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What is Bitcoin?

Bitcoin is a digital crypto-currency with no single point of failure due to its decentralized peer-to-peer architecture. The source code is publicly available and changes to the reference Bitcoin client are made via concensus within the community. Advantages of Bitcoin include irreversible transactions (i.e. no possibility of chargebacks as with credit cards), pseudo-anonymous, limited and fixed inflation, near instant transactions, multi-platform, no double-spend and little to no barriers to entry and more. It was created by an anonymous person known as Satoshi Nakamoto. Find out more at WeUseCoins.com.

Bitcoin Latest News

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Posted on 20 February 2018 | 11:19 am

It's not too late to invest everything in Steven Seagal's new Bitcoin - AV Club


It's not too late to invest everything in Steven Seagal's new Bitcoin
AV Club
Breathe deeply and allow this B-movie Buddha to open your Third “I” to the boundless possibilities that can be unlocked once you achieve full enlightenment and ignore the fact that Bitcoiin's white paper fails to explain specifically how it will ...

and more »

Posted on 20 February 2018 | 10:07 am

Game Over: Anonymous Vigilante Shuts Down Crypto All Stars

Only a week. That's how long Crypto All Stars, an ethereum-based collectable game modeled off CryptoKitties, lasted once founder in-fighting started.

Posted on 20 February 2018 | 10:00 am

Wyoming House Unanimously Approves Two Pro-Blockchain Bills

Wyoming House Unanimously Approves Two Pro-Blockchain Bills

In a watershed moment for United States blockchain and cryptocurrency law, Wyoming’s House of Representatives unanimously voted “aye” to pass two blockchain bills – HB 70 the “utility token bill” and HB 19 the “bitcoin bill” –  sending them to the State Senate for consideration. HB 70 defines utility tokens as neither traditional money nor securities; HB 19 exempts cryptocurrency from the 2003 Wyoming Money Transmitter Act (passed in the state before Bitcoin’s invention in 2008).

In an interview with Bitcoin Magazine, Wyoming Blockchain Coalition co-founder, and 22-year Wall Street veteran, Caitlin Long, attributed much of the bills’ successes so far to teamwork between Wyoming banking and security regulators and the efforts of House of Representatives member Tyler Lindholm, who is a co-sponsor and advocate of all five blockchain-related bills.

Wyoming aims to set the standard for blockchain-friendly regulation in the U.S. and to become a hub for blockchain-based innovation with these two bills. Long explained, “There are already bitcoin miners setting up shop because of [Wyoming’s] cheap electricity, no income tax and no franchise tax.”

HB 70: Utility Token Definition

The Wyoming HB 70 defines a utility token, or “open blockchain token,” as neither traditional money nor a security if it meets the following conditions:

  1. The token has not been marketed by the protocol developers as an investment opportunity.
  2. The token is exchangeable for goods or services. (This implies that protocols must offer a working product or service before tokens are issued, similar to Switzerland’s recent ICO framework.)
  3. The protocol developer has not entered into a repurchase agreement of any kind or entered into an agreement to locate buyers for the token.

Similarly, people who facilitate the exchange of an “open blockchain token” are not deemed traditional broker-dealers of securities.

HB 19: Cryptocurrency Exemption

HB 19 exempts cryptocurrency from the Wyoming Money Transmitter Act. A 2015 interpretation of this act by the Wyoming Division of Banking made it impractical for cryptocurrency exchanges to operate in the state. As a result, Coinbase suspended operations in Wyoming indefinitely in June 2015.

The passage of HB 19 moves Wyoming one step closer to cryptocurrency-friendly exchange regulation. Should the bill receive a majority vote in the Senate, exchanges such as Coinbase could resume operation in Wyoming.

Other Bills in the Pipeline

The Wyoming House of Representatives is also reviewing bills HB 101 and HB 126 in the House and SF 111 in the Senate.

HB 101, the “blockchain filings bill,” promises to update Wyoming’s Business Corporations Act to authorize the creation and use of blockchains to store records, the use of a network address to identify a corporation's shareholder and the acceptance of shareholder votes signed by network signatures.

At a high level, HB 101 specifies requirements for all corporations using electronic network or (blockchain) databases. HB 101 has passed the first reading in the House.

HB 126, the “series LLC bill” allows for the creation of “series LLCs.” This type of LLC structure is favorable towards decentralized protocols, as it enables LLCs to establish a compartmentalized series of members/managers, transferable interests or assets, and distributions to members.

HB 126 has also passed the first reading in the House.

SF 111, the “crypto property tax exemption bill,” has already been approved in the House, and its goal is to exempt cryptocurrency from Wyoming state property taxes. The bill is now awaiting consideration in the Senate.

Nothing Is Carved in Stone

While HB 70 and HB 19 have both passed in the House by a vote of 60–0, they must also pass in the Senate to be recognized as official acts.

Long expressed her optimism, while acknowledging the difficulties that lie ahead:

I don’t want to sugar-coat that it won’t be difficult. The Senate is a more uncertain chamber. But, we have incredible momentum, and all we need [for the bills to become acts] is a majority vote in the Senate.

Should the bill pass in the Senate and become an act in Wyoming, federal regulation and the SEC Howey Test could still nullify all of the advocates’ blood, sweat and tears. However, Long believes that Federal Law with regards to utility hasn’t been established yet — and, that there are people in the blockchain/cryptocurrency industry “flush with cash, interested in litigating this issue.”

Long and other Wyoming blockchain proponents hope for a final Senate outcome on HB 70, the “utility token bill,” and HB 19, the “Bitcoin bill,” as early as the middle next week.

This article originally appeared on Bitcoin Magazine.

Posted on 20 February 2018 | 9:42 am

NASA, ESA Considering Innovative Applications of Blockchain Technology

NASA, ESA Considering Innovative Applications of Blockchain Technology

NASA and other space agencies, such as the European Space Agency (ESA), are considering potential applications of blockchain technology to space missions and internal operations.

According to a NASA presentation titled “Bitcoin, Blockchains and Efficient Distributed Spacecraft Mission Control,” blockchain technology could have useful applications in distributed spacecraft missions involving multiple elements. Artificial intelligence (AI) and blockchain technologies could be further integrated to make space-based sensor networks more efficient and responsive.

In September 2017, NASA awarded a $333,000 grant to University of Akron (UA) Assistant Professor Jin Wei to research how to make space hardware smarter and more autonomous. The research program, titled “RNCP: A Resilient Networking and Computing Paradigm for NASA Space Exploration,” wants to improve the automation, environment awareness and intelligence of NASA space probes, which is an important requirement for deep space missions.

“The objective here is the application of blockchain and distributed intelligence to our space and ground network communication assets,” said Thomas Kacpura, advanced communications program manager at NASA’s Glenn Research Center. “If successful, the overall objective will be to incorporate Dr. Wei’s research in our overall portfolio to ultimately optimize our communication networks."

ESA is also quietly researching innovative blockchain-powered solutions. Recently, the Agency has been investigating the applicability of blockchain technologies to key challenges for ESA’s space activities and administrative areas. A position paper titled “Distributed Ledger Technology: Leveraging Blockchain for ESA's Success,” authored by trainee Torben David and senior coordinator Gianluigi Baldesi, offers a concise summary of blockchain technology and its main applications, and then goes on to list several potential applications to the Agency’s mission.

In particular, the paper mentions faster and more accurate payments, blockchain-based smart contracts applications to streamlining procurement, audit processes and record-keeping, data traceability and access rights, and voting and direct democracy.

It’s worth noting that the ESA paper focuses on blockchain technology applications to administrative processes but doesn’t address embedded blockchain technology for space hardware and software, which is covered by NASA’s RNCP. However, since ESA’s exploration of blockchain technology is just beginning, it seems likely that applications to space missions will be considered in due course.

In conversation with Bitcoin Magazine, Baldesi confirmed that the Agency is considering potential applications of blockchain technology with keen interest and a forward-looking approach. In the framework of “the Space 4.0 era” with diverse space actors around the world, including emerging private companies and citizen groups empowered by digital technologies, ESA launched the “Exploring Threats and Opportunities through Mega Trends in the Space 4.0 Era” initiative with the support of consulting firm Frost & Sullivan, and hosted a related workshop at the ESTEC technical centre in Noordwijk, the Netherlands, on October 23, 2017.

“In the era of Space 4.0 — as in our own lives — we have to be adaptive to change and nurture a culture of pro-activeness and open-mindedness to both disruption and opportunity,” said Baldesi.

The workshop was live-streamed and is now available for public viewing. Several presentations discuss blockchain technology as a key enabler of disruptive innovation in a wide range of industries, including space. Potential space applications of blockchain technology include  mission data; smart contracts and smart procurement to optimize the supply chain; and information management where applications may include virtual spacecraft (traceability and configuration consistency) and configuration control (hardware and documentation).

Baldesi explained that the Agency is awarding exploratory research contracts related to blockchain technology, such as a Satcom Maker Space initiative that includes Internet of Things (IoT) solutions for satellite telecommunications and a “Testbed for Blockchain supporting satellite M2M/IoT,” as well as an intended “Blockchain for Space Activities” study and an intended “fintech” initiative for innovative fintech-related applications and services based on the integration of space and non-space technology.

The governance and “direct democracy” applications mentioned in the position paper are especially interesting. Baldesi explained that the current Director General of the Agency, Johann-Dietrich Wörner, known for his vigorous support of bold, visionary initiatives such as the “Moon Village,” is determined to systematically use tools such as Kahoot for crowdsourced decision making and has launched several pilot e-voting initiatives, not only internally but also with the participation of external actors.

Blockchain-based e-voting platforms are, according to Baldesi, especially promising and in line with the desired openness and inclusiveness of Space 4.0.

These sorts of Space 4.0 citizen initiatives are growing in popularity; projects like Space Decentral project are moving in a similar direction.


This article originally appeared on Bitcoin Magazine.

Posted on 20 February 2018 | 9:33 am

500 Startups, Huobi Labs Team Up to Incubate Blockchain Projects

Silicon Valley accelerator 500 Startups is partnering with Huobi Labs to help new blockchain companies get off to a good start.

Posted on 20 February 2018 | 9:30 am

Finland Mandates Cold Storage, Public Auctions for Seized Bitcoins

The Finnish government has released guidelines prescribing how authorities must handle the 2,000 bitcoin confiscated since 2016.

Posted on 20 February 2018 | 8:00 am

Bitcoin hits 3-week high, trading above $11000 - MarketWatch


MarketWatch

Bitcoin hits 3-week high, trading above $11000
MarketWatch
Cryptocurrency prices were mixed Tuesday, with the No. 1 digital currency in the green, reaching its highest level since Jan. 28. The torrid start to the year for crypto investors is slowly abating, with bitcoin BTCUSD, +3.42% rising to an intraday ...

Posted on 20 February 2018 | 7:34 am

Nasdaq Says It Will Delist Long Blockchain, the Iced-Tea-Turned-Bitcoin Company - Fortune


Fortune

Nasdaq Says It Will Delist Long Blockchain, the Iced-Tea-Turned-Bitcoin Company
Fortune
The Nasdaq stock exchange has notified New Jersey-based Long Blockchain, Inc. that it would delist the stock because the company's market capitalization was too low. Long Blockchain was formerly known as Long Island Iced Tea, but changed its name last ...

and more »

Posted on 20 February 2018 | 6:27 am

The 'Free Money' guy from the '90s bursts your bitcoin bubble - CNET


CNET

The 'Free Money' guy from the '90s bursts your bitcoin bubble
CNET
This is part of "Blockchain Decoded," a series looking at the impact of blockchain, bitcoin and cryptocurrency on our lives. You probably don't know the name Matthew Lesko, but you might recognize a man in a question mark suit holding wads of cash ...

Posted on 20 February 2018 | 6:09 am

Bitcoin Price Tops $11600 Amid Keen South Korean Trading - CoinDesk


CoinDesk

Bitcoin Price Tops $11600 Amid Keen South Korean Trading
CoinDesk
Notably, in news announced this morning, the governor of the country's financial watchdog, the Financial Supervisory Service, has reportedly said that the government will support "normal" cryptocurrency trading transactions. Though a little vague, the ...
Police in South Korea Are Investigating the Death of a Bitcoin Policy CoordinatorFortune
A Cryptocurrency Pioneer Just Issued a Huge Word of Caution for InvestorsMoney Magazine
Bitcoin's price: Who decides the value of cryptocurrencies?Big Think (blog)
BGR -Express.co.uk -Westchester Magazine
all 136 news articles »

Posted on 20 February 2018 | 6:06 am

Bitcoin Price Ticks Higher Amid Strong Korean Demand

Bitcoin prices passed $11,600 in the morning's session, seemingly buoyed by enthusiastic trading in South Korea.

Posted on 20 February 2018 | 6:00 am

Jihadists See a Funding Boon in Bitcoin - Wall Street Journal


Wall Street Journal

Jihadists See a Funding Boon in Bitcoin
Wall Street Journal
When a group that says it provides financial assistance “relating to the jihad” sought to improve conditions for fighters in a squalid, sandbag-fortified trench in Syria late last year, it turned to a new funding conduit: bitcoin. “There is currently ...

Posted on 20 February 2018 | 6:00 am

Bitcoin's transaction fee crisis is over—for now - Ars Technica


Ars Technica

Bitcoin's transaction fee crisis is over—for now
Ars Technica
The median daily transaction fee on the bitcoin network fell to $0.79 on Sunday, a six-month low. That represents a dramatic 97-percent decline from the peak of $34 reached on December 23. The median daily bitcoin transaction fee was more than $10 from ...

Posted on 20 February 2018 | 5:15 am

South Korea to Support 'Normal' Crypto Trading, Says Finance Watchdog

South Korea's Financial Supervisory Service has reportedly said that the government will support "normal" cryptocurrency trading transactions.

Posted on 20 February 2018 | 5:10 am

Wyoming House Approves Utility Token Securities Exemptions Bill

The Wyoming House of Representatives has unanimously passed a bill exempting some utility tokens from securities regulations.

Posted on 20 February 2018 | 4:00 am

R3 Center to Train Next Generation of DLT Lawyers

Distributed ledger software provider R3 has formed a blockchain education group designed to prepare lawyers for large-scale enterprise adoption.

Posted on 20 February 2018 | 2:00 am

Regional Government in Russia to Test Blockchain Payments

Russian development bank Vnesheconombank has partnered with Kaliningrad's regions government to pilot blockchain-based payment solutions.

Posted on 20 February 2018 | 12:00 am

California Bill Would Legally Recognize Blockchain Data

A new bill introduced to the California Assembly seeks the legal recognition of blockchain data and smart contracts.

Posted on 19 February 2018 | 7:50 pm

Bitcoin Price Analysis: Bitcoin Tests Pivotal Resistance Levels Following Strong Rally

Bitcoin Price Analysis

After a strong rally from the $6,000s, bitcoin ultimately saw a near 100% growth in market value as it now sits atop its rally in the low $11,000s. Currently, the market is testing well-known, strong resistance levels and is seeing quite turbulent shakeouts and rallies as it decides what the next market move will be. On a macro view, we can see that bitcoin is testing the strength of the daily 50 EMA:

fig1Figure 1: BTC-USD, Daily Candles, Macro Trend

The red square at the top of the trend represents a macro distribution trading range that ultimately led to the decline in value of the last couple months. At the time of this article, we are currently testing the lower boundary of this trading range:

fig2Figure 2: BTC-USD, 4-Hour Candles, Retest of Distribution Trading Range

In a typical markdown phase of a market cycle, it is quite common for a distribution trading range to break down through the bottom, see a strong drop in price, and then see a rally that leads to a retest of the lower limits of the prior distribution trading range.

The markdown from the top of the market cycle has been well defined by the red, dotted channel sloping downward in the image above. This current rally has the price pushing beyond the limits of the channel and shows a break of the current downward trend.

One thing that should be noted however is that a breakdown of a downward trend doesn’t necessarily mean that it will become an uptrend. It’s entirely possible that a break from the downward trend could lead into a consolidation period that yields a new downward trend — we’ve seen this time and time again.

At the time of this article we are currently seeing turbulent swings in price as the market decides what its next move will be. At the top of this rally from $6,000 to the $11,000s, we see a trading range starting to form:

fig3Figure 3: BTC-USD, 30min Candles, Possible Trading Range

A bullish case for this trading range could be considered if we manage to break above it and find support on the top of the trading range. This sign of support would be a bullish signal to the market that we are no longer interested in lower values and that the market is ready to continue its markup campaign.

However, if we break above this trading range and fall back inside the trading range, it would be a very bearish sign that the we are actually forming another distribution trading range, indicating that the top of the current rally is over. At that point we could expect to begin a new markdown campaign in the following days and weeks.

Thus, this current resistance level is pivotal and will serve to mark either the end of the uptrend or the beginning of an even stronger move to higher values.

Summary:

  1. Bitcoin has seen a strong rally since it bottomed out around $6,000.
  2. Currently, it is finding turbulent market activity as it tests well-known and established resistance levels.
  3. If we manage to find support on the trading range outlined in Figure 3, this will be a strong indication of a continuation to higher highs. However, if pushing upward we don’t find support on the top of the trading range and manage to fall back inside the trading range, this is a strong bearish signal that a potential markdown in price is in store in the next few days and weeks.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


This article originally appeared on Bitcoin Magazine.

Posted on 19 February 2018 | 3:20 pm

Actor Steven Seagal Endorses Questionable 'Bitcoiin' ICO

Action film star Steven Seagal has become the brand ambassador for a controversial cryptocurrency ahead of an initial coin offering (ICO).

Posted on 19 February 2018 | 3:20 pm

Who's Said What About the Coinbase-Visa Dispute

A Visa spokesperson claimed that neither it nor Coinbase were responsible for last week's charging issue seen by the crypto-exchange's customers.

Posted on 19 February 2018 | 2:00 pm

Israel Confirms It Will Tax Bitcoin as Property

Israel has confirmed that it will treat cryptocurrencies as taxable assets in a new circular published on Monday.

Posted on 19 February 2018 | 12:40 pm

HashChain Technology Acquires Blockchain Company NODE40

HashChain Mining Operation Acquires NODE40 Blockchain Technology Company

HashChain Technology Inc. (HashChain) has acquired the blockchain technology company NODE40 for $8 million USD and 3,144,134 common shares of stock in HashChain (TSXV: KASH) (OTCQB: HSSHF).

HashChain is a Canadian-based crypto-mining company that currently operates 100 Dash mining rigs and is in the process of setting up nearly 4,000 more to mine bitcoin. By locating in Canada, they are able to take advantage of both the very low electrical rates for power and the cool climate for data center cooling.

Having recently gone public on the TSX Venture Exchange, the company was looking to diversify their business beyond crypto-mining and have now acquired NODE40, a company that develops Software as a Service (SaaS) products related to cryptocurrency.

HashChain CEO and Founder Patrick Gray said, “The acquisition of the NODE40 Business is an important next step of creating a global blockchain technology company."

On the hardware and mining side, NODE40 runs a managed service for running your own Dash masternode. Masternodes get paid 45 percent of the monthly block reward as incentive for providing services to the network.

On the software side, NODE40 provides the SaaS product NODE40 Balance (Balance), which determines accurate valuations for each input/output involved in a user’s transaction by using cryptocurrency transaction history and analyzing the blockchain. Once a value is assigned to each transaction, then Balance will report the users’ current total asset value, income and any realized gains or loses.

"Cryptocurrency accounting and reporting for tax purposes is a major concern in the industry at the moment,” said Gray. “The recent Coinbase subpoena from the IRS highlights the significant need for the software developed by NODE40."

The acquisition was finalized on February 15, 2018.

This article originally appeared on Bitcoin Magazine.

Posted on 19 February 2018 | 11:21 am

Long Blockchain Is At Risk for Exchange Removal Again

Long Blockchain announced it would appeal a notice by Nasdaq informing it that its stock was at risk of being delisted.

Posted on 19 February 2018 | 11:20 am

Op-ed: How Decentralized Protocols Are Threatening Traditional Business Models

Op-ed: How Decentralized Protocols Are Threatening Traditional Business Models

Corporates, suits and CEOs of traditional companies beware: decentralized protocols powered by blockchain technology are redefining your traditional business models, and you should be worried. Business models of the future are not created equal, and they certainly don’t play by the same rules. In the Venn Diagram of traditional business and decentralized protocols, there are a few overlaps and many differences.

Traditional Businesses vs. Decentralized Protocols

Boiled down to the most simple terms, all traditional businesses are organizations that charge customers a certain price (usually denoted in fiat currency) in exchange for a certain product or service. Starbucks charges $3.28 for a quad, grande, decaf Americano. Netflix charges a monthly $10.99 for unlimited Nicolas Cage streaming. Lover’s charges $20 to “spice things up” in the bedroom.

Ultimately, all traditional businesses –– no matter the product or service –– are driven by the quest for profit. Business owners are incentivized to reduce costs, increase efficiencies and scale carefully to maximize cash flows for shareholders.

The key stakeholders of traditional business are customers, business owners/employees and business financiers.

A decentralized protocol powered by blockchain technology is a network — a network framed by cryptography, distributed ledger technology, decentralization and consensus methods –– but a network nonetheless. The networks created by decentralized protocols aren’t structured like the networks created by any traditional business model.

Decentralized protocols aren’t driven by the need to create future cash flows for shareholders. Instead, they are programmed to facilitate commercial interactions between humans in a frictionless manner. A protocol’s incentives are aligned to benefit users and to achieve the smallest margins possible.

The key stakeholders of decentralized protocols are customers, protocol “community maintainers” and (occasionally) protocol financiers.

Customers

Customers benefit from the traditional business they choose to interact with. For a price specified by the business (in fiat currency), they are entitled to a product or service.

Similarly, customers benefit from the protocol they choose to interact with. For a price specified by the protocol, they are entitled to a product or service.

Generally, protocols are powered by utility tokens. For example, the fictional Planes Protocol facilitates coast-to-coast trips in a Tesla-of-the-skies (electric planes) for 1 PLN token. The PLN token is a medium-of-exchange. Nick, a businessman from Seattle, must pay 1 PLN token for a flight from Seattle to Miami. The plane operator is entitled to 99 percent of the PLN token fee and the Planes Protocol claims the other 1 percent.

Business Owners and Employees

Traditional business owners and employees must be compensated for their work. After all, there is a price to pay for food, water and shelter. Business owners pay themselves with portions of their revenue and pay their employees salaries for their work.

Because protocols are decentralized, the concept of “business owner” does not apply. Instead, protocols are cultivated by those designated as “community maintainers.” Whether the protocol founder is designated as the “community maintainer” is up to the community.

Protocols can facilitate commercial interactions between humans “at cost,” as long as they are generating enough in network fees to cover all required upkeep costs. For example, these can include a centralized unit to guarantee customer satisfaction and hiring of developers, project managers or anyone else necessary to keep the network alive and well. Therefore, a protocol’s margins can be much lower than that of a traditional business.

If a “greedy” protocol is programmed with transaction fees that are unreasonably high, anyone can “fork” the protocol (by using a modified copy of the original open-source code) and create a competing network with lower transaction fees. This will continue until price reaches a near-free equilibrium.

Protocol founders can reward themselves with a certain percentage of all tokens ever minted for creating the protocol; similarly, “community maintainers” are rewarded for their efforts via the protocol’s tokens on an ongoing, salary-style basis. These tokens usually have a related fiat value and can be redeemed on publicly traded exchanges.

Side note: Utility tokens are not a panacea. They face various problems such as publicly traded speculation and token velocity. A utopian, token-centric future will not happen overnight. There is much work to do.

Business Financiers

Many business owners or entrepreneurs traditionally rely on risk-tolerant financiers with capital. In the 1500s, enterprising trade voyagers relied on wealthy financiers to support their journeys. If trade voyagers were successful, financiers earned the lion’s share of the voyagers’ profits.

In 2018, Silicon Valley startup founders relinquish equity/control over their company to venture capitalists (modern day trade financiers) in exchange for seed funding. If startups are successful, venture capitalists earn a return proportional to their shares of the company.

It is important to note that capitalism and traditional business models work well. There are millions of happy customers across a variety of industries. But, in some cases, decentralized protocols provide cheaper access to products or services and better-aligned incentives for all stakeholders.

Founders of protocols have flexibility. Because they are creating a new network powered by utility tokens, they can afford to bypass traditional debt/equity financing.

While 16th century merchants and past Silicon Valley founders played by the rules of their financiers, founders of decentralized protocols are freed from this sort of pressure. Protocols can crowdfund capital by pre-selling their protocol’s utility tokens to accredited VCs and, in some cases, to the general public. Protocols can also give discounted tokens to developers for their skills.

Key Takeaway: Traditional businesses and protocols are not created equal. And decentralized protocols certainly don’t play by the same rules as traditional businesses.

Shifting the Value Paradigm

So, what might value creation in the future even look like? And how does a legacy business survive the decentralized future?

Corporate decision-makers must recognize and understand that:

  • This is a true instance of the often-overlooked “past performance is no guarantee of future results.” Traditional business models cannot be confused with or compared to protocols of the future.
  • Decentralized protocols of the Web 3.0 will not automatically dethrone legacy businesses. And, in some cases, traditional business would not benefit from decentralization. Protocols will not gain the necessary network effects for widespread adoption unless their value proposition is an order of magnitude better than current business models.
  • If your corporation operates on the basis of artificial scarcity or “middlemen economics,” you’re ripe for disruption.

Most decentralized protocols still require certain aspects of centralization to guarantee customer satisfaction. Sorry, libertarians, but certain things must maintain a degree of centralization.

Practical Example: Uber vs. Ride, a Fictional, Decentralized Ride-Sharing Protocol.

In 2018, Uber has 3 key competitive advantages in the ride-sharing market:

  1. Legacy Network: ~ 40 million total monthly, active riders; ~ 1.5 million total drivers
  2. Customer Satisfaction Guarantee: a centralized company able to provide riders/drivers with personalized troubleshooting. For example, when a driver complains that a college student threw up in his Uber, the centralized Uber troubleshooting authority reprimands the rider in the form of a citation and makes the driver whole.
  3. Brand Name Recognition: Uber has achieved ultimate “verb” status. On par with “Googling” something.

However, in 5–20 years, Ride will inevitably come along and attempt to win over Uber’s users and drivers. Ride won’t be structured like Uber’s traditional business model. Its goal won’t be to create future cash flows for Ride shareholders. Instead, the protocol will focus on facilitating transactions between riders and drivers in a frictionless, decentralized manner. Ride’s incentives will be aligned to benefit riders and drivers.

Because Ride isn’t driven by the quest for profit, it doesn’t have to charge drivers ~20 percent for each ride. Instead, they can charge users/drivers fractional transaction fees (by means of the RIDE utility token) for interacting with the protocol. These transaction fees are used to maintain and secure the Ride protocol.

The Ride protocol will raise money by pre-selling their utility tokens via decentralized crowdfunding. The protocol will provide an order of magnitude improvement over Uber’s network, executed by the right team and the right investors. Because of this, Ride will amass a significant network effect, user base and brand name recognition. Of course, the Ride protocol will likely still have aspects of centralization to provide customer satisfaction.

So, How Can Companies Like Uber Survive in 2025?

There are two options:

  1. “Reverse ICO,” or create a decentralized protocol for the service you provide.
  2. Slowly go bankrupt as market share is taken away by your competitors, who are decentralized protocols.

Decentralization will be just one of many difficult topics to bring up at a board meeting. After all, artificial intelligence and automation are advancing every year. Shrinking margins, employee layoffs and re-trainings are also implicit with decentralization. (Maybe it’s best to recruit your interns to volunteer this information to the board, in case this inevitability isn’t well-received by your shareholders.)

Legacy companies are presented with an incredible opportunity to participate in the next evolution of business models and commercial interactions between people. Choose to embrace the future or fall as a victim to social darwinism: the choice is up to you.

This is an opinion piece by Erik Kuebler. The views expressed are his own and do not necessarily reflect those of BTC Media or Bitcoin Magazine.

This article originally appeared on Bitcoin Magazine.

Posted on 19 February 2018 | 10:03 am

Lithuania's Central Bank Probes 100 Million Euro ICO

Lithuania's central bank has said it is probing Bankera's initial coin offering after determining that the token offered counts as a security.

Posted on 19 February 2018 | 9:00 am

$850 Million Raised in ICO So Far, Says Telegram

Messaging app provider Telegram has raised an initial $850 million in its controversial initial coin offering (ICO), according to a public document.

Posted on 19 February 2018 | 7:20 am

Record Retest? ETC Looks Poised on Double-Digit Climb

A prominent alternative to the ethereum blockchain is showing signs of building a higher base amid a period of strong market activity.

Posted on 19 February 2018 | 6:45 am

Swiss Regulator Gives Clear Guidelines for Launching ICOs

Swiss Regulator Gives Clear Guidelines for Launching ICOs

On February 16, 2018, the Swiss Financial Market Supervisory Authority FINMA put the world on notice by being the first major economy to set out clear guidelines on initial coin offerings (ICOs). In an announcement, the Swiss regulator addressed plans to apply financial market legislation to different tokens as well as lay out how ICO organizers can get proper input from FINMA when planning or launching their initial coin offerings.


The guidelines, offered as a downloadable PDF, show market participants what information is needed to help the Swiss regulator adequately address all issues presented in inquiries to the regulator, as well as how FINMA intends for current financial market legislation to be applied to ICOs. The published guidelines are intended to complement FINMA Guidance 04/2017, which in September 2017 addressed regulatory treatment of initial coin offerings.  

Important to note is FINMA’s concern over creating transparency. According to the regulator, “Creating transparency at this time is important given the dynamic market and high level of demand.”

FINMA also cited an increase in the number of inquiries corresponding with a sharp increase in the quantity of planned and executed ICOs in the country as a motivating factor for the move.

The regulator’s concern over transparency is clearly illustrated when they state in the guidelines that “ICOs raise a variety of legal issues for which there is no relevant case law and no consistent legal doctrine. Given the wide variety of types of token and ICO set-ups, it is not possible to generalise. Circumstances must be considered holistically in each individual case.”

The press release on the guidelines also provides useful information. The Swiss regulator highlighted that they would focus “on the underlying purpose of the tokens” and that the tokens were “tradeable and transferable.”

The release also showed how FINMA categorizes the tokens into three types — payment tokens, utility tokens and asset tokens (allowing for tokens to possibly take on aspects of more than one group) — and ascribes definitions for organizers to better understand their tokens’ potential assessment.  

Another major emphasis in the press release was on the guidelines’ role in displaying how FINMA will handle ICO inquiries regarding Anti-Money Laundering (AML) and securities regulations compliance. In the release, they referred market participants to the diagram on page 8 of the guidelines (as shown below), which distinguishes the regulator’s stance based on which of the three categories the tokens are put in.

Swiss Regulator Gives Clear Guidelines for Launching ICOs chart

While the press release does finish with a note to investors about the risks associated with investing in ICOs, the most important part of the announcement is the portion where FINMA highlights the “innovative potential” of blockchain technology. In it, FINMA CEO Mark Branson stated:

The application of blockchain technology has innovative potential within and far beyond the financial markets. However, blockchain-based projects conducted analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework. Our balanced approach to handling ICO projects and enquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.

While regulations on ICOs are either ambiguously evolving or demonstrating outright hostility in other countries, FINMA has given a clear signal that it wants to provide transparency, open communication and certainty (where possible) to those launching ICO projects within the Swiss Confederation.

This article originally appeared on Bitcoin Magazine.

Posted on 16 February 2018 | 4:20 pm

Decentralized Exchanges Stake Their Claim in the Cryptocurrency Ecosystem

Decentralized Exchanges Stake Their Claim in the Cryptocurrency Ecosystem

The cryptocurrency ecosystem has continued to take some major hits lately, causing many investors and holders to rethink the way they trade their crypto assets. Several high profile cryptocurrency hacks have made the news in the past few years. In one of the most recent hacks, the Japanese cryptocurrency exchange, Coincheck lost more than $500 million dollars worth of digital coins, adding to a growing perception that cryptocurrencies are particularly vulnerable to hackers.

Yet, as the total market capitalization of cryptocurrencies continues to increase (now above $4 billion), the most recent Coincheck hack may finally be a wake up call for crypto investors and holders.

As the vulnerability of centralized cryptocurrency exchanges is becoming more and more apparent to the cryptocurrency community, some are looking to alternatives in the form of decentralized exchanges.

Unlike a centralized exchange system that handles the trading of cryptocurrencies for its users, decentralized exchanges allow users to control their own funds within their own wallets. Decentralized exchanges do not rely on a third party service to hold a user’s funds, making them less vulnerable to large hacks. This also means that trades on a decentralized exchange happen directly between users in a peer-to-peer manner. These features make decentralized exchanges less vulnerable and much more transparent than centralized exchanges.

Decentralized exchanges such as AirSwap, Bisq, EtherDelta and Hodl Hodl — the newest player to enter the scene — have sparked the interest for crypto enthusiasts looking to control their own assets with little hand holding involved. Users on these decentralized exchanges keep their own private keys and transact directly with each other, demonstrating a truly decentralized form of trading crypto assets.

“We believe that there will be a huge liquidity migration from centralized exchanges to decentralized exchanges when it comes to token-to-token trading,” AirSwap strategist, Sam Tabar, told Bitcoin Magazine. “AirSwap’s mission is to let people trade crypto assets without a middleman involved and blockchain technology allows for just this.”

He pointed out that AirSwap doesn’t hold any user assets. The platform uses the Ethereum blockchain and atomic swaps based on smart contracts to make sure assets cannot be traded without another asset coming to a user.  

“In a way, centralized exchanges act as a bank, broker and clearing house because they hold all your money and charge fees. This is problematic though, and hacks are happening quite often because of this model,” said Tabar.

What About Crypto to Fiat Trades?

Most decentralized exchanges allow for crypto-to-crypto trading. While this model is common, Bisq is one of the few decentralized exchanges that lets users buy and sell bitcoins in exchange for national fiat currencies as well as alternative cryptocurrencies.

“Crypto-to-fiat exchange transactions are inherently difficult to decentralize, because fiat itself is under the centralized control of banks and governments,” Bisq co-founder, Chris Beams, told Bitcoin Magazine. “This means that any system designed to automate the process of trading crypto for fiat must get permission from these gatekeepers, and all too often they choose to close their gates to Bitcoin and cryptocurrency-related transactions — just as we saw last month with Visa shutting down all Bitcoin-based debit cards on its network.”

Bisq, however, solves this problem by coordinating out-of-band, manual fiat payments. It’s important to note that Bisq does not directly integrate with banks or other national currency payment systems in any way. Rather, Bisq’s trading protocol orchestrates the process of buyer and seller working together to settle fiat payments outside of the Bisq application — for example, via normal person-to-person SEPA payments in Europe or via a person-to-person payment system like Zelle in the U.S.

Bisq is also impressive in that their peer-to-peer network ensures a high level of user security.

“Centralized exchanges require users to ‘deposit’ cryptocurrency and fiat funds, putting them in the control — or custody — of the centralized exchange. Bisq is entirely non-custodial, meaning that you, the user, stay in control. You never hand over your private keys to a third party, meaning that they cannot be lost or stolen by that third party. This makes Bisq a fundamentally more secure way to exchange,” said Beam.

Most recently, the beta version of Hodl Hodl was launched. Hodl Hodl is another peer-to-peer crypto exchange that allows users to trade directly with each other, without holding user funds.

Instead, funds on Hodl Hodl are locked in multisig escrow.

Each time a contract is created between two parties, a multisig escrow cryptocurrency address is generated. The seller sends cryptocurrency from his wallet to this account and when the cryptocurrency is locked in escrow, the buyer sends fiat to the seller. The seller then releases the locked cryptocurrency from escrow and the buyer receives it directly in their wallet.

Enhanced Privacy

Furthermore, because decentralized exchanges do not hold funds and because the exchanges are all peer-to-peer, there are no AML/KYC requirements for users to set up accounts.

“AML/KYC type of compliance, in combination with the transparent nature of Bitcoin's blockchain, represents a significant loss of privacy,” said Manfred Karrer, founder of Bisq, when it first launched as Bitsquare.

“By piecing together the data collected by these exchanges, it can become trivial to figure out how much someone earns, or saves, or spends, and often even what the money is spent on. That’s not just inconvenient; it really makes Bitcoin unsuitable for all sorts of transactions ‒ including perfectly legal ones.”



This article originally appeared on Bitcoin Magazine.

Posted on 16 February 2018 | 3:11 pm

SEC Suspends Trading of 3 Penny Stocks With Tenuous Ties to Cryptocurrency, Blockchain

SEC Suspends Trading of 3 Penny Stocks With Tenuous Ties to Cryptocurrency, Blockchain

Today, February 16, 2018, the Securities and Exchange Commission (SEC) issued a press release announcing trading suspension of three companies that acquired AAA-rated assets from “a subsidiary of a private equity investor in cryptocurrency and blockchain technology, among other things.”

The three companies in question, PDX Partners, Inc., Victura Construction Group, and Cherubim Interests, Inc., had trading of their stocks suspended for 10 days by the SEC under the auspices of public interest and investor protection. Neither the SEC suspension orders, nor any of the announcements by the companies surrounding the acquisitions, however, seem to actually focus on blockchain or cryptocurrencies. The assets that were acquired were trust units (shares) in a management company for a private equity fund that invests in at least 12 disparate sectors, including blockchain and cryptocurrencies.

According to the orders of suspension by the SEC, the companies all set off alarm bells for the regulators when Victura Construction and PDX Partners issued press releases on January 4, 2018, related to the pending share acquisitions. Cherubim Interests issued a press release on January 3, 2018, to the same effect but was also cited by the SEC for its delinquency in filings with the SEC.

All three companies are helmed by CEO Patrick Johnson, former NFL journeyman wide receiver. All three companies are penny stocks with outdated financial information and unaudited or poor bookkeeping. These so-called “penny stocks” are typically a great concern for U.S. regulators as they are often the subject of attempted price manipulation or fraud.

All of the companies announced near the beginning of the year the acquisition of trust units from NVC Fund LLC, the trust manager of  NVC Fund Holding Trust, which commits private equity investments into everything from natural resources and entertainment to blockchain technology and “fintech cryptocurrency.” According to the NVC fund website, the trust manages assets valued at over $128 billion.

Investments made from all three companies were for sums that far outpaced any estimated market cap or gross profit of the companies. PDX Partners announced a purchase of $350 million in trust units, despite only having $29,000 in operating income at the end of 2016 and negative cash flow from operations.

Cherubim Interests announced a purchase of $250 million in trust units, despite having negative operating income and negative cash flow from operations for their 2016 year-end.

Victura Construction announced a purchase of $100 million in trust units, while they too had negative operating income and operating cash flow for the last year they reported financials in 2014. All told, Mr. Johnson’s companies would be taking on $700 million of investments in NVC Funds.

Instead of focusing on the questionable ability of these three companies to afford the price of these trust units, the underlying valuation of the assets themselves, or the fact that the companies all have limited transparency on their websites in public filings, the SEC devotes half of the press release to warning investors about investing in companies pivoting to blockchain or cryptocurrencies.

Michele Wein Layne, Director of the Los Angeles Regional Office, stated, “This is a reminder that investors should give heightened scrutiny to penny stock companies that have switched their focus to the latest business trend, such as cryptocurrency, blockchain technology or initial coin offerings”. It should be noted that the SEC states that Cherubim Interests executed a financing commitment to launch an ICO. This is the only reference in the suspension orders to the idea that any of the three companies dabbled in the cryptocurrency or blockchain space.

Of course, there may be more clarifying information the SEC has yet to disclose in future actions taken regarding the three companies that would clarify how the acquisitions were directed toward the blockchain and cryptocurrency aspects of NVC Fund’s investments. However, no press announcements by the companies seem to have specifically cited the two sectors, and no factors in the SEC suspension orders suggest that the companies were targeting the NVC Fund investments for those particular two categories.

The stated strategic focuses of PDX partners, Victura Construction and Cherubim Interests are: telecom, disaster recovery and restoration construction, and alternative construction projects, respectively.

This article originally appeared on Bitcoin Magazine.

Posted on 16 February 2018 | 2:38 pm

Bitcoin tops $10,000 milestone

Posted on 29 November 2017 | 2:30 am

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CRYENGINE now accepts Bitcoin

Posted on 29 March 2017 | 1:24 am

Consulting firm EY Switzerland accepts Bitcoin

Posted on 26 November 2016 | 12:47 am

Bitcoin Trading Bots

There have been a wide variety of situations in which algorithmic trading programs have proven to be beneficial for investors. However, investors who only trade a cryptocurrency can also take advantage of bitcoin trading bots. Through bitcoin bot trading, traders can become more flexible and prompt, minimize errors and process information more rapidly. At this… Read More »

Posted on 8 November 2016 | 6:20 pm

Steam accepts Bitcoin

Posted on 29 April 2016 | 1:09 am

Major Magazine Publisher to Accept Bitcoin Payments

Posted on 18 December 2014 | 12:43 pm

Microsoft accepts Bitcoin

Posted on 11 December 2014 | 5:06 am

PayPal and Virtual Currency

Posted on 23 September 2014 | 9:52 pm

Wikimedia Foundation Now Accepts Bitcoin

Posted on 30 July 2014 | 3:14 pm

German Newspaper "taz" accepts Bitcoin

Posted on 22 July 2014 | 1:32 pm

airBaltic - World’s First Airline To Accept Bitcoin

Posted on 22 July 2014 | 11:03 am

February 20, 2018 -
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