to obscure all values – transaction amounts and keys – while holding true basic mathematical facts. The blinding element relies on multiplying and adding secret factors to obscure real values.
For example, let's say I have a transaction with these amounts:
(1) 17 + 12 = 29

The balanced equation shows no new money was created, complying with property 1) above. The equation remains true if I apply a secret blinding number (eg 11) to all terms.

(2) 17*11 + 12*11 = 29*11

Without knowing my secret number 11, you would have a hard time guessing what the original transaction values are in this equation.

(3) 187 + 132 = 319

In equation (3), I’ve managed to keep both the values and blinding number private while still allowing others to verify I have not created new money in my transaction.
The big picture
Still don't think this is a big deal? MimbleWimble offers other extensive benefits that indicate it could form the foundation of the kind of network bitcoin was meant to be.

Freedom of choice
By obscuring all values, MimbleWimble provides full privacy and gives you the choice of what to reveal. It's similar to donor levels in various non-profits. You’ll see the range a donation was made for, but you don’t necessarily know the exact donation.
Both the donor and the non-profit know exactly how much was donated, but no one else needs to know.
This "right to privacy gives us the ability to choose which parts in this domain can be accessed by others, and to control the extent, manner and timing of the use of those parts we choose to disclose." [2]

Equal access
Another aspect of bitcoin that disturbs me greatly is there is little opportunity left for an average person to participate in securing the network. The requirement of a highly specialized and expensive chip for bitcoin mining – the ASIC – has almost eliminated anyone from becoming a bitcoin miner, whose primary responsibility is validating transactions and placing them into blocks.
The mining community is now heavily centralized and this has greatly contributed to bitcoin's woes.

The ability to grow over time while still providing equal opportunity to participate are key tenets of Ignotus' Grin implementation of MimbleWimble. Grin is designed to be ASIC resistant, so that anyone who wants to try mining can buy a widely available GPU chip at a local Best Buys or online for a reasonable price.
Making MimbleWimble ASIC resistant democratizes access. I’ve even toyed with the idea of building a GPU miner with my kids to see what it can do.

Ability to grow over time
Another way to safeguard equal access over time is to ensure the blockchain network doesn't get dragged to a standstill when transaction volume increases.

This is the core issue in the bitcoin block-size debate: there are more transactions than can fit into a 1Mb block. As long as there's a restrictive size limit, there will be a capacity issue. A dirty little secret is that to get around scalability issues, almost all payment processors and exchanges do off-chain transactions. Which begs the question: why bother using a cryptocurrency with blockchain?

Increasing usage will increase transaction volume. So how do you ensure that a block size can continue to accommodate volume increases? By streamlining each block.
The principle is similar to simplifying equations. If there are terms that are identical on both sides of an equation, you can cut them:
(8) 2+y = x+2
(9) 7+3+5+4+2+y = x+7+3+5+4+2

Both equations (8) and (9) simplify to:

(10) y = x

MimbleWimble maintains that if an output spends an input, you no longer have to keep them because they cancel each other out. This greatly cuts down the amount of data you have to store and process.

The only data that nodes keep is unspent outputs and block headers. Instead of thinking of blockchain capacity in terms of number of transactions, MimbleWimble is designed to grow with the number of users. The streamlined blocks make growth sustainable over time as the transaction data set does not continue to get bigger.

This increases privacy since transaction data gets removed and it also enables fungibility.

Fungibility is the ability for equal units to be interchangeable.
Let's say I give you a dollar – either as a coin or a paper note. The Federal Reserve prints the paper dollar and the US Mint produces the coin dollar, but both are equal. Neither is lesser or greater than the other and you can chose to use a dollar coin or bill interchangeably.
This is a key characteristic of currency: equal units must be interchangeable, or fungible. The US dollar is fungible. Bitcoin is not.

The bitcoin blockchain keeps every single input and output forever and so each coin carries a legacy. It's similar to equation (9) above.
Another dirty little secret is that when picking which transactions to process – in addition to the fee – payment processors, miners, and exchanges will look at the inputs (ie 7+3+5+4+2) to assess the quality of the transaction. The consequence is one bitcoin is not fungible with another.

The most valued bitcoins are called 'coinbase transactions', which are the ones created when a block is found. They are newly minted and 'clean' and some parties pay a premium to buy them. A hierarchy in coin quality develops. The consequence is, if you receive bitcoins that have inputs that are tainted (eg they have been used in a dark market), spending them may become increasingly difficult.

In MimbleWimble, because the (7+3+5+4+2) inputs and outputs are all discarded when spent, each coin is exactly equal to the other. In other words, MimbleWimble coins are interchangeable and fungible.

I'm very hopeful seeing the accelerating pace of research and innovation in public blockchains.
If privacy and scalability are solved, MimbleWimble could be the Patronus Charm for bitcoin, perhaps as a complementary sidechain. Imagine what a universal fungible digital coin could enable with access for everyone.

One hesitation I have, however, is that many people developing it have taken on Harry Potter-themed pseudonyms. It's understandable given the personal attacks rampant in the community, but it does conjure a mystical aura. I’m glad Andrew Poelstra, a highly qualified real figure, is actively involved with MimbleWimble.

I hope I can add my voice to the mix, also as a real person. I realize that by not using a pseudonym, I'm opening myself to the troll armies. I’ve attempted to explain why MimbleWimble is interesting to me.

I hope it intrigues enough people and inspires both men AND women to engage early; it would be great if this community doesn’t wind up as a testosterone-filled boys club.

Apparently, Merope Riddle (Lord Voldemort's mother) is already very involved in MimbleWimble’s development. I believe it’s worth learning, participating in its genesis, and helping to develop a healthy community around it.

Read More Read More, Posted by: halfgray
[Image: 725_Ly9jb2ludGVsZWdyYXBoLmNvbS9zdG9yYWdl...5qcGc=.jpg]

Another billionaire has come out after Mike Novogratz to indicate he’s put some money into digital currencies, particularly in Bitcoin. His name is Mike Cannon-Brookes and he is co-founder of the collaboration software firm Atlassian based in Sydney, Australia.

According to Forbes, his real time net worth as at May 1 stands at $2.4 bln. Cannon-Brookes’ business partner is billionaire co-founder, Scott Farquhar, who recently bought Australia's most expensive house - the $70 mln Point Piper estate Elaine. They are the only individuals under the age of 40 on Forbes list of Australia’s richest people.

Betting on Bitcoin much like a horse racing
Cannon-Brookes made a tweet last week to confirm his bet on Bitcoin and how it has turned out well. Unlike Novogratz, who disclosed that he has 10 percent of his net worth in the cryptocurrency space and described it as the "best investment of my life", Cannon-Brookes doesn’t seem to consider his as an investment.
He did not say in any of his tweets about the digital currency how much he put into Bitcoin or whether he is holding other cryptocurrencies as well.

According to the Sunday Morning Herald, Cannon-Brookes, whose firm has no sales team but boasts NASA, Tesla and SpaceX as customers, is understood to have a number of public bets in the cryptocurrency space via tech investor Blackbird Ventures and bank disrupter Tyro. He is currently working with Elon Musk to bring Musk's battery technology to Southern Australia.

What fraction of wealthy people could have Bitcoins?
Though it is unclear what the fraction of wealthy people who are presently owning some Bitcoins could be, disclosures of this nature show that the belief that those who own the digital currency are mostly minions is not completely true.

It also, in a way, confirms the view that main investors have started getting involved in Bitcoin by investing a part of their money.

This could be in line with the advice of billionaire bond manager Bill Gross who in his investment outlook letter last year picked Bitcoin as an attractive storage of wealth for investors.

According to, less than 150,000 Bitcoin wallet addresses - about one percent of the total addresses available - have 10 or more Bitcoins each and they keep almost 90 percent of the total Bitcoin currently in supply.

While individual owners may not be identified, some of the wallets could be for cryptocurrency exchanges or other businesses.

Read More Read More, Posted by: halfgray
Hi everyone, a Stellar newbie user here. Quick question, is it possible to implement Asset management kind of apps/contracts over the stellar protocol  such as the one described in the melon project. Afaik, options, bonds and some other financial instruments can be implemented, wonder whether it can go further than that or it has to be done on the edges and only use the stellar network as a clearing house. Thanks!    

greenpaper GitHub link

Read More Read More, Posted by: sr51pan
[Image: shutterstock_575249935.jpg]

There are quite some intriguing developments to be found in the world of bitcoin and cryptocurrencies. Parity Technologies has released their Bitcoin technology stacks, which also features a new implementation of the Bitcoin protocol. This client is focused on performance and reliability. Now is a good time to take a closer look at that what the Parity Bitcoin client is all about.

It is not surprising to find out a lot of people have no idea what the big deal is regarding this project. Parity Technologies is a business venture comprising of a large number of developers who created Ethereum and its commercial implementation. This team has also taken a keen interest in bringing improvements to the Bitcoin protocol, as it suffers from issues regarding performance and reliability, in their opinion.

What the Parity Bitcoin client does is address these problems and do so in an open manner. The source code of the project can be found on GitHub, which allows anyone in the world to build on top of this existing codebase moving forward. The entire project has been built from scratch, with a strong focus on proper software development. Moreover, it is fully compliant with the legacy Bitcoin implementation.

It is also worth mentioning the project is written in the Rust coding language, which is both fast and secure at the time same. In fact, the ZCash team has been using Rust as well in recent months. This new coding language offers speed improvements at any code and seems capable of allowing developers to introduce a lot of new features in the future.

Moreover, quite a few parties have been supportive of the development of the Parity Bitcoin client. F2Pool, Bitmain, and Bixin are some of the initial sponsors of this venture. Parity Technologies is a VC-funded enterprise, and their Parity Ethereum client has received a lot of praise since its release. Moreover, the Ethereum client can be integrated directly into a browser, and the same now applies to its Bitcoin counterpart.

While the Parity Bitcoin client is mainly designed as the new go-to solution for developers, it is also a good addition to the list of alternative protocol implementations. We have highlighted several of those implementations in the past, including the likes of Bcoin, btcd, and others. A growing diversity of bitcoin protocol implementations can only be seen as a positive development.

Moreover, the Parity bitcoin implementation can bring us one step closer to a successful integration of Schnorr signatures for bitcoin users. As we talked about earlier, Schnorr signatures provide additional features to bitcoin users all over the world. Parity Bitcoin can serve as a test bet ecosystem to test the viability of such an implementation before it becomes part of the main Bitcoin protocol.

Read More Read More, Posted by: treyxion
[Image: shutterstock_544285678.jpg]

The Summer is almost upon us and it appears the number of bitcoin cloud mining scams is increasing exponentially. Micro-BTC is another platform – quite similar to Micro Mining – that claims to provide cloud mining services to bitcoin investors. No one should invest their money in this platform by any means, as it offers no proof of its mining capacity whatsoever.

It is not hard to spot the bitcoin cloud mining scams these days, as most programs offer virtually the same experience every time. Micro-BTC is no different in this regard, as it is another one of those cloud mining scams that provides users with a free 15KH/s of mining power as a welcome bonus. This is also a clear indication the company would never mine bitcoin in the first place, but stick to altcoins instead.

Moreover, Micro-BTC also guarantees profits to all investors, which is impossible in the cryptocurrency ecosystem right now. Lifetime profits from cloud mining contracts can never be provided in a legitimate manner. Most mining contracts only run for a year or less, for obvious reasons. Any company claiming to offer an extended period of cloud mining is most likely a scam by default.

The different mining plans provided by the company are not overly spectacular either. Users are mining Scrypt coins at all times, which means there is very little room for profitable cloud mining whatsoever. That said, the company offers packages starting at US$0.31 per KH/s, all the way down to US$0.23 per KH/s depending on how much mining power one looks to purchase. Every plan is also subject to a hashpower bonus, which is very suspicious at best.

What is rather interesting is how the site hosts a camera at their mining farm. When looking at the livestream however, there is no sound whatsoever, and most of the racks visible are completely empty. It is also a still image by the look of things, as nothing is happening whatsoever. In fact, there aren’t even any blinking lights indicating hardware is being put to good use. A nice trick to sway people’s minds, but it is not hard to see through it.

Once again, this is a company providing no credible evidence of their cloud mining operations. There is also no public history of payouts made to users, although that is not all that uncommon. Offering bonus hashrate for customers and guaranteeing lifetime earnings is a clear sign of a Ponzi scheme, though. Additionally, there is an affiliate program in place, although none of this information is listed on the website, as it redirects to the homepage. It is evident the team has not put much effort into building a credible website for Micro-BTC whatsoever.

To make matters worse, Micro-BTC lists no public information regarding the company’s address, staffers, or registration number. It seems this company operated out of the UK – or claims to do so – based on the WHOIS information, which is also handily hidden from prying eyes. There is no reason to invest in Micro-BTC whatsoever unless you enjoy losing your bitcoin balance to scammers.

Read More Read More, Posted by: treyxion
[Image: analysis-charts-e1493382374824.jpg]

While there are many different methods for evaluating the price of bitcoin, fundamental analysis may be the most integral for figuring out its true value.

Fundamental analysis is the evaluation of economic, financial and other key variables, known as fundamentals, to determine a security's true value. This differs from technical analysis (the counterpart to fundamental analysis) in that the former is more interested in looking at a security's price movements to make better-informed decisions.

When evaluating bitcoin, though, investors are keen to evaluate key aspects of the cryptocurrency's underlying technology, for example, how its scaling challenges might affect the digital currency's value.

After all, if the digital currency's transactions grow costly and time-consuming on account of block size limitations, this could reduce demand, in turn lowering the price.

Laying the foundation
While investors use fundamental analysis to evaluate different asset classes, such as equities and fiat currencies, several analysts assert that using this approach to evaluate bitcoin is more complex.

For instance, investors can evaluate a company's stock by looking at certain items on its balance sheet, but bitcoin does not produce revenue or earnings numbers.

Jacob Eliosoff, a cryptocurrency fund manager, spoke to this situation, telling CoinDesk: "It's hard to derive an even remotely precise valuation for bitcoin from future cashflows", the way you can for other assets such as General Motors stock.

As a result, traders interested in conducting fundamental analysis on bitcoin have developed "a whole new set of metrics," according to Charles Hayter, founder and CEO of CryptoCompare.

However, even though bitcoin has been described as a new asset class, the same rules that apply to fiat currencies also apply to cryptocurrencies, said Tim Enneking, chairman of Crypto Asset Management. "All the laws of economics apply – in full – to cryptocurrencies," he said.

As a result, he emphasized that the starting point for all fundamental analysis should be the supply and demand that drives prices.

Key role of demand
Several variables affect bitcoin demand, including user adoption, transaction activity and trading.
Many analysts noted the importance of user adoption, which is crucial to a cryptocurrency's long-term viability. As for what drives user adoption, the analysts said money can have many uses. At its most basic level, money is a store of value, a medium of exchange and a unit of account.

Outside of small circles, bitcoin has never really been used as a unit of account, said Enneking.
But bitcoin has managed to gain significant traction as a medium of exchange. Hundreds of companies – including eBay and PayPal – have agreed to accept the digital currency since its inception in 2009.

In addition, the number of confirmed transactions per day has generally followed a steady, upward trend, according to data from Blockchain. Transactions started surging in early 2012, rising from more than 7,000 per day at the start of April 2012 to more than 300,000 per day now.

While this data is informative, Eliosoff asserted that it's not the best indicator, because many blockchain transactions are "generated by automated systems and don't represent economic activity, [especially] on scalable chains with low fees."

Instead, traders must figure out which transactions are an actual person sending to or accepting from another person.
But as bitcoin obtains more widespread adoption and retailers aren't seeing increasing sales via bitcoin, there's been a major shift in focusing on the cryptocurrency as a medium of exchange and to a store of value, concluded Enneking.

Arthur Hayes, co-founder and CEO of leveraged bitcoin trading platform BitMEX, said similar things, telling CoinDesk that the extent to which bitcoin is perceived as a store of value is a major driver of the digital currency's price.

Key role of supply
While demand for bitcoin can be a complex study, supply is a bit more straightforward.
The bitcoin protocol limits the total number of units at 21 million, and 16.3m bitcoins were in circulation at the time of reporting. Further, the rate of new supply is also determined by the bitcoin protocol. This contrasts sharply with the traditional monetary system, in which central banks have the ability to print money whenever they want.
However, there are some caveats that affect bitcoin's supply.

For starters, Satoshi Nakamoto, the pseudonymous creator of bitcoin, supposedly holds roughly 1.1m bitcoins which have not moved since they were mined. And many people in the bitcoin community think they won't ever be, seeing these coins as "dead bitcoins." Past that, it is impossible to know just how many "dead bitcoins" there really are, noted Enneking.

That's because for the first several years of bitcoin's existence, units of the digital currency didn't have much monetary value. When the price began moving upward, stories of people throwing away hard drives that held the private keys for their bitcoins were commonplace.

Major events
Analysts also noted the key role major events play in determining the price of bitcoin. These incidents are sometimes directly related to bitcoin, such as the hack of a major exchange, or a setback in the community's push to solve the scaling dilemma.
However, Enneking told CoinDesk:
"The events that impacted bitcoin prices the most were non-bitcoin events like Cyprus and Greece."

BitMEX's Hayes also spoke to the importance of macroeconomic events, emphasizing that ones fueling instability usually bolster alternative assets like bitcoin.
ARK Invest's Chris Burniske agreed. During times of economic turmoil, bitcoin can act as a "disaster hedge," he said.

Key considerations
By leveraging fundamental analysis, bitcoin traders can get a better sense of the cryptocurrency's true value and get a better sense of whether it's a good time to buy or sell.

However, some analysts criticize fundamental analysis because it reflects more what a security should be worth than what its actual market price is. Relying too much on fundamental analysis, without also using technical analysis, could cause a trader to buy or sell at a less-than-ideal time, they said.

To manage this risk, bitcoin traders can combine fundamental analysis with technical analysis. For example, a fundamental analyst might look at several indicators of demand, concluding that bitcoin is underbought, and then leverage technical analysis by reading charts to find the best entry point.

Alternatively, a trader might use technical analysis to determine that it's a good time to sell, and then leverage fundamental analysis to confirm this view by looking at key drivers of demand.

Read More Read More, Posted by: treyxion
[Image: shutterstock_388995775-640x427.jpg]
Overstock’s blockchain technology arm, Medici Ventures, has partnered with Bitcoin consumer financial services platform Ripio to democratize access to financial services in emerging markets.
Medici Ventures Partners with Ripio
[img=300x0][/img]Medici Ventures, a wholly owned subsidiary of Inc., announced on Wednesday that it has invested in Bitcoin consumer financial services platform Ripio. “We are super excited to partner with Medici Ventures team,” said Sebastian Serrano, CEO and co-founder of Ripio, adding that:
[i]This investment and their experience will help us leverage our vision of democratizing access to financial services in emerging markets.[/i]
[img=300x0][/img]Commenting on the partnership, the president of Medici Ventures, Jonathan Johnson, explained that Ripio has “the type of life-changing application of blockchain technology” his firm is interested in. He cited the startup’s simplified peer-to-peer payment system “that is accessible to anyone with a smartphone, no matter his or her level of technical sophistication.” As part of the partnership, Medici Ventures will also “take an observer’s seat in Ripio’s board of directors meetings.”
Ripio’s Bitcoin Financial Services
[img=300x0][/img]Launched in 2014 by Bitpagos, a bitcoin payment processor focussed in Latin America and emerging markets, Ripio claims to have more than 70,000 users across Argentina and Brazil. In addition, the company is in the process of expanding to other countries in the region, including Mexico and Colombia.
The startup offers a suite of Bitcoin financial services, such as buying and selling bitcoins in local currencies and making online payments at thousands of websites and stores. According to the company:
[i]Ripio’s Bitcoin financial services suite utilizes the blockchain and traditional payment rails to allow Latin America’s unbanked and underbanked population (as high as 70% in some areas) to buy and sell bitcoins using local currencies, and to pay for goods and services through a simple, direct transfer to peers and merchants.[/i]
In January, Ripio raised USD$1.9 million to promote financial inclusion in South America using Bitcoin. The startup revealed at the time its plan to use the new funding to expand services into Brazil and Mexico. Initially, the company will be offering its wallet service, but will later add a consumer credit system as well.
[img=300x0][/img]In May, the company launched a credit system in Argentina called “Ripio Credit” on top of its wallet offering. It allows people who are unbanked or without a credit card to make purchases online. Using the blockchain, the startup “created a payment system that enables users to buy goods online without the need for a credit card, or credit check,” Techcrunch reported, noting that for this service “no actual bitcoin is involved for either merchant or buyer.”
Once consumers apply for the card, it takes the company about a day to check the consumer for credit, the publication details, adding that “those that use the Bitpagos’ bitcoin wallet can be approved instantly because they have a payment history.” Ripio’s website states that its credit system allows users to “pay in installments in any store accepting bitcoin.”
What do you think of the partnership between Medici Ventures and Ripio? Let us know in the comments section below.

Images courtesy of Shutterstock,, Medici Ventures, and Ripio

Read More Read More, Posted by: sekalitas
[Image: nxt-ardor-blockchains-fintech-ready.jpg]
It’s been some really quite interesting weeks lately in crypto land.

Scaling hasn’t been much of topic for the last years – and boom – now it’s front and center. Bitcoiners used to clobber anyone who thinks miners having different incentives than currency holders is a problem.

Now it’s suddenly consensus on r/bitcoin. Not only are there repeated threads saying a change of the Proof of Work algorithm might be necessary, I’m actually seeing more and more suggestions to switch to Proof of Stake! I can’t believe my eyes! Just the mere mention of it even half a year ago would have brought you into downvote hell and 500 angry “nothing at stake” chants, before your post got shadow banned. I’m not saying that it’s a majority position by any means, but what a difference!

Crypto alts’ cap goes ^

The changing tides are sweeping a lot of money into the alts. The combined crypto cap is exploding:


While Bitcoin’s share of it is decreasing. The pace is accelerating towards parity. That could be a huge deal with unclear implications (…but don’t dare mention this on r/Bitcoin).


How Ardor fits into the mix

There is a major sea change going on, and props to the Jelurida dev team to see this long ahead: Designing Ardor specifically around scaling capabilities, puts it in a position to take advantage of the situation. Now there is just the question if this can somehow get attention. So far it is always Ethereum that gets used as example for Proof of Stake. Once again, it took the spotlight. It also gobbled up the biggest gains. Ardor seemed to have merely been swept up with the tidal wave that took all alts along.

I don’t know if all that will change to the best of Ardor and NXT. But I’m sure: This ain’t over. And people are still either in denial or stuck in old ways of thinking.

  • The Bitcoin wars will get worse.
    First off, there is AsicBoost, which is worth millions in advantage for parasitic miners. Why would they give that up for anything? Higher market cap doesn’t help their bottom line, they live of higher margins. A fork of some sort either will happen or must at least come close enough that these miners must fear trashing their hardware.

  • Disruption will be huge either way. The user experience will be a disaster. Alts will pick up refugees… but if Bitcoin suffers too much, all crypto will take a hit.

  • The miner problem is, of course, deeper anyways. It’s an incentive problem that will return. Miners, they only care about users and hodlers if it somehow helps their short-term earnings.

  • What also clearly came to light is that the monopoly is even worse than anyone thought: It’s the hardware! That’s all done by basically one manufacturer in one location – with the ability to legally block supply for anyone who doesn’t agree with their plans. Bitmain is abusing this already. That skews not just which miners can join, but also how much existing ones dare to contribute to debates.

  • People still don’t understand the scaling issue. It seems bizarre to me that Ethereum/Monero/Dash are seen as solutions. All these have exponentially worse situations should they ever catch on remotely as much as Bitcoin.

  • It’s just that neither Ether or Litecoin are used enough to make clear to everyone that they have the exact problem Bitcoin has – or worse.
So there is Ardor, with an actual solution. My fear is that people might once again overlook it, just like NXT was laughed at when it pioneered what is now the altcoin standard. Maybe it’s premature optimization. But it might be the right unique selling point at just the right time.

One joker card could be the Lightning network or the “sharding” that Buterin promises. Basically, they could change the landscape of the scaling discussion – and make it a non-issue. But it’s just promises so far. Maybe someone more knowledgeable can shed some light one that angle.
Anyways, the potential in the upcoming year is huge – and that’s what speculators are trading on.

This article was first posted in

Read More Read More, Posted by: lidya.fransisca
[Image: shutterstock_394488730.jpg]

It is not hard to see the cryptocurrency world has successfully attracted a lot of nefarious individuals looking to scam others. In fact, it appears there are more bitcoin-related scams showing up every single day. As one would expect, there are a few different types of scams that are more prevalent than others. Never change a winning tactic, according to criminals.

Virtually every platform offering bitcoin investment should be treated with a lot of scrutiny. While there is a way for people to make money with other’s money  – trading altcoins, for example – no one has successfully done so on a large scale. Trading itself is a very risky business, yet it is also the most legitimate way to increase cryptocurrency holdings over time.

Unfortunately, there are quite a few large-scale investment opportunities, all of which will eventually turn into a scam. Ponzi schemes in the bitcoin world will always attract desperate people and shills, and there is quite an abundance of these programs available right now. Never trust any online platform claiming to let you earn money without doing anything.

The Cryptocurrency world is home to some great innovation, especially where mining hardware is concerned. Gone are the days of FPGA mining, as it is all about ASICs right now. There are quite a few companies who claim to manufacture hardware, and most of them will offer pre-sale discounts to anyone investing in that company. It is not surprising a lot of these companies offering pre-sales are complete scams, as most of them do not even have any ASIC research and development lab whatsoever.

One of the more recent scams revolving around bitcoin mining hardware goes by the name of Foxminers. The company provides no evidence of their mining hardware or research. Companies like these often trick people into depositing funds in the hopes of getting a cheaper new bitcoin miner. However, they will continue to delay shipping and eventually run off with the money.

Perhaps the biggest industry of bitcoin scams comes in the form of companies claiming to run a cloud mining operation. One of the biggest cryptocurrency cloud mining scams to date goes by the name of HashOcean, a company that successfully paid miners for over a year until they finally disappeared and could no longer maintain paying out users accordingly.

Every cloud mining venture should be looked at very closely, as the number of legitimate companies can be counted on the fingers of one hand. Even then, ensuring a return on investment is virtually impossible due to volatile bitcoin prices and mining difficulty increases. Cloud mining can be somewhat lucrative if one is lucky, yet directly buying the cryptocurrency in question and holding onto it for the same duration as the mining contract will usually generate better returns.

Read More Read More, Posted by: treyxion
[Image: bitc1.jpg?itok=I3VA0L94]

Bitcoin has long been the transaction currency of choice for drug dealers and extortionists, but this month, the IRS has upped the game. Just as tax evasion finally took down Al Capone, now the IRS is looking for tax evaders and other tax cheats who have been using Bitcoin in an attempt to hide their tracks.

The IRS recently subpoenaed customer records from Coinbase, a leading Bitcoin exchange. However, the subpoena is but the latest skirmish in a years-long war against criminals who have been leveraging Bitcoin for a wide variety of nefarious purposes.

The specifics of the IRS subpoena, however, make one thing clear: the majority of Americans who trade in Bitcoin are likely breaking the law.
Coupled with Bitcoin’s popularity among ransomware extortionists and all manner of other cybercriminals, we must now face a chilling realization: the underlying value of Bitcoin really has little if nothing to do with its artificial scarcity or popularity as a medium of speculation.

On the contrary – the only reason Bitcoin has value to anyone is because of the underlying value as a medium of exchange for lawbreakers. If we could flip a switch and eliminate all illegal uses of Bitcoin, there would be nothing left of the cybercurrency.

The ‘John Doe’ Summons
The most recent order from the IRS to Coinbase is a ‘John Doe’ summons, which means that the IRS isn’t naming any particular Coinbase customers, but is rather issuing a blanket request for information about a large number of individuals – even though the IRS may not have any suspicions about all of them.

In response, Coinbase says that while it has a policy of complying with all legal orders (of which this is one), it believes this one overreaches, and is thus fighting it in court. “Suffice to say, we feel the IRS’s subpoena is overly broad and incorrectly implies that all users of virtual currency are evading taxes,” writes Coinbase Cofounder and CEO Brian Armstrong in a blog post. “Asking for detailed transaction information on so many people, simply for using digital currency, is a violation of their privacy, and is not the best way for us to 
accomplish our mutual objective.”

The IRS, however, is on firm ground with the John Doe summons. “The IRS uses John Doe summonses to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown,” the agency says. “The IRS not only has a suspicion that the John Doe class includes U.S. taxpayers who are not complying with the law – it knows that the class in the past included such violators, and very likely includes others,” it continues.

Such noncompliance, in fact, may not always be intentional. It’s likely many Bitcoin enthusiasts are inadvertently running afoul of IRS’s guidance that Bitcoin is property, not currency. As a result, every Bitcoin interaction is potentially taxable individually, leading to a paperwork headache for active Bitcoin traders.

Be that as it may, the IRS has reason to suspect virtually all Bitcoin traders have fallen into this trap. According to the IRS, it “searched the MTRDB [Modernized Tax Return Database] for Form 8949 data for tax years 2013 through 2015.” Form 8949 is the one that Bitcoin traders must use to report their activity. “Those results reflect that in 2013, 807 individuals reported a transaction.” Furthermore, the number for 2014 is 893 and for 2015, it dropped to 802 individuals.

Given the number of US citizens to conducted at least one Bitcoin transaction in 2015 probably numbers in the tens or hundreds of thousands, 802 is a mere drop in the bucket. The IRS is quite justified in presuming, therefore, that the vast majority of American Bitcoin traders are breaking the law.

Rationalization to the Rescue?
Armstrong’s exhortation that the IRS summons implies that all users of virtual currency are evading taxes is thus an overstatement. More worrisome, however, is his opinion that taking a legal action to enforce tax law is a violation of privacy.

The blogosphere, in fact, is rife with related rationalizations. The most extreme Libertarian proponents of Bitcoin are against taxes and the IRS in general, and even for those individuals who allow for the necessity of taxation, many believe that they are justified in using Bitcoin to evade more onerous legal constraints like the ‘Bitcoin is property’ guidance.

Another fallacious line of reasoning: the IRS is overstepping because they’re looking for a needle in a haystack. “It amounts to nothing more than asking for large amounts of hay in the hope they might find a needle,” opines Michael Beckerman, President and CEO of the Internet Association, a trade group whose members include Coinbase as well as companies like GoogleFacebook, and Amazon.

Such arguments, however, do not sway the IRS. “The IRS not only has a suspicion that the John Doe class includes U.S. taxpayers who are not complying with the law,” the agency says. “It knows that the class in the past included such violators, and very likely includes others.”
Charles Stross, popular author and blogger, summed up the situation nicely. “Bitcoin is pretty much designed for tax evasion,” he quips.

Tax Evasion Merely the Nail in Bitcoin’s Coffin
Running afoul of the IRS, however, is merely the focus of the latest news. The fact remains that Bitcoin is enormously popular for all manner of criminal enterprises, from illegal drug dealing to extortion cons.

The most popular con, in fact, is ransomware. The US Justice department reports that ransomware attacks quadrupled in 2016 to an average of 4,000 per day, with extortion amounts ballooning to $209 million for the first quarter of 2016 as compared to $24 million for all of 2015.

While there is broad agreement that most of today’s ransomware extortionists demand payment in Bitcoin, there remains disagreement as to whether Bitcoin is the primary cause of the rapid growth in ransomware attacks.

Is Bitcoin in fact tied to the growth of ransomware? “It’s helping. I think that’s definitely true,” says David Emm, Senior Security Researcher at Kaspersky Lab. “The existence of effectively anonymised payment mechanisms definitely plays into the hands of cybercriminals.”

Maya Horowitz, Threat Intelligence Group Manager at Check Point Software agrees. “It makes it much easier to avoid law enforcement,” she says.
And while it’s true that Bitcoin is not fully anonymous, many criminals are simply using a Bitcoin-based money laundering operation known as a ‘mixing service.’ “If you want your money in one wallet but you don’t want anyone to be able to trace it back and know how you got it, then you take it though a mixing service – like money laundering – and then it all eventually gets back to you after being mixed with other money,” Horowitz says. “It’s pretty standard for Bitcoin.”

Cue the Rationalization Again
Once again, however, there are a number of voices seeking to diminish the connection between Bitcoin and ransomware – or criminal enterprise in general.
One argument: if it weren’t for Bitcoin, bad guys would simply use something else. “The reality is cybercriminals will always use what is available to them,” explains Greg Day, VP and CSO, EMEA at Palo Alto Networks. “In many ways they’re inherently lazy, so if Bitcoin wasn’t there they’d find a different process to channel funds through.”

Another argument: paper currency is just as bad, so why all the fuss about Bitcoin? “The U.S. government should find it awkward to regulate bitcoin on the grounds that it facilitates illegal transactions,” opines William J. Luther, Assistant Professor of Economics at Kenyon College and an adjunct scholar at the Center for Monetary and Financial Alternatives at the Cato Institute, a conservative think tank. “Its own currency — and the $100 bill in particular — has done so for years.”

And then there’s the argument that Bitcoin isn’t really anonymous in the first place. “If you catch a dealer with drugs and cash on the street, you’ve caught them committing one crime,” says Sarah Meiklejohn, a computer scientist at University College London. “But if you catch people using something like Silk Road, you’ve uncovered their whole criminal history. It’s like discovering their books.”

Silk Road, of course, was the Bitcoin-driven clearinghouse for illegal drugs and stolen credit cards (and other contraband) that law enforcement shuttered in 2014. Bitcoin – and Bitcoin-related crime – have only flourished since.

Bitcoin-centered ransomware is so popular among the criminal element, in fact, because it is dead simple. Any modestly skilled bad actor can simply download the software off the Dark Web, create a Bitcoin wallet, and send out phishing emails to find gullible targets. The number of such extortionists and the typically modest ransoms are usually sufficient to avoid law enforcement investigations – a gamble such criminals are obviously willing to make.

Is that Bitcoin in Your Wallet? Didn’t Think So
For the readers of this article who are law-abiding citizens, the cold reality is that there is little reason to get involved in Bitcoin in the first place. “Bitcoin transactions are not very useful in casual purchases, thus there has been little mainstream consumer adoption,” admits Mikko Ohtamaa, CTO of Gibraltar-based cybercurrency trader TokenMarket. “Bitcoin shines in anonymous online payments and most day-to-day and/or point-of-sale payments don’t require this level of anonymity or the complexity it brings along with it.”

The final question for law-abiding, tax-paying citizens who may be interested in speculating in Bitcoin: does the fact that the cybercurrency is primarily used for criminal purposes taint it for other uses, a la blood diamonds?
Such a question of morality is beyond the scope of this article, but important food for thought for anyone interested in using Bitcoin for legal purposes.

Read More Read More, Posted by: treyxion


Help us Spread the News and Stellar Lumens XLM (Formerly known as STR)
Banner Rules Posting