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Some possible explanations
Over the past week, altcoin Ripple’s (XRP) price has gone through the roof. It has seen an unprecedented 140 percent growth over the past seven days, up almost 63 percent in the past 24 hours alone, trading at around $0.61 at press time.
XRP has gone as far as to beat Ethereum (ETH) to be ranked number two by total market capitalization on CoinMarketCap (returned to the third spot by the press time). What could possibly drive the price so high? While there’s no definite answer to that question, here’s some background and theories.
Background: What does Ripple bring to the table?
Ripple is a California-based payment network and protocol company that was established in 2012. Essentially, it focuses on facilitating transfers between major financial corporations.
Ripple is not quite your average cryptocurrency — in fact, some might argue it’s not a cryptocurrency at all. It champions a less conventional ideology for the industry: Ripple doesn’t want to overthrow the government along with the banking system. Conversely, it chose to work with mainstream financial players from the very start. As Brad Garlinghouse, CEO of Ripple, told Cointelegraph in March:
“We were, from the beginning, really looking at how we work with governments, how we work with banks. And I think some in the crypto community have been very much, ‘How do we destroy the government. How do we circumvent banks?’”
Garlinghouse believes that governments aren’t going anywhere, saying, “In my lifetime, I don’t think that’s happening” — which is why he finds it logical to cooperate with them and work within the existing regulatory framework. That attitude helped Ripple land crucial partnerships with important players, including China-based payment services provider Lian-Lian, the Saudi Arabian Monetary Authority and Western Union, among others.
Ripple’s native token is XRP. However, the company draws a line between the two: Ripple presents itself as a technology company, while XRP is an “independent digital asset” built on open-source blockchain technology called XRP Ledger. As per its website, Ripple uses both XRP and XRP Ledger in its products, such as xRapid, and owns 60 billion XPR — however, it allegedly does not control either the token nor the technology.
Theory #1: xRapid’s launch
xRapid is a blockchain-backed tool designed by Ripple for easing cross-border fiat transfers between financial institutions.
Ripple hopes to use it to pioneer the mainstream financial system: After testing the platform to run payments between the United States and Mexico in May, it proved to save transaction costs by 40-70 percent. Bypassing conventional foreign exchange providers, xRapid also increased transaction speed to “just over two minutes.” In comparison, according to McKinsey research, typical international payments take between three and five working days to complete.
The recent boost could be explained by the company’s recent announcement that xRapid could be launched commercially "in the next month or so," which was made by head of regulatory relations for Asia-Pacific and the Middle East at Ripple Sagar Sarbhai in an interview with CNBC on Sept. 17:
"I am very confident that in the next one month or so, you will see some good news coming in where we launch the product live in production."
In August, Ripple partnered with three international crypto exchanges — U.S.-based Bittrex, Mexican Bitso and Philippine Coins.Ph — as part of an xRapid solution to build a “healthy” ecosystem of digital asset exchanges. The new partnership will enable xRapid to move between XRP, U.S. dollars, Mexican pesos and Philippine pesos. Additionally, Ripple is considering entering the Chinese market to apply its distributed ledger technology (DLT) to cross-border payments, as Jeremy Light, vice president of European Union strategic accounts at Ripple, told CNBC on Aug. 15.
To explain XRP’s recent breakthrough, some Reddit users suggest that xRapid has been quietly launched, while Ripple is going to announce it at a later stage. “I think they are letting banks in one by one so the XRP markets would not go totally ballistic if everyone jumps in the same time,” wrote u/tradernoob76.
“Because of the volume and books [are] being eaten alive, leaving no corpses behind (except fudders), I wouldn't be surprised if xRapid is in use. People try to sell, but it comes back up and this volume is off the charts and is increasing. If it's just investors, then [a] new market opened somewhere with lots of people trading suddenly, which is less likely,” another user agreed. Either way, an official xRapid launch would be big, positive news for XRP.
Theory #2: PNC joining RippleNet
More concrete Ripple-related news this week came from PNC, one of top ten largest U.S. banks with 8 million customers and retail branches in 19 states. On Wednesday, Sept. 19, Ripple announced that PNC had joined RippleNet to process international payments for its customers. “It’s one of the first major U.S. banks to use blockchain tech to streamline payments into and out of the country,” Ripple tweeted.
RippleNet is a decentralized network of banks and payment providers that connect through Ripple's solutions, such as xCurrent. Specifically, a particular PNC unit — Treasury Management — will use xCurrent to speed up overseas transactions held by U.S. commercial clients.
Ripple emphasises that the solution will allow PNC business clients to receive payments against their invoices instantly. Senior vice president for product management of Ripple, Asheesh Birla, thinks that using xCurrent in banking is the first step toward the adoption of other Ripple products, such as xRapid. "It's a way [for the banks] to get their toe into the water,” Birla told Reuters.
Notably, xCurrent — unlike xRapid — doesn’t cut out the corresponding bank from the entire process, thus not quite changing the conventional system but rather modifying it. The latter uses immutable “interledger” protocol, which “is not a distributed ledger,” as confirmed by David Schwartz, Ripple’s chief cryptographer, who was sceptical about banks using xCurrent in cross-border payments. As Cointelegraph reported in June, David Schwartz declared banks were unlikely to deploy the technology because of low scalability and privacy problems.
Nevertheless, the news proved to be bullish. Interestingly, BlackRock Inc., a major American global investment management, used to be a subsidiary of PNC during the period of 1995-1999. Currently, PNC is BlackRock’s largest shareholder, owning a 21.45 percent stake of the company.
Theory #3: Ripple dodging the ‘security’ label
To defend the company’s native token, he pointed to the open-source protocol of the XRP ledger and its independence from the corporation itself, emphasizing that Ripple controls only seven percent of the validator nodes operating on the network. He further argued that XRP investors do not secure a stake or shareholder-like position when they purchase the asset and emphasized that countries such as Australia, the Philippines and Thailand have all classified XRP as a commodity.
Thus, similarly to Bitcoin and Ethereum, XRP might potentially become recognized as a “non-security” by the U.S. Securities and Exchange Commission (SEC), which has proven to be bullish for those cryptocurrencies in the past.
Theory #4: FOMO
The massive surge in price could also be explained by good old ‘fear of missing out,’ or FOMO — a particularly powerful force on the crypto market. This seems to be one of the main sentiments on Reddit. According to this theory, as soon as Ripple experienced the first pump on Sept. 18, other investors started to pile in, and the situation snowballed from there.
Cointelegraph investigates the murky web of incidents connected with the Bitconnect heist, from Texas to Gujarat.
An American musical prelude
Bitconnect, the now-defunct crypto lending and exchange platform that has been ousted as a ruinous Ponzi scheme, has memorably been compared by the Silver Miller law firm to the fleeting 2011 Broadway musical “Wonderland,” based on the dizzying impossibilities of Alice’s adventures in Lewis Carroll’s celebrated novel.
Silver Miller’s first class action complaint was filed on behalf of six defrauded Bitconnect investors in late January, just weeks after the Texas Securities Commissioner issued an emergency cease-and-desist order against Bitconnect for the selling of unlicensed securities.
The complaint unconventionally opened with the following lyrics:
“Welcome to Wonderland / Where everything you see / I mean from ‘A’ to ‘Z’ / Ain’t what it seems to be. / Welcome to Wonderland / Set phasers up to stun / Turn off the lights when done / Good luck and thanks a ton / Ciao, baby, gotta run!”
In the ensuing months, the federal court for the Southern District of Florida has appointed two lead co-plaintiffs for the class action’s third amended complaint, who will represent all potential plaintiffs in the case. One of the lead plaintiffs, said to be domiciled in Dubai, alleges his out-of-pocket investment loss at Bitconnect totaled 150.28 Bitcoin (BTC), valued at the time at over $1.6 million.
If the musical allusions have sadly disappeared from the most recent court documents, the number of potential plaintiffs looks set to burgeon. David Silver told Cointelegraph in an interview that the law firm “anticipate[s] thousands of people filing claims if and when this case gets certified and we hopefully recover assets to disperse.”
According to Silver, plaintiffs were duped into taking the Wonderland-like impossibilities of the Bitconnect looking glass for “improbable possibles” and clung to the “sliver of a chance” that the high-yield investment scheme was legit. As cited in Silver Miller court documents, Bitconnect described itself as an “all-in-one” Bitcoin and crypto platform, where:
“It is entirely possible to find the independence we all desire, in a community of like-minded, freedom-loving individuals who, like you, are seeking the possibility of income stability in a very unstable world.”
This purported “income stability” amounted to the promise — regardless of the amount of the initial investment — of a one percent daily return, which Bitconnect alleged would be “generated by its own proprietary trading bot and volatility software.” According to this Wonderland algorithm, a $1,000 investment stood to return $50 million within three years of daily compounded interest, as the first Silver Miller complaint noted.
Bitconnect is alleged to have run a global Ponzi investment scheme as of late 2016 that enlisted multi-level affiliate marketers through a referral program that rewarded them for luring investors to purchase Bitconnect native tokens (BCC) on the Bitconnect BCC exchange, using either Bitcoin or fiat currency.
These investors were solicited to participate in the so-called Bitconnect lending program, pitched as an “opportunity” for them to lend their BCCs back to Bitconnect, which the firm would then use its “trading bot” to generate “guaranteed” profits on their behalf, of the aforementioned astronomical proportions. Those who successfully solicited further investors were promised even higher returns.
It further marketed a Bitconnect staking program, in which investors were given the offer to hold their BCCs in the platform’s Bitconnect-QT wallet as yet another means of pocketing hefty profits.
While Silver Miller’s action represents the ongoing U.S. private litigation against the scheme — parallel to which federal muscle has also been working — recent developments in India have exposed a murky web of incidents that taint the highest echelons of the country’s political class.
The case’s corporate defendant, Bitconnect, while hiding behind a shadowy U.K. address, has wreaked havoc through its army of recruiters that range from viral American Youtubers — resulting in Youtube’s own implication as a defendant in the Silver Miller class action — to shrewd promoters in the moneyed state of Gujarat, the home turf of India’s current prime minister.
At the fulcrum of the Indian chapter is the city of Surat, known for its diamond moguls and textile export tycoons. Cointelegraph spoke to Kashif Raza of the Indian crypto litigation duo ‘Crypto Kanoon’ to investigate the scandal; an ever-thickening plot of alleged kidnappings and extortions, which has led to the arrest of a former lawmaker from India’s ruling party just this week.
“Curiouser and Curiouser!” Cried Alice
If Wonderland is known for the Queen of Heart’s imperious command to paint white roses red, in Modi’s post-demonetization of India, Google trends showed a startling spike in one particular search query that hoped for an equally dubious chromatic transformation: “how to convert black money into white money.”
As part of Prime Minister Narendra Modi’s attempts to clamp down on tax evasion, in November 2016, he announced the government would be invalidating 500 and 1,000 rupee bills — which accounted for 86 percent of the currency in circulation at the time.
“Black money” is a term used to describe undeclared income that escapes taxes, and Modi gave Indians until Dec. 30, 2016 to deposit their soon-to-be-defunct high-denomination notes, whose sum total was worth a staggering 15 trillion Indian rupee ($208 billion).
The subsequent panic reportedly saw some 45 billion rupee ($650 million) flow in to Gujarat’s wealthy port city of Surat, to be hidden away in assets including cryptocurrencies, according to an accountant interviewed by Bloomberg last month, who asked to remain anonymous.
This was the fertile soil in which Bitconnect’s India chapter took root. And over the course of the next year, as Bitcoin soared to all-time industry highs, so did the BCC token. But in January 2018, after receiving its first warnings from U.S. regulators, Bitconnect shuttered up shop, triggering a crash in the token, which plummeted from its Dec. 29, 2017 high of $437 to almost zero.
The subsequent crimes and misdemeanours of livid Bitconnect investors are alleged to have taken place in February, although they first came to the public’s eye only in April.
Malice in Surat
On Feb. 23, a Surat-based builder by the name of Shailesh Bhatt charged into the office of Gujarat state home minister Pradipsinh Jadeja and claimed that 10 Amreli-district cops had kidnapped and extorted him for 176 BTC, worth 9.45 crore* rupee (around $1.31 million).
* A crore rupee denotes 10 million rupee and is equal to 100 lakh rupee in the Indian numbering system (1 lakh denotes 100,000 rupee)
The band of 10 was alleged to have comprised not only rank-and-file constables, but to have included Superintendent (SP) Jagdish Patel, as well as local Crime Branch Inspector, Anant Patel.
As a builder and “businessman” reportedly known to have a penchant for Bitcoin trading and other “business verticals,” Bhatt is said to have been among those who declared their hidden incomes under the Modi government’s Income Declaration Scheme (IDS) after demonetization.
On Feb. 9, he alleged that state Central Bureau of Investigation (CBI) officer Sunil Nair threatened him over the phone and summoned him to the Gandhinagar CBI office, where he was allegedly beaten in a ‘torture room’ and asked to pay 10 crore rupee ($1.38 million).
Bhatt claimed he had been primed for the call by one of his business aides, Kirit Paladiya, who is alleged to have warned him that local authorities — supposedly both the Enforcement Directorate (ED) and the CBI — had him under close watch for his dealings in crypto.
After his initial confinement by officer Nair, Bhatt is said to have argued his ransom down to 5 crore rupee ($693,450), which is said to have been paid via a so-called ‘hawala’ broker.
Then, on Feb. 11, Bhatt claimed that Paladiya called him for a meeting in Gandhinagar, where they were both abducted by a band of cops in official government vehicles near a fuel station and whisked off to Keshav Farm House at Chiloda.
There, Bhatt alleged, "they beat me up inside a room and threatened to kill me in a fake encounter if I did not hand over my Bitcoins":
"Amreli SP Jagdish Patel and Amreli inspector Anant Patel were involved. I was forced to transfer 13 crore rupee [$1.8 million] in Bitcoins to Paladiya's account."
The plot thickened. For not only were the crème-de-la-crème of state police implicated, but Bhatt accused Paladiya himself of double-crossing him in cahoots with his influential uncle, a former Member of the Legislative Assembly (MLA) for the ruling Bharatiya Janata Party (BJP), Nalin Kotadiya:
"I contacted Paladiya post-demonetization in 2016 to invest my money. He advised me to invest in Bitcoins and knew about my investment."
He further claimed that Kotadiya himself pressured him into paying the ransom. More on Kotadiya later.
By April 9, the Gujarat’s elite Criminal Investigation Department (CID) had filed a First Information Report (FIR) against the 10 implicated cops, even though Director General of Police (DGP) CID Ashish Bhatia stated at the time that:
“The FIR has been filed on the basis of evidence found by the team so far. In his application, Shailesh Bhatt had mentioned the transfer of 200 Bitcoins worth 12 crore rupee [$1.66 million] from the digital wallet of his business partner, Kirit Paladiya. Another 32 crore rupee [$4.4 million] were allegedly paid for their release from a farmhouse. Later, 78.5 lakh rupee [$108,872] were allegedly paid to get the Bitcoins back. All these transactions mentioned in the application could not be proven.”
On July 20, the Indian Express covered a chargesheet which the Gujarat CID is said to have filed before a sessions court in Ahmedabad the previous day. The chargesheet outlined how the now-jailed and suspended SP Jagdish Patel had allegedly been in “constant” communication with his junior, Inspector Anant Patel, with the band of cops alleged to have received 1.32 crore rupee ($1.83 million) in booty from Paladiya following Bhatt’s abduction.
As per the chargesheet, on Feb. 16, Anant is alleged to have given 9,087,575 rupee ($125,797) to SP Jagdish, who sent this money to his relative, one Bhavesh Jagdish Patel, a resident of Thaltej, Ahmedabad. The money is said to have been delivered by Anant and two local crime branch (LCB) cops in government vehicles. At Bhavesh’s house, the money was allegedly counted, with 1 lakh rupee ($1,387) deemed to be “missing”:
“The money was counted again and 10,000 rupee [$139] was found to be missing. Bhavesh then called Jagdish and told him about it, to which Jagdish said, ‘No problem. You keep the bag that has 90 lakh rupee [$124,821].’”
Then, when word broke of Bhatt’s Feb. 23 complaint at the Home Ministry, Jagdish is accused of contacting Anant and organizing for the booty to be moved from Bhavesh’s house to a friend, one Hardrik Mahida.
“On March 6, Jagdish Patel was in Ahmedabad. At that time, accused Anant Patel was trying to cover up his crime and also demanding money for legal expenses for himself and other accused policemen. The then Amreli district Superintendent of Police gave 40 lakh rupee ($55,476) to Anant Patel to cover up his role and also policemen of his department […] [Jagdish handed over] 40 lakh rupee to Anant Patel and his staff Vijay Vadher, Sanjay Padmani and Pratap Der on April 6 at Pakwan cross roads, Ahmedabad. Jagdish’s presence has been captured in the CCTV footage.”
The chargesheet, citing further CCTV footage as evidence, then accused the suspended SP of approaching Bhatt’s friend Dharmendrasinh Gohil’s house at Pachchai village in Bhavnagar to — euphemistically — “reach a compromise.”
After this ploy allegedly failed, Jagish is said to have thrown “mobile instruments and SIM cards into the Sabarmati river” — the very devices that would have incriminated his scheming with the co-accused Anant and Ketan Patel.
A wolf in sheep’s clothing?
In parallel to emerging details of this quagmire of police corruption, the now-infamous extortion case made an about-turn when Bhatt himself was accused of an earlier — and even more explosive — extortion of a staggering 1.55 billion rupee ($215 million) worth of crypto and cash at gunpoint — including around 2,400 BTC — from two colleagues of a local Bitconnect promoter, Satish Kumbhani.
As CID’s Bhatia has reportedly stated, Kumbhani of Surat “floated” a company called Bitconnect and “lured people like Bhatt to invest for huge returns. Bhatt ended up investing 2 crore rupee ($277,380) in BitConnect [token]. However, its promoters shut shop in January 2018 and went underground.”
In a press note, the CID is reported to have stated that Bhatt’s misdemeanours were uncovered when its sleuths went on the trail of how he had himself acquired the hefty sum of Bitcoin of which he claimed to have been robbed.
The sleuths uncovered two earlier kidnappings — this time allegedly masterminded by Bhatt himself — involving nine accomplices, which included the builder’s nephew Nikunj Bhatt.
In apparent vengeance against those responsible for the Bitconnect heist, Bhatt and nine others are said to have posed as local tax officers and kidnapped a small-time Bitconnect employee named Piyush Savaliya on Jan. 30. Savaliya is said to have been held hostage at gunpoint, also at a shadowy farmhouse — so apparently beloved by Gujarat’s criminal underworld — but this time one located in Surat.
When Savaliya claimed he was unable to avail the men of their desired crypto, according to Bhatia:
“[The next day, Feb. 1], Bhatt’s men kidnapped Dhaval Mavani at gunpoint [...] [who was] also attached with the bankrupt firm BitConnect. Bhatt’s accomplices forced Mavani to transfer 2,256 Bitcoins, worth 131 crore rupee [$18.2 million] into their account. The builder and his accomplices also transferred another 166 Bitcoins, worth 9.64 crore rupee [$1.34 million] into their account.”
The CID’s press release reportedly added that Bhatt and his cohorts extorted a further 14.50 crore rupee ($2.01 million) in cash, which was secured through a local ‘angadia’ — an informal network of Gujarati couriers.
Bhatt is reported to have distributed the spoils among his nine accomplices, keeping around 700 BTC for himself and allegedly asking his tech-savvy nephew, Nikunj, to make the transactions.
When the sleuths tracked the beleaguered Savaliya down, he claimed Bhatt had paid him 34.50 lakh rupee ($47,848) to keep silent and to release a “false” statement denying the kidnappings. Mavani, for his part, was reportedly warned never to be sighted in Gujarat again: Police sources claim he has left the country.
As the allegations against Bhatt’s shady past surfaced, the builder himself absconded. Speaking to local media outlet The Quint, the builder’s lawyer said:
“The charges levied against him are false and part of a larger conspiracy. There is no Savaliya or Mavani; in fact, Mavani was not even in India when the alleged offence transpired. The police [are] fabricating the whole story about Savaliya getting 34 lakh rupee ($47,066) for staying mum.”
Nonetheless, both Nikunj Bhatt and a further alleged accomplice, Dilip Kanani, were arrested in May on charges of kidnapping and extortion, with CID reportedly recovering 152 Bitcoins worth 8.5 crore rupee ($1.18 million) from the duo.
Conspiracy, take two — this time, a failed one
Another chargesheet floating around, which was also filed by the Gujarat CID in July, alleges that when the accused policeman themselves got wind of Bhatt’s earlier crimes, they themselves met on Feb. 15 at a hotel in Ankleshwar in Surat to conspire to silence him and prevent him from lodging his complaint at the Home Ministry.
They are then said to have redoubled their efforts Feb. 21, when Inspector Patel, lawyer Ketan Patel, his brother Jatin Patel, Kirit Paladiya and an “independent witness” Vishal Sakadsariya are said to have met at yet another hotel to further scheme about ways in which to prevent Bhatt from coming forward.
The chargesheet alleges that Ketan and Anant Patel attempted to trace the vanished Mavani — even sending four fellow cops to pursue him all the way to Mumbai — in what emerged as being a false trail.
Mavani’s whereabouts are still unknown.
At this point, you’d be forgiven for losing track of the countless names and double-crossed co-conspirators allegedly embroiled in the case. As Times of India jocularly reported, the CID detectives faced a similar headache and have reportedly created monikers for the different “protagonists” of the many-tentacled incident based on the “unique passwords of their Bitcoin e-wallets or phones”:
“We identify Ketan Patel as “Loq,” and Shailesh Bhatt as “Choco,” a CID official is reported to have confessed.
“Icing on the cake”
In Cointelegraph’s correspondence with Raza Kashif, he sketched out the political backdrop of the unfolding crypto scandal, with its tarnished cops, victims-alleged-perpetrators and even former BJP lawmakers accused of being behind-the-scenes puppeteers:
“As we know, General elections are due to be held in India in April or May 2019 to constitute the 17th Lok Sabha. The opposition parties in India are leaving no stone unturned to corner BJP.
“The Indian National Congress (INC, often called Congress party) has been trying to prove that ‘Demonetization’ was a tactical blunder and [the] Bhartiya Janta Party (BJP) took this step to make their own black money into white money.
“The Bitconnect scam proved to be the icing on the cake for the opposition parties, as the name of the main protagonists is a former BJP MLA and he has been arrested by the Ahemdabad crime branch recently.”
Kashif referred to the arrest of the aforementioned ex-Member for the Legislative Assembly for the BJP, Nalin Kotadiya, the uncle of Bhatt’s allegedly duplicitous former aide, Kirit Paladiya.
Kotadiya was remanded in police custody just on Sept. 10.
Let’s backtrack to the immediate aftermath, when Kotadiya was first tainted by Bhatt’s brush.
In late April, after the allegations of extortion and conspiracy, with the disgraced band of rogue Amreli cops against him had surfaced, Kotadiya at first attempted to hit back, dismissing the claims as misinformation, with the bizarre defense that:
“I am a man of public life. I meet people and talk to them on the phone. It does not mean I am involved in criminal acts with the people I meet or talk to on the phone.”
Kotadiya more pointedly drew attention to the fact that the alleged BTC transfers remained to be proven, quipping that “if the Bitcoins were not transferred, the question that arises is where the money came from.” He claimed that SP Jagdish Patel was being “pressured” to implicate him in the case and even more explosively that:
“Bhatt accepted that he was investing money from people affiliated with political parties. To protect them, attempts are being made to fix me in the case.”
He then circulated a WhatsApp video, reposted on Youtube in late April, in which, attired in pink, he claimed he had duly informed authorities about the Bitcoin heist and attributed the full blame for the extortion scandal and conspiracy to Bhatt.
As one alleged conspiratorial mastermind accused another of the selfsame, Kotadiya moreover threatened to leak evidence that would implicate even more local politicians in the scandal.
By mid-May, despite Kotadiya’s protestations, his failure to turn himself in led a local Ahmedabad court to issue an arrest warrant against him. The CID’s plea reportedly alleged that the accused former-BJP figure had evaded the unit’s clutches:
“There is material evidence substantiating the allegation of [crimes] against Kotadiya. It has also emerged from the record that though summons were issued twice, Kotadiya, despite promising cooperation, did not present himself before the investigating agency.”
The CID plea alleged that in early May, Kotadiya had sent the agency a fax saying he would appear before them on May 12, but then failed to do so. On May 7, he was also reported to have released a press statement claiming he was being “framed by the conspirators.” But CID’s plea is said to have pressed on, stating that:
“We have concrete evidence against Kotadiya. He is a politically influential person. His evading arrest could be could be an attempt to delay the investigation and create hindrances to it.”
Meanwhile, May 4 saw the arrest of Kirit Paldiya, Bhatt’s accused former aide and Kotadiya’s nephew. His interrogation is reported to have revealed that Paladiya — in complicity with Kotadiya, the Amreli police SP and inspector, and lawyer Ketan Patel and his brother — had plotted to apportion the extorted Bitcoin spoils between them, allegedly reserving 15 percent to be split between Kotadiya, the lawyer, and his brother, and 15 percent to be split between the police officers.
Kotadiya himself is alleged to have received 66 lakh rupee ($91,535) — of which Paladiya is said to have given 35 lakh rupee ($48,540) in total to two family members through a Surat-based angadia firm. 25 lakh rupee ($34,672) of this was said to have been recovered by CID officials at the time.
As Kotadiya himself remained underground, by mid-June, an Ahmedabad sessions judge declared Kotadiya a "proclaimed offender" (absconder) under section 82 of the Code of Criminal Procedure (CrPC ) in response to an application by the CID and asked him to appear before the court within 30 days.
Scathing news reports at the time pointed to Kotadiya’s political background, as well as characterizing him as a “leader” of the Patidar caste, a socio-economically prominent lineage within Gujarati society.
Nabbed “fast asleep” on a construction site
Just last week, Kotadiya’s time was finally up.
On Sept. 10, the Times of India reported that the ex-MLA for the BJP had been nabbed after four months in hiding. He was reportedly found “fast asleep” on the second floor of the under-construction railway quarters in Amalner, in Dhule, Maharashtra.
He is alleged to have been hiding out there with laborers for the past two months, according to Deepan Bhadran, deputy commissioner of police for the Ahmedabad crime branch. The Times further claims that Kotadiya had eschewed using mobile phones to make sure he was off-grid, using relatives’ and other borrowed cars to travel between locations. A crime branch source is quoted as saying:
“When we [eventually] found him, he was sleeping on a mattress and there was just an earthen pot of water in the room.”
An Amreli-born contractor at the Amalner railway quarters is said to have first noticed him, giving the golden tip-off.
As Raza Kashif noted, the BJP’s embroilment has been a political gold mine for the opposition party, the Indian National Congress (INC).
In early July, senior congressional leader Shaktisinh Gohil alleged that the “mega Bitcoin scam” was being used to cover-up shifty conversions of black into white money by the members of the majority BJP party.
As Kashif wrote in his correspondence with Cointelegraph, Gohil claimed that the Gujarat scam had emerged as involving “more than $726 million (5,000 crore rupee) [...] with some reports pegging the figure at $12.7 billion (88,000 crore rupee).”
Gohil used the case for all the political mileage he could muster, demanding a Supreme Court-monitored investigation into the matter:
“The finger of suspicion of this massive scam of illegal cryptocurrency directly points to several top Bharatiya Janata Party leaders and a mastermind — an absconding BJP leader and former MLA Nalin Kotadiya.”
As the Deccan Herald bitingly put it, Gohil alleged that “extortion of crypto using government authorities at the behest of top BJP leaders in Gujarat has become a norm,” claiming that “political pressure” had muscled in on the local CID to hush the case up and launch the subsequent complaint against the Surat builder:
“Instead of [Bhatt] being the complainant in the first case, the CID at the behest of MoS Home made the police the complainant […] Who are the top BJP leaders against whom Kotadiya has damning evidence? We demand an impartial Supreme Court-monitored judicial investigation.”
Gohil’s allegations further claimed the Bitcoin had been widely used to carry out “illegal hawala transactions” post-demonetization, something he implied would not have surfaced were it not for the scandal first unearthed by Mr. Bhatt.
As Kashif outlined in his correspondence, Gohil drew upon the full extent of the alleged Bitconnect scandal — which extends well beyond the web of alleged extortions and kidnappings we have mostly been tracing so far:
“[News of the Bitconnect scam] transmitted a shockwave in the country at a time when the nation was already trying to recover from India’s biggest bank fraud case of $2 billion (over 13,000 crore rupee), a fraud [that had been] planned and executed by [diamantaire] Nirav Modi and his uncle Mehul Choksi. The Bitconnect fraud is six times bigger than the [aforementioned] bank fraud, which took all the headlines in the Indian media.”
As the Times of India has reported, tracing the full extent of Bitconnect’s tentacles in India — by which we mean pointing to a figure less wildly obscure than Gohil’s benchmark bracket of anywhere between $726 million and $12.7 billion — brings a unique hurdle, in that many of its investors are accused of laundering their “black” cash into the scam post-demonetization.
Even after Bitconnect scrammed late January — leaving its defrauded investors wallowing in now-worthless tokens — the CID’s Bhatia told the Times that the bureau has received few complaints, allegedly because so much black money is thought to have been siphoned into the the scheme.
While the Times itself considers that the Bitconnect swindle may indeed have “siphoned off more money than Nirav [Modi‘s banking fraud],” Bhatia stressed:
“So far, we have received complaints for cheating worth 1.14 crore rupee ($158,106).”
Ciao baby, gotta run!
So what of the Bitconnect promoters themselves? Has the protective cloak of black cash and the newsworthy distractions of lurid kidnappings and extortions really allowed them to get away scot-free?
Last month, police finally arrested a suspect, Divyesh Darji, who is said to have held “held seminars [and] events in India and other countries” promoting the Wonderland promises of Bitconnect. Darji, a resident of Surat, had reportedly already been issued with a look-out circular and was arrested on Aug. 18 in the Delhi airport, after a tip-off from local immigration services.
In his interview with Cointelegraph, Raza Kashif described Darji as a local and respected “influencer,” who enjoyed a number of high-profile and esteemed local connections, which he presumably made excellent use of to propagate the Bitconnect affair.
Darji’s still-active LinkedIn profile claims — in somewhat shrill ALL CAPS — that:
“I AM HAVING DEGREE OF M.COM. LL.B., B.ED., N.D. & HAD EXPERIENCE OF TEACHING +2 STUDENT & COLLEGE FOR 25 YEARS. I AM GOOD NET WORKER AND HAVING GOOD LEADERSHIP QUALITIES. RIGHT NOW I AM HAVING ENOUGH KNOWLEDGE ABOUT CRYPTO CURRENCY AND BITCOIN AND MAKING WEALTH THROUGH THAT [sic].”
A recent Times article cites CID crime officials as alleging that Darji enjoyed “10 percent commission” on investments he brought in:
“He was fluent in English and ran several social welfare programs. He had a big following and Khumbani hence roped him in […] Darji had brought investments of 4,100 crore rupee [around $567.6 million], while the total amount invested in Bitconnect could be around 41,000 crore rupee [around $5.6 billion].”
As for Satish Kumbhani, he is reported to still be absconding. A senior CID crime officer is quoted by the Times as saying that the unit has “begun the process of getting a warrant issued against [him] and will then press for a red-corner notice (RCN)” to trace him:
“Kumbhani was tracked down to South Korea some time ago, but by the time we could react, he had flown back to Dubai. He supposedly handled the worldwide operations of the company and may have possession of a large amount of money in Bitcoins, which belongs to investors.”
As Raza shrewdly noted, the INC has to date called four press conferences in response to the Bitconnect-related scandals, capitalizing on its potential to tarnish the BJP ahead of the forthcoming elections. In the wake of multiple high-profile scandals, he added that:
“Back-to-back in the last five months, the magnitude of [a string of] frauds has come to 1 lakh crores rupee [around $13.87 billion]. For a developing country like India to face scams of this magnitude, [it] has shaken people’s confidence in the system.”
Raza noted that news of the Bitconnect-related extortions broke after the Reserve Bank of India’s (RBI) notorious circular directing all banks to extract themselves from relationships with crypto exchanges and traders had already been issued on April 5.
But Raza nonetheless stressed:
“News like this makes life tougher for the average crypto trader in India […] the opposition party [INC] is opposing cryptocurrency now, because they have said that the ruling party used crypto to make their black money white. Now, if they come into power, they will not positively regulate crypto, because if the current party [BJP] goes into opposition, they will turn around and say that ‘once upon a time, you used to trash us for our involvement in crypto, and now you yourselves are regulating it!’ So this is not a good sign actually.”
In his correspondence, he added that as they bide their time until the next date of hearings devoted to the RBI restrictions, India’s crypto exchanges and traders have found their “messiah” in the “form of the p2p model”:
“Timely regulation will help curb these scams to mushroom in India. The main protagonists, in this case, took the advantage of ‘fear’ and ‘negativity’ surrounding this industry in India. Possession of ‘Bitcoin’ is not illegal in India and most of the exchanges in India are self-regulated and follow stricter norms on KYC than banks.
“There is a huge challenge in India when you approach a police station to file a complaint against a Bitcoin fraud, as there is a high probability that you might be sent back without [them] even listening to your complaint. The fraudsters know this fact and they take maximum advantage of looting the general public in the name of high-return promises.”
As of press time, Shailesh’s Bhatt’s whereabouts remain unknown. With Kotadiya still remanded in custody, the case is poised to send further shockwaves through the crypto community and to provide further grist to the mill of India’s opposition politicians.
As the final scores in Bitconnect’s Gujarat chapter remain to be settled, globally, the scandal has meanwhile bequeathed to us one of the most jarring memes in industry history. Here is a viral video of one Carlos Matos, a Bitconnect recruiter born in the Bronx who “serenaded” the audience at the platform’s first annual ceremony in back in 2017, in Pattay, Thailand. Click ‘play’ at your peril.
Crypto markets hold their recent gains, ETH takes back the second position on the market over XRP by market cap.
Saturday, September 22: crypto markets have seen a mix of red and green, with Ethereum (ETH) having passed Ripple (XRP) to come back to be ranked the second top cryptocurrency by market cap, according to CoinMarketCap.
Market visualization from Coin360
After surging up to $6,809 earlier today, Bitcoin (BTC) is slightly down over the past 24 hours, having traded below $6,700 over the past few hours. The leading cryptocurrency is down around 0.5 percent and trading at $6,667 at press time, seeing around 3 percent gains over the week.
Bitcoin weekly price chart. Source: Cointelegraph Bitcoin Price Index
Ethereum (ETH) has regained its position as the top second cryptocurrency by market cap, having overtaken Ripple by some $2 billion, with a market cap of $24.4 billion at press time. The altcoin has surged 4 percent over a 24 hour period, and is trading at $238 as of press time. Ethereum is still down around about 15 percent over the past 30 days, while seeing similar gains of around 15 percent over the week.
Ethereum weekly price chart. Source: Cointelegraph Ethereum Price Index
In contrast, Ripple has seen a notable decline over the day, down almost 8 percent over the past 24 hours. The cryptocurrency is trading at $0.55 at press time, which is a growth of around 102 percent over the past 7 days, following significant gains yesterday.
Ripple weekly price chart. Source: Cointelegraph Ripple Price Index
Total market cap has been hovering slightly above the $222 billion point over the day, with an intraday high of $227 billion and low of $219 billion. Over the past 48 hours, the crypto markets have gained at least $20 billion.
Weekly total market capitalization chart. Source: CoinMarketCap
Bitcoin’s dominance on the market is seeing a significant decline this week, down from 55 percent a week ago to 51.9 percent at press time.
Weekly percentage of total market capitalization (dominance). Source: CoinMarketCap
The majority of the top 20 coins by market cap have seen small fluctuations in the interval between 5 percent down and 4 percent up over the past 24 hours, with Stellar (XLM), Cardano (ADA), Tezos (XTZ) seeing losses today, according to CoinMarketCap.
Stellar is down about 6.5 percent and is trading at about $0.24 at press time, while Cardano and Tezos are down around 3.2 and 3.1 percent over a 24 hour period, trading at $0.08 and $1.64, respectively.
The seventh top cryptocurrency by market cap, Litecoin (LTC), is up almost 4 percent, trading at around $60 at press time.
Crypto markets have seen a notable recovery over the past 48 hours, with Bitcoin having tested $6,700 support level after dropping to as low as $6,229 earlier this week. The cryptocurrency rebound has taken place amidst the recent announcement by the largest Brazilian brokerage Grupo XP of the launch of a Bitcoin and Ethereum exchange in the near future.
Also on September 21, billionaire investor Mike Novogratz predicted that Bitcoin will see a 30 percent rally by the end of 2018. Stating that the $8,800 to $10,000 threshold would be the the defining moment for institutional investors to enter the space, Novogratz claimed that it is impossible for BTC to not reach the $8,800 to $10,000 price points by the end of the year.
Coinsquare’s subsidiary Coin Capital has become the 30th ETF provider in Canada with the launch of two ETFs focused on tech and blockchain.
A portfolio-management subsidiary of crypto exchange Coinsquare has launched two exchange-traded funds (ETFs) on the Toronto Stock Exchange (TSX), local news agency The Globe And Mail reports September 20.
Coinsquare’s subsidiary — Coin Capital Investment Management — has reportedly become the 30th ETF operator in Canada, with the launch of the Coincapital STOXX Blockchain Patents Innovation Index Fund (LDGR) and the Coincapital STOXX B.R.AI.N. Index Fund (THNK).
The ETFs trading started on Thursday, September 20, with a management fee of 0.64 per cent on the TSX, which is reportedly the 12th largest global stock exchange by market capitalization.
LDGR is a research-focused ETF that intends to provide investors with global equity securities of firms that invest in the development of blockchain technologies. The ETF is based on the recently launched iSTOXX Yewno Developed Markets Blockchain Index — an index that reflects a large volume of data to discover companies that focus on researching distributed ledger technology (DLT).
The second new ETF, THNK, aims to provide investments in global equity securities concentrated around four “megatrends” in technology — biotechnology, robotics, artificial intelligence (AI), and nanotechnology — based on the iSTOXX Developed Markets B.R.AI.N Index.
Lewis Bateman, chief executive of Coin Capital — which launched in July — claimed that the newly launched ETFs will allow investors to access “high-quality investments” in the industries of AI and blockchain “without deep domain expertise.”
Earlier this year, Harvest Portfolios investment solutions provider became the first Canadian blockchain-based ETF (HBLK), enabling customers to invest in securities focused on large and small-scale blockchain corporations, based on its own Harvest Blockchain Technologies Index.
On August 23, Coinsquare announced its plans to expand its business into the European market in Q4 2018, aiming to provide a “regulated, fully-compliant trading platform” to trade cryptocurrencies such as Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), Ripple (XRP), Dogecoin (DOGE), and Dash (DASH).
The Celsius Network has become a founding member of the SDG Impact Fund within the United Nations’ Sustainable Development Goals initiative.
Decentralized lending and borrowing platform Celsius Network will manage the Sustainable Development Goals Impact Fund (SDG Impact Fund) within the United Nations’ Sustainable Development Goals initiative, according to a press release published September 21.
The Sustainable Development Goals is an international program focused on bringing a “better and more sustainable future for all.” It addresses global challenges such as poverty, inequality, climate change, environmental degradation, prosperity, and peace and justice. The initiative aims to achieve a series of targets by 2030.
Per the announcement, the SDG Impact Fund will be launched by financial services firm Fifth Element with the aim to raise several hundred million dollars and deploy them in both fiat and digital format using a public blockchain. The fund will purportedly be the first to accept and operate all forms of crypto and digital assets in compliance with the UN Sustainable Development Goals.
Within the partnership with Fifth Element, Celsius Network is reportedly looking to “bring power back to the people” by providing banking services typically reserved for top tier asset owners. Celsius CEO Alex Mashinsky said that "by offering earned interest rates up to 7.1 percent, we allow individuals to make the same passive income Wall Street has been making for years." Scott Stornetta, adviser to Celsius, commented:
“We see a great opportunity to use this technology to deliver the value collected by different U.N. organizations in a more precise and effective way to the people and organizations that need it most."
In February the United Nations International Children’s Emergency Fund (UNICEF) embraced cryptocurrency by starting a charity drive for Syrian children, asking PC gamers to use their computers to mine Ethereum (ETH) and donate their earnings. Later in April, UNICEF Australia also announced an initiative that allows users to give their computer’s processing power to mine cryptocurrency for charity.
The South Korean government has pledged support for blockchain companies to speed up the growth of the industry in the country.
The Korean Ministry of Science and Information Communications Technology (MSICT) has pledged further support to facilitate the growth of the domestic blockchain industry, Business Korea reported September 21.
Second Minister of Science and ICT Min Won-ki held a meeting with blockchain startups as part of the government’s effort to establish contact with organizations in what it has dubbed the 10 key ICT sectors of the Fourth Industrial Revolution.
The agenda for the meeting was devoted to blockchain pilot projects initiated by the government in order to bolster the blockchain market and improve public services with the investment of 4.2 billion won ($3.7 million). Participants reviewed the deployment of blockchain technology in customs clearance, livestock provenance, and property transactions. Min said:
“Considering the fact that there is no significant blockchain technology gap between South Korea and the other countries, it is a good opportunity for South Korea to lead the industry. The government will actively back domestic companies to help them lead the global blockchain market.”
Blockchain startups highlighted the necessity to form a cloud-based blockchain environment, provide support for research and development in the private sector, and create a healthy competitive environment between domestic and foreign blockchain developers.
Though the South Korean government has prohibited all types of Initial Coin Offerings (ICOs) and has not developed a related policy since, the country is known for its proactive approach to blockchain adoption.
In the beginning of September, a partnership initiated by the MSICT began a six-month training course to turn forty-two applicants into “blockchain specialists,” aiming to increase the availability of skilled professionals in South Korea’s burgeoning blockchain economy.
Earlier this month, Cointelegraph also reported that the Korea Customs Service has signed an agreement with Samsung SDS to deploy blockchain technology for its customs clearance system. The customs services hopes to streamline and secure document sharing at each stage, from customs declarations of exported goods to delivery.
The biggest brokerage firm in Brazil, Grupo XP, is planning to launch a crypto exchange in the coming months.
Chief Executive Officer of Grupo XP Guilherme Benchimol told Bloomberg that the company will launch an exchange called XDEX in the coming months, with around forty employees. Grupo XP is the biggest financial group in Brazil, comprising companies with various business models.
XP has reportedly set a goal to have $1 trillion reais ($245 billion) under custody by 2020, which is four times what the company expects to raise by the end of this year. In addition, XP will launch a bank in the next few months.
Benchimol said that he “must confess, this is a theme I’d rather didn’t exist, but it does," adding that “we felt obligated to start advancing in this market." He noted that the company is being pushed into the crypto business by the popularity of cryptocurrencies among investors. 3 million Brazilians “have exposure” to Bitcoin, compared to only 600,000 that invest in the stock market.
Initially, Grupo XP announced its plans to launch an over-encounter (OTC) BTC exchange in April. The move was reportedly the first for XP, which first registered an outfit called XP COIN INTERMEDIACAO in August 2017. Later that year, following a 5 million reals (about $1.5 million) capital injection, the company rebranded to become XDEX.
Earlier this week, Brazil’s Administrative Council for Economic Defense (CADE) launched a probe into six major national banks regarding alleged monopolistic practices in the crypto space. Per a CADE report, “the main banks are imposing restrictions or even prohibiting ... access to the financial system by cryptocurrency brokerages.” The banks reportedly claim that the brokers’ accounts were closed due to the absence or lack of client data.
U.S. Congressman Tom Emmer will introduce three bills to support blockchain and digital assets in the country.
The three upcoming bills are entitled the “Resolution Supporting Digital Currencies and Blockchain Technology,” the “Blockchain Regulatory Certainty Act,” and the “Safe Harbor for Taxpayers with Forked Assets Act.”
The legislation is focused on the support and development of blockchain technology, as well as the establishment of a safe harbor for taxpayers with “forked” digital assets.
The bills would prompt the federal government to provide a “simple legal environment,” and restrict fines against individuals who report “forked” digital assets until the Internal Revenue Service (IRS) presents formal guidance on the appropriate means of reporting. According to Emmer, “taxpayers can only comply with the law when the law is clear.” The representative further commented on the initiative:
“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills.”
Moreover, Emmer has taken up the position of co-chairman of the Congressional Blockchain Caucus, a platform for the industry and government collaboration to examine the implications of blockchain and digital currencies. According to the announcement, “the Caucus believes in a hands-off regulatory approach to allow this technology to evolve the same way the Internet did; on its own.”
Earlier this week, U.S. lawmakers called on the IRS to issue clarified and “comprehensive” crypto taxation guidance. The lawmakers argue that while the IRS has proactively continued to remind taxpayers of the penalties for non-compliance with its guidance, its failure to introduce a more robust taxation framework “severely hinders taxpayers' ability” to meet their obligations.
Also this week, Cointelegraph reported that the American National Standards Institute is going to discuss blockchain and Artificial Intelligence (AI) issues at its next Legal Issues and Joint Member Forum. The attendees will reportedly focus on legal and ethical concerns and explore concrete applications of blockchain technology and AI.
Insider sources have suggested that Hong Kong Stock Exchange (HKEX) is eyeing takeovers in the blockchain and other tech sectors in a bid to boost it’s revenue sources.
Bloomberg cites “people with knowledge of the matter” as saying that the exchange is considering a change in strategy due to stalling trading links with exchanges in China, citing worsening U.S.-China trade relations as a further cause for concern.
The sources reportedly told Bloomberg that HKEX CEO Charles Li has met with “at least three investment banks” to discuss diversifying the exchange’s model, including a possible set of takeovers in the “data, analytics and blockchain sectors.” Due to the sensitivity of the matter, Bloomberg’s sources asked to remain anonymous.
They reportedly suggest that Li has been looking to the venture capital arms of U.S.-based stalwart exchanges CME Group Inc. and Nasdaq Inc. “as possible models,” with Bloomberg noting that Nasdaq saw 19 percent of its 2017 revenue from data products and 13 percent from market technology.
By contrast, Bloomberg’s data indicates that HKEX generated almost 100 percent of its 2017 revenue from clearing and trading fees.
Bloomberg’s sources further allege that potential technology acquisitions were “the focus” of two recent key HKEX meetings — a strategy discussion with senior managers on September 10, and a board member meeting on September 12. They report that the exchange is due to launch a three-year strategy plan starting in 2019, of which the details are currently under discussion.
Banny Lam, head of research at CEB International Investment Corp., told Bloomberg in an email that:
“The strategy is in the right direction but it is not easy to achieve the targets. HKEX needs to maintain a momentum of growth by exploring new businesses.”
According to Bloomberg, HKEX has “struggled to integrate” its 2012 acquisition of London Metal Exchange, and the article cites an unnamed HKEX advisor as saying that there are “industry concerns” surrounding the success of future deals.
As previously reported, within China itself, blockchain has been making inroads into the very infrastructure of major stock exchanges. Earlier this summer, the world’s fourth-largest stock exchange, the Shanghai Stock Exchange (SSE) released plans to adopt the technology for use in securities transactions.
Travis Kling has left Point72 Asset Management to start his own digital assets fund in the beginning of October.
Former equities portfolio manager Travis Kling has left billionaire Steven Cohen’s Point72 Asset Management to launch his own digital assets fund, Bloomberg reported September 21.
Point72 is an asset management firm founded in 2014 as the successor of investment company SAC Capital Advisors. The latter pleaded guilty to federal insider trading charges and paid a $1.8 billion fine. Point 72 has offices in New York City, Hong Kong, Tokyo, Singapore, London, Paris, and Palo Alto, while its staff is marked with former IBM executive Timothy Shaughnessy as chief operating officer.
The new Los Angeles-based fund called Ikigai will reportedly start on October 1 with partners’ capital, with plans to raise $15 million of outside capital on November 1. By mid-2019, Kling plans to increase Ikigai’s tokens portfolio to $100 million and its venture fund to $33 million.
At the time of launch, most of the funds will be in cash. The fund has a fee of two percent in addition to custody costs, while a minimum investment for accredited investors is $250,000.
Kling expressed confidence in cryptocurrencies, despite the current slump in markets, as interest in the space continues to grow. Kling said that “[cryptocurrency] will be a multi-trillion-dollar asset class,” adding:
“It will be part of our everyday lives. It’s still very early, but the development and growth of this technology will be exponential.”
In July, Cohen backed Arianna Simpson’s crypto and blockchain-focused hedge fund Autonomous Partners through his private equity firm Cohen Private Ventures. Simpson then said that her fund has held off from investing in Ripple (XRP) pending clarification from U.S. regulators as to whether XRP would be classified as a security.
In April, it was reported that 10 percent of crypto hedge funds could face closure in the subsequent eight months due to both market health and regulatory uncertainty. Kyle Samani, co-founder of U.S.-based fund Multicoin Capital, said that “new capital has slowed, even for a higher-profile fund like ours.”
Ever wondered what you can spend your cryptocurrency on? Cointelegraph unpacks some of the most outrageous things you can buy with crypto.
With Bitcoin’s 10th birthday just around the corner, it's worth taking a look at some of the most outrageous and expensive things people have been able to purchase with BTC.
We have certainly come a long way since the infamous Bitcoin pizza incident, where Laszlo Hanyecz ordered two pizzas from Papa John’s for 10,000 BTC back in 2010. It goes to show how much progress has been made in eight years — especially when you take a look at how much you’d pay for those same two pizzas with Bitcoin today.
Given the gradual rise in value of Bitcoin over the years, early adopters who got their hands on substantial sums of the cryptocurrency found themselves with an incredible amount of wealth in the last two years.
Some may have sold their Bitcoin, while others have adopted the ‘hodl’ mantra. Nevertheless, as the popularity of cryptocurrencies has increased, people have been open to selling real-world assets — from cars to islands — for a slice of the proverbial crypto pie.
Let's explore the wide variety of worldly possessions people can buy with their hoards of cryptocurrency.
Any crypto enthusiast is familiar with the phrase ‘When Lambo,’ as the luxury vehicle has become somewhat of a cult icon for crypto-made billionaires, who have bought the sports cars with their crypto-wealth.
While a Lamborghini may be the goal, people have been able to purchase a wide variety of vehicles, from affordable hatchbacks to luxury sports cars, with cryptocurrency for some time now.
A luxury car dealership in Japan now accepts Bitcoin as a payment method through renowned cryptocurrency exchange BitFlyer. According to the company, customers can easily pay for their next prospective vehicle in a matter of minutes — which certainly beats conventional means of buying vehicles, like obtaining finance through a bank.
While this dealership is driving forward a new payment model, it’s not the first time people have been able to buy cars with crypto. In December last year, a Manchester car owner listed a gold-colored Rolls Royce on Autotrader, which could only be purchased with Bitcoin. BlockShow Asia 2017 also provided the stage for BitCar to promote their platform, which allows people to buy and sell exotic cars like Lambos using cryptocurrency.
The latest company to begin accepting payment in crypto is American dealership Post Oak Motor Cars. The Rolls-Royce, Bentley and Bugatti dealership now accepts Bitcoin and Bitcoin Cash from clients. Owned by billionaire Tilman Fertitta, the company offers customers this facility around the world.
Brick and mortar
Astonishingly, some people are even willing to accept cryptocurrency for property, an asset class that has historically considered a good store of wealth and investment.
In this particular section, there is big divide between what you can buy with cryptocurrency, from a modest home to an entire tropical island.
Starting off with that piece of Caribbean paradise, a plot of on Union Island in St. Vincent and the Grenadines went up for sale in Bitcoin late last year. The £5.3 million, 13-acres plot was only up for sale in Bitcoin, with the owners asking for 570 BTC at the time.
Investors looking for property in the Middle East had the chance to buy a number of apartments in Dubai. A couple of British entrepreneurs listed 50 luxury flats for sale in Bitcoin in February this year, and amazingly all of those properties were sold. Incredibly one of the investors has bought 10 of the properties with Bitcoin.
We’ve also seen a number of mansions up for sale across the world, including a luxury mansion in Notting Hill in London, with the investment firm selling the property only taking payment in Bitcoin.
Across the Atlantic Ocean, an early Bitcoin investor listed his Miami mansion for sale, making payment in Bitcoin an option for prospective buyers.
It’s not all about million dollar mansions though, as a home in Grimsby on the North Coast of England was put on sale for 18 BTC in October 2017.
For the lovers of the finer things in life, it is possible to buy expensive jewelry with cryptocurrency.
Diamond retailer Samer Halimeh New York has been accepting crypto payments for jewelry since September 2017.
The move is an interesting one, as it was sparked by an increase demand from customers looking to buy jewelry worth more than $1 million.
Reeds is another American jewelry retailer that has begun accepting payment in Bitcoin. Their offerings go further than just conventional jewelry, as customers are able to buy gold ingots and loose diamonds with the cryptocurrency.
This essentially allows cryptocurrency holders to diversify their investments, should they choose to take an easier way by obtaining traditional stores of value like gold and diamonds.
Booking your seat
Bitcoin has also been used by some to purchase a wide variety of tickets, from big events to good old plane tickets.
Earlier this year, an American NFL fanatic was able to buy front row tickets for the Super Bowl through an online platform. The transaction cost $19,000, which was 2.2 BTC at the time, and the website that facilitated the purchase made a special effort to accept the cryptocurrency for the first time.
Those that have been bitten by the travel bug and have a substantial amount of Bitcoin in their possession can also travel the world using their cryptocurrency.
While we’re on the topic of travel, some of the world’s richest have been lucky enough to attend world-renowned entrepreneur Richard Branson’s annual blockchain summit on his very own Necker Island.
The Necker Blockchain Summit is an invite-only event which brings together some of the greatest minds to innovate and foster the growth of blockchain technology around the world.
If you want to check out where the richest in the world — including crypto-made millionaires — hang out, check out Cointelegraph’s prestigious list.
Knowledge is power
Perhaps one of the most intriguing ways you can spend cryptocurrency is by enrolling at a university and then paying for your tuition fees with Bitcoin.
Cumbria University in England has been allowing students to pay for their education with Bitcoin since 2014. Cointelegraph has confirmed that this payment option is still available, although the popularity of the option has waned in recent years.
The University of Nicosia in Cyprus was the first in the world to offer students the option of paying fees with Bitcoin.
You can also do the same at the European School of Management and Technology, which began accepting payment in BTC in 2017.
More of the same to come?
A common theme in the arguments against cryptocurrency adoption has been the obvious barrier to entry when it comes to day-to-day use of digital currencies.
Many argue that it is difficult to actually use cryptocurrency for everyday items like grocery shopping or other menial expenses.
While this may be the case, there have been moves in the right direction in all sorts of places. For one, the ever-growing number of cryptocurrency ATMs, which allow people to draw cash in exchange for crypto, makes it possible to use your crypto to pay for goods in a fairly quick manner.
What is more, the crypto ATM market is expected to grow exponentially in the next five years, according to reports published in September.
While the crypto markets have endured a testing year so far, these type of developments show that there is a steadily growing market of consumers that are looking to actively use cryptocurrency to settle payments.
Whether it’s cars, property, flights or a ticket to the Super Bowl, cryptocurrencies can and have been the answer for some. The only question is when this will snowball into an everyday phenomenon.
The Japanese FSA has launched an investigation following a $60 million hack of crypto exchange Zaif.
The Financial Services Agency (FSA) of Japan has launched an investigation after $60 million worth of cryptocurrencies were allegedly stolen from local crypto exchange Zaif, Cointelegraph Japan reports Friday, September 21.
According to the report, the FSA has sent its staff to Tech Bureau — Zaif's parent company based in Osaka — to verify whether the company will be able to cover customer losses.
As Cointelegraph Japan has learnеd, the Japan Virtual Currency Exchange Association (JVCEA) has urged all local crypto exchanges to conduct an immediate inspection of their security protocols. Following the notice, exchanges BitFlyer and Quoine reported they had not detected any data breach during the check.
As Cointelegraph has previously reported, Zaif experienced a security breach on September 14, but the server error was only detected on September 17. Hackers reportedly stole cryptocurrencies amounting to 4.5 billion yen from users' wallets along with 2.2 billion yen from the assets of the company itself, with total losses totalling $59.7 million.
According to Cointelegraph Japan, Zaif previously received two administrative warnings from the FSA in March and June. The first mentioned instances of “system failure” and “fraudulent withdrawals.” Despite Zaif failing the check, the exchanged was not closed.
The Japanese National Police Agency recently published a report stating that crypto thefts have tripled in 2018. During the first six months of this year 60.503 billion yen ($540 million) worth of crypto was stolen from different wallets. The biggest hack of this year took place in January 2018, when 58 billion yen ($520 million) worth of NEM coin were stolen from Coincheck crypto exchange.
Bitcoin mining behemoth Bitmain has unveiled its next-generation ASIC chip soon to be used in the firm’s new “Antminer” crypto mining machines.
An Application-Specific Integrated Circuit (ASIC) chip is a piece of tailored mining hardware geared to mine cryptocurrency based on a specific hashing algorithm.
Bitmain CEO and co-founder Jihan Wu reportedly announced the new crypto-mining-specific ASIC chip BM1391 during his keynote lecture at the World Digital Mining Summit in Georgia.
According to Wu, Bitmain has now started to mass produce the chip and plans to integrate it into its next-generation Antminer machines.
The new “acceleration” ASIC chip is said to use an SHA256 algorithm and is based on a highly-advanced semiconductor manufacturing technology, 7nm (nanometer) Finfet. It reportedly integrates “more than a billion transistors,” using a special circuit structure and low power-intensive technology to optimize efficiency. According to CEO Wu, tests have shown the chip “can achieve a ratio of energy consumption to the mining capacity that is as low as 42J/T.”
Wu emphasized that as the industry matures, “exponential growth” in blockchain user traffic means that ever-greater processing power will be required to keep pace. He predicted that bleeding-edge computing technology development will also need to be integrated with blockchain to address the challenges facing the burgeoning industry.
Just yesterday, Bitcoin mining software manufacturer Bitfury Group unveiled its own ASIC chip dubbed Bitfury Clarke, which the firm plans to integrate into a range of hardware, including its mining servers.
In July, Cointelegraph reported that bearish crypto markets had negatively impacted the sale of ASIC chips, with a predicted price drop of 20 percent that month. The affected graphics card suppliers including the Taiwan Semiconductor Manufacturing Company (TSMC), as well as its integrated circuit (IC) design service partners like Global Unichip.
The Swiss Bankers Association has divided blockchain startups in two categories, providing guidelines to prevent a crypto exodus.
The Swiss Bankers Association (SBA) has issued basic guidelines for banks working with blockchain startups on Friday, September 21. As Reuters reports, the measure was taken to prevent a mass crypto exodus out of Switzerland.
The document states that banks see blockchain as an opportunity for Switzerland to house financial and technology startups despite "risks," especially money laundering. Due to a significant increase of crypto-related companies based in the country, the SBA has decided to provide a road map for banks to open their corporate accounts.
The guidelines divides blockchain companies into two large groups: those with and those without Initial Coin Offerings (ICO). Blockchain companies without ICOs should be treated like other small- and medium-sized companies, and will be obliged to accept relevant Swiss regulations and apply them to their business models.
The second group includes blockchain startups with ICOs who issue tokens either in fiat or in crypto. Companies whose ICOs are funded via digital coins will have to comply with stricter rules and fall under the Swiss AML and KYC laws.
The SBA guidelines will treat the acceptance of cryptocurrencies under ICOs as a “spot transaction.” As per the scheme provided by SBA, ICOs funded with fiat are placed under the same rules as blockchain companies with no ICOs.
According to Reuters, the move comes amid a recent exodus of crypto-related startups who have failed to get access to the Swiss banking sector. As the news agency has learned, only a few of almost 250 local banks have allowed to assets raised via crypto to be stored.
Moreover, two of them have withdrawn their services for blockchain-related companies. For instance, Zuercher Kantonalbank, the fourth largest Swiss bank, has closed more than 20 blockchain-related accounts, Reuters reported in July.
Under these unstable conditions, the new guidelines might help to create a dialogue between banks and crypto startups more simple, according to SBA strategic adviser Adrian Schatzmann:
“We believe [...] we’ll be able to establish a basis for discussion between banks and innovative startups [...] facilitating the opening of accounts.”
Switzerland is home to dozens of crypto-related startups, situated mainly in the canton of Zug known as Crypto Valley. Based on Reuters data, the total number has now climbed up to 530 firms.
As Cointelegraph reported earlier in June, Hypothekarbank Lenzburg has become the first bank in Switzerland to provide business accounts to blockchain and cryptocurrency companies.
On Sept. 17, CloudFlare introduced its decentralized content gateway.
On Sept. 17, a vital United States-based content delivery network (CDN) CloudFlare introduced a new decentralized content gateway via InterPlanetary File System (IPFS), a peer-to-peer (p2p) network run by thousands of computers bypassing the conventional HTTP system. Here’s how it supposed to work and why CloudFlare decided to support such a project.
What is CloudFlare?
CloudFlare is a company that provides content delivery network (CDN) services and DDoS protection. Basically, CloudFlare plays the role of an intermediary between the website and the visitor. It defends the website by filtering out suspicious requests and speeds up its overall performance via its CDN, powered by 152 data centers located in different parts of the world. As CloudFlare’s CEO Matthew Prince explained to the Wire:
“At that data center, we’ll make a series of determinations: Are you a good guy or a bad guy? Are you trying to harm the site? Or are you actually a legitimate customer? If we determine that you’re a bad guy, we stop you there. We act essentially as this force shield that covers and protects our customers.”
The company was created in 2009, when Prince and Lee Holloway, who had been jointly working on a system that tracked how spammers harvested email addresses (dubbed ‘Project Honey Pot’), met Michelle Zatlyn at the Harvard Business School, where Prince went to get his MBA. Together, they expanded the concept, came up with a new name and won the Harvard Business School Business Plan competition.
The service itself quietly launched its beta in June 2010. On Sept. 27 of the same year, CloudFlare was officially launched at the TechCrunch Disrupt event in San Francisco. As per data stated on their website, the company serves around 8 million internet properties and “powers nearly 10 percent of all internet requests.” According to the Wire, Cloudflare customers vary “from individual bloggers who pay nothing for basic security services to Fortune 50 companies that pay up to a million dollars a year for guaranteed 24-hour support.”
CloudFlare’s politics: Path to decentralized internet
CloudFlare has been publicly championing net neutrality — the idea that networks should not discriminate against content that passes through them.
On June 2, 2011, the controversial hacker collective Lulzsec tweeted “we love Cloudflare” after the service assisted in handling a DDoS attack on their website. That event seemed to accurately describe the position that Cloudflare had found itself in — while it had received widespread acknowledgment for its efficiency, the service — albeit somewhat indirectly — has protected people who could be deemed radicals.
The situation escalated further in 2013, when Cloudflare was called “terrorists’ little helper” by a Kernel journalist for refusing to drop a Chechen news site Kavkaz Center. Prince then explained why the service chose to stand its ground in a blog post:
"One of the greatest strengths of the United States is a belief that speech, particularly political speech, is sacred. A website, of course, is nothing but speech [...] A website is speech. It is not a bomb. There is no imminent danger it creates and no provider has an affirmative obligation to monitor and make determinations about the theoretically harmful nature of speech a site may contain."
In March 2017, the Southern Poverty Law Center published an article claiming that Cloudflare had been optimizing content delivery for “at least 48 hate sites across Europe.” A similar article was published by ProRepublica in May 2017. In response to the latter piece, Cloudflare reportedly updated its abuse reporting system to allow people to more safely file complaints about the material on its sites.
In August 2017, Cloudflare decided to go against its net neutrality principles for the first time: After a neo-Nazi website The Daily Stormer wrote a hate-filled column dedicated to a white-supremacist rally in Charlottesville and went as far as to suggest that Cloudlflare’s top management shared their ideology by covering them, Prince decided to deny them service, setting a precedent.
New product: What is IPFS?
The policies mentioned above explain why creating a new decentralized content gateway seems like a logical step for Cloudflare. Called Cloudflare’s InterPlanetary File System (IPFS) Gateway, it serves as a simplified way to access the IPFS, which is a blockchain-based, peer-to-peer file system composed of thousands of computers that store files, acting as nodes within a global network.
IPFS alters the conventional HTTP system the internet is largely based on. Instead of using the location-addressed system that HTTP entails — to access, say, Google, the client sends a request to the Google server’s IP, and the server returns a response message — it introduces a content-addressed system. Thus, the IPFS uses a cryptographic hash on a file as the address. CloudFlare explains this system with the following example:
“So rather than asking the network ‘get me the content stored at 188.8.131.52,’ you ask ‘get me the content that has a hash value of QmXnnyufdzAWL5CqZ2RnSNgPbvCc1ALT73s6epPrRnZ1Xy’ […] The content with [that] hash could be stored on dozens of nodes, so if one node that was caching that content goes down, the network will just look for the content on another node.”
The IPFS project was founded in 2014 by Juan Benet of Protocol Labs. It has since become an open-source project developed with help from the community.
As Cointelegraph previously reported, the IPFS launched its distributed file storage network in 2016 on Ethereum instead of Bitcoin, explaining the move because of “the Ethereum Network’s supportive development community and various innovative features.”
How Cloudflare’s new product could help to expand the IPFS?
The company is being considerably ambitious about their new product. The press release boastfully states:
“Just like when Cloudflare launched back in 2010 and changed the game for web properties by providing the security, performance and availability that was previously only available to the internet giants, we think the IPFS gateway will provide the same boost to content on the distributed web.”
Indeed, at least theoretically, the new gateway simplifies the process of interacting with the decentralized network, allowing to access it with a casual browser:
“At the most basic level, you can access any of the billions of files stored on IPFS from your browser. But that’s not the only cool thing you can do. Using Cloudflare’s gateway, you can also build a website that’s hosted entirely on IPFS, but still available to your users at a custom domain name.”
To lure in new clients, CloudFlare is promoting their gateway by granting a free SSL certificate to any website connected via their new service, offering to secure it from “snooping and manipulation.”
Further, perhaps in an attempt to prevent new net neutrality-related scandals, the company claims that “Cloudflare’s IPFS gateway is simply a cache in front of IPFS” and that they do not “have the ability to modify or remove content from the IPFS network,” reminding that there is the possibility of users sharing abusive content. For such cases, the company urges to use their “standard abuse reporting mechanism.”
Lately, crypto prices have not been falling on bad news and have been rising on minor positive ones – investors are looking for reasons to buy.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
The market data is provided by the HitBTC exchange.
Michael Novogratz, founder of the digital asset management firm Galaxy Digital, has recently reiterated his view that cryptocurrencies have hit a bottom and a rebound is due. He believes several institutional players might invest in the market, boosting prices.
It, however, will be a slow grind higher. We have also been maintaining that the rally this year will be a gradual upward move, unlike the vertical increase seen in 2017.
Another billionaire investor, Tim Draper is unperturbed by the continuous decline in crypto, viewing it as a buying opportunity and sticking to his target of $250,000 by 2022. In regards to the news, the hack of a Japanese crypto exchange Zaif has not resulted in any panic selling, which shows that the bears are currently unable to capitalize on adverse headlines.
The U.S. Securities and Exchange Commission (SEC) has said it had not “reached any conclusions with respect to any of the issues involved,” with the Bitcoin exchange-traded fund (ETF) proposal backed by investment firm VanEck and financial services company SolidX.
The Commission has requested further comments on the matter. This keeps the hope alive that an ETF might become a reality sooner than most expect.
When an asset class doesn’t fall on adverse news but rises on minor positives, it indicates that the investors are looking for reasons to buy. So, which are the cryptocurrencies that are showing a bottom formation? Let’s find out.
Bitcoin has broken out of both moving averages. It should now move up to the downtrend line of the descending triangle, which will act as a stiff resistance. The cryptocurrency has turned down four times from this line, making a lower high on each occasion.
This sequence will be broken if the bulls can push price above the previous lower high of $7413.46. Such a move will invalidate the descending triangle, which is a bullish sign. The positive divergence on the RSI is another indication of accumulation at the support.
The zone of $5,900–$6,075.04 has held five times since February of this year, making it a formidable support. The traders can wait for today’s close (UTC) to be above $6,600 and buy 50 percent of the desired allocation in the range of $6,600–$6,750.
We don’t want to buy the complete allocation at the current level because the downtrend line of the descending triangle can invite selling by the bears. However, as the prices have bounced off the lows, we want to initiate partial position because the stops are close by. The initial SL can be kept at $5,900.
If the BTC/USD pair struggles to break out of the downtrend line of the triangle, the traders can trail the stops higher. We shall add the remaining 50 percent of the position when the price sustains above the downtrend line. The targets are $7413.46 and $8566.4. Our bullish view will be invalidated if the bears break the critical support zone.
Ethereum has not participated in the pullback. It continues to languish below the 50-day SMA and inside the descending channel.
The 20-day EMA has flattened out and the RSI is also trying to move up into the positive territory, which shows that the selling pressure has abated.
If the bulls can break out of the downtrend line of the descending channel and the 50-day SMA, a change in trend is likely. We suggest traders wait for the breakout before initiating any long positions.
If the ETH/USD pair fails to sustain above the 50-day SMA, it might remain range bound and enter a bottoming formation.
Ripple has rallied over 184 percent in just four days. With this move, it has broken out of the downtrend line with force. The downtrend is over and a new trend has started.
The moving averages have completed a bullish crossover and the RSI has risen into the overbought territory for the first time since April of this year. While all these are positive signs, we shall not attempt to chase the rally higher.
The traders should wait for the rally to stall for a day or two and then build new positions because if a long position is initiated at the current levels, the stop loss will have to be way lower. Therefore, although we are bullish on the XRP/USD pair, we shall not suggest any long positions at the current levels.
The important level to watch out on the upside is $0.70, which is acting as a stiff resistance. On any correction, the downtrend line, which had been acting as a resistance until now, will act as a strong support.
Bitcoin Cash has also pulled back along with the other cryptocurrencies. It has broken out of the 20-day EMA and can now move up to the 50-day SMA, which is just below the resistance line of the descending channel.
A break out of the descending channel will indicate a probable change in trend. The levels to watch out for on the upside are $660, and above that $880.
If the bulls fail to break out of the channel, the BCH/USD pair might remain stuck between $400 and the resistance line of the channel. Traders should establish a new position only on a confirmed break out of the channel because until then, the trend remains down.
EOS has risen above both moving averages and the overhead resistance at $5.65. It can now move up to $6.8299.
The moving averages are close to completing a bullish crossover and the RSI has entered the positive territory. This increases the probability of a change in trend.
The bulls might face selling in the zone of $6.8299–$7.324. If this zone is crossed, the rally can extend to $8. Therefore, the traders can hold their remaining long positions with a stop at $4.4. The stop loss can be trailed higher as the EOS/USD pair moves northwards.
Stellar rallied sharply for the past two days and has broken out of the range for the first time since September 11. This breakout has a pattern target of $0.3157505 with a minor resistance at the downtrend line.
During the previous two occasions, the XLM/USD pair had risen vertically after breaking out of the 50-day SMA. Currently, both moving averages are on the verge of a bullish crossover and the RSI is also in the positive territory.
A break out of the downtrend line of the descending triangle will invalidate the bearish pattern, which is a bullish sign. Therefore, traders can enter long positions on a close above $0.255, with the stop loss at $0.18. The targets are $0.3157505 and $0.36. If the pair struggles to break out of the downtrend line once again, traders can tighten their stops.
Litecoin has broken out of the downtrend line and the 20-day EMA. It is currently facing resistance at the 50-day SMA. The bulls haven’t been able to sustain above the 50-day SMA since May 16 of this year. Hence, any break out of this level will suggest a likely change in trend.
The important level to watch on the upside is $69.279. If the LTC/USD pair breaks out of this resistance, it will complete a double bottom formation, which has a pattern target of $89.
Therefore, we suggest a long position on a breakout and close (UTC time frame) above $69.279. The initial stop loss can be placed at $49 and raised later.
Cardano has broken out of the 20-day EMA and is close to the 50-day SMA. If the bulls push prices above the 50-day SMA, the pullback can extend to $0.111843.
The moving averages are flattening and the RSI is trying to rise into the positive territory. This increases the probability of a continued move higher.
On the downside, the ADA/USD pair will find support at the 20-day EMA and $0.071355. We don’t find any reliable buy setups on the cryptocurrency; hence, we shall wait for a few days before suggesting any long positions in it.
The bulls successfully defended the 50-day SMA on Monero from September 17–19 and have broken out of the downtrend line. There is a minor resistance at $122.6, above which a rally to $140 is probable.
The 20-day EMA has turned up while the 50-day SMA has flattened out. The RSI has entered into the positive territory. These signs indicate that the path of least resistance is to the upside. Therefore, traders can trail their stops on the long positions to $100. Let’s reduce the risk on the trade.
On the downside, the XMR/USD pair has support at the 20-day EMA, the 50-day SMA and the trendline of the triangle.
IOTA has pulled back close to the upper end of the range of $0.5–$0.6170, where it is facing resistance from the 50-day SMA and the downtrend line.
The 20-day EMA has flattened out and the RSI is moving closer to the neutral territory, which shows that the near-term selling pressure has reduced. If the bulls break out of the overhead resistances, a rally to $0.7448 and further to $0.8152 is likely.
How hackers stole $59 million from Zaif.
This week, yet another major hack occurred in Japan: Hackers stole around $59 million worth of cryptocurrencies from local cryptocurrency exchange Zaif. It took several days for the platform to notice the breach, and now it has fallen under the tight scrutiny of the country’s regulator. The company that owns Zaif has already agreed to sell its majority stake to cover the losses.
Zaif was already under the FSA’s scope
Zaif was founded in May 2014 by Osaka-based startup Tech Bureau Inc. It is one of the 16 crypto exchanges in Japan which have received approval from Financial Services Agency (FSA) — since the amendment of Payment Services Act in April 2017, all crypto exchanges in the country are required to register with the regulator.
Zaif has received “punishment notices” — or business improvement orders — from the FSA at least twice this year: the first one on March 8 and the second on June 22. Specifically, in March, Zaif was one of the seven exchanges criticized for a lack of “the proper and required internal control systems” by the watchdog. The FSA has been keeping a tight grip on local exchanges, firmly reacting to security breaches after two high-profile scandals: January’s unprecedented $532 million Coincheck hack (the exchange was not registered with the FSA at the time) and the infamous collapse of Tokyo-based Mt. Gox.
Now, according to government sources cited by Japan Times, the exchange is in danger of getting a third warning from the FSA, which also inspected all the other exchanges in the country for similar breaches.
Almost $60 million was stolen, but the amount might be even higher
According to Cointelegraph Japan, the security breach occurred on Sept. 14 and lasted for two hours — between 5 p.m. and 7 p.m. local time. As a result of the attack, the hackers managed to steal 4.5 billion yen (roughly $40.1 million) from users’ hot wallets as well as 2.2 billion yen (around $19.6 million) from the assets of the company, with total losses amounting to 6.7 billion yen, or around $59.7 million. Specifically, the fraudsters stole 5,966 Bitcoin (BTC). Two other stolen assets include Bitcoin Cash (BCH) and MonaCoin (MONA), however it is unclear how much of those were drained from the exchange, as the actual amount will be confirmed once the servers are back online.
Tech Bureau hasn’t disclosed any more details about the hack, citing a criminal investigation that has been launched by the FSA.
It took several days for the exchange to detect the security breach
According to Tech Bureau’s press release, the exchange spotted a server error on Sept. 17, after which Zaif suspended deposits and withdrawals. On Sept. 18, the exchange realized that the error was a hack and reported the incident to the police and the FSA.
It wasn’t the first time
In February 2018, Zaif admitted to a “system glitch” that allowed users to temporarily acquire trillions of dollars worth of Bitcoin (BTC) for free.
Similar to this time, Zaif reported the breach after several days — on Feb. 20, they made a post on their site explaining that for 18 minutes on Feb. 16, users accidentally found themselves able to ‘trade’ yen for virtual currency — at an exchange rate of zero yen per coin.
According to reports, seven users were able to obtain crypto for “free,” but the exchange managed to cancel all illicitly-gained transactions. Specifically, one “buyer” made an attempt to sell 2,200 trillion yen (about $20 trillion) in Bitcoin before the problem was resolved.
Users took to social media to complain about the exchange’s poor back-end performance and lack of support.
The exchange has already taken its toll
According to Fortune sources, the FSA has asked Tech Bureau to submit a report on the breach. Additionally, it plans to conduct an on-site inspection of the company’s offices after receiving the document.
Meanwhile, Tech Bureau has promised to refund clients who lost assets due to the attack, and “immediately” signed a deal with a Fisco Ltd., a Tokyo-based financial markets research firm which also has a cryptocurrency exchange in their operation. The Osaka-based startup will reportedly receive 5 billion yen (roughly $44.5 million) in exchange for selling a large stake of the company, making Fisco the majority shareholder. Moreover, as per the agreement, the startup will reportedly have to dismiss more than half of its directors and corporate auditors.
Currently, Zaif is the 37th largest cryptocurrency exchange by reported turnover, and its daily change volume is down 17 percent, according to CoinMarketCap.
Albert Heijn, Holland’s largest supermarket chain, has revealed it is using blockchain for its own-brand “sustainable” orange juice’s supply chain.
Albert Heijn, Holland’s largest supermarket chain, has revealed it is using blockchain to make the production chain of its orange juice transparent, International Supermarket News reports September 21.
Albert Heijn will reportedly launch the new blockchain system in partnership with its supplier, Refresco. To give customers’ maximum information about the source of Albert Heijn’s own-brand “sustainable” product, they will be able to scan a QR code on the orange juice carton that will trace the end-to-end route of its production, from Brazil to the Netherlands.
The system will reportedly store data that reveals the quality and sustainability ratings held by various produce growers, as well as information about the fruits themselves — including their harvesting period and sweetness intensity. The system will further enable customers to tip, using a “Like2Farmer” option.
Albert Heijn’s Commercial Director Marit van Egmond is quoted as saying that:
“We want to make an active contribution on issues that are important to our customers — by making our products healthier, reducing food waste and limiting our impact on the environment. Transparency in the chain is becoming increasingly important.”
As previously reported, blockchain technology has been gaining traction in the global food industry.
In June, the South Indian state of Kerala’s government announced it would be using the technology for food supply and distribution, considering a blockchain system could make the state’s supply network for dairy products, vegetables, and fish more efficient. That same month, Microsoft revealed a new partnership to develop its own blockchain-based product tracking platform to secure traceability and visibility across the supply chain.
In April, U.S. retail giant Walmart announced it was ready to use blockchain in its live food business. Together with IBM, the company has developed a system that it says will reduce food waste, as well as improve contamination management and transparency.
Nicolas Maduro has stated the Petro will “com[e] into play” as a currency for global exchange in October.
The Venezuelan president appeared on the national VTV channel to deliver his speech on the latest economic issues. As cited by the VTV website, he then announced the upcoming use of Petro on an international level, stating:
"Petro comes into play as a currency for exchange, purchase and convertible currencies for the world."
However, the Venezuelan leader did not specify the areas where the Petro will be used, nor did he name any of countries ready to accept the oil-backed cryptocurrency as payment.
According to the news agency’s investigation, the Petro does not currently trade on any of the major global crypto exchanges, nor it is backed yet with Venezuelan oil, as the Atapirire area that Maduro claimed was the actual petroleum center for backing the coin shows no signs of recent activity.
Furthermore, the Reuter’s article cited former Oil Minister Rafael Ramirez who wrote that "the petro [...] only exists in the government’s imagination.”
As experts told media outlet Wired in August, the state-owned currency was reportedly backed by national oil company PDVSA, which in fact had $45 billion in debt and showed no signs of any trading activity. Some experts, according to Wired, tended to think the Petro was a "smoke curtain" to conceal Maduro's recent failure to reanimate the national fiat currency, the sovereign bolivar.
Despite all claims about the Petro’s insolvency, Maduro has tied the national coin to economic reforms. According to a recent statement, the Petro reportedly became Venezuela's second government currency along with the bolivar, having started its circulation on August 20.
As Cointelegraph reported later in September, Venezuela announced that the currency would be used as a unit of account within the country, making salaries and pricing systems be tied to Petro. According to Maduro, the Petro has also been used in local social programs for funding the construction of houses for homeless.
Altcoin Ripple has seen daily growth of around 140 percent to overtake Ethereum in market cap rankings on CoinMarketCap.
As of press time, Ripple has a listed market cap of around $26 billion, while Ethereum — now in third on CoinMarketCap — has around $23 billion in market cap. Bitcoin (BTC) is still ranked number one, with a market cap of around $115 billion.
Ripple has seen unprecedented 140 percent growth on the week, up almost 80 percent on the day alone, to trade at around $0.65 by press time.
Ripple weekly price chart. Source: Cointelegraph Ripple Price Index
At the beginning of this week, Ripple executives hinted that its xRapid payment platform solution could soon be launched. Also this week, PNC, a top ten U.S. bank, announced that it would use RippleNet to process international payments for its customers.
Over a 24 hour period, total market capitalization of the crypto markets has gained around $26 billion dollars, with total market cap currently around $228 billion by press time.
Daily total market capitalization. Source: CoinMarketCap
Blockchain educator and entrepreneur Jeremy Gardner speaks with Cointelegraph about the necessary conditions for mass adoption and why he never trades.
This interview has been edited and condensed.
As a serial blockchain entrepreneur, educator and investor, Gardner has founded the global educational nonprofit the Blockchain Education Network and co-founded the blockchain-based prediction platform Augur. Most recently, he launched his own impact investing fund called Ausum Ventures.
Breaking down mass adoption
Olivia Capozzalo: Can you walk me through what mass adoption is — not from the tech or building side of things, but from the side of regular people? What does it look like? What does it mean?
Jeremy Gardner: So, my point during the panel discussion was that mass adoption has nothing to do with education. Mass adoption has to do with building products that people want. Mass adoption happens no other way.
You don’t suddenly educate hundreds of millions or billions of people on the virtues of decentralization and libertarian values and then expect that it is going to make them want to use Bitcoin or use blockchain-based applications.
No. What you’re going to do is create tools that people want in their lives that they don’t have today.
The reason why Bitcoin was initially adopted — the reason why Bitcoin and blockchain technology exists today — is that it exists for primarily one reason and one reason only. People don’t like to say this, but it’s because of the dark markets.
If there was no Silk Road, if there was no reason for people to actually buy and use Bitcoin to buy drugs online, I’m not sure it would exist today. I think otherwise it’s just a libertarian, cypherpunk thought experiment.
It was only once individuals in the developed world actually had a purpose for acquiring these crypto tokens to exchange in commerce that Bitcoin achieved meaningful value — once people understood that Bitcoin allowed people to do something they could not do before.
There are other examples in Cyprus, Venezuela, and Zimbabwe — places that have had really awful hyperinflation — places like India with demonetization, China with capital control, South Korea with capital controls.
The use cases have emerged, but initially, you know, initially the use case of Bitcoin was buying drugs on the internet, and that was great. But it didn’t actually have to do with the underlying ideological ethos that its earlier adherents had been attracted to.
And that’s going to be true with all blockchain technology. We’re simply going to build tools that people want in order to get adoption. No ideology, no education about the virtues.
We could try to act like missionaries and spread the word like a religion, but it’s not the best way to do things. As long as we build tech that people want, they will come, and they will adopt it.
Watch the full interview with Jeremy Gardner here:
Crypto vs. fiat in crime
OC: It’s just funny because I spoke with Jason Bloomberg recently who also says Bitcoin first became popular for buying drugs on the darknet. But he says that’s a problem, and we need to do something about it — we need to outlaw or ban permissionless cryptocurrencies.
JG: Well, that is beyond idiotic. First of all, the DEA (United States Drug Enforcement Agency) recently said that use cases of blockchain technology and cryptocurrencies — or crypto assets, in particular — have dropped from 90 percent [80 percent] being black market to 10 percent today. And it’s only going to get lower because, guess what? blockchains are publicly transparent ledgers.
The whole value of public blockchains are these transparent, immutable, censorship-resistant ledgers that allow for an open world of finance — compared to the closed world of finance that we have today.
I mean, look at what Credit Suisse did in Mexico. They literally made deposit boxes so cartels could fit massive boxes of cash into them. It’s not like the current financial system is protecting us from organized crime and criminal activity.
I mean, who is paying more in fines for fraud than anyone in history? I mean, it’s JPMorgan. These banks are not a better system than today. The financial system today is much more culpable for things like terrorism and crime than blockchain technology perhaps ever will be.
You know what can be used for illegal activity and is actually is used for illegal activity more than anything else in the world?
JG: $100 bills. Benjamins. More than 80 percent of black market activity is used with American $100 bills. Should we go and ban the dollar? I don’t think anybody in their right mind would argue that — I would, because Bitcoin would go up. Come on, I mean, that is just an absurd statement!
I mean, look, Bitcoin is digital cash, digital gold — whatever you want to call it. It is an online form of value. It is no different than the money systems that we have today, besides the fact that it may be better.
Technology is morally agnostic. It can be used for good, it can be used for evil.
I think collectively — as a community — whether you have that impact thesis or not, you should aim to invest in technology that makes the world better, because blockchains are all about network effects. And so, to suggest that we should ban it, to me, is just mind-boggling. I could never get behind such an option.
OC: I fully agree with you.
Porn and radical innovation
OC: I’m wondering about something like Pornhub using crypto — in terms of what that does for adoption. Is that something that you think is important or impactful?
JG: So, I’m very biased here. I know the MindGeek [Pornhub’s parent company] guys. I’m not a huge fan of the porn industry, but they got in touch with me and told me that they want to get involved in this space. I was nothing short of thrilled.
If you think about what the porn industry has done over the past two decades when it comes to technology adoption, it’s mind-boggling.
I mean, they are the reasons why we used VHS. They are the reasons why we used DVD over Betamax. They have increased streaming capacity and the capacity of content delivery networks more so than any other technology company on the planet.
Porn companies are technology companies. They have been radical innovators in the world of tech.
If they show this technology works — I mean, they are one of the largest content delivery networks on the planet — if they show this tech works, other content delivery networks that may not be in not such a sketchy industry may adopt as well, and they will see a massive upside and increase of their holdings.
So, look, I feel very ambiguous about porn — I’m not a huge fan of it — but their ability to be, kind of, thought leaders and trailblazers in the space is remarkable. And they have historically been in the world of tech, and internet technology and even cinematography.
A lot of other industries are very nervous about adopting blockchain tech because it’s so new, it’s so cutting-edge, and they don’t want to piss off shareholders — they are the largest tech companies in the world. But guess what? MindGeek is privately owned and they have more of a capacity to innovate and adopt new technology than a lot of the big, publicly traded companies that are out there. So, I’m hopeful.
Who needs blockchain?
OC: So, to get a little bit of a bigger picture than the entertainment industry — who needs blockchain adoption? What does it mean that they need it?
JG: Who needs to learn about blockchain technology and who needs it are different. It’s the disenfranchised who need blockchain technology.
And when I say disenfranchised or disadvantaged, I mean a massive subset of the world’s population. I mean, pretty much everyone except for me — like, a white, middle-class, heterosexual man who lives in the United States, who lives in San Francisco. Unless I want to buy drugs off of the internet, I literally have no really strong use cases. Maybe decentralized prediction markets are an exception.
But for the two billion people in the world who have no access to financial services and the four billion that have limited access — that includes that initial two billion — that’s what blockchain technology is made for. That’s where we will see the real adoption.
The ability to have a bank account in your pocket, to have something that is secure and safe in your pocket, cryptographically, in a way that money under your bed or behind your wallet is now — that is revolutionary.
It affects the people that are dealing with predatory institutions — whether they are governments, whether they are financial services, businesses or, you know, governments that exploit their positions of power as middlemen to disenfranchise their consumers and their users.
Because what blockchain technology affords is radical disintermediation.
Blockchain technology is the most radically disintermediated technology that’s ever existed. In that, if you want to transfer value — whether it’s money, the title to your house, the rights to your land — you can now do it in a way that only requires a single counterparty: the person who’s buying it from you.
And that is a massive upgrade from the world that we live in today, in which all sorts of clearing houses and third-party institutions that are necessitated due to a lack of trust in transactions. But with blockchain technology, you can actually have trustless financial or value exchange.
Now, how do we get there? It’s not entirely clear. You know, with remittance solutions today, trials today, about giving directly to folks such as this, but we’ve historically primarily been building the blockchain technology for the people that need it least: you and me, people in the United States, people in the West.
And that’s not where the blockchain technology is going to have its biggest impact.
But first, we need to be bringing in entrepreneurs from these places where they are disenfranchised. Bringing the disenfranchised and having them build products out of their own experiences.
That way it can be paired with technology companies in the West that are probably most well-equipped to build this software and tech.
But, we need to include the people who have the most benefit from this technology, and we haven’t done a great job doing that, yet.
Blockchain and government
OC: And do you see that happening really on the private scale? How is regulation going to affect this process?
JG: We’ve convinced regulators that blockchain technology is the Holy Grail of everything. I don’t find regulators to be any sort of hinderance on getting this tech adopted.
Whether it’s in the EU or U.S., even in Africa or East Asia, governments are getting behind trials of this technology to improve the lives of their people — sometimes for more authoritarian purposes, such as distributed ledger-based money in China and Russia — but overwhelmingly, governments have actually been a massive catalyst for the adoption of trials with this technology.
What I do think about is how we do reach the people that need this most and actually understand how this technology can help them. And that’s just kind of a long-term undertaking that will require the help of many governments and NGOs to really understand.
Because entrepreneurs often have this problem, especially in this industry, where they create solutions for problems that don’t exist. What we have to do is be identifying problems and then seeing if a blockchain can help mitigate that problem.
The general answer is ‘no,’ but you have to take a problem-first approach. Trying to build solutions without problems is probably the greatest fallacy of Silicon Valley and beyond.
Path to mass adoption
OC: What’s your opinion on government-backed cryptocurrencies?
JG: They’re going to do them, but they’re not cryptocurrencies in the traditional sense. They are distributed ledger-based, centrally banked money that is issued and monitored and controlled and validated by central banks.
I think there’s a lot of good evidence that suggests that central bank-issued cryptocurrency — crypto assets or e-money, if you want to call it that — actually would be better than the digital cash that we have today.
But it is the antithesis of what we’ve been building in the blockchain space/cryptocurrency space so far, because this is going to be incredibly Orwellian.
They’re going to see every transaction that’s ever been made, there’s going to be KYC (Know Your Customer) and they’re going to know who’s making those transactions.
And that, in fact, in my view, will be the greatest catalyst for the mass adoption of cryptocurrencies as we know them today, whether it’s Bitcoin or something else.
When there’s government-backed cryptocurrencies and we move to a cashless society in which there is no financial privacy in our daily financial transactions, that is when something like Bitcoin or a stablecoin — something that is not bank- or government-issued — will become popular. That’s when we’ll see mass adoption, not before.
You know, if Bitcoin were going to be mass-adopted this decade, it would have happened five years ago, three years ago. But it’s too volatile, it’s too hard to use, it’s too hard to understand.
But when people are forced to use it — because there’s no longer cash, which is kind of a grey economy and a massive part of the global economy overall — once that economy disappears in its current form without cash, which will happen over the next 50-70 years, that’s when we’ll see mass adoption of cryptocurrencies — decentralized cryptocurrencies — as we know them today.
Because people want to use cash. People want to make financial transactions that the government doesn’t know about — whether it’s paying your babysitter or your illegal immigrant.
OC: You think a lot of people care about that? I just feel like most people don’t care about their privacy.
JG: Literally, almost every family in America pays their nanny in cash and that nanny is not reporting it to the IRS and they are not reporting that to IRS. It is not uncommon that people want to do business in a way that is not being traced by the government or just want some privacy in their financial transactions — virtually almost every person on the planet.
The grey economy is absolutely massive, and the second you take away cash, it becomes much harder to engage in — especially if we’ve moved to a distributed ledger-based financial system, where not only is every transaction traceable, but it’s also tied to your identity, which is way worse than what we have today.
So, you really have to think about the ramifications of a world in which there is no cash, no ability to take place in an informal economy. That, for sure, will lead to the mass adoption of cryptocurrencies.
JG: We need, kind of, an open sandbox for innovation before we’re really ready for a lot of regulations. But there are certain areas, like securities laws, where it would be great if we could, kind of amend them for the reality of these tokenized securities, which are a very new concept.
OC: How exactly?
JG: So, if you think about the securities today, the reason why they are so heavily regulated is that they are not transparent — you don’t have any insight into the cash flow except for quarterly reports.
But, in theory, a lot of use cases for tokenized securities could be securities that pay automatically based off of the revenue of a software project — like, I should be able to sell tokens from my software project that every user, every transaction goes back to investors, like a portion of revenue. It’s transparent, it’s immutable, it’s on blockchain.
And thus, I shouldn’t have file an S1 and take a company public to offer that to your everyday consumer. People should be able to buy that in an ICO [Initial Coin Offering] and gain access to upside of this new software company that I’m building, because it’s so straightforward how they get paid out — where the revenue or the dividends are coming from.
OC: Right, yeah. And there are just a lot more hoops to jump through. And the law is from the 1930s...
JG: Right. You generally have to assume that a law that was written in the 1930s with regard to financial regulations is going to be at least partly outdated by 2018.
Crypto markets and the media
OC: I still want to talk a little bit more about your personal opinions on crypto, not about regulation. You’ve definitely publicly stated that you own crypto.
JG: Yes. Most of my money is in crypto.
OC: Right. So there is the fact that governments, consumers — people on a mass scale — pay attention to crypto and blockchain in relation to its price.
The price of Bitcoin going up a lot in December got a lot of press, mainstream media started reporting on it, etc. Since you’ve been in it a long time, what do you say to that kind of reaction?
JG: You know, I was somewhere in the world — I was either in India or Greece — when the markets last dropped and I actually didn’t learn about the drop in market price for, like, several days.
I don’t pay attention to the price. I kind of knew from following crypto Twitter that there had been a price drop, but people, kind of, speak about it ambiguously.
I don’t care about the price at all. If there were any underlying investment fundamentals driving the price of the crypto assets, I’d be concerned.
In crypto, price fluctuations are just hocus pocus — it’s just totally sentiment-driven. Nothing really drives the price increases or decreases besides just, like, FOMO [fear of missing out] sentiment and irrationality in the market. I’ve got a hedge fund side of my venture fund and it’s performing pretty abysmally right now because we don’t trade. I don’t try to time the market.
What I do is I invest in crypto assets. I believe we’re going to change the world and I just stopped caring. I don’t pay attention.
OC: You personally never trade?
JG: No, look, I’ve been in the industry since 2014. I wasn’t in that early, I didn’t make my money in Bitcoin, I made my money in other crypto assets — a little bit in Bitcoin.
You know, I’m often lauded or labeled as a Bitcoin millionaire — not really how I made my money. I invested in technology that I really believed in — whether it was Ether or, back then, XRP at a much different price — and I just held them. I never thought about it, I never traded them, I never watched the volatility.
I mean, this whole trader ethos that permeates the industry is just flabbergasting to me. These are illiquid markets. A single individual, a single factor in the trade can totally move the market against the way your Elliot-wave analysis predicted it was going to go.
These are not like traditional financial markets, which are deeply liquid, which are based off of companies with really strong fundamentals, cash flow, P-to-E ratios — you don’t have any of that here.
What you have are very speculative commodities that are potentially going to change the world, but none of them are yet. You know, Bitcoin maybe being the exception. So, if you’re not investing based on the long-term value proposition of a crypto asset or some really fantastic insider information about what that announcement about the crypto asset is, you’re never going to make money trading.
You know, I’ve met a lot of smart traders back in the fall of 2017. I don’t know any of those guys today. These guys were not actually that smart.
Everyone is smart in a bull market. But the guys that are smart in a bear market — or a downward market — are the guys that actually have conviction in their investment.
Now, I may go double-down on some of my investments, but I’m surely not selling right now like many people are. But most people who bought crypto assets in the past year, they just bought it because, “Oh, I have a feeling that this one is going to go up,” but now it’s going down and they’re selling, and there’s panic in the market, and there’s blood in the streets, and I love it.
I just get such masochistic joy, like, “Oh, my net worth is down 80 percent,” but I’m not concerned because I know it’s going to go up another 10,000 or 100,000 percent because the investments I made are valuable.
It’s a massive failure on the part of our industry not to be cynical about these price rises. If you look at my interviews back in mid-late 2017, I was calling these ICOs insanity, I was calling the market insanity, It was irrational, it didn’t make sense.
OC: What do you think about the mainstream media’s involvement in all that?
JG: I mean, can you blame them? You have the fastest appreciating asset class in history just roaring and turning 26-year-olds like me into multi-millionaires. It’s a compelling narrative! You can’t ignore it.
There’s never been an asset class like this that has enriched so many normal people. It’s something that the news is of course going to latch onto. Because what does everybody want? Everyone wants to be rich overnight. Who wants to be a millionaire?
Like, everybody wants to make money and they want to make it easily. And so, there’s this incredible new investment class that’s turning average Joes into very wealthy people. They’re going to report it! You just can’t blame them.
Now, do I wish they educated themselves more? Yes, but it is not their job.
I mean, if you want to be educated on blockchain technology and crypto assets, you’re going to have to immerse yourself for 90 percent of your life for the next six to 12 months of your life before you even have a baseline understanding of how this tech works and what its real purposes are and how it’s used.
And so, to expect the mainstream media to be able to report this accurately is not particularly reasonable. Now, I wish they did a little bit better due diligence, but at the end of a day, you really cannot expect the media to do a very good job.
OC: Okay, but I more mean the effects of this media attention.
JG: I mean, they are awful because they bring average Joes, who have no idea what they are investing in, into this new asset class. I mean, god, I just do not want consumer investors investing in this.
I’d love larger institutions, I’d love people who want to go and educate themselves. Your average consumer is buying Tesla because they think Teslas are cool cars or buying Amazon because they use Amazon every day — hey, maybe they could be good investments, maybe bad investments.
But they are sure as hell not using Bitcoin in their daily lives, so it’s not something they should be investing in. You know, unless you understand what you’re investing in, you shouldn’t be investing in it.
Unless you have a very balanced portfolio — like, look I think everybody should put five to 10 percent of their investment portfolio into Bitcoin and Ether, maybe a couple of other crypto assets — but that’s because when you do that, when you put five percent of your investment portfolio into a highly speculative, uncorrelated asset class, you actually mitigate the overall risk of your investment portfolio simply because it is uncorrelated.
And thus, even a grandma should put a tiny bit of her investment portfolio in Bitcoin, but she shouldn’t be mortgaging her house to do it, and it shouldn’t be a huge amount of money. It should only be a very small, yet respectable amount of portfolio — just due to the historical performance of this asset class. But the media narrative has definitely driven people to put way too much of their money into crypto.
OC: I ask because people do argue that the mainstream media’s attention helps with awareness, or it’s something important for, again, mass adoption. But that’s why we have to clarify what mass adoption means.
JG: Yeah, like, what is mass adoption?
Mass adoption of Bitcoin as a payment system? Yeah right, not going to happen. Not any time soon.
Well I’m saying, when we go to a cashless society, people will really have a use case, but using cash is almost always going to be better than using Bitcoin today.
And so, mass adoption is not going to happen until we create tools that actually catalyze that adoption. But that’s certainly not where we are right now.
OC: Okay, cool. Thank you so much!
Cointelegraph’s editorial team thanks Jeremy Gardner and BlockShow for the interview.
IBM has applied to patent a system that would use blockchain tech to tackle privacy and security concerns for drones.
IBM has applied to patent a system that would use blockchain tech to tackle privacy and security concerns for drones, according to a filing published by the U.S. Patent and Trademark Office (USPTO) September 20.
The computing giant first filed the patent in March 2017, detailing how blockchain could be used to securely store data associated with unmanned aerial vehicles (UAVs) — more commonly known as drones. The patent notes that a blockchain system can provide “effective techniques for managing data related to a UAV [...] particularly when a security risk level is considered to be relatively high.”
According to the filing, such data may include the drone’s location, its manufacturer and/or model, its flying behaviour (“e.g. erratic”), the model’s capabilities such as camera resolution, contextual information such as weather conditions, and the vehicle's proximity to restricted or forbidden flight zones.
The patent filing suggests that transaction data could be added “more frequently” as a block to the chain if and when a risk level is considered to be high. In terms of managing privacy concerns, if a drone is equipped with a high-resolution sensor, for example, the filing proposes that this could be recorded on the blockchain, with additional data transactions added whenever the sensor is detected to be activated.
As such, according to the filing, a shared and immutable ledger can enable multiple parties — which could include other drones, airspace controllers, regulatory bodies, and so forth — to participate as peers in managing risk. Validator nodes within the network could moreover grant special permissions, using the transparently stored data to verify that a drone has the authorization to fly in a particular zone.
The patent further proposes that smart contracts could be used to interface the blockchain system with extra information generated by machine learning models or other algorithms that compute historical data, both on- and off-chain. Such off-chain data could comprise, for example, raw video streaming data that has been capture during the drone’s flight.
IBM has been steadily expanding its involvement in blockchain across diverse fields, this summer signing a seminal five-year $740 million deal with the Australian government to use blockchain to improve data security and automation across federal departments.
Fresh data published late August revealed that IBM is vying with Chinese e-commerce giant Alibaba for the top spot on a new list ranking entities by the number of blockchain-related patents they have filed to date. Having filed 89 blockchain patents, IBM was only just outflanked by its rival — which filed 90.
Ant Financial, the financial affiliate of Chinese e-commerce giant Alibaba, is launching a blockchain BaaS (Backend-as-a-Service) platform.
The announcement was reportedly made by Ant Financial vice president Jiang Guoefei at the Ant Technology Exploration Conference (ATEC) in Hangzhou yesterday. The new BaaS platform is being launched in tandem with an enterprise-focused “ant blockchain partner program” that will reportedly enable small- and medium-scale businesses to implement and innovate new blockchain solutions.
The announcement aligns with what Gueofei characterized as a move to “open up” Ant’s in-house technologies to the wider commercial sector:
"In the past two years, Ant Financial has been working on two aspects about blockchain. One is to improve the technology, and the other is to open it up and accelerate the commercialization of blockchain applications."
As part of its impetus to commercialize the technology, Ant Financial trialed its very first blockchain remittances earlier this summer, using its newly-developed blockchain-based electronic wallet cross border remittance service. The trial demonstrated a transfer of funds between Ant Financial’s AliPayHK — the Hong Kong version of Ant’s popular mobile payment app Alipay — and Filipino payment app GCash.
Alibaba founder Jack Ma has signalled increasing involvement of AliPay in blockchain for several years, with Ant Financial most recently securing $14 billion in funding for the technology’s development this June.
Fresh data published late August revealed that Alibaba had sealed first place globally on a new list that ranked entities by the number of blockchain-related patents filed to date; the e-commerce conglomerate has filed a staggering 90 such patents, outflanking even IBM.
Nonetheless, Ma delivered a keynote lecture earlier this month in which he noted that blockchain is one of a host of advanced technologies that still need to prove they can help evolve society in a “greener and more inclusive” direction.
Bitcoin users running the Bitcoin Core client should upgrade to the newly-released version to avoid exposure to a vulnerability, developer urge.
Bitcoin Core developers published a “full disclosure” of the vulnerability affecting several implementations of the Bitcoin (BTC) client Friday, September 21, repeating calls for all nodes to upgrade to the latest version as a priority.
In addition to technical details about the bug, known as CVE-2018-17144, the disclosure explains how developers dealt with the threat to the Bitcoin network, along with a timeline of its discovery and patching in Bitcoin Core version 0.16.3.
“In order to encourage rapid upgrades, the decision was made to immediately patch and disclose the less serious Denial of Service vulnerability, concurrently with reaching out to miners, businesses, and other affected systems while delaying publication of the full issue to give times for systems to upgrade,” the notice reads.
“At this time we believe over half of the Bitcoin hashrate has upgraded to patched nodes. We are unaware of any attempts to exploit this vulnerability,” the disclosure continues, adding:
“However, it still remains critical that affected users upgrade and apply the latest patches to ensure no possibility of large reorganizations, mining of invalid blocks, or acceptance of invalid transactions occurs.”
The impetus to upgrade at the current time appears not to be shared unanimously, with Bitcoin Core developer Luke-jr subsequently claiming the update publication was “premature.”
“[In my opinion] this is being disclosed way too prematurely (only 2% of the network has upgraded), but the cat's out of the bag,” he wrote on Twitter, nonetheless urging followers to upgrade “ASAP!”
Despite federal U.S. regulations, California has banned Bitcoin from political donations due to transparency issues.
In August, the Fair Political Practices Commission (FPPC) had considered allowing donations in cryptocurrencies. The watchdog planned to discuss the use of Bitcoin and other cryptocurrencies for political contributions and discuss their adoption.
The FPPC then held a vote on donations of cryptocurrencies like Bitcoin on Thursday, September 20. According to the AP, the members voted 3-1 for the ban, noting that the origin of cryptocurrencies is hard to track and raises questions about transparency.
The U.S. Federal Elections Commission generally allows Bitcoin donations to federal candidates. However, several states have banned or restricted such type of contributions — South Carolina has completely banned Bitcoin donations, while Colorado and Montana allow them with restrictions, the AP writes.
Cointelegraph previously listed several U.S. politicians who succeeded in raising funds for their political campaigns via crypto. However, some of the campaigns raised questions on transparency and legality of such contributions.
For instance, in May 2018, Obama’s former aide on crypto and digital technologies, Brian Forde, was criticized for accepting Bitcoin donations during his campaign for the U.S. House of Representatives. In an ad by Forde’s opponent, Forde’s donors were pictured as “Bitcoin speculators that oppose cracking down on drug deals and human trafficking.” Forde himself considered the comments “wildly inaccurate”.
Relief over the VanEck/SolidX ETF has potentially fueled newfound optimism across cryptocurrency markets, which have seen fresh gains.
Bitcoin (BTC) has rapidly corrected its monthly losses Friday, September 21, after markets rallied to send prices above $6,700 for the first time in two weeks.
Market visualization from Coin360
The move upwards, which occurred over several hours, came as news broke that U.S. regulators had again postponed their decision on the VanEck/ SolidX Bitcoin exchange-traded fund (ETF), but had not rejected it outright.
At press time, BTC/USD was trading around $6,707 an increase of about 5 percent on the day, taking prices back to the range they hovered in during mid-August.
Bitcoin weekly price chart. Source: Cointelegraph Bitcoin Price Index
In altcoin markets, Ethereum’s (ETH) reversal of fortunes continued after weeks of beating Bitcoin on losses. Prices at press time for ETH/USD hit $225, also a first since September 7, having fallen as low as $171 in the meantime.
Ethereum monthly price chart. Source: Cointelegraph Ethereum Price Index
Ripple (XRP) nonetheless stood out as the clear winner on Friday, continuing its surge of over 44 percent on the day to hit weekly gains of around 68 percent, currently trading around $0.46.
Ripple weekly price chart. Source: Cointelegraph Ripple Price Index
Commentators were initially unsure as to the motivation for such a rise, Ripple itself having hinted its xRapid payment transfer network would shortly begin serving its first banking clients. xRapid would offer international payment settlements using XRP directly as an intermediary currency.
The weekend of Sept. 21-Sept. 23 will host over 1300 events, including the largest global meditation of millions of people for the Guinness Book of World Records.
CoinPayments.net, a platform for business-to-business (B2B) and business-to-customer (B2C) crypto payments, reported to Cointelegraph that they will be partnering with the nonprofit Unify.org for World Peace Weekend. From Sept. 21 to Sept. 23, the charitable nonprofit campaign will empower over 1300 events all over the world, including the largest global meditation of millions of people for the Guinness Book of World Records.
“CoinPayments will be waiving their industry-leading 0.5 percent fee for anyone who donates to Unify with any of the coins hosted on the CoinPayments platform,” reads the official press release of the company.
CoinPayments offers a cloud payment solution, allowing merchants to accept Bitcoin, Ethereum, Litecoins and hundreds of other coins and tokens through their plugins, APIs and point-of-sale (POS) interfaces.
Founded in 2013, CoinPayments is a global cryptocurrency payment processor with a reach of over 2,260,000 vendors across 182 countries, says the company’s blog.
Decentralized dancing and meditation
Aiming at promoting global consciousness, Unify.org intends to unite various charitable organizations across the world for three days, including Compassion Games, Uplift, Billion Acts, Decentralized Dance Party and not to mention the United Nations.
With over 1300 different events happening in over 3,000 communities across the world this weekend, Unify will make contact with an audience of over 100 million viewers during their 72-hour live broadcast through their own social media, plus others.
“For us, this was a project that we knew we had to be involved in. They are promoting peace on Earth by organizing through a completely decentralized model, uniting those who want to see a better world for their children, and their children’s children. This is a common vision we share with them, and will continue to support them now and through ongoing campaigns in the future. This is just the beginning.” said Andrew Brough, marketing director at CoinPayments.
On Sept. 21, various flash mob dance parties around the world — known as “Decentralized Dance Parties” — will take place. The press release reads that “thousands of people will take to the streets with boom boxes to dance in a family-friendly environment to promote peace, compassion and perhaps the most important element, to have fun!”
Sept. 22 will be claimed as a “Radical Acts Of Kindness” day. Participants are supposed to engage their local communities by offering their time and resources to better those in need. This includes providing food and clothing for those who need it, helping local outreach programs or by just giving selflessly in any conceivable way, including “buying a cup of coffee for the person behind you in your local coffee shop.”
Finally, the “Global Synchronized Meditation” day is planned for Sept. 23. Millions of people around the world will participate in hopes being added to the Guinness Book of World Records for the “Largest Global Meditation.”
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.
Michael Novogratz has again called the end of the 2018 crypto bear market, claiming this week marked the bottom for prices.
Galaxy Digital CEO and infamous Bitcoin (BTC) supporter Michael Novogratz says cryptocurrency markets have hit “seller fatigue,” repeating his belief that prices have bottomed, various media outlets report Friday, September 21.
As part of his comments at Yahoo Finance’s second annual “All Markets Summit,” Novogratz, who last week “called a bottom” for crypto on social media, said Bitcoin’s price drops throughout this year had demonstrated its new stability.
“Bitcoin has held $6,000. Yes, it is off its highs, but it has established itself as a store of value,” he told the audience quoted by Reuters, adding:
“I think institutions are moving towards investing. It’s shocking how much has happened.”
Both Bitcoin and major altcoins were seeing a renaissance Friday after a week of flat performance, with BTC/USD climbing to highs above $6700 at press time.
Ethereum (ETH) delivered gains of almost 11 percent in 24 hours, hitting $230 for the first time since September 6.
Continuing, Novogratz additionally likened the current climate in cannabis stocks to how Bitcoin and Ethereum were in 2017.
“The prices of cannabis stocks today feel like bitcoin and ethereum did in December of last year,” CNBC quotes him as saying, forecasting the market to grow “relatively rapidly.”
Thursday, September 20, saw U.S. regulators again postpone a decision on a Bitcoin exchange-traded fund (ETF) application by VanEck and SolidX, with prices starting to rise soon after the news became public.
Bitcoin tech company Bitfury has released a new generation of ASIC Bitcoin mining hardware, and plans to integrate it into its other mining products.
Bitcoin (BTC) mining software manufacturer Bitfury Group has launched a new generation of its BTC mining hardware. The new device is based on Application-Specific Integrated Circuit (ASIC) chip Bitfury Clarke, according to an announcement September 19.
An ASIC chip is a piece of mining hardware geared to mine digital currency based on a specific hashing algorithm. An ASIC is tailored for a particular use, rather than for general-purpose use.
The Bitfury Clarke ASIC will be sold individually in addition to being integrated into Bitfury’s other BTC mining hardware, including its mining servers and BlockBoxes. Bitfury is planning to implement the new ASIC in its mining centers in Canada, Norway, Iceland and Georgia. The announcement further describes the chip:
“The 14nm Bitfury Clarke ASIC is fully customized for SHA256 bitcoin mining. It can execute a hashrate up to 120 gigahashes per second (GH/s) and a power efficiency rate as low as 55 millijoules per gigahash (mJ/GH). The supply voltage required by Bitfury Clarke can be as low as 0.3 volts.”
In December, Bitfury facilitated the launch of Toronto-based BTC mining company Hut 8 by providing the company access to mining hardware and other necessities. In July, Hut 8 claimed that it had become the world’s “largest publicly-traded” operator by capacity. The company reportedly mined around 1,900 BTC since its original launch.
In July, Cointelegraph also reported that, according to sources from the “upstream supply chain,” the sale of ASIC crypto mining hardware had been negatively impacted, with a predicted price drop of 20 percent that month. The affected companies included the Taiwan Semiconductor Manufacturing Company, as well as its integrated circuit (IC) design service partners like Global Unichip.
Moreover, the price of specialized graphics processing units (GPUs) had been declining along with sinking prices in digital currency markets. In April, AMD’s OEM 4GB RX 580 six-pack was sold out at the price of $3,600, while in July it was available for $2,500. An Nvidia GeForce GTX 1080 Founders Edition, 8GB GDDR5X PCI Express 3.0 Graphics Card was sold out at a price tag of $1,050, but in July could be purchased for $709.
The Financial Action Task Force is closer to establishing a worldwide set of anti-money laundering standards, that will purportedly close the “gaps” in current regulations.
The Financial Action Task Force (FATF) said it is getting closer to the establishment of a global set of anti-money laundering (AML) standards for cryptocurrencies, Financial Times reported September 19.
The FATF is an international organization established in 1989 at the initiative of the G7 in order to develop policies and standards to fight money laundering. The agency’s scope of activities further expanded to combat terrorism financing. The FATF currently comprises 35 member jurisdictions and 2 regional organizations.
The agency’s president Marshall Billingslea reportedly said that he expects the coordination of a series of standards that will close “gaps” in global AML standards at an FATF plenary in October.
At that time, the FATF will purportedly discuss which existing standards should be adapted to digital currencies, as well as revise the assessment methods of how countries implement those standards. Billingslea also outlined the importance of developing standards that can be applied in a uniform manner.
According to Billingslea, current AML standards and regimes for cryptocurrencies are “very much a patchwork quilt or spotty process,” which is “creating significant vulnerabilities for both national and international financial systems”. Billingslea, noted that despite the risks related to this kind of assets, digital currency as an asset class presents “a great opportunity.”
In June, Cointelegraph reported that the FATF was planning to start developing binding rules for crypto exchanges later that month. The new rules would be an upgrade to the non-binding resolutions which were approved by the FATF in June 2015, considering whether existing guidelines on AML measures and reporting suspicious trading activity are still appropriate, and if they can be applied to new exchanges.
Earlier this month, Belgian think-tank Bruegel also called for unified legislation on cryptocurrencies and more scrutiny on how they distributed to investors. Bruegel noted that the virtual nature of cryptocurrencies limits the development of regulations, stating that a piecemeal approach to crypto regulation leaves an opportunity for regulatory arbitrage.