Bahrain’s Central Bank Issues Draft Crypto Regulations

The Central Bank of Bahrain (CBB) has prepared draft rules designed to regulate digital assets and certain aspects of the country’s crypto industry. The move aims to establish Bahrain as a regional leader in the fintech sector and restore its role as a major banking hub in the Persian Gulf.  

Also read: New Bitcoin ATM Tracker Site Launches in Russia

Addressing Market Demand

Bahrain’s Central Bank Issues Draft Crypto RegulationsThe regulations have been released for consultation and the bank has set Dec. 31 as the deadline for providing feedback. The proposals have been published on the bank’s website, local media reported.

The comprehensive rules cover the implementation of a licensing regime for companies operating cryptocurrency trading platforms. A supervisory mechanism for the providers of other services related to crypto assets has been developed as well.

The draft paper addresses the need to introduce measures to safeguard the interests of customers. It also contains technology standards designed to minimize and manage the cyber security risks associated with the nascent industry.

In a statement quoted by the Bahrain News Agency, CBB’s executive director of banking supervision Khalid Hamad explained:

This regulatory framework will address the demand from the market for these services and the need to recognize this financial innovation.

Hamad further commented that the CBB’s experience with the participants in Bahrain’s regulatory sandbox has been “insightful in shaping these rules.” The bank official was referring to Bahrain Fintech Bay, which was established to allow companies from the sector to operate and experiment with new ideas under lighter regulations.

Restoring Regional Leadership

Bahrain’s Central Bank Issues Draft Crypto RegulationsAuthorities in Manama launched the sandbox to boost the development of the fintech industry and increase the number of companies offering related services. At the same time, the initiative was part of efforts to reduce government expenditure through the implementation of new financial technology. In fintech Bahrain sees an opportunity to restore its position as a regional banking and business hub.

Bahrain Fintech Bay, which was set up in February of this year, has become home to around 30 companies working with cryptocurrencies, digital payments, blockchain and financial technologies. Other players in the Persian Gulf, including Abu Dhabi and Dubai, are also investing heavily to support the growth of fintech startups.

But while Bahrain’s CBB is working to adopt regulations for decentralized, private cryptocurrencies, the central bank of the United Arab Emirates and the Saudi Arabian Monetary Authority have announced plans to issue a government-controlled digital currency. The new “blockchain-backed” coin will be used to improve the efficiency of cross-border transactions between the two neighboring countries.

What do you think of Bahrain’s decision to regulate the crypto industry? Let us know in the comments section below.


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The post Bahrain’s Central Bank Issues Draft Crypto Regulations appeared first on BitcoinLinux.

Why Cryptocurrencies Matter [Opinion]

Why Cryptocurrencies Matter [Opinion]

After telling friends and family what I do for a living, I’m often asked, “Why cryptocurrency?” And it’s gotten me thinking: what is it about this space that I find so fascinating, so promising, and so important?

Of course there are a number of good explanations. There’s the obvious fact that cryptocurrencies are new and exciting from a technological point of view. Distributed networks are building censorship resistance; encryption is facilitating trustless online transactions; and blockchains are revolutionizing countless industries across the globe—even if the technology still needs work before realizing its full potential.

Then there’s the other obvious fact: that cryptocurrency is a multibillion dollar industry offering the prospect of lucrative financial returns. While 2018 has certainly put a damper on this side of the crypto industry, hope for the next bull run still lingers in the mind of every cryptocurrency enthusiast, myself included.

But these superficial characteristics are not enough to explain my interest in cryptocurrencies. If I wanted to write about technology, why not quantum computing, AI, genetic engineering or space travel? If I wanted to make money, then why not take the traditional finance route, which offers incredible wealth and significantly less risk?

The truth is that, while the obvious facts still matter, the real reason I and so many others care about this space is the unique set of principles that lie at the heart of cryptocurrency and cryptocurrency alone. What I think many outside of the crypto industry fail to appreciate is that cryptocurrency is more than technology, and it’s more than money. It is a concerted effort to reintroduce two basic principles that have been forgotten in the digital age:

  1. Individuals have a right to privacy.
  2. Decentralized power is preferable to centralized power.

These two beliefs are the foundation upon which nearly every cryptocurrency is built, and they do a decent job of summarizing what is unique about cryptocurrency compared to other fintech industries. What’s particularly interesting about these principles is that they transcend political lines: two individuals can agree with both of the above statements for very different reasons. This contributes to cryptocurrency’s widespread appeal, and is a big part of why cryptocurrency enthusiasts are so passionate about the space.

The remainder of this article will take a closer look at the philosophical underpinnings of cryptocurrency’s two most basic principles. Where did they come from? What reasons do we have to believe them? And how can we convince people outside of the cryptosphere to believe them too?

The Cypherpunk Ethos and the Right to Privacy

No group has played a bigger role in the creation of modern cryptocurrencies than the Cypherpunks. It’s a term you’ve probably seen thrown around in cryptocurrency circles, but maybe never heard a good definition of what it means. The most influential description of the Cypherpunk ethos comes from Eric Hughes’ A Cypherpunk Manifesto (1994), which describes the Cypherpunks as an ideologically motivated group of computer programmers who use cryptography to promote digital privacy.

For Hughes and other Cypherpunks, “privacy” is defined as “the power to selectively reveal oneself to the world.” This power is essential in order for individuals to have a personal life that remains separate from their public one. It’s something we often take for granted in our face-to-face interactions, while simultaneously giving it up altogether in many of our interactions online.

Early discussions about privacy on the Internet tended to focus on naive children making poor choices, first by interacting with strangers in shady chatrooms, then by revealing too much personal information on their publicly viewable MySpace profiles. In retrospect, our concerns were far too narrow.

Only in recent years have we begun to realize how much of our personal data has been collected by tech companies like Facebook and Google. I say “begun to realize” because we still have not fully come to terms with it, and we still have many unanswered questions. Most obviously, what these companies actually do with our data remains somewhat of a mystery: we know that they sometimes sell it to advertisers and other vague entities, but it’s hard not to wonder what Mr. Zuckerberg and Mr. Pichai still haven’t told us.

Indeed, social media companies are a major concern, but they are arguably not the worst offenders with regard to privacy, only because it is still possible to remain anonymous on social media. The arena in which privacy has been completely cast aside on the Internet is in online payments.

Prior to the advent of cryptocurrencies, the only options one had for making payments on the Internet were banks and Paypal, both of which require users to complete know your customer (KYC) requirements which eliminate the possibility of privacy.

Cypherpunks recognized this problem back in the early 90s. “When my identity is revealed by the underlying mechanism of [an online] transaction,” writes Hughes, “I have no privacy. I cannot here selectively reveal myself; I must always reveal myself.”

The Cypherpunk solution to the above problem was to create “anonymous transaction systems.” It might sound unusual in the Internet age to think of anonymous payments, as we’ve become so accustomed to revealing our personal information in many everyday purchases; but people have been making “anonymous” payments for millennia in the form of cash, coins or trade. Such systems are anonymous in that they do not require you to reveal your identity in order to make a purchase. For example, if you buy something with cash at the store, the clerk won’t ask for your name and address—which is handy if you’d prefer some purchases to be private.  

The Cypherpunk influence is clear in the Bitcoin white paper, in which Satoshi describes Bitcoin as “a peer-to-peer electronic cash system.” And true to the cypherpunk emphasis on privacy, bitcoin allows two parties to transact with one another without having to trust each other, and without having to reveal their identities to anyone.

Cryptocurrency enthusiasts generally resonate with the Cypherpunk ethos, but I’ve found when speaking to people outside the cryptocurrency industry that the right to privacy is not always taken very seriously. Many people are not particularly concerned about sharing their online payment histories with their payment providers. Nor are they concerned that such data might be compromised as it was in the notorious Equifax hack.

In my experience, such people are quite comfortable trusting the centralized third parties who make their payments possible. They either do not see any reasons why banks should not be trusted, they see the reasons but don’t find them compelling enough to explore alternatives, or, perhaps most commonly, they are willing to sacrifice some individual privacy in the name of safety/regulation/the common good: “Why would you need private transactions—unless you have something to hide?”

Ultimately this is why the right to privacy is the lesser of the two basic principles: because for many people, a transaction between you, your transaction partner, and your bank is private enough. But the types of people who are drawn to cryptocurrency tend to have stricter standards for privacy, standards that are based primarily on a belief that centralized power is inherently untrustworthy.

Decentralization: A Rallying Cry for Libertarians and Anti-Capitalists

A remarkable thing about cryptocurrencies is that they invite people to reevaluate their fundamental conceptions about how the world should work. For example, should governments and banks be in complete control of the money supply? It’s unlikely that this question would have been taken seriously 30 or 40 years ago, simply because there weren’t any viable alternatives to the existing system. With the advent of Bitcoin and other cryptocurrencies, however, many enthusiasts have begun to imagine new worlds without centralized money.

The desire for such a world is rooted in the second, and most important, principle of cryptocurrency: decentralized power is preferable to centralized power.

I was careful when writing this principle to make it very broad, so broad that it is likely to be agreed upon by almost everyone who reads it. Centralized power in its most extreme form is called tyranny, and there is nothing more universally despised than a tyrant.

Many of the most important structures in modern society are explicitly designed to prevent tyranny: democratic voting, governmental checks and balances, term limits, anti-trust laws, anti-discrimination laws, and progressive tax systems. I could go on and on, but the point is that nearly everyone recognizes that too much power cannot reside in one place, or else that power will likely be abused.

With these ideas in mind, I ask once again: Should governments and banks be in complete control of the money supply?

Cryptocurrency enthusiasts answer this question with a resounding “No.” Together, governments and banks have a duopoly on money, which gives them too much control over society as a whole.

As mentioned in the introduction, much of the power of this principle comes from the fact that it can be shared by individuals with completely opposite political leanings. Libertarians and anti-capitalists, for example, are likely to have clashing views on nearly every issue, but can still agree on decentralization.

Libertarians are in favor of decentralization because they are most interested in protecting the rights of individuals, including the rights to privacy, to free enterprise, and to self-defense. Given the focus on the individual, it makes sense that libertarians are generally distrustful of centralized power, as centralization always brings with it an implicit threat of coercion.

When it comes to the financial system, libertarians will argue that both the government and the banks have too much power. A favorite target of libertarians is the Federal Reserve and other central banks, which overtly manipulate a country’s money supply.

Libertarians point to the Fed and say that it is an affront to the free market and exerts too much power over individuals’ financial lives. Cryptocurrencies appeal to libertarian sensibilities because cryptocurrencies are capable of taking power away from the government and putting it back into the hands of individuals.

Anti-capitalists, by contrast, support cryptocurrencies and decentralization for entirely different reasons, usually emphasizing the power—and corruption—of banks rather than of governments. For the anti-capitalist, the ultimate goal is to produce a more equitable society in which resources are more widely distributed among all people. Government can be a valuable tool in bringing about this distribution; but banks consist of profit-minded “1 Percent-ers” who will happily cheat marginalized groups if it helps their bottom line.

For the anti-capitalist then, cryptocurrencies are valuable because they take power away from banks (and the wealthy people who run them) and redistribute that power across society.

The lines of thinking used by the libertarians and the anti-capitalists have almost nothing in common, yet decentralization of financial power is desired by both. It’s rare to find a principle that resonates with such a wide range of people while at the same time being so revolutionary. In my mind, this a strong indicator that there is truth in it.

Conclusion

Though crypto enthusiasts may disagree in profound ways, nearly everyone who cares about this industry shares a belief in two basic principles: individuals have a right to privacy, and decentralized power is preferable to centralized power. In its most favorable light—which admittedly is not the reality much of the time—the ultimate goal of cryptocurrency is to defend these principles in the digital age.

But is it all really necessary? In other words, do these principles really need defending?

If you’re reading this article, you likely live in a country with reasonably trustworthy financial systems. I for one am fortunate enough to live in the United States, which by global standards has incredibly fair institutions—even if it doesn’t always seem that way.

However, it’s important to never assume that stability and prosperity are permanent. A functioning society is a fragile thing, and hubris is a recipe for destruction.

The problem is not necessarily that our existing institutions are fundamentally broken, although many people would certainly agree with that statement. The problem is that we are all subject to those institutions whether we like it or not, and there’s a strong sense among us that the institutions are not always looking out for our best interests.

By providing individuals with privacy while simultaneously stripping power away from the nameless, faceless institutions that dominate society, cryptocurrencies offer a safeguard against tyranny in all its forms—and I cannot think of a more noble goal than that.

The post Why Cryptocurrencies Matter [Opinion] appeared first on UNHASHED.

SEC Chair ‘Optimistic’ DLT and Crypto Will Drive Investment Opportunities

Speaking as part of a testimony to the United States Senate Committee on Banking, Housing, and Urban Development, the chairman of the U.S. Securities and Exchange Commission Jay Clayton expressed optimism that the distributed ledger technology (DLT) sector will “facilitate capital formation.” Clayton also discussed the enforcement actions taken by the SEC in regulating initial coin offerings (ICOs).

Also Read: New Bitcoin ATM Tracker Site Launches in Russia 

SEC Chair Believes Crypto and DLT Will Generate Capital Formation

SEC Chair 'Optimistic' DLT and Crypto Will Drive Investment OpportunitiesJay Clayton stated that he is “optimistic” that the developing DLT sector will “facilitate capital formation” and provide “investment opportunities for both institutional and Main Street investors.”

The SEC chairman praised the commission’s regulatory apparatus pertaining to cryptocurrencies and DLT, describing it as a “balanced” approach that simultaneously “fosters innovation” and “protects investors.”

Clayton stated that the SEC has used a multitude of channels to convey its “message” to investors, citing the example of the SEC’s Howeycoins.com website. Of the site, Clayton said that the SEC “created a website to educate the public about frauds involving ICOs and just how easy it is for bad actors to engineer this type of fraud,” adding that the website attracted “over 100,000 people” within one week of being online.

Clayton Highlights SEC Oversight of ICO Sector

SEC Chair 'Optimistic' DLT and Crypto Will Drive Investment OpportunitiesThe SEC chair asserted that the commission has been “focusing a significant amount of attention and resources” to the oversight and regulation of cryptocurrencies and ICOs. Clayton emphasized the inter-division and inter-agency collaboration that the SEC has undertaken recently, highlighting the issuance of public statements regarding ICOs and virtual currencies.

Clayton stated that “while some market participants have engaged with our staff constructively and in good faith with questions about the application of our federal securities laws,” some companies have sought to “prey on investors’ excitement about cryptocurrencies and ICOs” and to engage in “fraud” or “other violations” of U.S. securities laws.

Clayton also highlighted the commission’s establishment of a cyber unit last year, stating that “In its first year, the Cyber Unit led investigations that resulted in several emergency actions to stop ongoing alleged frauds against retail investors that involved ICOs, as well as charges against a bitcoin-denominated platform and its operator for running an unregistered securities exchange and defrauding users of that exchange.”

Speaking on the cyber unit’s actions beyond ICOs, the SEC chair asserted that the unit’s enforcement actions led to the regulator returning $1.07 billion to investors during the 2017 financial year, and $794 during the 2018 financial year so far.

Do you think that the SEC’s regulatory approach is balanced? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

The post SEC Chair ‘Optimistic’ DLT and Crypto Will Drive Investment Opportunities appeared first on BitcoinLinux.

Op Ed: Bitcoin Is a Declaration of Our Monetary Independence

Nick Spanos is an early adopter and innovator in the blockchain space. He is best known for launching Bitcoin Center NYC, the world’s first live cryptocurrency exchange, in 2013, right next to the New York Stock Exchange — as immortalized in the Netflix documentary “Banking on Bitcoin.” As part of BitcoinLinux’s series of interviews and op eds leading up to the 10th Anniversary of Bitcoin, Nick shares his thoughts an early Bitcoin adopter.

Before Bitcoin, I worked tirelessly for liberty-minded political candidates for many years. These candidates, the most prominent of whom was Dr. Ron Paul, spoke out against the Federal Reserve Bank because of its role in inflating the money supply which devalued the life savings of hard-working people. In almost every case, the mass media would sharply (and often unfairly) attack the image of the candidate with half-truths and misinformation, decimating our poll numbers, until they were sure that we would be defeated on Election Day. No matter how hard we worked or how much money we raised, we were no match for what I call the political bosses of today, the mainstream media.

After two decades of struggle, I thought I had wasted my life fighting unwinnable battles. Then one day, I read the Bitcoin white paper. I read it half a dozen times and I thought, “Finally, I have a weapon that cannot be destroyed on Election Day.”

Bitcoin for me is not an instrument for financial investment. Bitcoin for me is a declaration of our monetary independence.

When I started the Bitcoin Center in 2013, I had a flourishing real estate business in downtown New York. I had an established career in developing technologies for political campaigns. Because of bitcoin’s reputation in the mainstream media back then, I knew that many of my relationships would be destroyed if I emerged as a public figure in the cryptocurrency space.

When I launched the center, a press release was sent out revealing me as the founder even though I never wanted that information to go public. Immediately, concerned friends and family started calling me, asking me what I was getting myself into and wondering if I had lost my mind. Bitcoin was for illicit activities on the internet, they told me. This is nothing but video game money, said others.

My life mission of personal freedom was more powerful than anything anyone could ever say to me.

I knew I had to bring Bitcoin out of the back alleys and onto Wall Street for the world to take it seriously. So, for many years, by day, we taught reporters, stockbrokers, students, technologists and tour groups about bitcoin, for free, and by night, bitcoin and other cryptocurrencies were traded on the world’s first live cryptocurrency trading floor (also for free).

Every day, we made our stand, not knowing which government agency might walk through the doors or what papers they might serve us, or even worse. Yet we stood there, like David with his slingshot up against the modern day Goliaths, in an open and notorious manner, unwavering and unafraid.

For years, we fought tooth and nail and spread the ethos of decentralization far and wide, with a team of lawyers at the ready. Licenses were created against us to thwart the rate at which we were growing. Agencies worked tirelessly to figure out how to turn people off from adopting bitcoin, and yet the little bitcoin thrived against all odds.

Then one day, we looked up and we realized something: Many big companies are attempting to bamboozle us. Microsoft, IBM, Goldman Sachs, JP Morgan, even Google and Facebook — overnight, all these goliaths of centralization are attempting to enter “blockchain.” 

They are touting what they call “blockchain,” but what they are actually peddling is another iteration of centralized control in, what is for many of them, a last ditch effort to stay relevant.

Many people in our community were excited by the invasion of these goliaths because they had thought it might lend us legitimacy. But that’s only because they had been brainwashed into thinking that our community was otherwise illegitimate. We, the open, permissionless blockchain believers, are the legitimate ones.

The reality is that the educational work we began at the Bitcoin Center is more important now than ever before as we continue to teach people the true meaning of decentralization. As many have said, and as I have said in forums in dozens of countries throughout the world, from Saudi Arabia to Sri Lanka: There can be no transparency, immutability or accountability without decentralization.

The internet grew by leaps and bounds because it was permissionless. A permissioned internet would probably have been nothing in comparison. The same is true for the blockchain. Despite these powerful institutions and regulators who are shoving their centralized agendas down our throats, I am confident in the resilience and fortitude of our ever growing community to withstand these attacks.

If we don’t all stand for something, we will fall for anything. We have made too many compromises and have retreated too many times without a fight. Goliaths hire many of us to tout their Trojan horse projects. Lobbyists working for the goliaths convince governments to regulate us into the ground while promoting their own unqualified, unseasoned friends. They change the tax code to tax us over and over with every little trade, even within our own portfolio, and we still do nothing. Are we to just give up? Are we to just lay down and let this happen to all of us?

Why do we fuel infighting within our own community? We are all in the same boat. Big torpedoes are aimed at us. Shots over the bow have turned into direct hits. If we don’t finish freeing ourselves with the open, permissionless, decentralized blockchain, they are going to imprison us with the closed, permissioned, centralized blockchain.

We have to look in the mirror every day and ask ourselves: What have we done to help Bitcoin? I don’t know about you but before I die in this cage, I want to run free in the wild, and Bitcoin is the key to our freedom after we fight for it.

This is a guest post Nick Spanos, an early adopter and innovator in the bitcoin and blockchain space. Views expressed are his own and do not necessarily reflect those of BitcoinLinux or BTC Inc.

This article originally appeared on BitcoinLinux.

U.K. Cryptocurrency Exchange Cubits Shuts Down After $33M Scam

Cubits, a London-based digital asset trading platform, has been forced into administration after fraudsters reportedly stole €29 million (about $32.5 million) from the exchange in February. The company claimed “it fell victim” to an elaborate scam orchestrated in collusion with three of its clients. 

Also read: Former Mt. Gox CEO Could Face 10 Years in Jail Over Embezzlement

Exchange Enters Into Voluntary Administration

The administration means that investors cannot deposit or withdraw funds until further notice. It’s not clear how much worth of bitcoin the exchange was holding on behalf of customers at the time of closure.

Cubits has now appointed Steve Parker and Trevor Binyon of Opus Restructuring & Insolvency as joint administrators. In a statement, the company said it had failed to recover from the “criminal act,” which involved the accounts of three customers.

U.K. Cryptocurrency Exchange Cubits Shuts Down After $33M Scam

Cubits, the trading name of legal entity Dooga Ltd., said the “serious criminal act” had crippled business operations and “finally led to the difficult decision to place the company into administration.”

Three Chinese traders allegedly purchased BTC through the platform via Pay Secure Online (Paysec), a payment processor based in Malta. However, Paysec never remitted the funds to Dooga, in an alleged scam. Cubits has now filed a lawsuit in Malta to force Paysec to reimburse the €35 million ($39.2 million it supposedly owes the exchange. The reimbursement claim includes funds from the three Chinese accounts and others.)

The company stated:

The criminal act happened in February 2018 and involved the accounts of three clients. Bitcoins with a market value at that time of approximately €29 million were properly delivered and subsequently withdrawn, with the customers apparently colluding with fraudsters. Dooga has never received the equivalent in fiat from the payment processor responsible for carrying out the transaction.

Dooga stated that it had informed the responsible authorities in the U.K., Malta, China and Germany of the scam. It has also filed several criminal complaints, but nothing has materialized, forcing the exchange to file for administration.

Fruitless Efforts

With administration – the U.K. equivalent of bankruptcy – the administrator will seek to restructure the company in financial distress, especially its debt. During this period, investors or creditors cannot make legal claims against the entity, giving it opportunity to recover.

Cubits said it had made “every possible effort to recover” the funds without success. The only other option was to file for bankruptcy.

U.K. Cryptocurrency Exchange Cubits Shuts Down After $33M Scam

“This decision secures the current position whilst the administrators seek offers for the business and its assets,” said the exchange. “The role of the administrators will be to work with those who are owed money by the company and to collect monies that are owed. The key objective is to achieve the best possible outcome for creditors and recover as much as possible of the funds owed to the company.”

Parker, who will also be working together with Allister Manson, technology partner at Opus Restructuring & Insolvency, and Nicholas Parton, head of forensic accounting at Opus, said his duties as administrator involve collaborating with those who are owed money by Cubits and to collect money owed to the company. “Dooga’s current position is secure, investigations are proceeding and we will be writing to creditors, formally, this week,” he said.

Cheated?

U.K. Cryptocurrency Exchange Cubits Shuts Down After $33M Scam

Users reacted angrily when the Cubits platform suddenly went offline on Monday. The exchange said on Twitter that the blackout was due to “maintenance.”  Later, the website began producing a general error message before subsequently announcing that the company was being placed under administration.

User Jamil Khadem complained on Twitter: “Have we been robbed by Cubits? I’ve been waiting for a withdrawal since the 6th of December and the company won’t give me a straight answer.”

Founded in 2014, Cubits has allowed customers to buy and sell cryptocurrency like bitcoin. It also claimed to act as a bridge between virtual currency and more traditional forms of payment, specifically to the online gaming industry.

What do you think about the developments at Cubits? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post U.K. Cryptocurrency Exchange Cubits Shuts Down After $33M Scam appeared first on BitcoinLinux.

Crypto Users Increased to 35 Million in 2018: What Will 2019 Bring?

Crypto Users Increased to 35 Million in 2018: What Will 2019 Bring?

As we approach the new year, it’s time to reflect on all that happened in 2018. In the cryptocurrency sector, there were a few ups and downs, more so than in 2017, the year the crypto boom took flight. But while various companies (and coins) had their share of plunges, the number of crypto users in 2018 doubled.

Well, almost.

Crypto Users in 2018

On Wednesday, December 12th, the Cambridge Centre for Alternative Finance published a study detailing the number of ‘verified’ crypto users the sector gained in 2018. The figure was over 15 million (17 million, to be exact).

The study also said the number of ID-verified crypto users came close to doubling in the first three quarters of the year. It went from 18 million to a whopping 35 million.

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Despite the 2018 crypto market decline, which caused many to run in the opposite direction, the Cambridge Centre study puts the future of crypto in an optimistic light. In fact, Bloomberg, when analyzing the study, concludes that even though the market declined in 2018, the increase in crypto users is evidence that an eventual recovery might be on the way. Bloomberg also believes the study indicates that most crypto users are “still speculators and long-term investors.”

>> Ethereum (ETH) Constantinople Hard Fork Nears and ETH Hacks Rise

Should We Believe the Crypto Study?

Crypto 2018 was a rollercoaster ride. Some lost hope, others did not. Cameron Winklevoss, a co-founder of Gemini, described the year well in a tweet:

One thing, however, that we can take away from the Cambridge study is that it’s not just business clients who are investing in cryptocurrency. Instead, it’s individuals, like consumers, retail investors, and anyone “seeking a better investment or payment alternative.”

As long as there’s an audience seeking these market changes, it’s likely crypto 2019 will see continued user growth; even if the prices of coins plunge from time to time (looking at you, Bitcoin).

What do you think?

Featured Image: depositphotos/alexey_boldin

Sponsored Crypto Content

The post Crypto Users Increased to 35 Million in 2018: What Will 2019 Bring? appeared first on BitcoinLinux.

Ontology Embraces Securities With New Token Standard

Ontology Embraces Securities With New Token Standard

Ontology, a blockchain with a focus on identity management, has announced a new token standard called OEP-506. This optional standard will allow developers to create and issue security tokens that are compatible with most Ontology wallets.

Security tokens created under OEP-506 can be controlled in a way that complies with regulations and satisfies user trust. The new token standard will also be tightly integrated with Ontology’s ID system, which can be used to approve investors and other parties.

Will this type of token become a prominent trend?

Security Tokens In a Nutshell

Securities are tradable assets that are subject to certain regulations. Although the SEC has made it clear that ICO tokens in general are securities, Ontology is using the term “security token” to refer to something slightly different.

By Ontology’s definition, security tokens are used to tokenize real-world securities such as corporate equity, trust shares, or precious metals — all of which are the target of the new standard. Traditional ICO tokens can still use Ontology’s regular token standards: OEP-4 and OEP-8.

However, the new standard does support practices that have become commonplace in both traditional ICOs and security token offerings (STOs). Most notably, the new standard facilitates KYC procedures by using Ontology’s ID system to approve investors who want to obtain a particular token.

In conjunction with Ontology’s ID system, the new standard can also provide different degrees of authorization and permission to different participants. For example, it could allow specific exchanges to access investor information. Additionally, the new standard would allow the creation of compliance and notification systems.

Ontology suggests that security token offerings have made access to security ownership widely available. It also claims that its own blockchain infrastructure and identity services will facilitate access on an even greater scale. With the help of Ontology, security tokens will indeed gain some amount of adoption thanks to the new feature.

Nevertheless, securities remain a controversial topic in the crypto world: some see securities regulations as exclusionary and overreaching, while others see blockchain-based securities as a vital bridge between traditional finance and the blockchain. In any case, OEP-586 serves a definite purpose and will likely remain a useful feature.

Suggested Reading Learn about the best EOS wallets.

Alternatives to Ontology

Ontology is not the only platform with an interest in supporting security tokens. In fact, Ethereum proposed a similar standard earlier this year. Since countless tokens can rely on a single underlying standard, this approach is extremely convenient: a new security token can be deposited in almost any Ontology or Ethereum wallet.

However, more full-fledged security token platforms are also available. For example, Swarm exclusively provides security-related features. Some platforms, such as OpenFinance, are committed to complying with U.S. regulations. These platforms usually introduce their own blockchain and token standard, but not always: for example, Tokeny is integrated with Ethereum.

As blockchain technology becomes more widely adopted by mainstream finance, it seems likely that controllable security tokens will become more prevalent — but whether specialized platforms will prevail over popular platforms remains to be seen.

The post Ontology Embraces Securities With New Token Standard appeared first on UNHASHED.

SeedCX Exchange Is Barring Employees from Crypto Trading

SeedCX Exchange Is Barring Employees from Crypto Trading

Having traded cryptocurrency with his own money since 2014, software engineer Alex Wachli made a difficult choice when he joined the institutional crypto startup Seed CX.

He had to give up trading.

Seed CX forbids cryptocurrency trading by its roughly 40 employees. So Walchli effectively locked up his crypto holdings by handing the compliance team a list of all his wallet addresses, so they could monitor them and confirm his holdings stayed put.

The engineer says he understands how personal investments could create a conflict of interest with regards to the customers he serves and the way his team evaluates support for various assets.

“I think everybody here is not here to try and pick and choose winners, and to let the market to decide,” Walchli told CoinDesk. “If we didn’t have these policies we might be biased and we might not be focusing on the right goals.”

Seed CX’s policy, quietly put into place last year, appears to be one of the industry’s strictest. Few exchange startups have employee trading policies comparable to those found in traditional capital markets, in part because crypto is still considered by some to be a Wild West industry without clear regulatory requirements.

“We don’t necessarily know what ‘material, non-public information’ [MNPI] means in a crypto context,” Justin Steffen, a litigation partner at Jenner & Block LLP, told CoinDesk, referring to the legal term for information that would give insiders an edge over the investing public. “That will be worked out by courts.”

In the securities markets, for example, an executive who trades stock knowing that the company is about to announce a merger or recall a defective product might be a straightforward case of illegal insider trading. But in crypto, where the assets are created with open-source software and network activity is visible to all on a blockchain, different types of news move the markets.

And sometimes the people working at crypto exchanges are privy to such information – including trading trends, technical issues related to liquidity, and decisions to list certain assets – before anyone else.

In traditional finance, “it’s rare for exchanges to have this much power to change the price of a token or asset that they list,” said Edward Woodford, co-founder of Seed CX, which has raised $25 million of venture capital and is courting instititonal investors as clients.

As such, Woodford said his company’s no-trading policy aims to foster trust among institutions that are used to established corporate norms beyond MNPI contracts, which state employees may not trade based on internal information that could move the broader market.

Speaking of rumors that some crypto exchanges trade against their customers or allow front-running, where employees make personal trades based on information general customers don’t have yet, Woodford told CoinDesk:

“We wanted to avoid any risk that these [frontrunning] allegations could be levied against us.”

Lay of the land

To put Seed CX’s employee trading ban in perspective, CoinDesk reached out to several other prominent crypto trading platforms about their policies.

A spokesperson for Binance, currently the world’s second-largest exchange by trading volume according to CoinMarketCap, said the Singapore-based company has “a strict policy in place banning insider trading, similar to that of investment banks,” but would not share further details.

In Silicon Valley, industry unicorn Coinbase’s chief legal officer Brian Brooks told CoinDesk his company’s current policy requires a small group of employees with decision-making power to self-report their holdings.

“For rank-and-file employees there is no reporting requirement. There is an MNPI prohibition,” Brooks said, referring to a contract employees must sign. “And you may be subject to certain blackout windows depending on whether we are about to list an asset and other kinds of things.”

Employees are also routinely recused from participating in decisions based on their personal holdings, he said.

A Coinbase spokesperson said this policy has been in place for “several years,” but would not be more specific. The company is fighting an ongoing class-action lawsuit alleging employees engaged in insider trading when the bitcoin network forked in 2017 to create the alternative currency bitcoin cash. Among other claims, the plaintiffs allege that insiders traded bitcoin cash at inflated prices while trading was closed for retail customers.

Coinbase isn’t the sole crypto platform with MNPI contracts. Wall Street veteran and AirSwap co-founder Michael Oved told CoinDesk that, in addition to MNPI restrictions, all employees require written approval from the legal team for trades over a certain amount, a value which Oved declined to specify.

Speaking to this point about clearing trades with an internal legal team, Steffen said MNPI policies may be insufficient without supervision. He added:

“Traditional financial institutions are actively making you report trades, transactions, and issues that may constitute insider trading. That is the norm. That is the standard. When I say ‘every trade you make and every real estate transaction you do has to go through compliance,’ that’s what I mean by supervision.”

Winds of change

Some legal experts believe courts and regulators will encourage exchanges to follow even stricter compliance standards, beyond self-reporting, in the near future.

Attorney Jeremy Deutsch, a partner at the Washington, D.C.-based law firm Anderson Kill, agreed with Steffen that the standard norm among banks and capital market exchanges is for legal experts to monitor or restrict all employee trading, and communications such as emails, and external business transactions like purchasing property.

Even beyond securities markets, Deutsch said professional fiat currency and commodities traders also have numerous restrictions related to their personal assets, adding that he sees no reason why the same should not hold true for crypto:

“What would the justification be to not apply the full scope of compliance obligations to those who are entrusted with early information on the market direction, or potentially the ability to move the markets themselves with their trading, just due to their privileged position?”

Looking forward to 2019, Deutsch said courts and regulators may specify that lower-ranking employees at exchange companies who deal with “the flow of information or orders” also require monitoring, and approvals for most significant financial activities, from the compliance department.

“Otherwise, you’re going to see a tremendous amount of private litigation,” Deutsch said.

Steffen agreed. Crypto markets, he said, involve “very fact-intensive situations” that require legal expertise because “there’s not uniformity among everyone about what is material, nonpublic information or a security.”

That’s why Woodford of Seed CX believes a no-trading policy benefits his employees as much as exchange users.

“An employee may not deem something material whereas we as a company would deem it as material,” Woodford said, concluding:

“It’s also about protecting [employees] as well.”

Edward Woodford image via SeedCX

The post SeedCX Exchange Is Barring Employees from Crypto Trading appeared first on BitcoinLinux.

Markets Update: Bears Continue to Drag Cryptocurrency Prices Down

Digital asset prices have been dipping in value again after a few days of price consolidation. At the moment, the entire cryptocurrency economy is awfully close to dropping under the psychological $100 billion market valuation. Furthermore, since our last markets update cryptocurrency global trade volumes are weaker than usual, with only $11.5 billion worth of assets traded over the last 24 hours.

Also read: Password Manager App Dashlane Mocks Cryptocurrency Owners

More Price Dips and Lower Trade Volumes

Crypto-market prices are sliding again as the top 10 digital assets have seen 24-hour losses between 2-13%. At the time of publication, the entire market capitalization of all the coins in existence is $104.2 billion today. Currently, bitcoin core (BTC) prices are down 3.8%, on Friday, and 2.8% over the course of the last week. This gives BTC a global average price of about $3,302 and the value is lower on certain exchanges. Moreover, bitcoin core has a market valuation of about $57.5 billion which is 55% dominance over the entire digital asset economy.

Markets Update: Bears Continue to Drag Cryptocurrency Prices Down
Top 10 cryptocurrencies on Dec. 14, 2018.

BTC is followed by ripple (XRP) as the market captures $12 billion and each XRP is being swapped for $0.29 per coin. Ethereum (ETH) holds the third position but markets are down 4.6% and ETH is being traded for $86 per token. Stellar (XLM) takes the fourth position today as each coin is trading for $0.10 a piece. However, XLM markets have lost over 7.5% during the last 24 hours of trading. Lastly, the current ruler of the fifth position is the stablecoin tether (USDT) which is trading for a U.S. dollar and once in a while a few pennies above 1 USD.

Bitcoin Cash (BCH) Market Action

Bitcoin cash (BCH) is the seventh largest market valuation just before the weekend and the entire BCH capitalization is only $1.4 billion. BCH prices during Friday’s trading sessions are down 13% over the last 24 hours and over 18% for the week. This action has given BCH a value of about $82 per coin with roughly $98 million in global trade volume. Bitcoin cash trade volume has increased since our last market update which is a positive sign.

Markets Update: Bears Continue to Drag Cryptocurrency Prices Down
BCH/USD daily chart.

The top five exchanges swapping the most BCH include Lbank, Binance, Kraken, Huobi, and Coinbase. During our last four market updates, ETH had dominated BCH trading pairs over the last few weeks. On Friday, BTC captures the most trades against BCH with 28.5% of global trades. This is followed by ETH (26.5%), USDT (22%), EUR (9%), and USD (6.4%).

BCH/USD Technical Indicators

Looking at the BCH/USD 4-hour chart on Bitstamp indicates that bears have the reigns again today. The long-term 200 Simple Moving Average (SMA) is still well above the short-term 100 SMA trend line. This shows that the path towards the least resistance is still very much the downside.

Markets Update: Bears Continue to Drag Cryptocurrency Prices Down
BCH/USD 4-hour Bitstamp.

The Relative Strength Index (RSI ~21.96) is also indicating extremely bearish conditions as the RSI is still showing an oversold market. Stochastic and MACd readings show a similar downside trajectory as there will need to be some surprise bull action to make things less dreary. Order books on the upside show bulls have some resistance from now until $100 and some smoother seas from there. On the backside, support is pretty decent from the current vantage point up to $75 where buy orders start to get slimmer.

Markets Update: Bears Continue to Drag Cryptocurrency Prices Down
Bitstamp BCH/USD trading view 4-hour chart on Dec. 14, 2018.

The Verdict: Uncertainty Remains Strong With Crypto-Markets Below Their 200-Day Averages

This December is showing that cryptocurrency values are not as bright as some people predicted throughout the course of 2018. Being so close to the end of the year, Fundstrat’s Tom Lee has stated that he’s getting “tired” of cryptocurrency price predictions. Lee stated multiple times this year that BTC prices could hit a target of $15,000-25,000 by the year’s end. According to Lee’s note to clients this week, the Fundstrat Global Advisor says BTC’s fair model price should be between $13,800 and $14,800.

“Given we are so close to year-end, we are not providing any updates to near-term price objectives — read this as, we are tired of people asking us about target prices,” explained Lee on Friday.

Lee conceded by adding:

Given the steep discounts of [bitcoin] to our fair value models, the excessive bearish sentiment about fundamentals does not seem warranted.

Lee’s fair market value is still more than $10,000 higher than today’s BTC spot prices. Further, with the price so low BTC/USD, and ETH/USD short positions are still at all-time highs this week. This means more so than ever individuals and organizations believe prices are going to drop again. A large portion of the top digital assets continue to slowly drop into a narrowing price range with no signs of any significant price bounces ahead. As long as BCH, ETH, BTC, and many other coins ride below their 200-day moving averages and show extremely oversold RSI levels, traders will remain skeptical.

Where do you see the price of BCH, BTC and other coins heading from here? Let us know in the comments below.

Disclaimer: Price articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”


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The post Markets Update: Bears Continue to Drag Cryptocurrency Prices Down appeared first on BitcoinLinux.

These Two Analogies Will Help You Explain Bitcoin to Anyone

Explaining Bitcoin to someone who knows nothing about Bitcoin isn’t easy. In fact it’s fiendishly tricky. Describing concepts such as blockchain, decentralized networks, and permissionless ledgers to beginners is as tough as describing the color orange to a blind person or the taste of an orange to someone who’s never peeled one. Two new Bitcoin analogies surfaced this week, however, that should make that task easier.

Also read: Password Manager App Dashlane Mocks Cryptocurrency Owners

How to Explain Bitcoin to Anyone

These Two Analogies Will Help You Explain Bitcoin to AnyoneComplete the following sentence: “Bitcoin is like ____.” Defining Bitcoin isn’t easy; hell, even bitcoiners can’t agree on what the cryptocurrency is designed for, be it a store of value, medium of exchange, or a form of censorship-resistant money. It’s no surprise, therefore, that well-intentioned attempts at explaining Bitcoin to beginners can go awry. Two very different but equally compelling analogies provide a fresh take on Bitcoin. One likens it to text messaging, the other to fungus. Both are effective in driving their point home, with the text messaging comparison particularly suited to Bitcoin beginners.

Analogy 1: Bitcoin Is Like Text Messaging

These Two Analogies Will Help You Explain Bitcoin to AnyoneAdvanced by ‘Beautyon’ on the Bitcoin Matters podcast, and then transcribed by David van der Weele on Twitter, the first analogy goes as follows: Bitcoin operates like text messaging, only instead of words, you can only send numbers. Those numbers are called bitcoins and because their supply is limited (unlike text messages, which are infinite), they can serve as a form of money.

Continuing the analogy, van der Weele explains how “Anybody can download a bitcoin app on their phone and start using it to buy things online or [receive bitcoin] for doing work for others.” This is similar to text messaging apps such as Whatsapp where it is necessary only for the other person to install the application, whereupon anyone in the world can message them.

Rounding off the Bitcoin-as-text-messaging analogy, van der Weele summarizes:

These Two Analogies Will Help You Explain Bitcoin to Anyone

Analogy 2: Bitcoin Is Like Fungus

While less relatable to the average person, the second Bitcoin analogy to have garnered attention this week is arguably more accurate. The only downside is that to fully appreciate it, a degree of familiarity with eukaryotic organisms is required. The concept, advanced by Brandon Quittem, is that the Bitcoin network, made up of nodes, miners, wallets and other points of access, spreads just like fungus, which has been described as “earth’s natural internet.”

These Two Analogies Will Help You Explain Bitcoin to Anyone“Fungi don’t have a central ‘brain,” explains Quittem, “they’re decentralized networks distributing information and resources. These fungal networks form consensus on resource management, reproduction, and defense strategy.” It is fitting therefore, that “Mycelium”, a name that many bitcoiners associate with the popular BTC wallet, draws its name from fungus threads that branch together to form colonies.

Brandon Quittem drives the analogy home by adding: “Fungi are the most successful species on our planet. They “inherited the earth” after all five mass extinction events … because fungi are antifragile decentralized networks and can adapt quickly and don’t need sunlight to survive and find their own food. Bitcoin will become the most successful monetary species because it’s decentralized, adapts (relatively) quickly, finds its own food (unmet demand), and doesn’t need government support. In the event of a mass monetary extinction event, bitcoin will ‘inherit the earth.’”

Comparing Bitcoin to fungus probably isn’t going to entice a slew of new crypto converts. But it’s certainly a novel way of looking at a decentralized network that has thus far resisted all attempts to eradicate it.

How do you describe Bitcoin to friends and family? Let us know in the comments section below.


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