Delays Be Damned: Tezos Blockchain Tech Enters Beta Testing

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A nearly year-long wait appears to be over for investors in the embattled block chain project Tezos.

via CoinDesk https://www.coindesk.com/delays-damned-tezos-blockchain-enters-beta/

Newsflash: Bitcoin Price Crosses $6,300 as Trading Volume Spikes

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Payments Giant Qiwi Unveils Crypto Investment Bank

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Russian epayment giant Qiwi is launching a crypto investment bank to advise ICO investors and help companies tokenize their assets.

via CoinDesk https://www.coindesk.com/payments-giant-qiwi-unveils-crypto-investment-bank/

VeChain Arrives: What to Know About the $1.5 Billion Blockchain for Business

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After amassing more than $1 billion in investment, the VeChain blockchain is officially operational, marking the latest milestone for the project.

via CoinDesk https://www.coindesk.com/vechain-arrives-know-1-5-billion-blockchain-business/

This Month in Crypto

Below $0.50: XRP Prices Fall to New 2018 Lows

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XRP and other well-known crypto assets are sitting on dangerous grounds as they print new price lows not seen since 2017.

via CoinDesk https://www.coindesk.com/xrp-prices-fall-to-new-2018-low/

Business Highlights

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Bitcoin Magazine’s Week in Review: Charity Funds and Dark Web Run-Ins

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This week, the U.S. Department of Justice and other law enforcement agencies banded together to bring down some bad actors on the dark web. EOS is undergoing some growing pains with the launch of its network, exposing the trials and tribulations of an all-too-centralized governance model.

It wasn’t all unsavory news, though. A new $300 million crypto fund was launched by Andreessen Horowitz to help grow the ecosystem, and Coinbase’s CEO started a cryptocurrency charity fund that already has $1 million to work with.

We witnessed some notable technological advancements this week as well with the announcement of the ERC-1155 token standard for Ethereum. The new standard will build on and enhance ERC-721’s functionality, the same standard used to tokenize non-fungible assets like CryptoKitties.

Featured stories by Jimmy Aki, Colin Harper, Erik Kuebler and Nick Marinoff.

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DOJ, U.S. Agencies Seize Over $12M Bitcoin in a Slew of Dark Web Busts

The U.S. Department of Justice, in cooperation with the Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Secret Service (USSS), the Postal Inspection Service (USPIS) and the Drug Enforcement Administration (DEA), have apprehended more than 35 dark web drugs and arms dealers in a nation-wide bust. In the nation’s first inter-agency crackdown on dark web operators, the sweep ended in the confiscation of military-grade weapons, drugs and drug manufacturing equipment, $3.6 million in hard cash and gold bars and over 2,000 bitcoin, valued at around $12 million.

Andreessen Horowitz Has Launched a $300M Crypto Fund

Financial firm Andreessen Horowitz has established a new $300 million crypto fund that is dedicated to investing in cryptocurrencies and other blockchain-related projects. Named a16z crypto, the new fund has the firm delving deeper into the cryptocurrency space to grow its existing portfolio, which includes digital currency exchange Coinbase. In a statement posted on the company's blog, general partner Chris Dixon states that the a16z crypto fund provides the firm with the flexibility to invest in any area of its choosing, from traditional equities to digital tokens. As a result, the firm will be able to invest in both companies and the tokens those companies create.

Enjin Coin CTO Creates ERC-1155, a New Token Standard for Ethereum

Co-founder and CTO of Enjin Coin Witek Radomski has developed the ERC-1155 token, a new standard for defining video game tokens on the Ethereum blockchain. Radomski was responsible for the development of the ERC-721 non-fungible token standard that was used in the development of CryptoKitties. The new protocol allows for an infinite number of both fungible and non-fungible items to be deployed through a single contract, a breakthrough that has ramifications for tokenized asset management for the gaming industry and beyond.

EOS Founder Wants to Scrap the Platform's Constitution, Start Anew

The long awaited EOS launch occurred earlier this month, but it has not been without its difficulties. Daniel Larmier, the founder and technical architect of EOS, has confirmed that he wants to scrap the platform’s current constitution and build a new one. Speaking on the EOSIO Gov Telegram Channel, Larmier revealed that he has doubts about the company’s current on-chain governance model and called the existing constitution “unwise.” While Larmier has a proposal to change the problems, those for the change would have to outnumber those against it by 10 percent. They would then have to hold this position for 30 consecutive days within a 120-day period, so even if Larmier does get his way, we’re not likely to see the emergence of a new constitution for a minimum of four months.

Coinbase CEO Brian Armstrong Launches Cryptocurrency Charity Fund

On June 27, 2018, Coinbase CEO Brian Armstrong announced his new cryptocurrency charity fund, GiveCrypto. Armstrong established the philanthropic venture to financially empower people with direct cryptocurrency distributions. The charity has already raised $1 million from prominent cryptocurrency community members, and it plans to raise $10 million by the end of 2018 and $1 billion over a two-year time frame. The nonprofit’s mission is to give 100 percent of its cryptocurrency contributions to impoverished people, an altruistic goal that simultaneously drives cryptocurrency’s real-world utility.

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/bitcoin-magazines-week-review-charity-funds-and-dark-web-run-ins/#1530294972

Ross Ulbricht Is Denied Prison Sentence Review by Supreme Court

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The Supreme Court announced on June 28, 2018, that it will not reconsider the conviction or life sentence of Ross Ulbricht, the alleged mastermind behind the darknet site Silk Road. At press time, no reason has been provided for the Court’s decision.

Ulbricht was first arrested in October 2013 at the Glen Park Branch Library in San Francisco. During his trial, prosecutors stated that, at the time, he was speaking online with an undercover FBI agent while running the site through an open laptop under the name “Dread Pirate Roberts.” Among the evidence collected from Ulbricht’s computer were chat logs, journal entries and spreadsheets pertaining to Silk Road financial data between the years 2011 and 2013.

Ulbricht’s defense team insisted that he was not the man prosecutors were looking for. They argued that Ulbricht had created Silk Road as an “economic experiment,” but that he handed the website off to another person when it became “too chaotic.” They claimed the real Dread Pirate Roberts was still out there and that Ulbricht was simply a “fall guy.”

The jury remained unconvinced by these remarks. Ulbricht was found guilty on counts of trafficking drugs on the internet, running a criminal enterprise, narcotics-trafficking conspiracy, computer hacking and money laundering, and was sentenced to life in prison. Ulbricht’s legal team later filed an appeal of the sentence, which was formally denied in 2017.

Ulbricht attempted to bring his case before the Supreme Court last December, alleging that his fourth and sixth amendment rights had been violated. Ulbricht said that during the investigation and his sentencing, law enforcement agents had collected internet traffic information without warrants, and that the judge presiding over the case had imposed an “unreasonable sentence” due to reports that Ulbricht had tried to hire a hitman — a crime for which he was never convicted or charged with.

Ulbricht’s attempts to bring his case to the Supreme Court had been met with support from several organizations including the Gun Owners of America, the National Lawyers Guild and the Reason Foundation.

Upon hearing the recent case Carpenter v. United States — which involved location data stored and obtained by cell phone providers — the Supreme Court ruled that the fourth amendment does offer individuals “legitimate expectation of privacy” over their personal data, even if they voluntarily provide it to third parties. The ruling convinced many of Ulbricht’s supporters that the Court would be willing to at least consider his side of the story, though it appears these hopes have been dashed, and Ulbricht’s life sentence will stand.

The Twitter account @free_ross immediately posted its reaction to the decision, saying, “SCOTUS denied #RossUlbricht cert petition this morning after holding it pending Carpenter. This is a NO on internet privacy and Ross’s case. Devastating. #freeross.”

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/ross-ulbricht-denied-prison-sentence-review-supreme-court/#1530303611

Tron's Election Is Underway, But Who's In Control of the $2 Billion Code?

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Tron is in the process of electing "super representatives," but who's behind the wheel until the votes are in?

via CoinDesk https://www.coindesk.com/trons-election-underway-whos-control-2-billion-code/

Startup Raises $600K to Build Bitcoin Cash Mobile Wallet

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CoinText.io,a blockchain startup developing a way of conducting offline bitcoin cash transactions, closed a $600,000 seed funding round.

via CoinDesk https://www.coindesk.com/startup-raises-600k-to-build-bitcoin-cash-mobile-wallet/

Trillion Dollar Wipeout: World Stocks' Worst First Half Since 2010

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Huobi Partners With JD Cloud to Explore Blockchain Tech Applications

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JD Cloud has signed a partnership contract with Huobi to conduct research in several fields related to cloud computing and blockchain technology.

via CoinDesk https://www.coindesk.com/huobi-partners-with-jd-cloud-to-explore-blockchain-tech-applications/

Blockchain Hype Overstates Reality, Says Steve Wozniak

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Technologist and Apple Inc. co-founder Steve Wozniak played contrarian at the NEX technology conference in late June, comparing the hype around blockchain to the fervor he witnessed just before the implosion of the dot-com bubble. Still, Wozniak stood by his unflinching loyalty for Bitcoin, even in the midst of the market’s 2018 downturn.

To be sure, Wozniak believes blockchain technology will serve as a cornerstone for business and industry in the future, calling it “decentralized and totally trustworthy.”

Nonetheless, early adopters “can burn themselves out by not being prepared to be stable in the long run,” Wozniak said. Comparing the growth of the blockchain industry to the dot-com mania of yesteryear, he said, “It was a bubble, and I feel that way about blockchain.”

It’s Wozniak’s guess that the same pattern will repeat today. “If you look now you say all that internet stuff happened, we got it, it just took a while,” he told the tech conference audience.

Ultimately, Wozniak forecasts that blockchain technology will disrupt the social media sector. Facebook, which holds somewhat of a social media monopoly, is ripe for competition, and a blockchain-based platform could emerge as a key rival to challenge the status quo.

Wozniak also sees long-term potential in Ethereum and its currency, ether. In particular, Wozniak cited programmers’ ability to build out their own Ethereum-based projects, as well as development efforts from companies like Microsoft Corp. and J.P. Morgan to unearth the DApp platform’s full potential.

While Wozniak is putting blockchain on ice for now, saying it isn’t yet ready to live up to the hype with mainstream adoption, he held his ground on Bitcoin, something he once referred to as “digital gold.” Although the cryptocurrency lost more than half its value so far this year, he still referred to it as “just amazing.”

Wozniak purchased bitcoin at around the $700 mark and sold most of his holdings at the peak near $20,000.

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/blockchain-hype-overstates-reality-says-steve-wozniak/#1530293348

Malta Passes Favorable Cryptocurrency Laws in Next Step as a Blockchain Island

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The Maltese Parliament has voted into law three cryptocurrency and blockchain bills, making Malta one of the most desirable locations for setting up blockchain enterprises.

According to legislative records, the bills, which were introduced to the parliament by Parliamentary Secretary for Financial Services, Digital Economy and Innovation Silvio Schembri, were passed unanimously on Tuesday, June 26, 2018.

The bills-turned-law detail the regulation of ICOs and cryptocurrencies and the process for setting up crypto-based businesses in Malta. The news, which Schembri shared via a tweet, makes Malta the first country to enact such laws.

“Today, Maltese Parliament unanimously approved three bills on DLT/blockchain, a 1st in the World. Honored to have driven these bills," he said.

The three bills passed into law are "The Virtual Financial Assets Act," "The Malta Digital Innovation Authority Act," and "The Innovative Technology Arrangements and Services Act," respectively.

The Virtual Financial Assets Act (VFA)

The VFA will regulate initial coin offerings. The law requires new companies raising capital through ICOs to publish white papers that outline a detailed description for the entire project. Issuers are also expected to make their financial history public.

The Malta Digital Innovation Authority Act

This law formalizes regulatory procedures for the cryptocurrency and the blockchain industry. It also establishes the Malta Digital Innovation Authority (MDIA), which will serve as the regulatory body for the industry. The functions of the MDIA will be carried out by a Board of Governors, headed by a CEO. Local news outlet the Times of Malta confirmed the appointment of Stephen McCarthy as the first chief executive of the Malta Digital Innovation Authority.

Technology Arrangements and Services Bill

This law details the registration and certification of technology service providers and technology arrangements, and it focuses on the registration of exchanges in Malta. Industry insiders believe this bill was created to make Malta the destination of choice for cryptocurrency exchanges.

Malta, which, even before these laws, was known as a friendly hub for blockchain businesses, has already attracted some crypto heavyweights such as OKEx and Binance.

The new bills are expected to guide the government on how to embrace the technology and achieve its aim of becoming a hotspot for crypto and blockchain businesses.

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/malta-passes-favorable-cryptocurrency-laws-next-step-blockchain-island/#1530290324

Tether Code 'Flaw' Was Actually an Exchange Integration Error

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A suspected vulnerability in Tether's code for its USDT stablecoin has been confirmed as an exchange integration issue, not a protocol bug.

via CoinDesk https://www.coindesk.com/tether-code-flaw-was-actually-an-exchange-integration-error/

Polish Bitcoin Association Challenges Banks Over Crypto Account Refusals

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An industry group in Poland is attempting to challenge banks that have allegedly denied services for firms working with cryptocurrencies.

via CoinDesk https://www.coindesk.com/polish-bitcoin-association-challenges-banks-over-crypto-account-refusals/

U.K. Banks Warned to Be Careful With Cryptocurrencies

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The Bank of England has warned U.K. lenders to study cryptocurrencies before doing business in the space. In a letter sent out to the financial institutions in the country yesterday, the Bank of England Deputy Governor Sam Woods warned financial companies to take appropriate steps to protect themselves against "exposure to crypto-assets" which he believes are susceptible to "fraud and manipulation, as well as money-laundering and terrorist financing risks."

While acknowledging the benefits of the underlying distributed ledger, the deputy governor believes the high price volatility and relative illiquidity of cryptocurrencies are good enough reasons why financial institutions need to be careful when dealing with crypto assets.

The letter went on to explain the steps banks should take to lower any possible risk from trading in crypto assets. He lists hiring a PRA-approved "Senior (Insurance) Management Function (S(I)MF)" auditor to review and sign off on the "risk assessment framework," conservative incentives that discourage "excessive risk-taking" and aligning the bank's risk management approach with the uncertainties associated with cryptos.

Woods, who also doubles as the CEO of Prudential Regulation Authority (PRA), reminded financial institutions of their fiduciary responsibility under the PRA regulations.

While borrowing a leaf from the Bank of International Settlements (BIS) scathing report on bitcoin, the deputy governor advised the banks not to get ahead of themselves by considering cryptos as a form of money.

"Crypto-assets should not be considered as currency for prudential purposes," he said.

Classification of cryptocurrencies has been a problem in the U.K., as with most parts of the world. Earlier this year, the Bank of England Governor Mark Carney informed students of the failure of Bitcoin as a form of money as no one "uses it as a medium of exchange." Carney, who softened his tone some weeks after, advocated for regulating cryptocurrencies not banning “crypto-assets outright.” Authorities should "be careful not to stifle innovations which could in the future improve financial stability," he said.

Last year, the Bank of England partnered with Ripple to test an interledger system, and it has announced a revamp of its entire settlement system to accommodate distributed ledger technology.

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/uk-banks-warned-be-careful-cryptocurrencies/#1530285444

Promoted: Trivver: XR Advertising in an XR World

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Imagine an enhanced field of vision — one which allows us to seamlessly interact with others, through the use of our hands and without dependency on a screen.

This future has arrived — with unparalleled possibilities for advertising, training and collaboration — free of geographical barriers. Welcome to extended reality (XR), encompassing mixed reality (MR), augmented reality (AR), virtual reality (VR) and 3D technology. 

The projected market size — $209 billion by 2022 according to Statista — for AR and VR is massive. Trivver, a cutting-edge, programmatic advertising startup, is at the nexus of this XR world and traditional advertising. Trivver will employ blockchain technology for validating advertising, to ensure transparency, security and efficiency. In pursuing XR technology, Trivver joins the likes of Facebook, Google and Apple in pushing the boundaries of this new digital frontier.

Trivver uses 3D product placement of brand models to deliver advertising — in games, business, entertainment or sports XR environments. Trivver’s comprehensive XR advertising platform leverages its suite of patented technologies to deliver 3D branded objects across environments and platforms, enabling a single model to autoscale to fit seamlessly with multiple environments. With this technology, Trivver is poised to enable the adoption, commercialization and monetization of XR.

Trivver provides advertisers with the ability to engage with today’s rapidly growing XR user community. In particular, Trivver’s Smart Objects are intended to foster organic relationships between brands and consumers, leading to less digital ad friction. In addition, Smart Objects offer unprecedented capability to record view engagements with brands, including viewability and intent to purchase. 

The platform provides a set of tools for game developers, retailers, real estate and other XR content publishers. Trivver is using its Ethereum-based token, TRVR, to promote development of a library of Generic Smart Objects, the default 3D models that represent ad spots in the environment. As the library of Generic Smart Objects grows, it will become available to game developers for future development, as well as offer a way for XR developers and designers to become part of the Trivver ecosystem. 

The Genesis

Founded in 2011, Trivver is the brainchild of founder and CEO Joel LaMontagne. A serial entrepreneur with a background in computer science and mathematics, LaMontagne’s previous work includes the creation of a patented digital randomization engine that facilitates nonlinear experiences for online gaming, education and military training.

“The epiphany [that led to Trivver] came to me back in 2007 when I witnessed my twelve-year-old son play an online game and repeat the same level again and again to achieve a better score, because he learned the game’s pattern,” LaMontagne said.

He added that Trivver’s multi-patented technology enables advertisers to easily deploy, monitor and efficiently measure user actions across all devices inside AR/VR/MR/3D — really any XR environment. 

“Our ‘one and done’ IP allows a brand to create a single 3D Branded Object file and send it to many XR locations in just one click,” he said. 

Trivver’s 3D Branded Object files, or “branded smart objects,” are native to the environment they are placed in, creating nondisruptive advertisements that consumers actually enjoy interacting with. Trivver, LaMontagne added, also monitors and tracks metrics to provide brands with detailed consumer data.

LaMontagne said that Trivver’s patented technology allows both large and small developers the ability to “become a part of our network and monetize their published content.” The Trivver ad network, he said, provides advertisers the ability to connect with smaller content providers seamlessly.

The “Virtual” Road Map Ahead 

The public sale of TRVR commenced on June 15.

All available TRVR will be issued during the one-time distribution period with no additional issuance after the close of the campaign. The total number of TRVR to be issued will be calculated at the end of the distribution period.

“Our desire is to become the standard in XR advertising,” LaMontagne said. “We want to enable developers in the XR Space — both large and small — to fund themselves through advertising, to encourage the improvement of technology that enhances people’s lives and to make product placement in XR space as relevant and interesting to users as possible.” 

Note: Trading and investing in digital assets is speculative and can be high risk. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

This promoted article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/trivver-xr-advertising-xr-world/#1530282161

Op-Ed: Challenge of Mining Centralization Unveils Bitcoin’s Elegant Design

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Last year, growing problems of Bitcoin mining centralization came to light with the controversy of an AsicBoost scandal. As a largely centralized hash rate began to threaten the software’s magical property, concerns were raised that incentives at the crux of Bitcoin’s game theory had broken away.

Now, the power of miners, harnessed by economic incentives, escaped accountability by attacking Bitcoin’s SHA 2 hashcash and exploiting it. This further gained advantage through vulnerability in the network’s interface with the old world of industrial infrastructure and patents.

In facing the increasing power of hardware manufacturers, the idea emerged to make changes in proof of work to fix incentives. Some see such moves to be dangerous, as it could devastate the security of the network and create a contentious hard fork. Others are more pessimistic about ASIC-resistant algorithms, due to the flexibility of hardware engineers and manufacturers’ ability to control hardware production. This challenge that cannot simply be solved technically brings us a unique opportunity to explore this innovation and discover the technology’s elegant design.

Money as a Technology of Cooperation

The invention of Bitcoin arrived through the accumulative efforts of many minds. Before Satoshi Nakamoto shared the vision of peer-to-peer digital cash in the white paper, there were pioneers who stepped into this uncharted territory. Nick Szabo, a legal scholar and cryptographer, with his creation of bit gold inspired this breakthrough of computer science.

In the paper Shelling Out, the Origins of Money, published in 2002, Szabo traveled into the ancient past to trace precursors of money used by our ancestors. By gaining the insight of evolutionary biologist Richard Dawkins who saw money as a “formal token of delayed reciprocal altruism,” Szabo recognized the role of money in providing humans’ unique evolutionary advantage. Describing it as a “technology of cooperation,” he noted how early forms of money, such as the shells of clams, solved the problem of the risk of cheating in the exchange of favor, where reciprocity wouldn’t be made simultaneously.

Now, in this digital age and with the birth of Bitcoin, this tool for cooperation is replicated online. Satoshi, through engaging computer machines to work on mathematical puzzles of computation, found a way to check man’s selfishness that takes advantage of others’ good will. Bitcoin’s consensus algorithm enforces sets of rules across a network, by aligning incentives of all players and encouraging each to overcome selfish tendencies that prevent cooperation with a careful balance of risk and reward.

Puzzle of Altruism

The genius of Bitcoin’s protocol was developed on this understanding of the origin of money that is deeply tied to evolutionary forces within mankind. At the core of this technology lies knowledge of human nature informed by evolutionary biology. Dawkins, who authored the influential book, “The Selfish Gene” renewed the theory of evolution by putting genes rather than individuals at the center. With the term “the selfish gene,” he explained how “a gene that didn’t look after its own interests would not survive.” With this gene’s-eye view of life, Dawkins appeared to have solved part of the riddle of human nature. Yet, he stumbled upon another when he recognized acts of kindness in nature. Altruism has been one of the greatest puzzles for many biologists.

Dawkins asked, “How can selfish genes support kindness?” Charles Darwin’s theory of natural selection offered no incentive for organisms to help others. Dawkins went on, “If genes are striving selfishly to make more copies of themselves, how can a gene achieve this selfish objective by making their bearers act altruistically?” He contemplated how, in the Darwinian struggle for existence, kindness toward others seemed to counter this programming.

Partial explanations were provided in the idea of kin selection. Inclusive fitness theory argues the reason for such behavior is due to a sharing of large percentages of genes among close relatives. Another is the idea of reciprocal altruism used to explain costly cooperation between non-relatives, with a tit-for-tat strategy of “you scratch my back and I scratch yours.” Here, altruism is widely considered by biologists to be part of a survival game for genes, and nature has shown that the genes that return favor are more likely to survive. Yet, Dawkins pondered that, when it comes to humans, there seems to be something more that goes beyond what these theories can explain, for helping occurs even among those who are not close relatives and is given to complete strangers who don’t return favors.

Paradox of Human Nature

In recent years, examples of altruistic acts emerged on the internet with the waves of whistleblowers. From WikiLeaks founder Julian Assange to Chelsea Manning and Edward Snowden, we have seen individuals that acted on behalf of the public good at expense of their own well-being. These individuals demonstrated extraordinary courage, even risking their lives to protect not only the welfare of their nations, but all of humanity.

This presents an internal contradiction within humans: man is selfish and can be nasty, yet at the same time has a capacity for empathy and can act kindly to others. Dawkins found a way to embrace this paradox of human nature. He remarked how “selfish genes give rise to altruistic individuals” and asserted that the puzzle of altruism can be solved by using the concept of the selfish gene. He looked at altruism as the misfiring of selfish genes and explained how “we have a lust to be nice, even to total strangers, because niceness has been hardwired into us from the time we used to live in small groups of close kin and close acquaintances with whom it would pay to reciprocate favors.”

Civilization seems to have lost this paradox of human nature. Western construction of morality split an evolutionary force in nature into opposite tendencies. Humanity, in efforts to attain virtues that are considered positive, suppressed others that have been deemed negative and unworthy. Philosopher Jacob Needleman described how religious and moral doctrines of European cultures created a dualistic morality that “supports the radical separation of the good (however it is understood) and the evil (that which resists the good).” He noted such morality becomes “‘moralism’ when it imposes a sense of good and evil that diminishes the interconnectedness of life.”

Duality of human nature with selfishness on one hand and altruistic attributes like empathy on the other, created an internal conflict within man. This made people pit one side of human nature against the other. This one-sidedness of a human view in favor of certain characteristics over the other led to the failure of self-honesty, making it difficult for us to truly account for our deeds. Selfish parts of ourselves that are denied and condemned become dark. Efforts to eradicate this force made it more hostile and cunning. The extreme selfishness created through society’s refusal to accept human nature in its fullness has become destructive. It began to pose a threat to civilization itself.

The Value of Networked Individuals

In the last half of the 20th century, we have seen an increase in this schism of human nature. The tension of opposites that could no longer be contained, unleashed a cold war dividing the world into two competing power blocks. One sector was represented by the U.S. and Western European model of liberal democracies and the other was by Russian and Chinese communist states. Unresolved conflicts inside ourselves became ideological battles, creating a brutal competition for existence. In this grand struggle of power, Western capitalism promoted the value of the individual over the needs of the collective, while communism forced people to place the interests of a community over individuals.

Systems of governance based on political ideologies, incapable of holding the paradox of human nature, suppressed the dynamics of life. The centralized model of society, both in a form of capitalism and socialism, has subverted the force of evolution, by using money as an instrument of control to regulate aspects of human nature. The state’s oppression of self-interests of the majority led to the concentration of power in a few hands, fueling the corruption in the system. As ordinary people were held hostage by this political battle of governments, being kept in a loop of a death spiral, Satoshi found the perfect equation that could restore the paradox of human nature to end this war that is waged inside each person.

While the hierarchy of institutions divides human nature, breaking apart the value of individuality and the collective, decentralization unites them, creating a higher value of the networked individual. In Bitcoin’s open horizontal platform, what one does to oneself can be directly translated into what one does to others and vice versa. Everyone’s contribution enriches the whole network, while harmful behaviors bring loss for all. In this inclusive circle, contradiction between the logic of service to oneself and service to a group can now be reconciled. What an individual does out of one’s self-interests can become a communal act of giving because it benefits all in the network.

In this invention of free software, Satoshi liberated human nature that was bound up by intellectual property of the nation-state built on the archaic knowledge of man. Centralized systems of politics are inherently undemocratic. In this, the reform and progress of society often relies on the conscience of individuals who can demonstrate an extraordinary capacity to act altruistically as is seen by the example of whistleblowers. This requires a great sacrifice on the part of these individuals to take risks that are unsustainable.

Now, Bitcoin opens a new paradigm that is much more balanced. In this, one no longer has to sacrifice one’s needs in order to act altruistically and one does not have to give up aspirations for altruism in order to preserve self-interests. Upon economic incentives of selfishness, a spiral staircase of Bitcoin’s DNA can emerge. The incentive structure that is built upon a realistic assessment of humanity allows individuals to align themselves with their own self-interests. Through each taking risks voluntarily, the system increases the rewards for networked value.

Dormant Sleeping Codes

In the act of releasing a protocol pseudonymously online, the unknown creator of Bitcoin launched an open source development to build a new habitat for networked individuals. Responding to the good will of strangers, developers around the world came together to engage in a labor of love to work on Bitcoin. Those ambitious and adventurous ones among us all began investing precious resources to play the market. Greed of miners through the survival of the fittest mining markets have helped the network build a global level of security.

Now, in facing the threat of mining centralization, it might be tempting to jump into a quick tech fix of changing algorithms, trying to punish selfishness and combat our destructive potential within. But such solutions will likely just replicate the problem of the old system of control and possibly destroy the harmony of human nature that has been restored in the code.

Perhaps a perceived design oversight of a proof-of-work function, with its lack of resistance against mining centralization is not a flaw that needs to be fixed. Rather, it can be seen as something that could enable the vital feature that needs to be activated at a critical phase in the development of this technology. The problem that now confronts this ecosystem urges us to find solutions that are already in the protocol. Crisis can stimulate and trigger resistance from a human organism. This awakens dormant sleeping codes: sovereign users who claim their role in the network as ones who ultimately give Bitcoin value.

The integrity of Bitcoin is ensured through decentralization. This decentralization that ensures Bitcoin’s defining feature of permissionless-ness and censorship resistance cannot just be guaranteed with proof of work through people simply depending on technology. In the summer of 2017, in the midst of the storm of the scaling debacle, cryptographer and inventor of Hashcash, Adam Back reminded:

cypherpunks write code, and sovereign individuals run code? that maybe levelling up soon

The design of Bitcoin’s unprecedented immutability built with the best security practice in computer science includes the pressure for decentralization that is to be applied from everywhere.

Activation of Sovereign Users

The new stream of self-interests began to emerge in the ecosystem during the block size battle in 2017. As the threat of a contentious hard fork grew, resistance was swiftly organized from the bottom up. From the #UASF movement to the #No2X protest, we have seen the awakening of sleeping giants. Samson Mow, chief strategy officer of Blockstream and CEO of game company Pixelmatic, instigated a new game of “Proof of Hat consensus” by distributing the UASF cap across the network. What arose was a vision of cypherpunks. It placed Bitcoin’s value proposition in features that could bring a larger implication in the functioning of democracy, such as an ability to circumvent financial blockades and governments’ seizures. This came to clash with the PayPal 2.0 vision of Bitcoin, with emphasis on its utilitarian and commercial value as cheaper, faster, on-chain transactions.

Under the radar, the activation of sovereign users has been slowly occurring. Some are stepping up to fulfill their role in this network, manifesting the blueprint of this technology. Teams behind Bitseed created Bitcoin full node devices to help users around the world attain secure access to the blockchain to run full nodes and enforce rules. Bisq, an open-source desktop application, has been working to bring a P2P-based solution to the problems of centralized exchanges in order to extend Bitcoin’s decentralization.

Now, the network is finding creative ways to tackle problems of mining centralization. With an aim to break the mining hardware monopoly and bring much needed competition, Bitcoin Core contributor BtcDrak began a mining project, setting up an ASIC chip manufacturing company. While some strongly oppose it, a new initiative for the Blockchain Defensive Patent License is put forward as a way to counteract the AsicBoost patent monopoly that blocks competition, without jeopardizing the pristine protocol. Opportunities for the use of renewable energy are emerging as a way to decentralize mining. The idea is to take the excess capacity from solar and hydro energy production and use them to mine bitcoin.

The darkness of the old world that has yet to be enlightened became tyrannical. As it begins to infiltrate this new P2P network, the call is given for a wider distribution of self-interests to strengthen Bitcoin’s noble architecture. Imagination of computer science inspires us all to align ourselves with incentives coded inside our own DNA and restore the balance of human nature. Each individual’s participation in the development of this technology helps Bitcoin maintain its mathematical precision. By laying the solid foundation upon the virtue of selfishness, blocks of cooperation can be built to further improve the workings of reciprocal altruism.

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/op-ed-challenge-mining-centralization-unveils-bitcoins-elegant-design/#1530279764

Bitcoin Skids Below $6,000, Hits Lowest Level Since November

By REUTERS via NYT https://ift.tt/2lG8bCR

Major Banks, Regulators Trial 'Know Your Customer' App on R3's Corda

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Around 40 participants have trialed a "self-sovereign" know-your-customer application that gives customers more control over their data.

via CoinDesk https://www.coindesk.com/major-banks-regulators-trial-know-your-customer-app-on-r3s-corda/

Keeping Ethereum's Promise: CryptoKitties Is Embracing Open-Source

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By moving to open-source more of the CryptoKitties codebase, the ethereum-based startup is making its project more of a true decentralized app.

via CoinDesk https://www.coindesk.com/decentralized-cryptokitties/

Alibaba Seeks to Eliminate Middlemen in Blockchain Payments Patent

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A new patent filing reveals Chinese e-commerce giant has been exploring the use of blockchain technology to speed up international payments.

via CoinDesk https://www.coindesk.com/alibaba-seeks-to-eliminate-middlemen-in-blockchain-payments-patent/

Bitcoin Price Risks Further Drop After Close Below $6K

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Bitcoin could drop to fresh 2018 lows below $5,755, having closed below the key support of $6,000 yesterday.

via CoinDesk https://www.coindesk.com/bitcoin-faces-fresh-2018-lows-after-close-below-6000-support/

Mobiles Next? Kaspersky Warns on Rapid Spread of Malicious Crypto Miners

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Kaspersky Lab says crypto-mining malware is quickly replacing ransomware, warning that mobiles could be the next big target.

via CoinDesk https://www.coindesk.com/mobiles-next-kaspersky-warns-on-rapid-spread-of-malicious-crypto-miners/

Reinsurance Giants Tap Blockchain for Data Transparency Boost

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A group of reinsurance giants in China are jointly developing a blockchain system aimed to reduce data disparities in the industry.

via CoinDesk https://www.coindesk.com/reinsurance-giants-tap-blockchain-for-data-transparency-boost/

How Your Smart Fridge Might Be Mining Bitcoin for Criminals

By THE ASSOCIATED PRESS via NYT Europe https://ift.tt/2KvJwff

Regulator Survey Prompts Concerns Over Public Knowledge of Crypto

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Hodling but ignorant? An Ontario regulator is concerned the public still lacks knowledge about crypto and its regulation – even if they own assets.

via CoinDesk https://www.coindesk.com/regulator-survey-prompts-concerns-over-public-knowledge-of-crypto/

Neo's Next Act? $700 Million Crypto Ontology Is About to Go Live

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The project, closely tied to Neo, has big plans for enterprise applications and digital identity.

via CoinDesk https://www.coindesk.com/800-million-ontology-blockchain-live/

Digital Currency Sales Hit $13.7 Billion in First Five Months of 2018: Report

By REUTERS via NYT https://ift.tt/2N7KzU8

Israel Convicts Hacker Who Threatened US Jewish Centers

By THE ASSOCIATED PRESS via NYT Middle East https://ift.tt/2typ07k

Zcash Governance Panel Shoots Down Research on ASIC Resistance

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Members of the zcash community have voted not to prioritize ASIC resistance.

via CoinDesk https://www.coindesk.com/zcash-governance-panel-shoots-research-asic-resistance/

France Wants to Extradite Alleged Bitcoin Money Launderer

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France, joined United States and Russia, is seeking the extradition of the alleged bitcoin money launder Alexander Vinnik.

via CoinDesk https://www.coindesk.com/france-wants-extradite-bitcoin-money-launderer-sought-us-russia/

Coinbase is coming to Portland

What Bitcoin Did #22 An Interview With Erik Vorhees

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'œThings like money, education and healthcare are super important, that is why governments shouldn't be involved in them whatsoever.'

'" Erik Voorhees

Interview location: London, UKInterview date: Fri 8th Jun 2018

The Crypto space appeals to the libertarian ideals of separating money and state. Those who I have met on my podcasting journey consistently say that same thing, from tax being theft to not wanting their money stolen to pay for the war machine. Bitcoin appeals because the money supply sits outside of government control:

• They can't steal it
• They can't inflate it
• They can't control it

Erik Voorhees does not shy away from his opinion on the role of the state and believes that with Cryptocurrencies we have the opportunity of changing the role of government. He is a successful businessman too, from Coinapult and Satoshi Dice to Shapeshift and Keepkey, Erik has consistently built successful Crypto businesses.

While touring Shapeshift around Europe, I had the chance to meet with Erik in London where we discussed his political and social views, problems with ICOs the latest on the many Shapeshift.

This episode is also on:

• iTunes
• Youtube
• Stitcher
• Google Play
• TuneIn

Listen to more What Bitcoin Did episodes

via The Let's Talk Bitcoin Network https://letstalkbitcoin.com/blog/post/what-bitcoin-did-22-an-interview-with-erik-vorhees

U.S.-Israeli Teen Convicted in Israel for Bomb Threats During Trump's Rise

By REUTERS via NYT Middle East https://ift.tt/2IzdQDG

Registered Broker Templum Plans Security Identifiers for Tokenized Assets

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Regulated token trader Templum Markets is partnering with CUSIP Global Services (CGS) to bring securities identification numbers to tokenized assets.

via CoinDesk https://www.coindesk.com/registered-broker-templum-plans-security-identifiers-for-tokenized-assets/

Bank of England Warns Finance Firms Over Crypto Risks

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A Bank of England official has warned banks and other financial firms about exposure to cryptocurrency-related assets in a letter.

via CoinDesk https://www.coindesk.com/bank-of-england-warns-finance-firms-over-crypto-risks/

Industrial Giant GE Eyes Blockchain in Fight Against 3D-Printing Fakes

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General Electric wants to use a blockchain to verify 3D-printed parts in its supply chain, according to a recently published patent filing.

via CoinDesk https://www.coindesk.com/industrial-giant-ge-eyes-blockchain-in-fight-against-3d-printing-fakes/

Messaging Giant Line to Launch Crypto Exchange in July

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Line, the company behind a popular chat app in Japan, announced Thursday that will open a cryptocurrency exchange in July. 

via CoinDesk https://www.coindesk.com/messaging-giant-line-to-launch-crypto-exchange-in-july/

Bittrex CEO to Advise Cuban-Backed Crypto Gaming Platform Unikrn

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Bittrex CEO Bill Shihara will help guide the crypto eSports betting platform as it works to improve the security and adoption of its crypto token.

via CoinDesk https://www.coindesk.com/bittrex-ceo-to-advise-cuban-backed-crypto-gaming-platform-unikrn/

Blockchain Can Legally Authenticate Evidence, Chinese Judge Rules

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A court in China's Hangzhou city has ruled that evidence authenticated with blockchain technology can be presented in legal disputes.

via CoinDesk https://www.coindesk.com/blockchain-can-legally-authenticate-evidence-chinese-judge-rules/

Novogratz's Galaxy Invests $20 Million in Virtual Reality Platform

By REUTERS via NYT https://ift.tt/2Kv2qG0

Bithumb Claims to Have Retrieved $14 Million in Hacked Cryptos

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The Korean exchange says it has clawed back some of the millions lost in a theft of cryptocurrencies including bitcoin, XRP and bitcoin cash.

via CoinDesk https://www.coindesk.com/bithumb-claims-to-have-retrieved-14-million-in-hacked-cryptos/

Bitcoin Price Defends $6K as Traders Go Long

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Bitcoin's technical charts continue to call a drop below $6,000, yet investor activity indicates a corrective rally could be on the cards.

via CoinDesk https://www.coindesk.com/bitcoin-price-defends-6k-as-traders-go-long/

BoE Tells Banks and Insurers to Be Wary of Crypto Assets

By REUTERS via NYT https://ift.tt/2tPxDtw

DealBook Briefing: The Supreme Court Is Open for Business

By Unknown Author via NYT DealBook https://ift.tt/2lDyJon

Crypto Venture Firm to Invest 200K Ether in US Startups

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A China-based venture firm focused on the crypto industry aims to invest 200,000 ethereum in U.S. startups

via CoinDesk https://www.coindesk.com/crypto-venture-firm-to-invest-200k-ether-in-us-startups/

A Plan to Send Millions in Bitcoin to Venezuela Is Moving Ahead

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Developer Jonathan Wheeler plans to airdrop bitcoin across Venezuela, in an ambitious attempt at quelling the country's ongoing economic crisis.

via CoinDesk https://www.coindesk.com/plan-send-millions-bitcoin-venezuela-taking-shape/

Ottessa Moshfegh: By the Book

By Unknown Author via NYT Book Review https://ift.tt/2twwasD

Bank Regulator Proposes Chinese Crypto License In Research Paper

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A research paper from China's banking regulator suggests the country should let ICOs operate legally under a financial regulatory framework.

via CoinDesk https://www.coindesk.com/banking-regulator-study-suggests-ico-trading-license-china/

DOJ, U.S. Agencies Seize Over $12M Bitcoin in a Slew of Dark Web Busts

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The U.S. Department of Justice, in cooperation with the Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Secret Service (USSS), the Postal Inspection Service (USPIS) and the Drug Enforcement Administration (DEA), have apprehended more than 35 dark web drugs and arms dealers in a nation-wide bust.

Per the arrests, the agencies confiscated such illicit items as military-grade weapons, drugs and drug manufacturing equipment. They also seized some $3.6 million in hard cash and gold bars, as well as at least 2,000 bitcoin (valued at just over $12 million) and related mining hardware.

According to the Department of Justice’s press release, the bust is the culmination of “a year-long, coordinated national operation that used the first nationwide undercover action to target vendors of illicit goods on the Darknet.” Kick-starting the investigation, special agents for the HSI’s New York Field Division acted as money launderers on dark web marketplaces like the Silk Road, AlphaBay, Hansa and Dream, among others, exchanging cryptocurrencies for cash.

With these leads, the coalition of federal agencies rooted out an extensive network of black market dealers.

“Through this operation, HSI New York was able to identify numerous vendors of illicit goods, leading to the opening of more than 90 active cases around the country. The Money Laundering and Asset Recovery Section (MLARS) of the Department of Justice’s Criminal Division, working with more than 40 U.S. Attorney’s Offices throughout the country, coordinated the nationwide investigation of over 65 targets, that lead to the arrest and impending prosecution of more than 35 Darknet vendors,” the press release states.

In sum, the investigation and subsequent seizures yielded upward of 100 firearms, 15 pill presses, more than 25 kilograms of illegal narcotics and synthetic pharmaceuticals, a few hundred kilograms of marijuana, and nearly $30 million worth of physical and digital assets.

Of the investigation’s most notably indicted, nearly all the charged individuals used bitcoin or other cryptocurrencies to some degree in their operations. In one case, the federal officials are seeking the forfeiture of an additional 4,000 bitcoin that they suspect to be tied to online drug sales. If seized, the supplementary stash will put the government’s cryptocurrency requisitions just south of $40 million.

“The Darknet is ever-changing and increasingly more intricate, making locating and targeting those selling illicit items on this platform more complicated. But in this case, HSI special agents were able to walk amongst those in the cyber underworld to find those vendors who sell highly addictive drugs for a profit,” HSI Acting Executive Associate Director Derek Benner states in the official press release. “The veil has been lifted. HSI has infiltrated the Darknet, and together with its law enforcement partners nationwide, it has proven, once again, that every criminal is within arm’s reach of the law.”

Announced on Tuesday, June 26, 2018, the investigation’s findings coincide with Congress’ own efforts to police illicit online trafficking and the use of cryptocurrencies therein. The findings went public just a day after the House of Representatives passed the Fight Illicit Networks and Detect (FIND) Trafficking Act of 2018 (H.R. 6069), a bipartisan bill that seeks “to study how virtual currencies and online marketplaces are used to facilitate sex or drug trafficking and propose regulatory and legislative actions to put an end to these illicit activities.”

The bill’s proposer, Rep. Juan Vargas, expresses in a press release that the House’s approval is “an important first step in helping Congress understand the full extent of how virtual currencies are being used to facilitate drug and sex trafficking and will help us propose effective legislative solutions to fight these crimes.” As the bill moves up to Congress’ upper house, he “[hopes] to see the same level of support for this legislation in the Senate.”

In a 2017 National Drug Assessment, the U.S. Drug Enforcement Administration found that cryptocurrencies like Bitcoin, Dash, ZCash and Monero — the last three of which have built-in anonymity protocols — have become increasingly popular payment options for dark web trade. Along with fueling a harrowing human trafficking market, they are also funding marketplaces that are contributing to America’s growing opioid crisis, the administration claims.

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/doj-us-agencies-seize-over-12m-bitcoin-slew-dark-web-busts/#1530120413

Dan Larimer: EOS Arbitrator 'Damage to Community' Worse Than Thefts

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The CTO of Block.One wants to curtail the controversial EOS arbitrator's role – if not eliminate it entirely.

via CoinDesk https://www.coindesk.com/dan-larimer-eos-arbitrator-damage-community-worse-thefts/

Chat App Kik Launches 'Crypto-Economy' With Kin Token Integration

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Messaging app Kik's users can now begin earning and spending its kin token with the launch of its "crypto-economy," the company said Wednesday.

via CoinDesk https://www.coindesk.com/chat-app-kik-launches-crypto-economy-kin-token-integration/

Pornhub Adds Tron, ZenCash as Crypto Payment Options

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Pornhub, the largest pornography site in the Internet world, announced today that it will accept TRON(TRX) and ZenCash soon as payment methods.

via CoinDesk https://www.coindesk.com/pornhub-taps-tron-zencash-crypto-payment-option/

France Joins US, Russia, Asks Greece for Cybercrime Suspect

By THE ASSOCIATED PRESS via NYT Europe https://ift.tt/2IAxsHS

Risk Flight? Bitcoin 'Dominance Rate' Hits 9-Week High

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Bitcoin's percentage of the crypto market is up – a sign that investors are likely switching their money from alternative cryptocurrencies.

via CoinDesk https://www.coindesk.com/risk-flight-bitcoin-dominance-rate-hits-9-week-high/

Malta Passes Trio of Bills as Part of 'Blockchain Island' Plan

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Malta's parliament has passed three bills on crypto assets and blockchain, in a big step toward its plan to become a "Blockchain Island."

via CoinDesk https://www.coindesk.com/malta-passes-three-bills-on-blockchain-and-crypto-assets/

Zeroing In: Zcash Sets 2-Year Course for Better Crypto Privacy

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Nearly two years after launch, Zcash is entering what could be a crucial period, one that could expand the core features of its technology.

via CoinDesk https://www.coindesk.com/zeroing-zcash-sets-2-year-course-better-crypto-privacy/

Crypto Startup Uphold Moves to Become Licensed U.S. Broker-Dealer

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Digital money platform Uphold is looking to become a Finra-registered broker-dealer following a new acquisition, the company says.

via CoinDesk https://www.coindesk.com/crypto-startup-uphold-moves-to-become-licensed-u-s-broker-dealer/

Bitcoin Price Risks Another Fall Below $6K, Charts Say

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After yesterday's drop, bitcoin could fall below the $6,000 mark, but will likely fare better other cryptocurrencies.

via CoinDesk https://www.coindesk.com/bitcoin-price-risks-another-fall-below-6k-charts-say/

Korean Watchdog Tightens Rules on Crypto Exchange Bank Accounts

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Banks in South Korea are now required to monitor all accounts held by crypto exchanges following a tightening of anti-money laundering measures.

via CoinDesk https://www.coindesk.com/korean-watchdog-tightens-rules-on-crypto-exchange-bank-accounts/

Huobi Pro Exchange to Suspend Crypto Trading in Japan

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Huobi Pro is to stop offering trading services to investors living in Japan, reportedly over its lack of a license in the country.

via CoinDesk https://www.coindesk.com/huobi-pro-exchange-to-suspend-crypto-trading-in-japan/

The EOS Arbitrator Problem: A Crypto Governance Breakdown Explained

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Dispute settlement in EOS is being handled by a group called ECAF, but its role – and how it should communicate – still needs to be figured out.

via CoinDesk https://www.coindesk.com/eos-arbitrator-problem-crypto-governance-breakdown-explained/

US State Seeks to Confiscate $24 Million in Dark Web Bitcoin

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The crackdown of vendors on darkweb marketplaces lets the U.S. government seize 4,000 bitcoins and now it wants to confiscate all of them.

via CoinDesk https://www.coindesk.com/us-government-seeks-sell-24-million-confiscated-bitcoin/

Hong Kong Seeks to Widen DLT Use in Trade Finance

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Hong Kong's banking regulator is planning to widen its works on cross-border trade finance using distributed ledger technology.

via CoinDesk https://www.coindesk.com/hong-kong-seeks-to-widen-dlt-use-in-trade-finance-with-abu-dhabi/

How to Slow Down a Startup: Erik Voorhees’ Hard Lesson

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The Let’s Talk Bitcoin Network has added a new show to its lineup, “What Bitcoin Did.” The WBD podcast is hosted by U.K.-based Peter McCormack, an “accidental Bitcoin and Cryptocurrency investor, miner, blogger and podcaster.” His show, an industry interview program, follows important figures and developments in and around the crypto space.

What’s the next level beyond being a cryptocurrency investor? That would be achieving the status of bitcoin entrepreneur.

Imagine not only profiting from your trades but being the one who built the exchange you executed it on; created the portfolio platform for your digital asset holdings; designed a comprehensive bitcoin banking platform; acquired a cryptocurrency hardware wallet manufacturer; and/or were among the first to see your bitcoin business acquired for a significant sum.

Those moves aren’t an imagined scenario. They’re the real-life portfolio highlights of Erik Voorhees, reflecting his involvement with ShapeShift.io, Prism, Coinapult, KeepKey and SatoshiDice respectively. He’s been accumulating these credentials since 2012, when he launched SatoshiDice, the well-known gambling website that proved to be the first of Voorhees’ many wagers on crypto’s future.

Voorhees went in-depth on those bets, and the reasons why they’re no sure thing, in a candid interview with Peter McCormack on Episode 22 of his podcast series What Bitcoin Did, which marks the latest addition to the Let’s Talk Bitcoin network. The conversation that resulted from their London meetup was equal parts engaging and sobering, offering a painful reminder of why many new crypto services may face a complicated rollout before they can take off, particularly in the U.S.

Oversight Overdose

Voorhees’ markedly libertarian leanings have driven him to innovate within the bitcoin vertical. But in the process of building out businesses like ShapeShift, he’s relearned why he believes that the government’s role in key areas like money, education and healthcare is best minimized: what he sees as regulatory overreach by entities such as the U.S. Securities and Exchange Commission (SEC) is stifling new crypto businesses.

Voorhees speaks from his own personal experience of trying to expand ShapeShift. “At this point we’re about 100 people, and all through 2017 we were just trying to grow,” he relates. “2018, unfortunately, has largely been trying to navigate regulatory issues because we’ve gotten big, and because the industry has gotten bigger, and trying to figure out how to grow something in a legal gray area is tricky. We’ve spent a lot of resources and time both on regulatory matters with SEC-style stuff, as well as transaction monitoring and other questions, which many governments have strong feelings about. Frankly, it’s all been very depressing.”

Discussing the varying scrutiny of KYC (Know Your Client) practices from country to country as an example, Voorhees notes that, although every jurisdiction is different, there’s one that stands out for having the most complications. “It’s always the U.S.,” he tells McCormack. “The U.S. is the biggest pain in the ass for any crypto business, I think. That’s why a lot of companies block the U.S. entirely. Suffice to say that each regulator in the U.S. … all claim jurisdiction on various things. Because crypto blurs so many lines, you end up in a situation where a lot of regulations either don’t apply, or do apply, and you don’t know which it is and it gets into this big tangled mess. For example, we haven’t added any new coins to the platform in six months, and this is all due to SEC crap. The SEC has been very unclear about which tokens are securities and which are not.”

The result, according to Voorhees, is an environment where banks around the world won’t take on U.S.-based customers because the reporting requirements and regulatory risk are simply too onerous. “Most Americans are just getting ring-fenced into a financial system from which they will not be able to escape,” he states. “Crypto is really the only answer.”

Crypto Caution

For any successful crypto investor who dreams of being bitcoin’s next Bill Gates, ShapeShift’s tough experiences illuminate a sobering reality: If even Erik Voorhees is being slowed by an uncertain regulatory environment, how will others fare?

This question introduces additional risk to what’s already a risky proposition, no matter what the industry, namely launching a new startup. Voorhees’ trials and tribulations with ShapeShift show how the waters of crypto entrepreneurship remain largely uncharted. Not only are there zero guarantees, but many of the rules are yet to be clearly written, especially for one of the world’s largest markets.

Then again, maybe that’s why the spoils of today’s crypto industries are earmarked for those with a special type of tenacity. “If the question is, ‘Does the business have to be destroyed, or do we have to become more conservative?’ I wouldn’t necessarily destroy everything,” Voorhees says, “but it’s a fight I won’t give up. If we have to give in one area, we will fight more strongly in another.”

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/how-slow-down-startup-erik-voorhees-hard-lesson/#1530034456

Korea's Exchange Hacks: What the Country's Crypto Scene Is Saying

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Koreans have been up in arms on social media ever since two popular South Korean crypto exchanges were hacked only weeks a part from each other.

via CoinDesk https://www.coindesk.com/koreas-exchange-hacks-countrys-crypto-scene-saying/

Congress Advances Bill to Study Crypto Use in Drug, Sex Trafficking

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Lawmakers in the House of Representatives have passed a bill that would approve a study of the use of cryptocurrencies in the sex and drug trades.

via CoinDesk https://www.coindesk.com/congress-advances-bill-study-crypto-use-sex-drug-trafficking/

Op Ed: Utility Token? Why You’re Still Better Off as a Security

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The SEC’s proclamation that ether (ETH) is not a security has sparked some celebration amongst the cryptocurrency community. Regulatory clarity is always a good thing, but ICO operators shouldn’t see this as a reason to put the champagne on ice.

The fact is, ICOs are still better off operating as if they were securities. Even if the case can be made that you’re a utility token, there are still an array of external factors that can upend your legitimacy. Though following the path of least regulatory resistance is more tempting than ever, taking the steps to be overseen as a security, which includes proactive engagement with regulatory bodies, is the wiser move, both for the stability of your business and the viability of the cryptocurrency space.

Before we dive into the reasons why, let’s make one thing clear: the SEC’s view on ETH is correct. It is more akin to a commodity like oil than it is a security.

That said, the SEC’s announcement has its flip side: further clarity on what can be considered a security. While the SEC’s reasoning behind why ETH is a utility can still be loosely interpreted, their instruction for security tokens to register with them is pretty clear-cut.

This brings us to the first reason why going the utility route is less than ideal: regulatory flux. To put it differently, regulators can change their minds. The warm sentiment that has opened the door to utility tokens can grow cold faster than people realize. All it takes is one catastrophic market event to force regulators to tighten the reins. Additionally, the appointment of a new commissioner or a shift in the political climate can send regulatory bodies in a new direction.

Dodd-Frank is a prime example. The arguably draconian, though beneficial, rules were instilled after a major crisis, upending banking as we know it. Less than eight years and one new president later, those rules are starting to be wiped away.

Additionally, the ETH proclamation may seem to excuse many ICOs from SEC oversight. But, if a token is deemed akin to a commodity, does that then encourage the CFTC to step in? How does their view differ from the SEC’s? Instead of seizing on the clarity the SEC has provided, going down the utility token route reintroduces uncertainty — and heightens the risk of being cracked down on later.

If regulatory sentiment does indeed shift, many ICO operators will be tempted to double down on their rebellious stance, arguing that the SEC did not make any formal rules and cannot come after them for issuing non-registered securities. Others will avoid the U.S. altogether when raising capital; this could help an ICO work around the rules now, but it may end up precluding them from operating in the U.S. later, even as a utility token.  

Which brings us to our next reason for opting to be governed as a security token: operational stability and strength. In contrast to the disruption that could occur for any token operating under loosely defined regulations, ICOs that have preemptively registered with regulatory bodies will continue to function as usual.

In addition, they stand to be protected if regulators decide to retroactively crack down on tokens. While I do believe in the merit of utility tokens, I also firmly believe there will be a day when the utility argument will fail for many ICOs, whether it be in the court of public opinion or in the court of law.

For registered security tokens, this is a business advantage. If the marketplace is wiped clear of questionably-governed businesses, those that are left standing can seize a larger slice of market share.

Moreover, being overseen as a security allows the flexibility for future business model changes, including the issuance of tokens under more sophisticated structures. The upcoming generation of security token issuances will likely represent equity, preferred shares, dividend streams and more. Instead of crowdfunding for platform creation, these offerings will resemble those that traditional companies undertake, whether to raise capital for further growth or to create real shareholder equity and deliver a return-on-investment for holders. Those companies that grasp onto the “utility” label may end up locking themselves out of this evolved marketplace.

The utility label is a necessary and valid one for the space. But it’s also highly speculative and, again, subject to interpretation. As the cryptocurrency market matures, a day will come where any company looking to be taken seriously by investors will have to register with regulators in some way. Registering as a security isn’t cheap or easy, and it may bring on more oversight than needed. But it is an investment in the future, recognizing that it is the ultimate path to stability, security and growth, both for your company and the cryptocurrency market.

Louis Adimando is the Chief Strategy Officer of The Praetorian Group. He is also a lawyer and a former compliance officer for multiple Wall Street banks.

This is a guest post by Louis Adimando. Views expressed are his own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

This article originally appeared on Bitcoin Magazine.

via Bitcoin Magazine https://bitcoinmagazine.com/articles/op-ed-utility-token-why-youre-still-better-security/#1530031017