Suspected Mastermind Behind Kassh Coin Arrested

Suspected Mastermind Behind Kassh Coin Arrested

The New Delhi Police Branch has arrested Asif Ashraf Malkani – a thirty-five-year-old man accused of operating Kassh Coin – a multi-million dollar scam that duped Bollywood celebrities, among scores of Indian investors.

Also Read: ‘Crypto Fund’ Approved to Manage Cryptocurrency Investments in Switzerland

Operator of Crypto Scam That Duped Bollywood Celebrities Apprehended

Suspected Mastermind Behind Kassh Coin ArrestedAsif Ashraf Malkani, the accused mastermind behind a multi-million-dollar scam that targeted scores of prospective Indian cryptocurrency investors, has been arrested by police in New Delhi.

According to local media, Mr. Malkani ‘launched’ the fictitious cryptocurrency ‘Kassh Coin’ during 2016, before promoting the coin during December 2017 at “a grand function held at a farmhouse in Chhatarpur” that saw “Bollywood celebrities and models” enlisted to “perform and market the coin” at the event. Investors paid 3.5 Indian Rupees ($0.047 USD) per Kassh Coin.

Mr. Malkani is said to have sought to go into hiding after many of the scammed investors contacted police, however, he was caught after relocating to Uttar Pradesh and attempting to launch another cryptocurrency called ‘V-flix’.

Investigations have revealed that Mr. Malkani was also seeking investment to launch a “commercially viable video streaming website” called V-Tube, and has been identified as moving a significant sum of money through a firm named “Puneet Enterprise.”

Malkani Organizes Multiple “Youth Seminars” to Promote Kassh Coin

Suspected Mastermind Behind Kassh Coin ArrestedPolice Commissioner, Ajit K Singla, stated that the arrest and investigations into the operations of Mr. Malkani and his companies were carried out by a team led by Deputy Commissioner of Police, Bhisham Singh.

Commissioner Singh has stated that Mr. Malkani began operating a multi-level marketing scheme in 2015 after joining advertising Unetnet alongside his wife, before becoming interested in cryptocurrencies the following year.

The investigations also uncovered that Mr. Malkani and company organized a number of “youth seminars” across India and Nepal following the success of their farmhouse event in 2017. Since then, Mr. Malkani made his way through Goa, Chennai, Kolkata, Kanpur, and Pune whilst attempting to evade law enforcement.

Do you think that increased regulatory action is reducing the presence of scammers within the cryptocurrency industries? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


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Japanese Internet Giant GMO to Launch Yen-Pegged Cryptocurrency

Japanese Internet Giant GMO to Launch Yen-Pegged Cryptocurrency

Japan’s GMO Internet Group has announced plans to issue a yen-pegged stablecoin called GMO Japanese Yen. Already in the crypto exchange and mining hardware businesses, the company plans to launch its third crypto enterprise with this stablecoin.

Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals

Yen-Pegged Stablecoin

Japanese Internet Giant GMO to Launch Yen-Pegged CryptocurrencyGMO Internet Group announced Tuesday that it “will start full-scale preparations to issue stable coins of virtual currency, with an eye to enter into the ‘settlement’ area of virtual currency business.” The company detailed:

‘GMO Japanese Yen (ticker symbol: GJY)’ [will be launched] through the unified brand (global brand) ‘Z.com’ in the overseas strategy of the GMO Internet Group. [It will be a] ‘yen-pegged currency’ linked with the Japanese yen.

Noting that there are already 57 stablecoins in the world, 23 of which are already in circulation, GMO disclosed that “We plan to start issuing [the stablecoin] for the Asian region around the fiscal year 2019.”

Third Crypto Business

Currently, GMO has two businesses in the crypto space: the exchange business which started in May last year and the mining business which started in December. In its earnings presentation published in August, the company outlined another crypto business area it seeks to enter called “cryptocurrency payment.”

In Tuesday’s stablecoin announcement, GMO revealed that it has been “investigating and researching whether the virtual currency could be the settlement currency from the viewpoint of volatility.”

Japanese Internet Giant GMO to Launch Yen-Pegged Cryptocurrency
GMO’s crypto businesses. Source: GMO Internet Group

GMO’s Hope for Its Stablecoin

Japanese Internet Giant GMO to Launch Yen-Pegged CryptocurrencyAccording to GMO, in order to solve the hyperinflation problem seen in many developing countries, “issues such as true non-centralization need to be overcome.” The firm asserted that stablecoins can be a solution to this problem “as a currency to replace low-credit domestic currencies.” The firm also believes that even in developed countries, stablecoins have “a potential to become a global standard innovative financial infrastructure.”

Referring to its yen-pegged crypto, GMO described:

One of the tasks is to stabilize price fluctuation (volatility), which is a risk to remittance and settlement, in order to increase the spreading and development of the virtual currency.

What do you think of GMO issuing a yen-pegged stablecoin? Let us know in the comments section below.


Images courtesy of Shutterstock and GMO Internet Group.


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The post Japanese Internet Giant GMO to Launch Yen-Pegged Cryptocurrency appeared first on BitcoinLinux.

New Patent Suggests Mastercard Could Have Big Blockchain Plans

New Patent Suggests Mastercard Could Have Big Blockchain Plans

A new patent awarded to global lending and payment solutions company Mastercard points to the giant developing blockchain technology that supports multiple currencies. It’s one of a number of patent applications from Mastercard and hints that the company may have big plans to compete in the blockchain-based payments marketplace.

Mastercard’s latest patent, which was awarded on October 9, 2018 and first filed in July 2016, outlines the issue of needing to store different types of transactions on a single platform. An “entity” wanting to use multiple types of blockchains, such as for managing several different currencies might need to run multiple blockchain platforms, needing more computer power.

The patent says:

“There is a need for a technological solution to provide a partitioned blockchain that is capable of storing multiple transaction formats and types in a single blockchain.”

The partitions, named “subnets” by the patent would hold different transaction types allowing one blockchain to receive information about different transaction types from different sources. The resulting blockchain would be “more robust” and have “greater utility.”

Mastercard is in the Top 3 Globally for Patent Filings

In IPR Daily’s 2018 Top 100 Global Blockchain Patent Enterprise Ranking Mastercard was listed third place with 80 patents, surpassed only by Alibaba and IBM. Mastercard has filed and been awarded numerous patents relating to blockchain technology in the past few years including one released in July 2018 proposing a method for managing fractional reserves of blockchain currency and linking blockchain-based assets to fiat currency accounts. Three more blockchain patents were awarded to Mastercard in September focusing on business-to-business transactions and data flow.

Of course, patents are no guarantee a company is actually working on the technology or will ever implement it. Mastercard’s activity, however, is a sure indication the corporation has big plans for blockchain technology. Recent news out of Mastercard Labs confirms this.

R&D and Technology Expansion

Ken Moore, head of Mastercard’s global research and development initiatives, spoke to The Irish Times in September 2018. Mastercard’s Dublin-based research center is investigating blockchain, artificial intelligence, and machine learning technologies, focusing on products and services built on this “deep tech.” Much of Mastercard’s research now happens in Ireland under the banner Mastercard Labs and employing around 400 staff.

Moore confirms that the research arm of Mastercard is looking to go beyond the “hype” and develop “real, grounded services and products” that would be rolled out across the wider group. “This is not exploratory work for us,” says Moore.

Mastercard Labs recently revealed plans to create 175 new jobs including positions for blockchain specialists, data scientists, and cloud infrastructure specialists.

The payments company is also expanding its technology hub in New York City and plans to add 470 new staff to its existing 250 by 2024, as well as creating a new 212,000 square foot facility in Manhattan.

Mastercard also partnered with Microsoft in September 2018 on a new payments platform titled “Mastercard Track” which uses Microsoft Azure. Though Microsoft Azure has blockchain functionality, it has not been confirmed whether the new platform will integrate blockchain. Mastercard Track aims to automate global trade for business clients and reduce inefficiencies, it will enable more direct cross-border payments.

If indeed Mastercard quickly develops workable blockchain solutions that can fulfill blockchain’s promise to improve global financial systems, it could quickly overtake newer fintech firms focused solely on blockchain. These newer firms just don’t yet have the market reach of Mastercard.

It could also make millions from this kind of blockchain success in a similar way to the predicted profits from blockchain for other corporate giants like Amazon and Microsoft.

The post New Patent Suggests Mastercard Could Have Big Blockchain Plans appeared first on BitcoinLinux.

Kadena Brings Blockchain Forefather Stuart Haber on Board

Kadena Brings Blockchain Forefather Stuart Haber on Board

Kadena, a blockchain platform targeted at businesses, has announced that it has appointed one of the original pioneers of blockchain technology to its board. According to a press release issued today, Stuart Haber, sometimes called the co-inventor of the blockchain, will serve on Kadena’s board of advisors.

Haber, along with W. Scott Stornetta, devised a precursor to the blockchain in 1991. This system provided tamper-proof timestamps and made use of Merkle trees to store information in a sequence of blocks. In 1994, Haber and Stornetta brought system this to the real world when they founded “Surety,”  an anti-backdating service which involved printing hashes in the classified ads of the New York Times.

Haber’s system was eventually innovated upon by Satoshi Nakamoto, who invented Bitcoin and created the blockchain as we know it today: a public, cryptographically secured ledger of transactions and data.

As Kadena’s press release notes, Haber was one of the most cited authors in Nakamoto’s 2008 paper, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Haber’s years of scholarly output were a large influence on the modern blockchain.

Since Bitcoin’s rise to prominence, Haber has become a renowned name in the blockchain world, and he has served several blockchain companies. This September, Haber joined the board of Endor, a blockchain-based predictive analytics engine. Earlier in the year, he signed on as Auditchain’s chief scientist. Haber also created his own consultancy company, Stuart Haber Crypto, LLC., in 2017.

About Kadena

Kadena provides a streamlined blockchain platform for businesses and enterprises, promising “speed, safety, scalability, and simplicity.” Haber had this to say about the company:

“As we’re still in the nascent years of blockchain, it’s exciting to see the amazing applications [the] technology has achieved so far…Kadena is working on some of the most promising innovations in proof-of-work blockchain since Bitcoin itself.”

Kadena uses a custom proof-of-work consensus mechanism called Chainweb for its public chain, which boasts 10,000 transactions per second. Meanwhile, the company’s Pact language allows users to author human-readable smart contracts without coding.

In addition to its public chain, Kadena also offers private chains. A single public blockchain is ideal for a cryptocurrency, but is not necessarily desired by private organizations, who may need confidentiality and particular user permissions.

Kadena’s capacity for building private chains classifies it as an enterprise blockchain. This makes it a competitor to prominent platforms such as IBM Hyperledger, R3 Corda, and Quorum.

The post Kadena Brings Blockchain Forefather Stuart Haber on Board appeared first on BitcoinLinux.

Japanese Internet Monolith GMO to Launch Yen-Pegged Stablecoin

Japanese Internet Monolith GMO to Launch Yen-Pegged Stablecoin

GMO Internet Group is working to launch a stablecoin by 2019. In an announcement released on Tuesday, October 9, 2018, the Japanese IT conglomerate said it is putting all gears in place to begin building its stablecoin, called the GMO Japanese Yen (GJY).

Banking on success on its home turf, GJY will look to penetrate the Asian market via Z.com once the fiscal year of 2019 is in full swing. GMO launched Z.com as a cryptocurrency exchange subsidiary in its relentless bid to penetrate the cryptocurrency industry.

The company made headlines in December of 2017 when it announced that it would open up a salary option that allowed employees to earn half of their pay in bitcoin.

The news signals the entry of another potential player in the yen-pegged stablecoin market, which already includes Hong Kong’s Grandshores Technology Group.

For a company that already has a foothold in the crypto exchange and mining business, launching a stablecoin, which offers price stability, would help it support “borderless cryptocurrency transactions.” Among efforts to expand its scope of operation, the company also partnered with Aozora Bank Group and others to launch a blockchain-powered online bank.

The web bank is expected to provide a portal that leverages blockchain technology for making cross-border settlements. GMO is also keen on bridging the gap of international remittances via its financial corporations in Japan.

“We have banks and trust licenses in Japan, so we will issue (GJY) in Asia, but we can store assets in Japan as well,” GMO founder and president Masatoshi Kumagai noted in the release.

Kumagai also believes the company is headed in the right direction to avoid the issues associated with tether. He went further to state:

“If that happens, everyone will not be worried like with tether; it can be said that GMO has a bank there and keeps fiat there.”

GMO joins a long list of companies to have issued stablecoins in recent months. Back in July, IBM revealed it had collaborated with Stronghold and the Stellar protocol on a U.S. dollar–pegged stablecoin. In the same vein, crypto exchange Gemini, blockchain startup Paxos and crypto payments firm Circle all announced their U.S dollar–anchored stablecoins earlier this year.

This article originally appeared on BitcoinLinux.

Forbes Enters Blockchain Game, Partners With Civil

Forbes Enters Blockchain Game, Partners With Civil

Civil, an Ethereum-based platform with a heady bid to save journalism, has partnered with Forbes to help the 100-year-old publisher keep its stories free from meddling hands.

Matt Coolidge, Civil cofounder, made the announcement today, October 9, 2018, in a blog post. He called the partnership a “major milestone for blockchain-based journalism.” Salah Zalatimo, senior vice president of product and technology at Forbes, said the partnership would allow the media company to provide “unprecedented transparency” around content.  

Forbes plans to try out the Civil system next year. Kicking off the process, Forbes will integrate Civil’s software with its own custom-built content management system known as Bertie. Once that process is complete, journalists working under the Forbes umbrella will be able to upload metadata (information pertaining to who published a story and when) to the Civil network at the same time they upload their stories to Forbes.com.

The hope is that publishing this metadata onto the blockchain will help to establish the author’s identity and credibility. For added assurance, a Civil “badge” will appear next to articles as a signal that the content’s metadata has been recorded to the blockchain.

Forbes will start experimenting with a sampling of content (starting with its blockchain-related stories) in Q1 of 2019. If all goes well, the media company will begin uploading metadata from all of its new articles on Forbes.com to the Civil platform in the next 12 months.  

According to Axios, which reported some additional information, Forbes also hopes to expand the footprint of its contributor network with smart contracts, which would allow it to publish content through Bertie to outlets like Medium and LinkedIn.

As part of the partnership agreement, Forbes will “possess” CVL tokens. (It’s not clear if Forbes needs to purchase the tokens or if Civil is planning to give  them to Forbes.) Civil founder Matthew Iles said the tokens will play a “vital role” in self-governance on the platform. Participants in the system can use the tokens to vote for or against a newsroom that is being challenged for violating the Civil Constitution.  

Beyond that, CVL tokens also play other roles in the system. For instance, contributors have to stake tokens in order to operate a newsrooms on the platform and propose amendments to the Civil Constitution. Readers can also use these tokens to tip their favorite newsrooms and journalist and pay for premium content where applicable.

Civil is not alone in its quest to put journalism on the blockchain. Other journalism-based blockchain projects include nwzer, Userfeeds, Factmata and Po.et, which was founded by Jarrod Dicker, a former vice president at the Washington Post.  

Last year, Civil received $5 million in funding from blockchain venture studio ConsenSys. The project’s token sale, which started on September 18, 2018, is still ongoing. So far, Civil has raised about $1.4 million in token sales — a far cry from its hard-cap goal of $24 million. If the project does not hit a soft cap of $8 million, Civil has said it will return the ICO money.

Disclaimer: BitcoinLinux is an alpha partner of Po.et. BTC Inc., the parent company of BitcoinLinux, is an investor in Po.et.

This article originally appeared on BitcoinLinux.

NEO Name Service Goes Live—Bidding Starts Today

NEO Name Service Goes Live—Bidding Starts Today

The NEO Name Service (NNS) has gone live as of Tuesday, October 9th. Users are now able to bid on domain names ending in .neo. These names can be used to create custom wallet addresses, email addresses, smart contract hashes, and much more:

[Source: NNS]

The current bidding process is described as “mining”: users who successfully bid on NEO domain names will receive a number of NNC tokens as a reward. The mining stage will last for two weeks and will end on October 23rd.

2000 names have been auctioned over the first six hours of the platform’s launch. Domain name prices start at 0.1 CGAS (~$0.60), but some bids have gone as high as 100 CGAS (~$600). Of course, each name’s price depends on whether it is in demand or not.

Various features and changes are in the pipeline: the O3 wallet will support domain name transfers by October 15th, and by the end of October users will be able to bid on domain names directly from the O3 wallet. At the moment, domain name bidding must be done from the NNS website.

The NNC Token

Currently, users must pay for domain names with GAS instead of the NEO Name Service’s custom NNC token. The NNC token offers certain privileges to holders: it permits them to vote on root domain names, and allows them to receive a cut of auction proceeds.

However, the NNC token will not be accepted as a payment method until users begin buying established domain names, according to the developers:

“Bidding on .neo domains needs GAS, but in the future, if you buy and sell pre-owned domains, only NNC is accepted. We are developing the .neo domain name exchange.
At this stage, NNC is more like a security. There is no need for large portion of NNC [to be] circulated…NNC has its utility side. Anyway, NNC will be circulated over time as its use cases expand.”

Users have criticized the NEO Name Service for allocating a large proportion of tokens to itself and its partners. Of the one billion existing NNC tokens, only 10% were sold to private investors — namely exchanges. The remaining 89% of the tokens have gone to the NNS team, its partners, and the NEO Foundation. The team did not run a public token sale at all, although 1% of the tokens were given to the community via an airdrop.

A User-Friendly Feature

Despite the controversial allocation scheme, the NEO Name Service will likely become an indispensable feature of the NEO blockchain. It follows in the footsteps of the Ethereum Name Service (ENS), which was launched in late 2017, and quickly gained adoption across several Ethereum clients.

Name services are a major step forward in making cryptocurrency a user-friendly technology. However, human-readable names do carry a risk, as they facilitate phishing and spoofing.

The post NEO Name Service Goes Live—Bidding Starts Today appeared first on BitcoinLinux.

‘Crypto Fund’ Approved to Manage Cryptocurrency Investments in Switzerland

‘Crypto Fund’ Approved to Manage Cryptocurrency Investments in Switzerland

Emerging Swiss virtual currency fund, Crypto Fund AG, said on Tuesday it had been given an asset management license by the Financial Market Supervisory Authority (Finma). The license allows the company to manage crypto-related investments within Switzerland and to solicit for others elsewhere. Crypto Fund will also be authorized to provide investment advice to corporate investors.

Also read: Online Automotive Parts Retailer Newparts Now Accepts Bitcoin Cash

Crypto Fund to ‘Accelerate Maturity’ in Crypto Markets After Getting Finma License

“The authorization represents our professional work over the last 12 months and is a major milestone for us,” said Mathias Maurer, chief operating officer of Crypto Fund, in an emailed statement to news.Bitcoin.com. “This [license] puts…[the company] on the same playing field with other globally recognized and regulated Swiss fund managers,” he wrote.

Crypto Fund Gets Go-Ahead to Manage Cryptocurrency Investment Funds in Switzerland

Without the license, issued under the Swiss Collective Investment Schemes Act, activities of crypto firms in the Alpine country will be limited and only “subject to fulfilling compliance with money laundering,” Maurer noted.

Founded in June 2017, Crypto Fund is the financial arm of Crypto Finance AG. The Zug-based company facilitates the implementation of blockchain technology through services such as asset management and brokerage, building bridges between investors and businesses that seek to utilize the technology.

Switzerland has taken a progressive stance towards cryptocurrency, legalizing its use and formalizing crypto transactions in various contexts. But some crypto projects still find it difficult to open bank accounts and regulatory clarity to cryptocurrency-focused bankers and investors is still not as clear as it might be.

In June, Finma licensed Crypto Finance to distribute collective investment schemes and funds to qualifying investors.

Jan Brzezek

“The importance of crypto assets is growing and our aim is to accelerate maturity in these markets,” Crypto Finance chief executive officer Jan Brzezek said in an online statement.

He noted that the license was important in building confidence “for crypto assets around the world.” Brzezek is looking to seek approval for a passive investment fund in the future.

Progressive Switzerland Continues to Expand Crypto Space

Along with countries such as Gibraltar, Isle of Man, Cayman Islands and Mauritius, Switzerland has welcomed cryptocurrencies like bitcoin core and bitcoin cash, going against other governments’ sceptical view of digital coins as being opaque, volatile and speculative.

Uncertainty by legacy Swiss banks on the policing and implementation of initial coin offerings (ICOs) in the financial market made them cautious, and reluctant to issue participants in the nascent market with company accounts, leading to the departure of at least two major players this year. However, banks have started to open up. The 86-year-old private bank Maerki Baumann now accepts crypto assets.

Crypto Fund Gets Go-Ahead to Manage Cryptocurrency Investment Funds in Switzerland

Faced with competition from crypto-affirming rivals including Liechtenstein, Gibraltar and the Cayman Islands, whose banks are more welcoming, Switzerland’s financial regulator got to work with lawmakers this year to provide clarity on the policing of the ICO market. The Crypto Fund license is the latest high-profile effort to build seamless synergies in the area.

Crypto-related businesses employ hundreds of people in Switzerland, with cryptocurrency legal tender in certain contexts. Switzerland sees virtual money and blockchain as a strategic innovation in global finance and is intent on maintaining and growing the jobs it has to offer in this field. The country’s tax regulatory authority considers cryptocurrencies to be assets, subject to wealth tax and declared on annual tax returns.

According to reports, Zug, also known as Crypto Valley, ranks favorably among the most crypto-friendly cities in the world, boasting more than 400 crypto businesses. Four of the 10 biggest ICOs in 2017 were registered in Switzerland, greater than any other country, according to a PwC report.

What do you think about crypto-related investment funds? Let us know in the comments section below.

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Bitcoin Price Analysis: Consolidation Primes Market for Big Move

Bitcoin Price Analysis: Consolidation Primes Market for Big Move

For several weeks, bitcoin has remained in a consolidating uptrend. The market hasn’t seen a new high since mid-September, but the lows have steadily gained higher and higher ground. Overall, the volume is highly consolidated and the market is ready for a large move — the question is, where will it move next?

fig1Figure 1: BTC-USD, Daily Candles, Sideways Consolidation

The market has been range-bound for weeks and has maintained a very consistent but very non-eventful uptrend. An interesting thing to note, however, is how slowly and steadily the bitcoin market had begun its march toward its multi-month downtrend:

Fig2Figure 2: BTC-USD, 12-Hour Candles, Historic Downtrend

A test of this downtrend will yield important information about what investors can expect in the coming weeks and months. A decisive break of the downtrend will be a very strong buy signal to a lot of large players that have capital sidelined. If the market manages to break and hold support above the downtrend, that will be a sign to many investors that, at minimum, a break of the downtrend is likely and a new trend is likely to develop. Whether that new trend yields a sustained uptrend, sideways consolidation or a temporary reprieve from months and months of a bear market remains to be seen. However, it will, at minimum, be a point of high volatility and likely be the sign of hope the battered bulls are looking for.

However, if this test is rejected, bitcoin will undoubtedly see a test of the high $5,000s to the low $6,000s range. A rejection of this downtrend would be the result of poor market demand as this would be the fifth rejection so far, and I would highly expect to see a test of new lows.

Whether or not the market rejects or blows right through the downtrend line remains to be seen. Either way, I would personally consider this a no-trade zone. The market is very tightly consolidated and squeezed between support and resistance, and I would highly expect the next move to be very strong. The next move will likely shape the state of the market for weeks and months to come.

If we look at the lower time frames, we can see a very well-defined supply-and-demand channel that has governed the bitcoin market over the last few weeks:

fig3Figure 3: BTC-USD, 6-Hour Candles, Supply-and-Demand Channel

This supply-and-demand channel has shown a relatively bullish trend as the market has made consistently higher lows with consolidating volume. The downtrend (outlined in red) shows just how close the market is to its next test and, given the supply-and-demand channel, it seems unlikely that any major movement will occur without a proper test of the downtrend. Similarly, the next major movement will likely be in the form of a channel breakout either to the upside or the downside. The first signs of strength or weakness in the market will be either a failure to maintain the uptrend/support of the demand side, or a complete breakout to the upside of the channel. For now, we will have to wait and see if demand surfaces on the next test of the multi-month downtrend.

Summary:

  1. For several weeks, bitcoin has consolidated in an upward sloping supply and demand channel.
  2. Overall, the market is very tightly consolidated and will likely yield a very large, sustained move. It is unclear whether or not the move will be to the downside or the upside.
  3. We are slowly snaking our way toward a multi-month downtrend and will have the market making its fifth test of the resistance. If we manage to break the downtrend line, we will likely see a strong swell of demand hit the market as it will be a sign to large investors that the market is exhibiting signs of bearish exhaustion. However, if we reject the downtrend line, I fully expect to see a test of the upper $5,000 range before any meaningful demand surfaces.

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 BitcoinLinux 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 BitcoinLinux.

With the CBAC, East Meets West in Search of Adoption and Innovation

With the CBAC, East Meets West in Search of Adoption and Innovation

The noise that surrounds economic relations between the United States and China is amping up exponentially. You can thank the latest trade wars for that, as fresh tensions boil over between the two nations who are currently trading new tariffs on imports, with no shortage of ill will underpinning the moves.

But the Chinese government’s ire is not just outward-facing. As a country where ICOs are currently not allowed, exchanges have had their bank accounts frozen, and internet and mobile access to cryptocurrency trading information has been banned, China is taking an equally hard line on a wide range of crypto-centric activities within its own borders. All this despite a stark dichotomy, wherein over 50 percent of the worldwide mining population resided within its borders in 2017, and cryptocurrency adoption is outpacing most other countries.

While trade war bullets may be flying thick and fast between these two mega-economies, the key to a better Chinese blockchain sector just may be unlocked by deploying cooperative forces in the United States, as seen by the recent launch of a New York City office for the China Blockchain Application Center (CBAC). The CBAC NY was founded with the hope of paving the way for rapid blockchain adoption in China, in part by picking up regulatory best practices from the United States, all while fostering blockchain and crypto collaboration between the two nations.

An early-stage, non-governmental organization (NGO) established in 2015, the CBAC collaborates with regulatory bodies to develop comprehensive regulations, encourage the application of blockchain technology in traditional industries, and connect Chinese practitioners with peers around the world. By helping to develop increased regulations, blockchain industry applications and international connections, members of the CBAC are hoping to elevate blockchain’s role in China’s $12 trillion economy.

Crypto Challenges in China

One of the speakers at a well-attended August launch party in NYC’s financial district was Stewie Zhu, founder and CEO of the distributed banking public blockchain Distributed Credit Chain (DCC), and a standing committee member of the CBAC. While ICO scams and other bad actors have significantly hindered progress in his home country, Zhu sees plenty of near-term potential for crypto and blockchain technology there.

“While China has prohibited the sale of new cryptocurrencies through ICOs since early last September, there is still a big appetite for the application of blockchain technology,” Zhu told BitcoinLinux. “In fact, a [recent] Chinese Supreme Court ruling has stated that blockchain technology can be used to authenticate evidence in legal contexts. The trading of cryptocurrencies is possible, but the government is trying to create financial stability to minimize any illegal activity. The Chinese government is eager to make considerable strides on the technology front, and while stringent, they are trying to ensure that cryptocurrency trading is done responsibly.

“There are challenges behind blockchain technology as it relates to banking,” Zhu continued, “because it requires a reconstruction of long-standing relationships in the current market, as well as time for citizens to understand the mechanisms behind using blockchain. Companies may need to make significant changes to their daily operations to incorporate blockchain, not to mention the time and resources needed for pre-application research.”

Zhu pointed out that it also takes time for private citizens to fully understand and trust cryptocurrency. Between price swings and security vulnerabilities, they may be leery of entering the market, he believes.

“Given the volatility in the crypto market and the negative news about problematic ICOs, individual customers can be cautious of tokens,” he said. “Security is also an issue. Blockchain technology is not perfect. We still need more R&D to develop ways to prevent potential threats such as the 51% attack, where an organization controlling the majority of network mining power can prevent transactions by others and allow its own coin to be spent twice (double spending). So long as these threats exist, many companies may not see blockchain as a practical tool.”

Part of a Bigger Picture

A successful push by the Chinese government to instill crypto confidence goes beyond better banking and protecting consumers, however.

“The Chinese government is trying to shift the economy from manufacturing-based to a more value-added, services-based, to move from being the factory of the world to being the service provider of the world, which is a natural economic evolution that you would expect from any country as they try to level-up,” Zennon Kapron observed in an interview with BitcoinLinux. Kapron is the founder of Kapronasia, a Singapore-based firm focused on providing insights into Asia’s financial industry.

“China has always tried to stay ahead and it’s used technology as a way of leveraging that with things like AI, machine learning, and some of the camera/surveillance technology as a way for the country to differentiate itself. From an economic perspective, it’s a very challenging transition to make because you’re trying to shift demands from import/export to domestic consumption, while you’ve got a banking system that’s relatively new that has a lot of challenges internally. So the government wants to avoid risk to the financial system, as well as the economy as a whole, and largely a lot of the pushback that we’ve seen from the government on cryptocurrencies is because of that.”

While Kapron is guarded on the immediate impact of blockchain on banking within China, he sees a real near-future need for applying distributed ledger to other fields.

“If we look at health records and food provenance in China, in certain ways [blockchain] would allow China to become coordinated and move much quicker, so the government is very open to the idea of launching technology and seems to be very supportive of it. That support is coming from the idea that, first of all, there are challenges that can be solved and, second of all, if they establish a leading edge around blockchain that could be a competitive advantage for them going forward.”

For Zhu, however, the most tantalizing possibilities for blockchain, in China and elsewhere, lay firmly within the financial realm.

“Blockchain can provide a comprehensive solution to multiple problems in the current financial industry,” he stated. “First off, it provides a decentralized structure, which will break the data monopoly of big, traditional banks and allows individual customers to control their own information. Second, the information on the chain cannot be changed or tampered with, which helps to enhance data security, one of the most important aspects in credit and banking. Third, while enhancing data security, blockchain also helps improve transparency, because every action is recorded on a smart contract and is always trackable.

“In my opinion, the philosophy behind blockchain is security and sharing,” added Zhu. “This technology connects people around the world, allowing them to access reliable information in a more efficient manner.”

Zhu has applied this outlook to his twin goals of growing his company, DCC, while also improving the CBAC’s prospects. For the industry to succeed, he believes it needs to embrace the same cooperation that blockchain facilitates by design.

“Collaboration is very important for companies in the tech sector, especially in an emerging industry like blockchain,” he said. “By joining the CBAC, I’d like to create a connection between the Chinese government authorities, as well as unite projects from both geographies and accelerate development processes. We would like to help our peers and DCC connect with additional experts in the space so that we can grow together at a much faster rate.

“Any new industry, at its birth, will experience volatility before the period of stable, healthy growth. I’d like to work as an active member of the CBAC on the development of industrial regulations, so that the blockchain industry will become more organized, allowing individual companies to fully unleash their potential.”

Coming to America

With the launch of a New York City presence, the CBAC is looking to foster collaboration not just between companies but between countries. Despite the many stumbles of Wall Street and the SEC in their approaches to crypto, Zhu maintains that both entities represent a “gold standard” of regulation, and the CBAC NY is in place specifically to model their best practices.

“As many countries are exploring and experimenting regulations for the blockchain industry, the U.S. is at the forefront and is doing a good job of placing certain safeguards and protection for investors stepping into the ICO world,” he said. “For example, the SEC is taking steps to create regulatory standards with the ‘Howey Test’ which determines whether cryptocurrencies are securities and thus subject to federal securities laws. Also, the United States Securities and Exchange Commission’s Office of Investor Education and Advocacy (OIEA) has published a report that seeks to warn investors of the potential ‘risks associated with self-directed Individual Retirement Accounts (self-directed IRAs)’ in which ICOs and cryptocurrencies are highlighted.”

Backed by the Beijing Municipal Bureau of Financial Work, the CBAC NY’s mission is to arrange meetings with U.S. regulators and lawyers to gain insight into how the U.S. is setting such standards. From there, the organization will work to push those standards to the top of regulatory authorities in China to help create change. Ultimately, China’s Ministry of Industry and Information Technology develops policies for the blockchain industry.

Seizing Momentum

A range of attendees present at the CBAC NY launch, including blockchain projects, entrepreneurs, regulators, academics, investment firms and exchanges across China and the U.S., indicated the high stakes and hopes for the organization’s success.

“The promise of decentralization and the new platforms and applications currently in development is to lead towards a much more connected world that will make financial value transfer faster, easier, and cheaper,” David Namdar, co-head of trading for the crypto asset merchant bank Galaxy Digital, told BitcoinLinux. “As the regulatory landscape develops globally, the CBAC can be instrumental in helping China to regulate blockchain in a way that leads toward greater involvement in an improved global financial ecosystem.

“I have been spending more and more time in Asia this year as we’ve expanded Galaxy Digital to Hong Kong and Tokyo,” Namdar continues, “and have been blown away by the amount of activity and enthusiasm around cryptocurrencies and blockchain applications. In China, I believe there is a lot of momentum as more and more people become educated about the space and understand the technology and it’s potential. However, it continues to be an important challenge to promote innovation around actual uses while curbing speculation.”

While classifying the record of non-profit organizations in influencing Chinese government policy as “hit or miss,” Kapronasia’s Zennon Kapron sees how an improved blockchain ecosystem could translate into major gains for the country with the world’s largest economy in terms of purchasing power parity.

“Certainly, China has become an epicenter of blockchain development,” he stated, “and China moves at China speed: [For example] we did a study a couple of years ago and we looked at cash usage in China. You think about China being a very cash-driven society. 60 percent of all retail transactions in 2010 were done with cash, and we expect that to drop in half to 30 percent by 2020. That shift, considering the population and considering the amount of money that that represents is massive. China can move very quickly on something like this, and so when we look at blockchain development in general and then regulation around blockchain, China could very well be a leader in this space as we go forward.”

“In China, the blockchain industry is growing quickly,” Zhu affirmed. “According to CoinTelegraph, in 2017, the most patent filings for blockchain technology to the World Intellectual Property Organization (WIPO) came from China, so we anticipate further applications of blockchain in China in the form of innovation in technology and banking/Internet finance. As I mentioned earlier, China is already using blockchain in a legal context and this type of growth will only continue to increase.”

With its massive footprint, rich resources, deep talent and influencers like the CBAC at work, China looms as a tempting frontier for outside operators in search of the ultimate blockchain destination.

“One of our core missions is to help grow the entire industry globally through technological development, investment and sensible regulation,” says Namdar. “Groups like the CBAC play an important role in education and cross-collaboration efforts with wide-reaching global impact.”

Still, in the eyes of educated observers like Kapron, it’s too early to say definitively if China, crypto and blockchain technology are bound for a copacetic outcome.

“I think we’ve seen very positive output from them in terms of their opinion and the way they think it could go, but that could change rapidly if there is a risk to the financial system,” he said.

“We’re at the very early days right now, and, for most investors or either funds or individuals overseas that are looking at investing in Chinese blockchain projects, it’s critical to understand the ecosystem. There are potentially outsized returns in China from some of these platforms, but it still remains to be seen how successful they are and how much the government allows things to move forward.”

This article originally appeared on BitcoinLinux.