Day: July 14, 2018

This article originally appeared on Bitcoin Magazine.

A lot of things are changing in South Korea’s cryptocurrency ecosystem. With all major exchanges adhering to self-regulation, the government has bought additional time prior to introducing official guidelines. It seems that regulation will be introduced a lot sooner than originally thought.

South Korean Regulators Make Their Move

According to local sources, there will be some regulatory changes in South Korea fairly soon. Local lawmakers are preparing to introduce official guidelines for cryptocurrency, blockchain, and initial coin offerings. The first two areas will be of particular interest, as there has never been any official rule set for either industry in the country to date.

An “unusual” session of the South Korean National Assembly is taking place from July 13 to July 26. It is expected the new rules will be unveiled during this extraordinary session, although nothing has been officially confirmed at this stage. Several lawmakers have drafted their final proposals, which seems to indicate they will be introduced at some point over the next two weeks.

One has to keep in mind that these are merely proposals being put forward. Nothing has been turned into law yet, and it is unlikely that situation will change in the coming two weeks. Anything is possible in South Korea when it comes to cryptocurrency regulation, although the government is mainly interested in bringing more legitimacy to this industry rather than ban all activity.

Offering an official legal status to cryptocurrency seems to be one of the proposals to look forward to. Similar to Japan, South Korean lawmakers may device to effectively legitimize Bitcoin and other key cryptocurrencies later this year. Additionally, an official legal framework for cryptocurrency exchanges will bring more legitimacy to this industry as well.

Earlier this week, South Korean cryptocurrency exchanges all received a favorable “audit” from the Korean Blockchain Association. That came as a bit of a surprise, especially in light of the recent hack which affected the Bithumb trading platform. Even so, it seems self-regulation has been a positive step toward official cryptocurrency regulation in the country. Preventing money laundering and other criminal activity will remain one of the top priorities.

With South Korean regulators paying positive attention to cryptocurrency, the ecosystem will continue to grow and expand. Even though there is still a lot of work to be done prior to taking this technology mainstream, all of these developments are fueling global adoption of Bitcoin and altcoins. No short-term changes in terms of pricing are to be expected at this time.

Crime and cryptocurrency seem to go hand-in-hand these days. That’s more than unfortunate, although it seems there is no real improvement in sight just yet. A new report by Kaspersky Lab shows that 2017 was a big year for social engineering schemes related to cryptocurrency.

Social Engineering Remains a Big Problem

Even though there has been a strong focus on malware and cryptojacking in the past few months, they are just two of the major threats affecting this industry these days. Cryptocurrency users are of keen interest to criminals all over the world, mainly because of the non-refundable nature of Bitcoin and altcoins. That’s especially true when it comes to novice cryptocurrency enthusiasts.

A new report by Kaspersky Lab paints a worrisome outlook when it comes to cryptocurrency-related social engineering attacks. Although these events are hardly ever documented, it is evident that criminals are exploring many different options when it comes to making money. Multiple tactics are at play when it comes to social engineering, and some ventures have proven to be more successful than others.

As one would expect, a lot of social engineering attempts are aimed at ICO investors. Anyone throwing money at an initial coin offering is at risk of losing their funds in the process. That isn’t just because the project may be a complete scam, but also because so many ventures fail within the first six to twelve months. All the money in the world can’t make people execute business ideas if they lack the necessary skills.

Cybercriminals are targeting ICO speculators by creating fake websites which mimic legitimate projects. Additionally, they’re targeting ICO investors using platforms such as Slack, social media, and even Discord. The Switcheo ICO was an interesting example of this, as hackers stole over $25,000 through a fake Twitter account. It was a stark reminder for all enthusiasts and speculators to conduct their own due diligence.

Perhaps the biggest social engineering threat are the so-called giveaway scams. By mimicking existing cryptocurrency-related accounts on social media, hackers and criminals try to make people send them cryptocurrency by offering them higher amounts of crypto in return. Although everyone knows such a business model is not sustainable for more than a few hours, these ventures continue to claim many victims around the world.

It is estimated that all of these social engineering efforts netted criminals close to $10 million worth of cryptocurrency in 2017. This year’s number is expected to be even higher, as there have been numerous attempts to defraud investors in 2018. Users need to take the necessary precautions to protect themselves at all times, rather than blindly trust others to take care of all the work.

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 4
Does Your Money Serve the State or You?

The State, in short, subjects people, whereas Society associates them voluntarily.

– Felix Morley

Two simple litmus tests determine whether money serves the state (organized force) or whether it serves society (voluntary exchanges).

• Who issues it? State money is issued either by the state or by an authority controlled by it, who claims a monopoly.
• Can people choose to use it or not? State money is established by requiring people to accept it as legal tender.

Cryptocurrency is privately issued, and no one is forced to use or to accept it. Crypto is a pure money of society—a public money, not one that serves rulers and elites. Indeed, many people use it to escape the corrupt central banking system and its domination of the global economy through fiat money. Control of the economy is the basis of social control.

The state lives or dies through its ability to regulate the flow of wealth within society. This makes cryptocurrency, even in its infancy, a threat to established power that the state addresses by dominating crypto through regulation, through its own monopoly issuance, or through banning it. Each step requires law. And, except for dictatorships, law requires public justification. Even with dictatorships, public justification is usually offered in order to avoid public resistance. The state needs law to destroy crypto, which means it needs justification. If there is not a real need, then a false one must be created.

The appeal to law reveals another and more fundamental difference between state money and that of society. Namely, what is the purpose of law regarding each one?

What is the Purpose of State Law Regarding Crypto?

The alleged illegality of crypto and of those who use it is, again, divided by the state into two clear categories.

First and foremost to the state are violations of its own self-declared jurisdiction. Given that the state produces no wealth, its claimed jurisdiction amounts to the rules by which wealth is confiscated and redistributed. Crypto violates these rules. Some uses do so directly. For example, it is sometimes used for tax evasion, money laundering, black-market activities, and other functions that compromise the state.

Of course, people who use fiat also commit such ‘crimes.’ In those cases, however, there is a remarkable difference in how the law approaches the offenses. Namely, objectionable individuals are demonized, often in a high-profile manner that intimidates those in the shadows. But the money itself is accused of no crime, and bears no liability. With cryptocurrency, both individuals and the money are demonized. The money is the true target, with individuals being the means by which to attack its legitimacy. Prosecutions springboard quickly into calls for monetary control.

Crypto also violates rules of the state in a more profound manner. It renders trusted third parties irrelevant, and there is no more massive third party than the state. The state created the central banking system as an omnipresent regulator of money and as a choke point for information. It wove an iron web of laws to monitor money and require its ounce of flesh from every transaction. If no one needs central banks, if they can easily avoid the strangling laws, then the power of the state dramatically diminishes. Some crypto zealots argue that the power is or will be destroyed. In either case, crypto constitutes a threat as muscular as any other revolution. Perhaps more so. No wonder, the loudest cry of “there ought to be a law” revolves around the preservation of state privileges.

The second round of the state’s cry for law is the claim that crypto violates the person and property of individuals. The line of attack is secondary, by far, and often sounds like an afterthought. But it is also the most dangerous claim to the continued freedom of crypto users because the accusation is valid, and it resonates with decent people. Most people hate taxes, and many would avoid them if it were safe to do so. But the same people hate fraud, theft, and violence.

Fraud, Theft, and Violence

Some uses of cryptocurrency are fraudulent. A March 2018 article in bitcoin.com opened,

“In the time it takes you to read this sentence, $850 will have been lost to cryptocurrency scams. In the time it takes to complete this article, that figure will have risen to $17,000. Phishing; fraud; theft; hacking; it’s all rife. In the first two months of 2018, there were 22 separate scams involving thefts of $400,000 or more. Put it all together and that equates to an average of $9.1 million a day. Oh, and that doesn’t include 2018’s outliers – Coincheck, Bitconnect, and Bitgrail. Otherwise, the total would actually stand at $23 million a day.”

There are thieves who prey upon the crypto community. An April 2018 article in bitcoin.com explained,

“Hardware wallets are regarded as one of the safest means of storing bitcoin and other cryptocurrencies. Each device grants the holder possession of their private keys and adds a PIN code plus other tamer-proof [sic] tech for enhanced security. Hardware wallets are not impregnable, however, as one British man found to his peril after purchasing the device on Ebay. Redditor moodyrocket is coming to terms with having his “life savings” wiped out this week, after $34,000 of crypto was stolen from his newly acquired Nano Ledger hardware wallet. The device was compromised, not due to any flaws in its design, but thanks to a man in the middle attack that saw the reseller insert their own recovery seed.”

Crypto allegedly cloaks acts of violence. This is the shakiest claim, because it is based on reports from state officials, or experts who are often in their pay. The “10 of the Biggest Lies Told About Bitcoin” (December 2017) addressed the claim that crypto is the finance of choice for terrorists.

“If you want to blame a currency, try the U.S. dollar which has been used to fund more wars, proxy wars, bombings, hijackings, and insurgencies than any other. Europol found no evidence that terrorists were using cryptocurrencies to fund their activities. That’s not to say it hasn’t happened and won’t happen. It’s telling however that the only people linking bitcoin with terrorism are governments seeking to crackdown on digital currencies.”

For the sake of argument, assume every accusation leveled at cryptocurrency is true. But it is also true of fiat. Fraud, theft, and violence has been associated with every means of exchange that has ever existed. Again, only crypto is discredited. Not barter. Not gold. Not fiat, against which no one shakes their fist due to fraud. It is telling that cryptocurrency is blamed for the actions of individuals, in much the same manner that guns are blamed for crimes.

Law will be imposed upon crypto. The state needs to reassert control. The free market needs to do what it does best: provide a solution to a need. State versus society. It will play out before our eyes.  I have a good idea of what it will look like, on both sides.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters

Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Does Your Money Serve the State or You? appeared first on Bitcoin News.

The Mediterranean island of Malta is set to become a key component of blockchain and cryptocurrency innovation and evolution. There are plans for the world’s first decentralized bank to be built regulation-ready, in the future blockchain hub of the world.

A Decentralized Bank

In a Bloomberg report on July 12^th, cryptocurrency exchange giant Binance and its CEO Changpeng Zhao were said to be backing the world’s first decentralized bank named the ‘Founders Bank’.

A unique characteristic of the bank will see that it owned in parts; Founders Bank will be issuing a “legally-binding equity token” offering through a blockchain-based equity fundraising platform called Neufund.

According to comments made by Binance on Bloomberg, Binance has taken a five percent stake alongside other anchor investors at a 133 million-euro ($155 million) pre-money valuation.

However, the Maltese prime minister Joseph Muscat remains sanguine in the face of these hurdles, saying in a recent speech describing the countries future, “The concept sounds confusing right now, but I have no doubt that it will form the base of a new economy in the future. Just as we attribute value to pieces of paper, so too will future generations attribute value to electronic storage systems.”

The equity-token sale would be a collaboration with a major European stock exchange and conducted under German regulations, though the exchange at present has not been named.

Motions in Malta

In March of this year, Binance announced plans to move its operations to Malta; this came after rigorous reviews of several other potential locations and conclusively, the European island proved itself worthy of the largest crypto exchange in the world.

On July 4^th, Malta passed three bills into law that legalized cryptocurrency businesses, making it the first ‘legal certainty’ country for the industry. The island has been especially bullish on crypto for quite some time; proposals for new rules regarding cryptocurrency investments were made in late 2017 and by March 2018 the three recently passed bills were entered into debate.

Bullish Lawmakers

Cointelegraph spoke to Simon Chembri, (13^th July), a partner at Ganado Advocates — a leading law firm in Malta which was a critical component during the drafting of the new legislation. He comments, “The purpose was to make Malta a blockchain hub, attracting a number of investments in the country.”

Which is simple enough, however he also gave bullish comments on the legitimization of distributed ledger technology (DLT), blockchains, ICOs, crypto assets etc. by the Malta Digital Innovation Authority, saying, “It gives the opportunity for DLT frameworks at the outset to come over to Malta and voluntary, — if they want — register, or have their DLT framework licensed or certified by this new authority…”

Later adding in regards to a national cryptocurrency, “At this stage, there is nothing set as an agenda by the Maltese government. But we are aware that other countries are considering this and have already taken steps. And we would not be surprised if that would be the next step.”

Ranked third most ‘crypto-friendly’ nation by a BlockShow Europe study earlier this year, it would be no surprise to see Malta reach and hold the top spot should the study be conducted again after the Founders Bank is launched.

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Square, the financial services company started by Twitter’s co-founder Jack Dorsey, has been seeing its crypto service expand rapidly.

Nomura Instinet: Square Is Decoupling From Bitcoin’s Performance

Bitcoin has seen a dismal year so far, to be frank, with the foremost cryptocurrency taking a tumble from $20,000 down to a low of $5,800. Many industry on-lookers expected cryptocurrency-related companies to stutter in a direct correlation with prices, while this was the case for some firms, Square’s ‘Cash’ service has excelled, seeing a surge in interest.

Square, founded by Twitter CEO Jack Dorsey, opened its cryptocurrency service to consumers in January, facilitating the buying and selling of Bitcoin through a mobile application. The fintech firm’s foray into the cryptocurrency industry was expected, at Dorsey indicated interest towards support cryptos throughout his tenure as the firm’s CEO. Square Cash’s Bitcoin support was quickly met with success, with CNBC reporting that 2018 Q1 saw the firm sell $34.1 million worth of Bitcoin to a wide array of consumers.

CNBC’s most recent coverage of the firm points out that Square’s success with Bitcoin has continued.

According to Nomura Instinet, a long time Square proponent, statistics indicate that Square Cash has managed to “decouple” from Bitcoin’s performance. The brokerage firm analysis has shown that the app is growing nearly three times faster than Paypal’s move into mobile payments, receiving upwards of four million downloads in May and June of this year. Nomura expects Square Cash to surpass Venmo’s 31.4 million total downloads figure within the next few weeks.

Dan Dolev, an executive director and analyst at Instinet, gave CNBC a statement regarding Square’s Bitcoin play, stating:

Square is more than just a bitcoin play.  A lot of people were worried because it went up with bitcoin, but instead it’s decoupling.

Additional statistics show that the app’s download figures have increased by 154% on a year over year scale, not resembling the chart of Bitcoin’s price in any matter.

Square Cash Outperforms Coinbase’s App Download Figures

As NewsBTC reported recently, Coinbase mobile downloads have been on the decline, with Coinbase’s position as a top U.S. finance app becoming nothing but a memory.  Coinbase quickly rose to the top of Apple and Google’s app stores as Bitcoin hit all-time highs, but the app’s performance has continued to follow the trajectory of Bitcoin.

The performance of Square Cash and Coinbase emulate polar opposites, with Square experiencing newfound success in the form of growing traction. Despite only offering Bitcoin trading at the present time, Square customers have enjoyed the feeless acquisition and sale of Bitcoin per the website of the fintech firm. This may be one of the many reasons why Square’s Bitcoin offering has begun to outperform high-fee services like Coinbase, which can charge upwards of 4% on fiat to crypto buy orders.

Square’s Stock Sees Extraordinary Gains

Square’s publicly traded shares, under the ticker ‘SQ’, have seen stellar gains recently, with the aforementioned brokerage firm pointing out that the stock is up 86% on the year, and up 154% year over year. Oddly enough, the 154% figure lines up with directly with the growth statistics of Square’s cash app, an unlikely coincidence that goes to show how well Square is doing as a company.

Nomura Instinet currently holds a ‘buy’ rating for the SQ stock, calling for the firm to reach $82 per share or approximately 25% higher than the stock trades now.

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Blockchain technology allows consumers to benefit from a wide range of new tools. When it comes to online identity and reputation management, the competition is heating up significantly. Scatter aims to play a role of importance in this regard over the coming years.

The Idea Behind Scatter

User authentication on the internet has become a rather complicated process. Every platform has a separate login and password, with some services interlinking with one another. Scatter aims to simplify matters by providing single sign-on backed by asymmetric encryption, allowing one to log into applications and services without using passwords.

How Does it Work?

Creating a single sign-on solution backed by cryptography and encryption is not all that easy. Offering a convenient yet secure solution to the masses will require the use of innovative technologies. Scatter aims to let owners retain full control of their information at all times. All information is stored on one’s own device, although it can be pushed to a blockchain using a hashed fingerprint.

With Scatter, handing over one’s personal information is a decision that only the user can make. Applications and service providers cannot harvest client data without the end user’s permission. Additionally, Scatter will warn users about applications which have a habit of leaking client data. This will hopefully force companies to ensure they adhere to the highest level of security and privacy at all times.

Perhaps the most intriguing aspect of Scatter is that it works with multiple blockchains. Only EOS and Ethereum are supported at this stage, but additional chains will be supported in the future. Having one identity and reputation system capable of being used across all blockchains sounds very appealing to the right users. This multi-chain approach also means users can interact with any application, which will pave the way for mass adoption of DApps.

The Road Ahead

Unlike what one might expect, Scatter is a completely free solution which is currently available for beta testing. Although there is still a lot of work to be done, there is a Chrome extension available to users who prefer to access this service that way. Once support for all other main blockchains is incorporated, Scatter can begin making its mark on the industry as a whole.

More than $1.5 million worth of cryptocurrency was seized as part of an anti-gambling operation run by Chinese police during the 2018 FIFA World Cup.

Chinese Police Seize $1.5 Million

The Chinese state-run news source Xinhua reported two days ago that local authorities first came across the so far unnamed online gambling platform in May. The betting site advertised that it would “accept international recognized cryptocurrencies including bitcoin, Ether, and Litecoin”, the police launched an investigation that resulted in the seizure.

The investigation team found that the overseas site used a standard online betting model on which it built- in cryptocurrency payment methods, circumventing national regulatory restrictions which allowed the site owners to secure their profits using the native anonymity of crypto.

The investigation found that 330,000 users had accessed the site over eight months which saw an estimated transaction volume of $1.5 billion of which $1.5 million in cryptocurrency was confiscated. Police arrested six organizers and also seized $750,000 in renminbi from their bank accounts.

The Guangdong provincial police released a statement which said that the task force will continue to investigate online gambling and that citizens should enjoy the competition “rationally and consciously.”

Online Crypto Betting popular During 2014 Cup

Before the rise in popularity, concern over and regulation of Bitcoin, the last world cup gave birth to a number of online cryptocurrency driven sites aimed at roping in footy fans. Betting on the 2014 cup in Brazil was openly advertised throughout the internet and sites like BitKup and Cloud offered all levels of wagering action, including “VIP Rooms” and free to enter pools with a grand prize of one hundred BTC.

Bitkup organizers pointed to their terms and conditions and transparency policy which read:

“We are definitely not a fraud, let alone a fake, we have spent much time working on this, our goal being to create something different for the World Cup.”

Some expected the 2018 Russian hosted World Cup to offer Bitcoin’s stagnated price position some help. Though online betting via cryptocurrency may have been greatly reduced in the last four years more, businesses have adopted payment options for cryptocurrency.

Billy Bambrough writing for Forbes suggested that the mass of international football fans descending on Russia for the matches may turn to cryptocurrency as a way to skirt bad exchange rates and overseas fees for withdrawing money. He noted that one of the host cities, Kaliningrad, had hotels accepting cryptocurrency and that airline tickets, travel agency fees and bar and restaurant taps might combine to perk up Bitcoins flagging price, but no noticeable effect has been felt.

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