Throughout the past 24 hours, several publications and public figures have misreported that China has put an end to its blanket ban on bitcoin and the cryptocurrency exchange market.

On Nov. 9, one cryptocurrency-focused publication released a story entitled “China Lifts Bitcoin Ban; Individuals and Businesses Can Now Own Cryptocurrencies Legally.” The article instantly attracted many investors in the cryptocurrency market, who demonstrated optimism towards the supposed unbanning of Bitcoin.

However, the article itself was based on a court ruling of the Shenzhen Court of International Arbitration which was released on Oct. 25. The outdated and misrepresented story falsely led many investors in the market to manufacture hype around the asset class, in a period in which the cryptocurrency market is stagnant and struggling to initiate major upward price movements.

Overhyped News is Alluring But Not Beneficial to the Industry

In October, as CnLedger, a trusted news source in China reported, the Chinese court confirmed that Bitcoin is protected by law as property. As such, individuals, businesses, and merchants can technically utilize cryptocurrencies like Bitcoin and Ethereum as a payment method without conflicting with local regulations.

cnLedger@cnLedger

1/ Chinese court confirms Bitcoin protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: CN law does not forbid owning & transferring bitcoin, which should be protected by law bc its property nature and economic value.

1,190 people are talking about this

China’s Crypto Market is Thriving: Ethereum Hotel, Exchanges, and OTC Trading
Related: China’s Crypto Market is Thriving: Ethereum Hotel, Exchanges, and OTC Trading

In the previous month, CryptoSlate reported that the cryptocurrency market of China has become more active as of late, due to the acceptance of digital assets by hotels and publications.

In late September, Ethereum Hotel, China’s first hotel that accepts Ethereum (ETH) as a payment method, reportedly opened their business in National Scenic Area of Four Girls Mountain (Sichuan Province).

On Oct. 1, China’s oldest technology publication Beijing Sci-Tech Report (BSTR) announced that it would accept Bitcoin as a payment method for its subscriptions beginning early 2019, to encourage the utilization of crypto in a “real-world setting for practical actions,”

The Ethereum Hotel and BSTR have been able to integrate cryptocurrencies into their payment systems because the two digital assets are recognized as properties under local laws.

But, the trading of Bitcoin and other cryptocurrencies remains strictly banned, and the areas of the cryptocurrency market that the government of China has banned remain prohibited.

While merchants are technically allowed to accept cryptocurrencies, trading, crypto events, ICOs, and any form of OTC investment in the asset class are still prohibited.

Exaggerated and overhyped reports could provide the cryptocurrency community with optimism in the short-term, but in the mid to long-term, they tend to have a negative impact. If the expectations of the community increase significantly due to misrepresented reports and the expectations are not met in the future, then it can have a worse effect on the market.

Similar to Bakkt, ETF

This week, Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim stated that Bakkt could have an actual impact on the price of Bitcoin because of its physical delivery of digital assets to investors, and if institutional investors invest in Bitcoin through the Bakkt Bitcoin futures market, it could lead to an increase in the price of BTC.

However, there still exists many variables and conditions to the long-term success of Bakkt and especially given that the majority of the community believes Bakkt will act as a catalyst for the next bull run of crypto, Chervinsky emphasized the need to approach the progress of Bakkt with caution.

Chervinsky said:

“In the minds of many, Bakkt’s launch has become a full-fledged narrative for when & how the bear market will end. It plays the same role as bitcoin ETFs as a trusted vehicle to bring that sweet institutional money into the space, but without all the trouble of SEC approval.”

And added:

“Hype aside, some people have lingering concerns about Bakkt. The big question is if Bakkt will try to financialize bitcoin in a harmful way, such as through the use of hidden leverage.”

As with Bakkt, ETF, and recent reports about China, it is of the importance of for investors to approach developments in the space with caution and a neutral stance.

This post credited to cryptoslate  Image source: Unsplash

From China’s outlook on Bitcoin and cryptocurrency to a new addition on Coinbase, here’s a look at some of the stories breaking in the world of crypto.

EOS, Ethereum, XRP, Bitcoin

China just released its latest crypto ratings index.

EOS and Ethereum remain in first and second place, respectively. Meanwhile, Bitcoin has fallen from 13th place all the way down to 19th since the publication of the country’s official crypto rankings in May.

The big surprise in the new rankings is XRP, which has surged into the top 10. XRP is now in 7th, after sitting at 15th place in September.

China strongly supports blockchain, but has had a tumultuous relationship with cryptocurrency since announcing an all-out ban on crypto last year. In a ray of hope, the Shenzhen Court of International Arbitration recently ruled that Bitcoin has economic value, and should be legally protected as property.

Ripple

In a new interview with Forbes, Ripple’s senior VP of marketing and communications Monica Long says the current speed of cross-border payments is pushing the adoption of crypto and blockchain technology.

“Moving money from one country to another can be extremely costly and time-consuming. Your money can be in limbo for up to five days, which is absurd when a business could be putting that capital to work.

This friction in cross-border payments has driven enterprises to be some of the biggest champions of blockchain technology and digital assets. For example, these individuals are asking their banks to look into this realm as a solution to their problems. This is beneficial for smaller businesses who pay suppliers in other countries and have tight margins. By utilizing this technology, these mom and pop stores can help to reduce their costs and speed up the time it takes to move money.”

Tron

Tron has now paid out more than $75,000 to developers who identified and reported bugs on the Tron blockchain.

According to HackerOne, the average payout is between $3,000 – $4,000.

Basic Attention Token

Leading US crypto exchange Coinbase has added support for BAT tokens on Coinbase Pro. BAT is the cryptocurrency of startup browser Brave, an alternative to Google Chrome. BAT support will roll out in four phases: transfer-only, post-only for limit orders, limit-only for matching orders and full trading. Platform support does not include retail trading at coinbase.com, iOS or Android apps.

Deposits are already available, and trading is expected to launch as soon as “sufficient liquidity is established.”

OmiseGo

The first decentralized app on OmiseGo just launched its proof-of-concept.

The game is called Plasma Dog and utilizes OmiseGo’s Plasma testnet, a layer 2 solution designed to dramatically increase blockchain scalability.

OmiseGO

@omise_go

We’re happy to announce that @hoardexchange is the first to build on our internal testnet. Their game demonstrates just one of the many use-cases for the OMG Network and Plasma’s potential. Read all about how it works! https://blog.hoard.exchange/how-hoard-created-the-first-omg-network-application-plasma-dog-62f139ec3dd4 

Hoard@hoardexchange

We developed a game with @omise_go to demonstrate an integration with their Plasma chain. It’s called Plasma Dog. To read more about how we did it, read this blogpost 👇 https://blog.hoard.exchange/how-hoard-created-the-first-omg-network-application-plasma-dog-62f139ec3dd4 

This post credited to Daily HODL  Image source: Daily HODL

An arbitration body in China has ruled that cryptocurrencies such as Bitcoin (BTC) are legally protected as property, in a case published Oct. 25 via the arbitrator’s WeChat account.

The Shenzhen Court of International Arbitration ruled in favor of an unnamed plaintiff in an equity transfer dispute, in which the defendant failed to return holdings of Bitcoin, Bitcoin Cash (BCH) and Bitcoin Diamond (BCD) as had been agreed upon in a contractual agreement.

According to the case outline, the contract had authorized the defendant to trade and manage the plaintiff’s portfolio of 20.13 BTC, 50 BCH, and 12.66 BCD for a stipulated time. When the defendant failed to return the holdings as per the agreed schedule, the plaintiff brought the case before the arbitrator, seeking the return of his assets with interest.

The defense had attempted to argue that the contractual equity transfer agreement was invalid, pointing to the fact that cryptocurrencies are not recognized as legal tender in China, and that their circulation is subject to severe restrictions in the country.

The defendant cited the central bank’s Announcement on Preventing Financial Risks from Initial Coin Offerings (ICO), which was passed in Sept. 2017, stating that ICOs that raise “so-called virtual currencies” such as BTC and Ethereum (ETH) “through the irregular sale and circulation of tokens” are engaging in “unauthorized” public financing, which is “illegal.”

The central bank had also determined that crypto “cannot and should not be circulated nor used in the market as currency.”

The defendant claimed that the core “payment and arrangement of the transfer price” clause of the contract was thus in violation of the mandatory provisions of Chinese law, which prohibits the sale and circulation of crypto tokens, as well as the trading platforms used as a venue for their transfer and exchange.

The arbitrator however found that the contractual obligation under dispute did not fall under the relevant provisions as outlined in the Sept. 2017 prohibition, stating that:

“There is no law or regulation that explicitly prohibits parties from holding bitcoin or private transactions in bitcoin, [only warnings to] the public about the investment risks. The contract in this case stipulates the obligation to return the bitcoin between two natural persons, and does not belong to the [Sept. 2017 ban].”

The arbitrator thus concluded that the contract was legally binding, adding that:

“Bitcoin has the nature of a property, which can be owned and controlled by parties, and is able to provide economic values and benefits.”

The arbitrator refuted that restrictions on exchanges pose an obstacle, noting that private crypto transfers face no technical difficulties as long as both parties have a unique wallet address.

The ruling thus ordered the defendant to uphold his contractual obligations and return the assets under dispute with interest (calculated by the arbitrator as being worth $493,158.40), as well as to pay a penalty of 100,000 yuan ($14,400).

This June, a Shanghai court similarly ruled in favor of an ICO operator in the context of an unjust enrichment civil dispute case. Similarly denying the applicability of the Sept. 2017 ban, the court deemed that Ethereum (ETH) is protected under China’s property law, as long as the plaintiff can provide proof a digital chain of custody to the court.

This September, China’s Supreme Court ruled that evidence authenticated with blockchain technology is binding in legal disputes.

This post credited to cointelegraph Image source: Cointelegraph

When Bitcoin was debuted in October of 2008, the world’s first cryptocurrency was slow to garner traction. At the time, only the most eccentric internet users were willing to allocate capital, time, and brain power to bolster the development efforts of the Bitcoin Network, the first true blockchain/decentralized database. However, as time elapsed, the cryptocurrency found an ally in the Chinese people, many of which were open to utilizing BTC in day-to-day commerce.

While the local cryptocurrency economy saw a multi-year boom, which facilitated the rise of Bitmain, as BTC began its monumental run at the start of 2017, rumors began to circulate that China’s financial regulators were poised to crack down on blockchain-based assets.

Sadly, these rumors eventually became a reality, with the Chinese government reportedly establishing a blanket ban on crypto trading and ICOs in late-2017. As reported by NewsBTC, this heavy-handed action saw RMB/CNY-to-crypto volumes all but dissipate, leading many to claim that China’s crypto scene had sadly bitten the dust.

Due to the apparent extent of the ban, some were quick to believe that all crypto-related actions, including owning digital assets, weren’t permitted in the Asian nation. However, reports indicate that a Shenzhen-based court has ruled in favor of Bitcoin, likely bringing clarity to China’s precarious regulatory climate surrounding cryptocurrencies.

Shenzhen Court Rules In Favor Of Crypto, Bitcoin

CnLedger, a prominent crypto and blockchain source within China, recently claimed that members of the Shenzhen Court of International Arbitration moderated a case pertaining to this new technology.

Citing a document posted on WeChat, China’s one-stop shop for internet users, CnLedger claimed that the court’s verdict indicates that Chinese law permits consumers to transact and own Bitcoin. The local source added that the Shenzhen body has ruled the crypto asset legal due to its inherent nature as “property” and its “economic value.”

While this regulatory green light came as a shock to many, what didn’t come as a surprise is that the same court deemed that Bitcoin isn’t a legal currency by any means. However, in spite of the fact that this ruling may sound disconcerting, the lawyers overseeing this case acknowledged that the use of BTC “can bring economic benefits to parties,” and as such, the asset shouldn’t be invalidated in bona fide transactions and legitimate use cases.

However, it is important to note that this case underwent proceedings in Shenzhen, one of China’s special economic zones, which may have skewed the results of the case in favor of crypto assets.

Could This Ruling Turn The Regulatory Tide For Bitcoin?

Regardless, there are many that are still hopeful for crypto’s future within China, even if restrictions on Bitcoin aren’t consistent throughout the nation of 1.4 billion individuals. Per previous reports from NewsBTC, after Beijing’s recent move to double-down on its anti-cryptocurrency trading efforts, which included issuing public warnings regarding ICOs, blocking 124 exchanges, and banning crypto media outlets, traders took to shady over-the-counter (OTC) exchanges to purchase and sell cryptocurrency for fiat currencies.

While the WeChat document didn’t mention these questionable exchanges, the aforementioned court’s ruling to validate the use of Bitcoin in transactions could be a precursor to the reappearance of Chinese cryptocurrency exchanges, which are near-impossible to access in the eastern country.

So although this move isn’t likely to jumpstart China’s second drive for widespread cryptocurrency adoption, this unexpected ruling from Shenzhen’s International Arbitration Court indicates that hope isn’t lost for local Bitcoin fanatics.

This post credited to News BTC  Image source: News BTC

China and the USA have been competing with each other in every field to gain global dominance. The same competition seems to have entered the cryptocurrency industry as White House, understanding China’s Bitcoin Dominance is now backing Ripple Labs.

Its BTC vs XRP as two global superpowers look at a crypto world

China is, by far, the undisputed world leader in bitcoin mining — with Chinese mining pools controlling more than 70% of the bitcoin network’s collective hash rate, the measuring unit of the processing power of the bitcoin network.

Many in the bitcoin and cryptocurrency industry have expressed concern about how much control this gives China over bitcoin, with the Beijing-based Bitmain Technologies mining more than half the world’s bitcoins creating an oligopolistic to near monopoly situation.

While China’s dominance is fairly visible, the United States doesn’t want to stay behind in this race. According to the reports coming in from the White House, it appears U.S. president Donald Trump’s White House is also worrying about China’s bitcoin dominance and Ripple Labs executive, are suggesting the U.S. administration is interested in ripple (XRP) adoption to offset China’s bitcoin strength.

Ripple Lab’s chief strategist, Cory Johnson, was quoted saying in a wide-ranging interview with crypto-focused magazine Breaker that

“The White House, in particular, seems to be thinking about what it means to have 80% of bitcoin mining taking place in China and a majority of ether mining taking place in China,”

“When you look at XRP, there is no mining, so from a foreign-control aspect or from an environmental aspect, XRP is a very different beast. And in conversations we’ve had with the administration, they seem to get that and think that might matter.”

China manufactures most of the world’s bitcoin and cryptocurrency mining equipment and its massive mining farms are supported by the country’s cheap electricity prices, giving it dominance in bitcoin while for Ripple, Ripple Labs controls 60% of the ripple supply and the XRP tokens don’t require any mining. This situation of Bitmain’s dominating control over Bitcoin’s mining and Ripple’s majority control over XRP has received a lot of criticism from the industry as these being centralized in hands of few. A lot of experts believe that this war of the US vs China may intensify the centralization issues as both global superpowers would want to control these cryptos.

This post credited to coingape  Image source: Coingape

Despite a blanket ban on cryptocurrencies and related businesses, China’s central bank is employing cryptographers and blockchain engineers to launch a state-issued digital currency presumably, reported South China Morning Post on Oct. 12.

BitYuan Soon?

As per vacancies observed in the People’s Bank of China’s annual hiring listof 2019 for its Digital Currency Research Institute, the central bank is actively seeking talented employees to work on finance, cryptography, and other areas relevant to a digital currency.

A total of four employees specializing in cryptography, microelectronics, computer science,  and holding a master’s degree or higher are required, according to the descriptions. Details go on to state the roles include the creation of encryption models, research and development of software, and manufacturing of chips required to make a “digital fiat” currency and its trading. Candidates with prior experience in big data technologies and blockchain are preferred.

Loosely translated, the posting states that engineers will handle digital currency-related software protocols, security models, and lead research and development for a transaction-enabling terminal chip.

Experts in the subjects of economics and law will be responsible for analyzing economic implications and legal research, risk management, and lead a policy study on the creation of “legal digital currency.”

The move could be China’s mark on the global cryptocurrency ecosystem, with regard to the technology’s ease-of-trace, deflationary, and cheaper-to-maintain features. For now, governments around the world have been primarily opposed to cryptocurrencies like Bitcoin and ether, yet respond positively to suggestions of a state-backed cryptocurrency. Such sentiment implies the issue, for authorities, lies in the lack of centralized control in a widely-circulated financial asset, not the technological concept itself.

PBoC a Blockchain Permabull

The PBoC’s efforts to explore digital assets began in 2014, but a serious push took place last year after the Digital Currency Research Institution was formed. The latter is head by Yao Qian, an official of PBoC’s technology division.

The group previously posted job requirements for computer science and mathematics majors, but the recent development is the first time a cryptography position is advertised. Meanwhile, officials refused to provide more information on the subject when reached by local reporters.

People’s Bank of China Recommends Yuan-Pegged Stablecoin
Related: People’s Bank of China Recommends Yuan-Pegged Stablecoin

Despite the lack of clarity beyond job postings for a presumed state-backed cryptocurrency, PBoC chief Zhou Xiaochaun stated in March 2018 that an ideal digital currency would ensure all monetary and financial stability policies are met while protecting consumers from the nuances of fraud.

PBoC has explored blockchain solutions for its existing platforms previously. In September, the bank launched a cross-border trading and finance platform running wholly on a blockchain in China’s southern port city of Shenzhen. Reports stated the blockchain-based network would soon expand to include Hong Kong, Macau, and Guangdong.

It remains to be seen if a digital Yuan comes into existence by 2019. With central governments around the world moving fast in the cryptocurrency for regulations or state-issued digital currency, China’s moves are highly unsurprising – considering the country’s prominence in all pressing global topics.

This post credited to cryptoslate Image source: Unsplash

Distributed though it may be, the EOS community has fought hard to remain united.

As of June, two rival groups were briefly in competition to launch the official EOS blockchain (or mainnet) using code released by the company behind the protocol, Block.One. The standoff was resolved, and the EOS community launched a unified network later that month.

However, in the time since, another rift has emerged, an East-West divide being made worse by a language barrier between Mandarin and English-speaking members, as well as differences in internet availability. Namely, Chinese internet controls – commonly known as the “Great Firewall” – make it difficult for those in China and the West to converse using the same platforms: Western EOS enthusiasts mostly gather on Telegram, while WeChat dominates in China.

The fact that two broadly separate conversations are happening in parallel has made it difficult for EOS to live up to its promise as a blockchain with built-in democratic governance. It’s also had tangible effects for EOS token holders, since some have had relatively easy access to dispute resolution, while others haven’t.

Dispute resolution emerged as an important theme early on in the network’s existence, as many community members had lost their private keys to scams and hacks. While the main arbitration body, the EOS Core Arbitration Forum (ECAF), was a source of confusion and controversyearly on, it was at least able to keep some users with compromised addresses from having their tokens stolen.

In the West, at least.

Scammers and hackers targeted EOS users all over the world, but Chinese-speaking users were often unable to access ECAF’s service. None of its members spoke Mandarin, and since much of the conversation around arbitration had taken place on Telegram (and in English), many WeChat users weren’t aware that arbitration was even an option.

In recent weeks, however, the EOS community has begun to focus on bridging the East-West divide. A new organization, the EOS Mandarin Arbitration Community (EMAC) is working to increase Chinese speakers’ access to dispute resolution, and two of its members have joined ECAF.

“I do believe that the language barrier and cultural difference still exists,” an EMAC spokesperson told CoinDesk in a statement, adding:

“But with community collaboration I’m confident that they no longer pose as serious issue and we could eventually overcome them.”

An ‘official language of EOS’

In statements to CoinDesk – sent via WeChat – EMAC described English as “the ‘official language’ of EOS,” adding, “there is no doubt about that.”

Of course, EOS users speak a variety of languages, but several sources whose first language is not English said more or less the same thing: for the time being, fully participating in EOS requires English skills. (Indeed, aside from a few pleasantries, the conversations quoted here all took place in English.)

“We found it very difficult to find any information in Spanish,” a spokesperson for the block producer candidate EOS Argentina said of EOS’ early days. As for Portuguese-language content, Luiz Hadad EOS Rio, a Brazil-based block producer candidate, said it is “still very rare.”

EOS Argentina

Matías Romeo (left) and Jesús Chitty of EOS Argentina at a meet-up in Seoul. Image via EOS Argentina.

Korean is generally considered EOS’ third major language group. Even so, Orchid Kim, from the block producer candidate EOSYS, said “it has been a basic assumption that Korean community […] has to provide extra effort in various translations in order to be involved in the whole EOS community.”

For the most part, according to these block producers, the portions of Spanish, Portuguese and Korean-speaking communities that were interested in EOS spoke at least some English. (It would have been difficult to develop the interest otherwise.)

Today, all three block producers are involved with some sort of translation efforts, which they say are helping broaden their communities beyond English speakers.

Despite representing a Babel of world languages, then, the EOS community outside of China is participating in a more or less unified, English-dominated conversation. And while that conversation occurs on a gaggle of channels, most of those channels are at least on a single platform, Telegram.

The Great Firewall

While participating in this broader English-language conversation may be challenging for some parts of the community, for those in mainland China, it’s been extremely difficult.

“You can’t really access Telegram from inside China,” said former VP of product at Block.One, Thomas Cox, “so an entire swathe of our constituency was effectively frozen out. It wasn’t that we didn’t care, it’s that we didn’t know how to reach them very well.”

Moti Tabulo, head of ECAF, also noted the difficulties arising from Chinese internet controls. He pointed out that the use of a virtual private network (VPN) could allow access to Telegram.

Even so, Chinese users may be unwilling to stray far from their country’s dominant platform. As Stephen Zhang, an EMAC representative, said in an interview in August:

“WeChat is the tool in China. It’s not like Western social media network. They have Twitter, Facebook and different platforms to choose from, but in China WeChat is the communication tool.”

Importantly, though, the gulf between EOS’ Chinese and Western communities may have an additional dimension, besides language and choice of social media platform. As Tabulo noted, “the concepts can be difficult to translate.”

Amy Wan, founder and CEO of the blockchain startup Sagewise, recently gave an example of this sort of difficulty, though she didn’t reference EOS specifically: “I laugh when Westerners argue about decentralization. Only a few people in the world really control bitcoin, [ethereum], etc., and they’re all in China and don’t give a damn about decentralization.”

To make matters worse, a recent scandal has thrown fuel on these simmering cultural differences. An anonymous Twitter account recently posted unverified allegations – originating on WeChat – of “collusion, mutual voting and pay-offs that occur amongst the Chinese BP community” (block producers or BPs are elected by EOS token holders and fulfill a role similar to that of miners in bitcoin).

As CoinDesk reported, some people on the English-speaking, Telegram-using side of the community vowed to stop voting for China-based block producers entirely in the wake of these allegations. And in China, “most people are mad with this activity if it is true and the discussion of how to prevent it is very enthusiastic,” said EOS Beijing’s co-founder, who goes by Sven.

The incident points to the difficulty of building a governed blockchain that spans linguistic and cultural divides. There is an ongoing debate regarding the rules or “constitution” the EOS community should abide by, but it has so far occurred almost exclusively in English and on Telegram.

And of course, as mentioned above, hacks and scams have hit the Chinese EOS community harder than others because, according to EMAC, “very few of Mandarin token-holders are fluent in English to feel confident to directly communicate and interact with ECAF.”

Looking up

The situation appears to be improving, though.

Micheal Yeung of EOS Pacific, a block producer candidate, and others founded EMAC to “promote governance awareness among Mandarin community members and facilitate collaboration between Mandarin and non-Mandarin communities in governance and arbitration,” according to EMAC’s statement.

Michael Yeung EMAC

Michael Yeung, EMAC’s first chairman, who stepped down in July (center). Image via EOS Pacific.

The job has been difficult. In July the organization stopped providing direct help to victims of token theft after some of the victims began harassing EMAC volunteers, threatening them and exposing their private information.

Today, the organization focuses on providing the Chinese-speaking community with “education and training” on governance in EOS. In addition, two members of EMAC, Stephan Zhang and Siqi Yao, have joined ECAF, meaning EOS’ main arbitration body no longer lacks Mandarin speakers.

Meanwhile, another new organization, EOS Alliance, is hosting calls in Mandarin on arbitration and other topics, in particular the constitution. It is coordinating translations of governance-related documents to Mandarin, as well as working to reduce tensions. For example, it issued a statement on Chinese BPs’ alleged vote-buying that warned against “creat[ing] a sense that Chinese token holders or BPs are being unfairly picked on.”

Wan of Sagewise has joined EOS Alliance as the head of a working group on dispute resolution and arbitration. She told CoinDesk, “ever since connecting with [EMAC], we’ve been trying to collaborate and work with them in terms of bridging the divide and not having two discussions but one large, global discussion.”

Cox, who is serving as interim executive director of EOS Alliance and an adviser to EMAC, told CoinDesk that the situation is improving rapidly:

“I would say that as of a month ago there was a lot of sense of separation. I would say by now anybody who feels that there’s an unbridgeable divide probably was on vacation for four or five weeks.”

Still, he added, the attempt to unite the EOS community and keep it united is “an enormous undertaking.” EMAC echoed that sentiment, saying, “there is a long way ahead of us.”

Of course, EOS is far from the only project to face an East-West divide. As Wan alluded to, there is a prevalent perception that the bitcoin network is controlled by Chinese miners, which often generates resentment in the West.

In other cases, there’s an explicit assumption that the West needs one solution, while China needs its own: the smart contract platform Neo is often referred to as “China’s ethereum.” Nor is that phenomenon limited to crypto: the West has Google, China has Baidu; the West has Amazon, China has Alibaba.

Sven underscored this point when he told CoinDesk that while EOS suffered from a gulf between East and West, “this is not the problem of EOS, it is the problem of the world.”

This post credited to coindesk Image via Shutterstock

A man in China has been been sentenced to three and a half years in jail for stealing power from a train station to fuel his Bitcoin (BTC) mining operations, local media outlet The Paper reports October 8.

According to court documents released today, the sentencing was served September 13 at the Datong Railway Transport Court in China’s northern Shanxi province. In addition to jail time, the individual, a local named Xu Xinghua, has reportedly been fined 100,000 yuan (around $14,500).

Xinghua is said to have stolen electricity from one of the factories at Kouquan Railway back in November and December 2017 to power his 50 Bitcoin miners and three electric fans around the clock. The document states that five of the mining machines were damaged during this period.

As of April 2018, Xinghua is said to have successfully mined 3.2 Bitcoin, earning 120,000 yuan (about $17,400) and running up an electricity bill of 104,000 yuan ($15,000).

In addition to imprisonment and a fine, the court has ordered Xinghua to cover the cost of the electricity charges and has confiscated his mining equipment, The Paper reports.

Charges of a similar nature are not unprecedented in China. In June, a man in China’s Anhui province was arrested for attempting to steal electricity to fund his reportedly “unprofitable” mining operations. The suspect was said to have stolen 150 megawatt (MW) of power to fuel two hundred computers that he used to mine both Bitcoin and Ethereum (ETH) – running a bill of over 6000 yuan ($930) daily.

With the country established as a crypto mining superpower due to its abundance of cheap energy and hardware, reports surfaced at the start of this year that Chinese authorities were poised to attempt to quash the industry.

A leaked memo from the People’s Bank of China (PBoC) to a top-level government internet finance regulator reportedly stated that Bitcoin miners should make an “orderly exit” from the country due to them sapping “huge amounts of resources and stok[ing] speculation of virtual currencies.”

The regulator is said to have subsequently ordered local authorities to wield all available means in their arsenal – including “measures linked to electricity price, land use, tax, and environmental protection” – to pressure miners to cease their operations.

This post credited to cointelegraph  Image source: Cointelegraph

Much noise has been made about the untraceable qualities of Bitcoin and other cryptocurrencies. Bitcoin “can be used to buy merchandise anonymously” said early primers on crypto, it offers users the kind of financial privacy that was previously available only from a “Swiss bank account,” say more recent commentators. And given its ability to provide people with a layer of anonymity and privacy, it has been smeared by politicians, experts and mainstream journalists alike as a hiding place for almost any hacker, drug dealer, gang member, terrorist or despot you could possibly name (even if cash is still the preferred financial medium of such personae non gratae).

It’s therefore no wonder that, for several years, governments have been feverishly trying to trace Bitcoin’s circulation, as well as that of other digital currencies. And despite the popular reputation of most cryptocurrencies as anonymous, they’ve been aided in this pursuit by the fact that most cryptos are not anonymous, but rather pseudonymous. In other words, by linking transactions to fixed wallet addresses, and by keeping a public record of every single transaction ever made on their chains, most popular cryptocurrencies provide national governments with an almost perfect means of keeping tabs on our financial activity.

However, while many governments have begun capitalizing on this very convenient affordance by building systems that compile transaction data and scraped private info into a single database, most have only just begun moving in this direction. And more importantly, there are a number of privacy coins – Monero being the most prominent  – that don’t offer a public record linking transactions to wallets, while there are also mixing tools for making the transactions of non-privacy coins private. As such, there are still ways to remain anonymous in crypto for those who want to keep a low profile, despite the best efforts of governments in the USRussiaJapan, and elsewhere.

Japan and Russia

Japan and Russia

As the most recent example of government crypto monitoring, the Japanese National Police Agency (NPA) announced plans to implement a system that can reportedly “track” cryptocurrency transactions within Japan. While specific technical details are scarce, the software is being developed by an unnamed private company and will cost the NPA around $315,000 next year to run. In particular, its main function will be to trace transactions reported to it as ‘suspicious’, linking them together into a visualization that will, in theory, enable it to pinpoint the sources and destinations of illicit money.

For the most part, it will receive its reports of suspicious activity from Japanese crypto-exchanges, which ever since the May introduction (by the Financial Services Agency) of anti-money laundering (AML) legislation have been sending it intelligence on potentially illegal transactions and the accounts associated with them. Indeed, this reporting is precisely what makes a ‘transaction-tracking system’ possible, rather than the invention of some novel cryptographic technology capable of breaking through the pseudonymity/anonymity of most cryptocurrencies. Simply, exchanges are being legally required to follow strict know-your-customer (KYC) policies, which enable them to link real-world identities to addresses and to transactions recorded on public blockchains. And given that they’re supplying this info to the NPA, all the NPA will really be doing with their system is feeding such info into a database and creating visualizations of the flow of crypto.

What this means is that such a system isn’t likely to have much direct application to anyone who circumvents (regulated) exchanges when receiving and sending crypto. That said, even if certain users stay away from Japanese exchanges they could still be linked to illicit crypto if said crypto has passed through an exchange and already raised suspicions. Either way, another area to which the system isn’t likely to have much direct application are privacy-enabling coins such as MoneroZcash and Dash, since rather than attempting to track such coins the Japanese authorities have merely decided to ban exchanges from carrying them.

A similar story is currently emerging in Russia, where the Federal Financial Monitoring Service (Rosfinmonitoring) has contracted for a system that will collate various sources of information regarding suspects in finance-related crimes. As reported by the BBC Russia service, the system will be used to create profiles for suspects, to which the authorities then add whatever relevant info they can gleam about him or her: phone numbers, bank card details, physical addresses, and crypto wallet addresses. Once again, the system hasn’t been designed specifically to compromise the cryptography of Bitcoin or any other crypto, but rather seeks to simply add wallet information – where available – to any other data Rosfinmonitoring has on a suspect.

By doing this, the Russian authorities clearly hope to prevent suspects from laundering any illicitly gained money via crypto, while they also assert that they intend to stop crypto being used directly for illegal purposes. “Because of their anonymity and the inability to trace them,” German Klimenko – an ex-advisor to Vladimir Putin on internet development (and head of the cryptocurrency group at the Russian Chamber of Commerce and Industry) – told the BBC. “Cryptocurrency is used in grey areas, in the dark web, for buying weapons, drugs, or violent videos. Lawmakers of many countries are wary of this phenomenon: this was confirmed by the analysis that we conducted under orders from the president [Putin].”

While Russia hasn’t introduced regulations requiring exchanges to uphold strict AML and KYC policies, the State Duma is in the process of negotiating a digital assets bill that would do just that. And once this bill has passed, Russian authorities will – like their Japanese counterparts – have access to info on the identities of wallet holders. As a result, the Rosfinmonitoring service will be able to enter this information in the soon-to-be-launched system (coming at the end of 2018), which will enable it to link transactions, wallets, and identities together.

But because this system will be tapping into crypto-exchange records rather than novel ‘crypto-hacking’ technology, it’s likely that it won’t apply to all cryptocurrencies and all cryptocurrency users. Some experts even believe that it will have a largely counterproductive effect, forcing many cryptocurrencies and their users to become more untraceable.

“If you look at the entire volume of laundered funds, the share that is laundered through cryptocurrency is very small,” Anton Merkurov – an advisor with US-based the Free Russia Foundation – said. “Let’s say the turnover of the local exchange is about one billion rubles [around $14.7 million] a week. This, in fact, is not very much. Instead of catching the proverbial Colonel Zakharchenko [a former anti-corruption officer who was caught with around $140 million in bribe money in 2016], authorities are trying to find a microbe under a microscope in a drop of water. This should not be a priority. And most importantly, start pressing there and opposition will begin, you will think up real tools for laundering.”

The United States

The United States

While the systems being rolled out by Japan and Russia largely depend on cooperation from crypto-exchanges and on piecing together disparate sources of information, there are indications that some governments at least have taken a more direct approach to identifying crypto users.

The US, to take the most notable – and disconcerting – example, has developed a covert piece of technology that can actually extract raw internet data from fiber-optic cables in order to identify the IP addresses and IDs of those sending and receiving Bitcoin. According to documents obtained by whistleblower Edward Snowden in 2013 and published by the Intercept in March 2018, the technology in question is a program developed by the National Security Agency (NSA) and known as OAKSTAR. Masquerading as a piece of virtual private network (VPN) and downloaded by some 16,000 users in such nations as China and Iran, the program instead siphons data from an “unspecified ‘foreign’ fiber cable site,” according to the Intercept.

Using this data, the NSA can then extract such information from Bitcoin users as their password information, their internet browsing activity, and their MAC address, while certain whistle-blown docs also discuss extracting users’ internet addresses, timestamps, and network ports. Effectively, OAKSTAR can be used to gather much more than the information necessary to identify someone and link them to specific Bitcoin addresses and transactions, and it can do so without having to rely on crypto-exchanges.

This is a big blow for Bitcoin privacy. As Cornell University professor Emin Gün Sirer told the Intercept:

“People who are privacy conscious will switch to privacy-oriented coins […] when the adversary model involves the NSA, the pseudonymity disappears. You should really lower your expectations of privacy on this network.”

Similarly, Matthew Green – an assistant prof. at Johns Hopkins University Information Security Institute (and a key Zcash developer) – explained to the Intercept that the NSA’s exploits are “bad news for privacy, because it means that in addition to the really hard problem of making [crypto] transactions private […] you also have to make sure all the network connections [are private].”

As alarming as OAKSTAR and the activity surrounding it are, no new information has emerged recently to indicate that the NSA has extended its Bitcoin-tracking endeavors to other cryptocurrencies. There’s also the fact that its ability to link certain people with Bitcoin wallets is predicated on these people unwittingly downloading a piece of software that secretly extracts their internet data (while purporting to provide some other service). As a result, if users stick to VPN packages (and other pieces of software) they know and trust, it’s likely they will avoid the NSA’s long claws.

This reassurance aside, there is still the predictable reality that the United States government has been seeking user data from cryptocurrency exchanges, and has been doing so for longer than either the Japanese or Russian governments. In November 2016, for instance, it filed a legal summons that required Coinbase to provide the Inland Revenue Service (IRS) with the identities of an unspecified number of individuals associated with a number of cryptocurrency wallets. As Cointelegraph reported at the time, this summons was significant not so much in itself, but because it indicated that the IRS had been able to track certain wallets to an extent sufficient to determine that they’d been involved in the violation of tax legislation. Similarly, it also indicated that the IRS had been able to determine that the wallets were attached to Coinbase.

While the IRS unsurprisingly hasn’t divulged how it was able to track these wallets, a 2015 document leaked to the Daily Beast in 2017 revealed that it awarded a contract to Chainalysis, a Switzerland-based “blockchain intelligence” provider that monitors cryptocurrencies such as Bitcoin for compliance reasons. As Cointelegraph reported at the time, Chainalysis uses “data scraped from public forums, leaked data sources including dark web, exchange deposits and withdrawals to tag and identify transactions.” It attempts to combine what’s made publicly available on blockchains with personal info unthinkingly/carelessly left by crypto users on the web. It runs, therefore, another system that is less about cryptographically penetrating blockchains and more about simply putting together all the disparate threads of info strewn across the Internet.

And even though the IRS hasn’t explicitly acknowledged its employment of Chainalysis or any other service, it’s also interesting to note that past instances where an agency of the federal US government has succeeded in tracking crypto users have potentially involved input from the NSA. In October 2013, Ross Ulbricht was arrested by FBI agents in San Francisco and then charged (almost a year later) with conspiracy to traffic narcotics, money laundering, and computer hacking. During his trial, he claimed his prosecution violated the fourth amendment (i.e. right to protection against unwarranted searches), since the only way the FBI could have identified him was through the illegal help of the NSA and its data-gathering trickery. Needless to say, this defense didn’t exactly work, yet the Intercept noted that the NSA’s OAKSTAR project got under way six months before Ulbricht was arrested. More interestingly, the website also published classified documents in November 2017 revealing that the NSA had secretly helped the FBI secure other convictions in the past.

Whatever the truth behind Ulbricht’s conviction, it’s clear that the NSA has had the ability to covertly identify Bitcoin users for over five years, while it’s also true that other US agencies have been tracking crypto transactions (using undisclosed means). As such, it’s a safe bet to say that American crypto users should probably think carefully before engaging in anything Uncle Sam wouldn’t condone.

China, India and beyond

China and India

It would appear that few nations can match the US in the reach and power of their crypto-tracking activities. However, this isn’t stopping many from trying. In China, reports emerged in March that the Public Information Network Security Supervision (PINSS) agency has been monitoring foreign crypto-exchanges that serve Chinese customers. Even though the government has banned domestic exchanges and trading on foreign alternatives, this hasn’t stopped every Chinese trader from seeking out crypto abroad. Because of this, PINSS has been ‘monitoring’ foreign exchanges so as to “prevent illegal money laundering, pyramid schemes [and] fraud,” according to Chinese news outlet Yicai.

While Yicai could confirm via sources at PINSS that such monitoring had been underways since September 2017, it couldn’t explain just what kind of monitoring was being pursued, or whether the Chinese government was actively trying to identify individuals trading in crypto. Still, whatever the extent of the surveillance involved, the knowledge that other nations are tracking crypto would indicate that Chinese traders should also add themselves to the growing list of ‘people who ought to be careful.’

So too should Indian traders, who in January may or may not have learned that their government was keeping tabs on them for tax purposes. Actually, chances are they would have learned about this, since the Indian tax department sent notices to “tens of thousands” of investors (according to Reuters), after having conducted national surveys and having obtained user data from nine Indian exchanges. This provided a clear signal that the government was indeed tracking cryptocurrency transactions, something which it had begun contemplating in July 2017, when India’s Supreme Court demanded information from it and the Reserve Bank of India on the steps being taken to ensure that crypto isn’t being used for illicit purposes.

As reported in July by Indian news website LiveMint, the system the government was considering, would involve cooperation between the central bank, the Securities and Exchange Board of India (SEBI), and India’s intelligence agencies. However, as the involvement of India’s crypto-exchanges in January’s tax notices reveals, it’s once again likely that the system currently rests on input from these exchanges, rather than on technology comparable to the NSA’s, for instance.

Other than the prominent examples of Japan, Russian, the US, China and India, there are few other cases of national governments going public with (or being known for) crypto-tracking systems. Nonetheless, even if there’s currently no public record of other governments investigating the potential for tracking systems, it’s highly probable that those governments with a significant interest in crypto have contemplated a tracking system in one form or another.

UK and EU

For example, the UK and EU governments jointly announced in December 2017 that they’re planning a “crackdown” on crypto-enabled money laundering and tax evasion. UK economic secretary to the Treasury Stephen Barclay said in last October:

“The UK government is currently negotiating amendments to the anti-money-laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counter-terrorist financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas.”

While this doesn’t confirm tracking, it would at least imply it, since the ability to enforce AML legislation entails that governmental bodies and departments should have some means of not only detecting when someone is earning crypto that needs to be taxed, but also determining just who that person is. Hence, UK and EU authorities need to have some kind of tracking system in place, otherwise their threats of ‘cracking down’ on money laundering and the like will equate to only so much hot air.

And in the future, it may become increasingly possible for them or any other government, regardless of technological development, to carry through with such threats. In April, a corporate giant none other than Amazon, received a patent for a “streaming data marketplace” that would permit the combining of multiple data sources, thereby enabling the real-time tracking of cryptocurrency transactions and the users involved. As the text of the patent makes clear, this technology could potentially be offered to governments, who would be able to link crypto addresses to official IDs:

“The electronic retailers may combine the shipping address with the bitcoin transaction data to create correlated data and republish the combined data as a combined data stream. A group of telecommunications providers may subscribe downstream to the combined data stream and be able to correlate the IP (Internet Protocol) addresses of the transactions to countries of origin. Government agencies may be able to subscribe downstream and correlate tax transaction data to help identify transaction participants.”

Given the arrival of such technology (and the current existence of such firms as Chainalysis), it’s only a matter of time before transactions involving Bitcoin, Ethereum or any other non-privacy cryptocurrency will be systematically de-anonymized. It will take some time, particularly given that Amazon’s patent requires its users (e.g. retailers and telecoms providers) to combine separate pieces of data in order to create correlations. Still, it’s becoming increasingly apparent that things are moving in only one direction when it comes to the privacy and anonymity of crypto.

Privacy coins

And in light of this direction, anyone wanting to keep their chances of being identified as low as possible is advised to migrate to one of the so-called privacy coins. Monero is the most well-known of these, having entered into 10 most valuable cryptocurrencies by market cap since its initial launch in April 2014. More than anything else, what distinguishes it from the likes of Bitcoin is its CryptoNight proof-of-work algorithm, which uses a mix of ring signatures and stealth addresses to not only bury the sender’s wallet address in those of multiple other users, but also to hide the precise amount being transferred.

It’s because of this that the cryptocurrency has proven popular with those who’ve needed to evade government power (for whatever reason), and such is Monero’s apparent ability in preserving anonymity that its price increased by around 2,883% between Jan. 1 and Dec. 31, 2017 (from $12.3 to $358). By contrast, Bitcoin’s 2017 growth rate was a slightly less impressive 1,357%.

2,883% may be impressive, but it pales in comparison to the 9,000% growth enjoyed in 2017 by Dash, another altcoin with certain privacy-enhancing qualities. The 13th most valuable cryptocurrency by total market cap, its PrivateSend feature mixes addresses so as to obscure the origins and destinations of transactions, in the process making it noticeably harder for any interested authority to put the pieces together.

This may be a part of the reason why the currency has took off so spectacularly in Venezuela, where the government cracked down on such cryptocurrencies, such as Bitcoin, in a big way last year (before showing favoritism towards its own oil-backed Petro coin). Venezuelans also turned increasingly to Zcash during this period, which has become the 21st biggest cryptocurrency since launching in October 2016. Building upon Bitcoin Core’s architecture and using zero-knowledge proofs, it keeps the sender and receiver’s pseudonyms private, while also doing the same for the quantity being transacted.

Therefore, a choice of privacy coins is available for anyone worried about the growing ability of governments to track crypto transactions. And even if a concerned crypto user holds no Monero, Dash, or Zcash, they can still take advantage of the various mixing services available for non-privacy coins. For example,there are anonymization protocols available that, much like the features available via Monero and Zcash, enables senders and receivers of Bitcoin to mix their transactions with those of other senders and receivers, making it very difficult to disentangle the multiple threads involved. Such protocols include the likes of CoinJoin, Dark Wallet, bestmixer.io, SharedCoin, and CoinSwap, all of which also provide holders of Bitcoin and other cryptos with the ability to anonymize their transactions.

So even though cryptocurrency tracking is increasing, crypto investors and holders needn’t be overly fearful of government surveillance. For one, most of the tracking systems in use or which are being developed rely on input from crypto-exchanges, while others (such as those provided by Chainalysis) depend on scavenging data that users may have left carelessly throughout the web. Meanwhile, more direct and intrusive methods being honed by the NSA also rely on crypto users unknowingly compromising their internet connections, something which couldn’t be counted on for monitoring all cryptocurrency transactions en masse. This is why, in addition to such privacy coins as Monero and Zcash, privacy-conscious crypto holders shouldn’t be too concerned, since there are ways of remaining anonymous for those who want it bad enough.

 

This post is credited to cointelegraph  Image source: Cointelegraph

The regulatory clampdown on cryptocurrency exchanges in China has been noted as a key factor in the sensational growth of Binance in 2018.

Launched in the middle of 2017, the rate of growth that Binance has experienced, both in terms of trading volume and capitalization has attracted a lot of attention within the cryptocurrency environment. In just a few months, the exchange grew from just a newcomer to one of the leading crypto exchanges in the world.

Even though the company started in 2017, its founder & CEO Changpeng Zhao has always been a major player within the crypto ecosystem and other related industries. Zhao founded Fusion Systems in 2005 in Shanghai, a company that specialized in building high-frequency systems for brokers. Down the road in 2013, he became the third member of the Blockchain.info cryptocurrency wallet team. Zhao also had a brief stint at OKCoin, where he worked as a CTO.

Despite his experience and expertise, Zhao notes that the force behind Binance comes from innovation that was born out of a supposedly adverse circumstance, speaking to the South China Morning Post. The ban in China motivated Zhao and the entire Binance team to expand everywhere else, hence the subsequent growth that has established the company as a leader in the industry.

In September 2017, China shut down the activities of all domestic crypto exchanges. This move forced Binance to move its headquarters and servers to Tokyo. This kept the establishment outside the regions where the Chinese regulations could affect its activities.

Binance then embarked on its systematic expansion exercise, which saw the company encroach into other markets, including Singapore and Taiwan.

Zhao elaborates that while Chinese operators of cryptocurrency exchanges scrambled to keep up with new regulations on the mainland, Binance found the perfect opportunity to capture new regions and establish itself. This is a move that has proven to be rewarding, based on visible evidence.

Binance claims to have over 10 million users across the globe who engage in trading digital tokens. From transaction fees alone, the company claims to have generated a profit of $350 million between January and June 2018.

The expansion philosophy of Binance necessitates the nomadic lifestyle of Zhao, who is known by his constant travels across different parts of the world. During the past month alone, Zhao said he has visited eight countries which includes Switzerland and South Korea to hire new staff, attend industry events and forge deals. He has not traveled back to mainland China since the cryptocurrency crackdown a year ago, he said.

This post credited to ccn Featured image from Shutterstock.