G7 Agrees on Crypto Action Plan Spurred by Facebook’s Libra

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra

G7 finance chiefs met this week and Facebook’s Libra cryptocurrency was high on their agenda. They agreed on several crypto initiatives and fast regulatory responses to projects such as Libra, calling for them to meet the highest standards of financial regulation.

Also read: G20 Leaders Issue Declaration on Crypto Assets – A Look at Their Commitments

A Call for Urgent Action

The G7 finance ministers and central bank governors met in Chantilly, north of Paris, for a two-day conference on July 17 and 18. Other than France, which chairs this year’s meetings, the G7 comprises Canada, Germany, Italy, Japan, the U.K., and the U.S. In addition, the European Union has participated fully in the G7 since 1981 as a “nonenumerated” member. At the end of their meeting, the ministers issued the Chair’s Summary of the decisions made.

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra
Group photo showing some of the G7 finance ministers and central bank governors who attended the two-day meeting in Chantilly.

“Ministers and governors acknowledged that while innovation in the financial sector can bring substantial benefits, it can also entail risks,” the statement reads. “They agreed that stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns, as well as wider policy issues, which both need to be addressed before such projects can be implemented.” The summary details:

Regarding regulatory concerns, ministers and governors agreed that possible ‘stablecoin’ initiatives and their operators would in any case need to meet the highest standards of financial regulation.

“Regarding systemic concerns, ministers and governors agreed that projects such as Libra may affect monetary sovereignty and the functioning of the international monetary system,” the Chair’s Summary continues.

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra
G7 meeting of finance ministers and central bank governors in Chantilly.

“On Libra, we had a very constructive and detailed discussion with a very large and shared consensus on the need for action,” a French official told the AFP news agency. After chairing the first day’s meeting, French Finance Minister Bruno Le Maire was quoted by Reuters as saying:

The sovereignty of nations cannot be jeopardised … The overall mood around the table was clearly one of important concerns about the recent Libra announcements, and a shared view that action is needed urgently.

G7 Agrees on Crypto Action Plan in Response to Facebook’s Libra
French Finance Minister Bruno Le Maire.

“The issuance of a currency does not belong in the hands of a private company because it is a core feature of a sovereign state,” German Finance Minister Olaf Scholz proclaimed. Asserting that Facebook’s plans do not “seem to be fully thought through,” he is convinced Libra “cannot go ahead without all legal and regulatory questions being resolved,” the news outlet added. A senior Japanese finance ministry official who was at the meeting told the press:

Most G7 members saw Libra as posing a serious problem from the perspective of consumer data protection and the impact on monetary policy.

Facebook recently unveiled its plans for Calibra, a new subsidiary aimed at providing financial services via the Libra network. “The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology,” the company described.

Global Coordination and G7 Working Group

The G7 has set up a working group on stablecoins, coordinated by Benoit Coeure, Chair of the Committee on Payments and Market Infrastructures (CPMI). Its preliminary findings were provided at the meeting.

The group consists initially of senior officials from the G7 central banks, the International Monetary Fund (IMF), the Bank for International Settlements and the Financial Stability Board (FSB), the Chair’s Summary reveals, adding that it will be expanded to representatives from G7 ministries of finance. The group will also coordinate with the G20 and other relevant standard-setting bodies. Its final report and recommendations are expected by the time of the IMF-World Bank annual meetings in October.

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra
Benoit Coeure, Chair of the CPMI.

Bank of Japan Governor Haruhiko Kuroda believes that, given the potential impact of Libra on the global economy, the G7 working group would evolve over time to include a broader range of regulators, elaborating:

If the Libra is aspiring to be used globally, countries must seek a globally coordinated response … This is not something that can be discussed among G7 central banks alone.

Central bankers have emphasized that Facebook needs a banking license if it wants to take deposits, with some expressing concerns about allowing people to transact anonymously.

Japan’s Own Crypto-Focused Working Group

In response to Facebook’s Libra plans, Japanese regulators also set up a working group ahead of the G7 Finance Ministers and Central Bank Governors Meeting to discuss the potential impact of the planned digital currency on monetary policy and financial regulation, Reuters reported government sources revealing.

This working group consists of Japan’s central bank, Ministry of Finance and Financial Services Agency (FSA) which is in charge of the country’s banking regulation. “The group has started comprehensive discussions on various aspects of stablecoins,” Mainichi publication reported Japanese Finance Minister Taro Aso as saying after the G7 meeting. Sources told Reuters that the group “will seek to coordinate policies to address the impact Libra could have on regulation, monetary policy, tax and payments settlement.”

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra

The officials explained:

Japan hopes to rally support from other countries to expand the task force into a bigger group of tax and financial regulators, given the wide range of policies that could be affected by digital currencies.

As this year’s chair of the G20 meetings, Japan will look at ways to align separate efforts made by the G7 and G20 to address the policy implications of Libra, the officials noted.

At the G20 summit last month, the G20 leaders declared that “crypto-assets do not pose a threat to global financial stability at this point.” However, they “are closely monitoring developments and remain vigilant to existing and emerging risks.” The leaders also asked the FSB and other standard-setting bodies “to advise on additional multilateral responses as needed.”

Global Network for Crypto Payments

The Japanese government is also setting up “an international network for cryptocurrency payments, similar to the SWIFT network used by banks, in an effort to fight money laundering,” Reuters reported Thursday, citing a person familiar with the matter.

The plan, proposed by the country’s Ministry of Finance and the FSA, is for the network to be in place in the next few years, the publication noted. The Financial Action Task Force (FATF), an intergovernmental standard-setting body in areas such as money laundering, will monitor the system’s development and Japan will cooperate with other countries. The FATF approved the plan for this new network in June, according to the source.

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra

Moving Beyond Current Regulations

Japan’s finance minister urged his G7 counterparts Wednesday to comprehensively assess Libra for any new challenges that may fall outside of existing regulations, emphasizing:

Applying existing regulations alone may not be enough. A comprehensive examination is needed to see if Libra poses new challenges that existing rules do not take into account.

“On the other hand, authorities need to respond in a timely fashion so they’re not behind the curve,” the finance minister opined.

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra
Japanese Finance Minister Taro Aso.

Libra Grilled by US Lawmakers

Facebook executive and Calibra CEO David Marcus appeared before the U.S. Senate Banking Committee and the House Financial Services Committee this week. The committees asked him questions such as how Libra could affect global monetary policy and how customer data will be protected.

“Facebook has demonstrated through scandal after scandal that it doesn’t deserve our trust … We’d be crazy to give them a chance to let them experiment with people’s bank accounts,” Senator Sherrod Brown said in his opening remarks.

Rep. Andy Barr said to Marcus: “Tell me how Libra will not undermine sovereign currencies and central banks, or is the very point to undermine central bankers and to provide a greater freedom away from central banking?” The Facebook executive responded: “I want to be very clear, we do not want to compete with the dollar or sovereign currencies.”

G7 Agrees on Crypto Action Plan Spurred by Facebook's Libra
Calibra CEO David Marcus.

During Wednesday’s hearing, Rep. Brad Sherman compared the potential consequences of Facebook’s crypto project to the terrorist attacks of 9/11. “We’re told by some that innovation is always good … The most innovative thing that’s happened this century is when Osama bin Laden came up with the innovative idea of flying two airplanes into towers,” he claimed. Sherman asserted that if successful, Libra could be “one of the biggest things this committee will deal with this decade,” then questioned why Marcus appeared in Congress for Facebook instead of CEO Mark Zuckerberg.

“I don’t think you should launch Libra at all,” Rep. Carolyn Maloney told Marcus, while Rep. Madeleine Dean said, “I think before you move on to Libra, you ought to clean up the messes of the past.” According to Marcus:

Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.

What do you think of how the G7 countries plan to handle cryptocurrencies including Libra? Let us know in the comments section below.

Images courtesy of Shutterstock, the French government, Nikkei Asian Review, Kyodo News, and Reuters.

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Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

Bitcoin Cash Milestones: Delivered Code, Upgrades, and Platform Development

Bitcoin Cash (BCH) platform and protocol development have seen a lot of delivered code and projects over the last two years. The upgrades will help Bitcoin Cash scale to the masses, and many of the added features are protocol developments that are unique to BCH.

Also read: Indian Government Breaks Silence on Crypto Regulation

BCH Infrastructure and Blockchain Development

In less than two weeks, BCH fans around the world will be celebrating the anniversary of the blockchain split that occurred on August 1, 2017. Since then there’s been a lot of Bitcoin Cash development and a total of four BCH upgrades. In the following report, news.Bitcoin.com summarizes a list of completed BCH developments that reveal how much has been accomplished in two years. All of the completed BCH features can be seen on the analytics website Coin Dance, alongside other developments in the works. BCH developers also have plans to upgrade the chain this November and the specifications in regard to the consensus rule changes are being reviewed before the feature freeze on August 15, 2019.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development
A statement about Bitcoin Cash according to Ethereum cofounder Vitalik Buterin’s recent interview with the publication Coinspice.io.

Re-enabled Satoshi Opcodes

Back in the early days of Bitcoin, Satoshi Nakamoto added operation codes to the protocol that could push data or perform certain functions via the Bitcoin Script language. Not long after, the opcodes were disabled after developers found a bug in a specific opcode called OP_LShift. In May 2018, Bitcoin Cash developers re-enabled the Satoshi operation codes (opcodes) that can allow for a variety of decision-based transactions, compilers, and other functions depending on the opcode used.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development
A long list of Bitcoin opcodes.

OP_Checkdatasig Implementation

The opcode OP_Checkdatasig is a Script operation that checks the validity of a signature using a message and public key. Essentially the operation calculates the hash within a transaction in order to validate signatures in an automated way. OP_Checkdatasig allows for data to be imported that can be validated through the use of an oracle. The opcode has facilitated some very cool concepts like a noncustodial escrow system, an onchain SLP token auction console, a BCH recurring payment system, an endowment platform, and an onchain game of chess.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

32MB Block Size Increase

The Bitcoin Cash chain implemented a 32MB block size increase in May 2018. The BCH block size is a lot larger than BTC’s 1MB limit and 4X larger than the 8MB size BCH started out with two years ago. 32MB blocks are not processed yet, but large blocks were tested on the BCH mainnet in September 2018 during the stress tests. During the first week of that month, BCH miners processed a few 15MB blocks and the largest was 23MB that week. However, prior to the blockchain split which created Bitcoin SV the mining pool, BMG processed multiple 32MB blocks on November 10, 2018.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

Graphene Version 1

On July 25, 2018, the Bitcoin Unlimited (BU) development team announced merging Graphene version 1 into the BU client. Graphene is a block propagation concept that aims to be 10X more efficient than compact blocks. The code merge provides the first functional implementation of graphene blocks according to BU’s George Bissias who also stated that the “code will also require further optimization.” In the past, developers have mentioned that Graphene blocks could be optimized with a different transaction ordering process like canonical ordering.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

Canonical Transaction Ordering

Prior to the implementation of Canonical Transaction Ordering or CTOR, consensus rules processed transactions in a list form and the list was topologically sorted. After the November 15, 2018 upgrade, the BCH chain can now work with blocks as a set, as opposed to a list ordering, and the process is done in a canonical fashion. As mentioned above, according to some, Graphene can leverage CTOR when it comes to concepts like Graphene compression rates. By itself, developers believe CTOR is important for the future of BCH scaling in order to alleviate computational load and allow for giant-sized blocks.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development
The CTOR whitepaper.

Schnorr Signatures

At block 582680, the BCH chain upgraded by adding Schnorr signatures, a signature scheme invented by Claus Schnorr. The recent Schnorr addition acts as the foundation for a variety of different techniques that can improve scaling and privacy. The day before Schnorr was implemented on BCH, independent developer Mark Lundeberg told news.Bitcoin.com that the Schnorr foundations could remove 4% of the current transaction storage. Lundeberg also detailed that in the future after further Schnorr upgrades, the scheme could provide for public signature aggregation and more complex sign-to-contract concepts.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

A Number of Accomplishments Worth Celebrating

This is just the tip of the mountain when it comes to BCH platform and protocol development. Other notable developments include Cash-ID, an open protocol that allows secure authentication; Hash-DB, a database written by Flowee specifically for the Bitcoin Cash UTXO set; Cashshuffle, a stable mixing application release that helps preserve an individual’s transaction privacy when using the BCH network; Neutrino, a lightweight SPV wallet that uses BCHD and allows client-side filtering. Cashshuffle participants have already shuffled more than 100,000 BCH since March 27. Then there’s the Simple Ledger Protocol (SLP) which has boosted the concept of tokenization solutions using the BCH chain. SLP infrastructure is growing as various wallets like Crescent Cash, Badger, Ifwallet, and the social media platform Memo.cash all support SLP tokens. Moreover, developers have produced other features like X-Versionmessage, Cash Accounts, Cleanstack and the Segwit recovery option alongside other protocol developments.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

Bitcoin Cash developers are also working on features for the upcoming November 2019 BCH upgrade. The draft specification summary for the next set of implementations include various protocol enhancements like enabling Schnorr signatures for OP_Checkmultisig(Verify), a minimal push and minimal number encoding rules in Script, enabling NULLDUMMY and the rule that limits signature operations in Script will be changed.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

On July 11, during the 12th Bitcoin Cash Development video meeting, programmers explained that people can review the code and consensus ruleset changes before developers enact the feature freeze on August 15, 2019. There are also other developments under discussion like Avalanche, Merklix Trees, Blocktorrent, and projects still being worked on like Cashscript, Cashfusion, Spedn, and Xthinner.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development
Tokenization on the BCH chain has been very popular using SLP.

Additionally, in May, a group of BCH supporting businesses and individuals initiated a fundraiser to help bolster the future of open source Bitcoin Cash development. BCH proponents can visit the Bitcoin.com/fundraise page to donate to BCH projects like Bitcoin ABC, Unlimited, BCHD, Bcash, Verde, Flowee, and Bitprim.

Bitcoin Cash Milestones: Delivered Code, Upgrades and Platform Development

The fundraiser aims to raise 1,600 BCH by August 1 and there are still 12 days left to go. At that time, Bitcoin Cash fans will be celebrating the large number of accomplishments the protocol has achieved in the last two years. BCH supporters will surely be tipping their hats to platform and protocol developers who have contributed an enormous amount of time, energy, and innovative concepts to the BCH chain.

What do you think about all the developments achieved in the last two years? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Bitcoin.com/fundraise, SLP, Cashshuffle, Github, Blog.vermorel.com, Twitter, Coin Dance, and, en.bitcoin.it/wiki/Script.

Want to create your own secure cold storage paper wallet? Check our tools section. You can also enjoy the easiest way to buy Bitcoin online with us. Download your free Bitcoin wallet and head to our Purchase Bitcoin page where you can buy BCH and BTC securely.

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7 Unorthodox Ways to Mine Bitcoin

7 Unorthodox Ways to Mine Bitcoin

Bitcoin isn’t crazy – in fact it might just be the soundest monetary system this generation has ever known. Some of the techniques miners have devised to extract it, however, are extremely unorthodox, ranging from the ingenious to the downright crazy. Here are seven of the strangest attempts at extracting bitcoin ever conjured.

Also read: Bitcoin Mining Helps Oil Companies Reduce Carbon Footprint

Bitcoin Mining Takes Many Forms

The process of adding bitcoin transactions to a newly created block and propagating it to the network is known as mining. To create the next block, miners must solve a mathematical puzzle whose answer is a number ranging anywhere from 0 to 4,294,967,296. In exchange for performing this task, miners are rewarded the transaction fees included in that block, plus a reward that currently stands at 12.5 BTC, dropping to 6.25 BTC in 2020. That, in a nutshell, is bitcoin mining.

Given the lucrative rewards at stake – the block reward alone is worth $130,000 at current prices – it is no surprise that there are so many miners clamoring to solve the math problem that grants them authority to publish the next block. Bitcoin mining is an arms race, math the process as rationally as possible, seeking to maximize your hashrate (the number of computations your miners can perform per second) while minimizing your fixed costs such as electricity. As the following examples show, however, not all miners are in it for monetary gain; some are more interested in pushing the limits of what is physically and practically possible.

7 Unorthodox Ways to Mine Bitcoin

Method 1: With Waste Gas

“Stop burning, start earning” is the slogan of Upstream Data, which provides mobile mining datacenters that can be installed at oil company facilities that need to vent gas. As news.Bitcoin.com reported, they “can bring in over 15 times more revenue than the market price of the fuel, while limiting carbon footprint.” Ignore the screeching environmentalists – Bitcoin is greener and cleaner than mainstream media will ever acknowledge.

Method 2: With a Moon Computer

The Apollo Guidance Computer (AGC) was created in the 1960s to guide a U.S. rocket to the moon. It passed the test with flying colors, but in today’s fast-paced tech world, 16-bit computers no longer cut it. That didn’t stop one intrepid soul from attempting to mine bitcoin on an AGC. As he conceded, however, “Unfortunately, the computer is so slow that it would take about a million times the age of the universe to successfully mine a Bitcoin block.”

7 Unorthodox Ways to Mine Bitcoin
The Apollo Guidance Computer used to mine bitcoin.

Method 3: With Pencil and Paper

The same guy who attempted to mine bitcoin with an Apollo computer previously tried to mine BTC by solving the mathematical problems by hand. Technically it worked, though as Ken Shirriff concluded, “One round of the algorithm takes 16 minutes, 45 seconds which works out to a hash rate of 0.67 hashes per day.” The Apollo Guidance Computer, in comparison, managed one hash every 10.3 seconds. Still, as a proof of concept, manual mining is pretty cool.

Method 4: With a Nuclear Reactor

Okay, so no one’s built a nuclear reactor for the sole purpose of mining bitcoin, although if they did, they might just be able to 51% attack the network. A single reactor power plant produces 5.1 TWh annually, around 10% of the Bitcoin network’s annual consumption. Due to their sheer might, nuclear reactors face an unusual problem: they actually produce too much energy. As news.Bitcoin.com previously reported, “Slamming on the brakes does not save any fuel; rather, energy literary ends up being wasted.” You know what’s always on the lookout for excess energy? Bitcoin.

7 Unorthodox Ways to Mine Bitcoin

Method 5: With a Mosque

A mosque might sound like a strange tool with which to mine bitcoin, but when that mosque is subsidized with free electricity, it becomes the most attractive mining location in the world. Despite reports of a government crackdown on the practice, mosque mining is alive and well in Iran. It’s not the only country whose entrepreneurs have capitalized on this loophole, either, with a Russian church also having been caught mining.

7 Unorthodox Ways to Mine Bitcoin

Method 6: While Growing Tomatoes

It’s no secret that cryptocurrency mining generates heat. Some enterprising individuals have found ways to repurpose that heat, turning a byproduct into a valuable commodity in its own right. In 2018, for example, Kamil Brejcha used excess heat from mining to grow ‘cryptomatoes’ in a greenhouse.

Method 6: While Heating Your Home

Harnessing the heat from crypto mining to warm your home is a more obvious application for the primary byproduct of bitcoin extraction. The colder the climate, the more you’ll appreciate the toasty glow of your miners in winter. In Siberia, miners have even constructed an underfloor heating system that repurposes the excess heat expelled.

Method 7: While Making Rum

Heating your home while cryptocurrency mining is all well and good, but true patricians use their miners to make rum. That’s what Avi Aisenberg did in 2017, using the heat to warm his rum barrels, creating a spicy spirit that he dubbed EtherRum.

As “free speech money,” it’s not surprising that Bitcoin should attract free thinkers and free spirits in its droves. Their out of the box ideas can be seen in the multiple techniques devised for mining and in ever more efficient (and occasionally less efficient) ways. As the mining arms race intensifies, expect to see smarter solutions that derive greater hashrate at lower cost while further reducing Bitcoin’s environmental impact.

What other unusual ways do you know of mining bitcoin? Let us know in the comments section below.

Images courtesy of Shutterstock.

Did you know you can verify any unconfirmed Bitcoin transaction with our Bitcoin Block Explorer tool? Simply complete a Bitcoin address search to view it on the blockchain. Plus, visit our Bitcoin Charts to see what’s happening in the industry.

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Hayek’s 1984: Rediscovered Footage Shows Austrian Economist Predicting Bitcoin

Hayek's 1984: Rediscovered Footage of the Austrian Economist Predicting Bitcoin, Prescribing Subversion

Born in 1899 in Vienna, Nobel Prize-winning economist F.A. Hayek is a legend of sorts in voluntaryist, libertarian, and crypto-economic circles. Freshly rediscovered video footage of the Austrian School philosopher and social theorist from 1984 is now making the rounds on crypto Twitter. In a stunning soundbite of an already well-known quote, Hayek declares that the only way to return to sound money is to take it out of the hands of government. He goes on to describe in spine-chillingly fortuitous fashion a money that requires no permission, and no central “authority.”

Also read: Money Laundering Fines Worth Billions Help Bankers Avoid Prosecution and Unpleasant Labels

The Prescience of Hayek

“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can’t stop.” So spoke Friedrich Hayek in 1984. Reevaluating those words 35 years hence and it is hard not to interpret them in the context of Bitcoin.

Hayek's 1984: Rediscovered Footage Shows Austrian Economist Predicting Bitcoin

Hayek was not alone in predicting the coming phenomenon of crypto in the 1980s. The Crypto Anarchist Manifesto of 1988 also called it way beforehand. As did American economist Milton Friedman in 1999:

The one thing that’s missing, but that will soon be developed, it’s a reliable e-cash. A method where buying on the Internet you can transfer funds from A to B, without A knowing B or B knowing A. The way in which I can take a 20 dollar bill and hand it over to you and there’s no record of where it came from. And you may get that without knowing who I am. That kind of thing will develop on the Internet.

The common thread among these striking predictions is, of course, the internet. Many thought it was crazy back in the early and mid-90s to talk of “working online” or “online shopping.” To try and imagine a permissionless future currency not regulated by the government would have been beyond the pale for most. And yet, bitcoin is here. They were right.

The Keynesian/Austrian Clash

Hayek was a key thinker and innovator of the Austrian school of economics. The Austrian system is a classic economic model in which government interference in the free market is undesired and viewed as harmful and illogical. The conflicting viewpoint and economic model which holds sway today, the Keynesian system, submits that governments must be actively involved in economies via centralized regulation and force-backed implementation of monetary policy.

While the view of almost all modern nation states is that interest rates must be set via policy—this would, in fact, be defined as a form of policing—adherents to the Austrian School view the market as an organic entity functioning by its own natural rules. Boom and bust cycles in business, and things like stock market crashes are the natural consequence of artificially instituted credit bubbles.

Hayek's 1984: Rediscovered Footage Shows Austrian Economist Predicting Bitcoin

The Knowledge Problem

Friedrich Hayek’s most important contribution to the Austrian school, arguably, is the concept known as the knowledge problem, or the “local knowledge problem.” A kind of derivative and extension of fellow Austrian School thinker Ludwig von Mises’ economic calculation problem, the knowledge problem deals with the fundamental dysfunction of central planning. In his 1945 work “The Use of Knowledge” Hayek states:

…the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.

In this sense, centralized economic planning is doomed to fail. Whereas aggregated data, stats, and relatively “stable” numbers may present one picture, these are the effects of individual market actors and their demonstrated preferences, and not central planning. That is to say, relative stability is achieved as a byproduct of individual, independent, atomized market signals. This in spite — and not because — of central planning.

Hayek's 1984: Rediscovered Footage Shows Austrian Economist Predicting Bitcoin

Individual Nodes in a Free Market ‘Blockchain’

Unique, diverse knowledge possessed by each individual market actor (i.e. “The factory is out of nails, I must replace them” or “I could invent this great device, if only I had more affordable access to that specific resource”) cannot be processed, understood, or adequately detected by a synthetic, centrally regulated entity according to Austrian school thinking.

Supply and demand cannot be “felt” accurately. Thus, huge boom and bust cycles are seen, and are considered relatively stable when in fact this is a kind of ex post facto approach to the data. In a very real sense, Austrian economic theory advocates decentralized, “permissionless” networks of nodes (autonomous market actors) much like bitcoin and the decentralized network of actors on the blockchain.

Hayek's 1984: Rediscovered Footage Shows Austrian Economist Predicting Bitcoin

1984’s Non-Dystopian Prognosis

Though Keynesian policy currently holds sway, many take issue with the fact that prescribed government interference and assistance seems so often to take the form of disruptive market corrections. Hayek viewed economic cycles as signals that an organic adjustment was in progress. Much like a headache can signal dehydration or stress in the body, decreased demand and less spending signal hesitance on the part of market actors, and a call to readjust and recalibrate according to fresh, real-time market signals.

As witnessed with the mega bank bailouts of recent times, however, this Austrian “bitter pill” is not really allowed to function. Instead, Keynesian economists create more credit (and debt which taxpayers must ultimately hold) to save bad actors and institutions that would have failed otherwise. The predictions of Hayek, Mises, Friedman, and their fellows stand in stark contrast to those of noted, award-winning Keynesians.

Hayek's 1984: Rediscovered Footage Shows Austrian Economist Predicting Bitcoin
Award-winning Keynesian economist Paul Krugman.

Keynesian Predictions

Mises predicted the now-witnessed collapse of major socialist states choosing to ignore the economic calculation problem in modern times. Hayek and Friedman predicted — among other things — the advent of cryptocurrency. As for John Maynard Keynes, father of the Keynesian School, he predicted a 15-hour workweek back in 1930, as automation and a prevalence of riches would make toil unnecessary:

But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!

The ‘Adam’ he speaks of is the Adam of the Christian Bible, who was cursed to work the ground for his sustenance and so habitually feels the need to toil. He goes on: “The love of money as a possession … will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”

Almost 100 years out, one might wonder why the altruism supposedly being exercised by Keynesian central planners hasn’t kicked in for everyone yet. Some have argued it has, as there is now at least more of a chance that this or that average Joe could get rich and afford a 15-hour workweek. Whichever predictions one chooses to abide by, one thing is for sure: bitcoin is here, and it isn’t going away anytime soon.

What are your thoughts on the Keynesian vs. Austrian debate, and Hayek’s quote? Let us know in the comments section below.

Image credits: Shutterstock, Fair use

Did you know you can verify any unconfirmed Bitcoin transaction with our Bitcoin Block Explorer tool? Simply complete a Bitcoin address search to view it on the blockchain. Plus, visit our Bitcoin Charts to see what’s happening in the industry.

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Ethereum’s Wrapped Bitcoin Set to Eclipse Lightning Network Capacity

Ethereum's Wrapped Bitcoin Set to Eclipse the Lightning Network's Capacity

Since the project launched a little over six months ago, Wrapped Bitcoin (WBTC) has roughly $5.9 million or 558 BTC locked into the system. At the rate WBTC’s token contract is climbing, the project is close to surpassing the Lightning Network’s capacity in the near future.

Also read: The ”Wrapped Bitcoin” Project Has Now Officially Launched on Ethereum

Wrapped Bitcoin Contract Captures 558 BTC

In January, Bitgo, Kyber Network, and Ren (formerly Republic Protocol) revealed the creation of a new ERC20 token project called Wrapped Bitcoin, a token created on the Ethereum network that’s been gathering a bunch of growth recently. Essentially WBTC is an ERC20 token backed by bitcoin core (BTC) at a 1:1 ratio. The creators of WBTC explained during the token’s launch that the system was designed to bring more liquidity into the crypto ecosystem. At the moment, the token contract’s locked BTC has climbed significantly in value, gathering 558 BTC with roughly $5.9 million in value. The numbers have been impressive since the project started in January and reached a million dollars by the first week of May. Since April 16, the amount of BTC added to the WBTC contract has grown by 272%.

Ethereum's Wrapped Bitcoin Set to Eclipse the Lightning Network's Capacity
WBTC statistics according to Defi Pulse.

In comparison to the Lightning Network’s growth, the WBTC contract is growing much faster and they both provide similar functionality. Since February 2018, the Lightning Network capacity has held around 5.5 BTC or roughly $46,000 and it’s taken more than a year to climb past $10 million and reached an all-time high of $12 million last month. At the time of writing, the Lighting Network’s current capacity is $9.5 million or 911 BTC. While the Lightning Network’s capacity has been dwindling, there’s been a lot more demand for WBTC tokens. WBTC can be obtained from a number of exchanges like Airswap, Hitbtc, Kyber, Radarrelay, Uniswap, and Imtoken. The project now has a slew of merchants like Grapefruit Trading and the San Francisco-based security platform Bitgo has been acting as the custodian for the WBTC project’s reserves as well.

Ethereum’s Wrapped Bitcoin Set to Eclipse Lightning Network Capacity
Lightning Network statistics according to Defi Pulse.

WBTC’s recent popularity is also due in part to the cryptocurrency infrastructure providers giving the asset support. On July 16, the Compound protocol, an open source lending platform that compounds interest on the Ethereum blockchain, announced its support for WBTC. The Compound community voted on adding WBTC in January, but there were some delays, like the length of time it took for bitcoins to get wrapped. After the project reached a level of maturity, Compound community members were “clamoring” for the coin to be supported. Now the team behind the Compound software has deployed WBTC and users are now able to earn interest on and borrow WBTC. “The market uses the same interest rate model as ETH, BAT, ZRX, and REP, and the initial exchange rate is 0.0200,” the Compound team detailed. So far, $32,000 worth of WBTC loans has been issued since the launch on Compound.

Ethereum's Wrapped Bitcoin Set to Eclipse the Lightning Network's Capacity
Infrastructure that supports WBTC.

A week prior, on July 8, the NEO-based cross-chain atomic swap exchange Switcheo also launched WBTC on the trading platform. Switcheo’s Jack Yeu explained: “For the first time, traders around the world will be able to buy or sell NEO with the BTC-pegged token, WBTC, in a trustless manner via Switcheo’s cross-chain atomic swaps.” Adding WBTC is part of Switcheo’s goal toward creating a network with cross-chain swapping capabilities across multiple chains. WBTC has added a lot of value into the Ethereum ecosystem and between all the decentralized finance (defi) platforms like WBTC, Maker, and Compound, defi protocols command more than 2% of the entire ETH supply.

Another Instance of Wrapping BTC Using the Bitcoin Cash Network

The rise of WBTC also follows the recent launch of a Simple Ledger Protocol (SLP) token that has similar attributes. The SLP token built on top of the Bitcoin Cash network is called BTC2 and the pegged token is issued by the platform Sideshift.ai. According to the Sideshift creator, BTC2 tokens are backed 1:1 with BTC and people who don’t live in the U.S. can obtain the token using the Sideshift swapping application. BTC2 tokens (not to be confused with the BTC snapshot fork of the same name) use the same BCH network fee to transact which means people can send BTC without paying high transaction fees.

Ethereum's Wrapped Bitcoin Set to Eclipse the Lightning Network's Capacity
Swapping BTC for WBTC on Sideshift.ai.

Similarly to sending WBTC, owners must sign a transaction that requires a certain amount of gas or gwei. In contrast, BCH or SLP transactions typically have a network fee of around $0.001 to $0.005 on average. At the time of publication, there are 100 BTC2 tokens in existence which is a touch more than $1 million worth at current BTC market prices. Sideshift’s creator Andreas Brekken told news.Bitcoin.com that with Sideshift acting as the custodian of people’s BTC, it adds a counterparty, which means BTC2 can also open new doors such as earning interest.

Ethereum's Wrapped Bitcoin Set to Eclipse the Lightning Network's Capacity
The BTC2 token graph according to Simpleledger.info.

In addition to both WBTC and BTC2, there’s Blockstream’s LBTC, a project aimed at facilitating large amounts of BTC transfers offchain. However, unlike the two aforementioned tokens created on public blockchains, LBTC is a federated sidechain using a number of exchanges as the trusted federation. It’s interesting and ironic that there are people with millions of dollars between WBTC, BTC2, and LBTC that think it’s valuable to transact with BTC using alternative chains with lower fees. Moreover, as WBTC comes close to surpassing the Lightning Network’s capacity, one could conclude that it’s easier to transact with WBTC or BTC2 than learning to grasp the technical aspects of the Lightning Network.

What do you think about the WBTC project’s growth? Why do you think people think it’s valuable to transact with BTC on an alternative chain? Let us know what you think about this project in the comments section below.

Disclaimer: This editorial is intended for informational purposes only. Readers should do their own due diligence before taking any actions related to the mentioned companies or any of their affiliates or services. Bitcoin.com or the author is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Image credits: Shutterstock, Defi Pulse, Simpleledger.info, wbtc.network, and Sideshift.ai

Are you a developer looking to build on Bitcoin Cash? Head over to our Bitcoin Developer page where you can get Bitcoin Cash developer guides and start using the Bitbox, SLP, and Badger Wallet SDKs.


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Bitcoin Mining Helps Oil Companies Reduce Carbon Footprint

Burning Wasted Gas to Mine Bitcoin Promises to Become a Booming Business

Natural gas acquired as a byproduct of oil extraction has become synonymous with wasted energy. In certain areas, drilling companies are unable to find a profitable market for the excess fuel. It’s often vented into the atmosphere. Startups are now offering on-site systems that utilize the surplus to mine cryptocurrencies. This new business is growing in regions where shale oil and gas extraction are major industries.

Also read: Georgia Exempts Bitcoin From VAT to Become the Next Country to Affirm Its Currency Status

Fossil Fuels Aren’t Going Anywhere

At least for the foreseeable future, traditional energy sources such as oil and gas are here to stay. Their abundance and relatively low price compared to some renewables, their utility, mobility and well developed supporting infrastructure are hard to beat. However, despite these obvious advantages, getting them out of the ground can sometimes be a wasteful process.

Bitcoin Helps Oil Companies Reduce Carbon Footprint

Electricity is the primary cost of bitcoin mining and while coin minting is often powered by renewables like hydro, energy from traditional sources is widely used as well. Cryptocurrency mining can utilize the surplus fuel that would otherwise be wasted, and the oil and gas industry is a good example of this. With the spread of alternative methods of extraction to even remote, hard-to-access places, the need for on-site consumers grows.

New shale oil wells have been popping up across North America and other parts of the world in the past few years. They are often located far from potential markets, and the transportation of certain byproducts such as methane and other compounds forming natural gas is not always economically viable, because grid prices are too low or because expensive additional infrastructure is needed to transport the fuel.

Associated gas, or flare gas, is a liability for oil companies and they have several options for dealing with it. If a well is close to a market, producers can pipe it to end consumers. Alternatively, they can flare it or vent it into the atmosphere. However, authorities in the U.S. and Canada impose restrictions on the amount of gas that can be released or burned. Exceeding these limits usually leads to costly production stoppages.

Crypto Mining Makes Excess Gas Profitable

Installing bitcoin mining equipment at oil production sites provides a solution to these problems. Some companies are already offering this type of service. Gas engines are used to generate electricity and power mining rigs. Oil producers remain compliant with venting quotas and receive additional income, while ensuring uninterrupted oil extraction. Mining rewards can be significantly higher than the price most companies get when they sell gas to the grid. At the same time, nature is spared from a very potent greenhouse gas – methane gas is 25 times more harmful than CO2.

Upstream Data is a Canadian company offering mobile mining datacenters that can be bought or rented by oil companies and installed at facilities which need to vent associated gas. They can bring in over 15 times more revenue than the market price of the fuel, while limiting carbon footprint. The datacenters come in different configurations depending on their equipment and power rating. The all-in-one Ohmm Combo can be ordered with up to 125 kW of ASICs and a natural gas genset, all housed in a modified shipping container. The midrange version starts at 28,000 Canadian dollars ($21,400). A new product called Ohmm Mini, a 50 kW stackable datacenter, is also on sale, and Ohmm Mega, a 1,000 kW datacenter, is currently under development.

Bitcoin Helps Oil Companies Reduce Carbon Footprint

Upstream Data founder and CEO Stephen Barbour, who is a mechanical engineer with eight years of experience in the oil industry, told news.Bitcoin.com that his business continues to pick up. Earlier this month, he tweeted about the commissioning of a new Ohmm datacenter in Texas. The entrepreneur noted that media reports on his solutions have brought more legitimacy to crypto mining as a means of utilizing stranded gas. His company continues to get new orders and is conducting trials with small and large groups. “A lot of great things are happening for us so we’re pretty excited to expand our services,” Barbour said and added:

Aside from the oil industry, our datacenters can also be used in traditional mining applications. However, I believe the future of bitcoin mining is in the oil and gas industry due to the enormity of the energy produced and wasted.

Huge Amounts of Stranded Gas Flared Each Year

Various studies have shown that oil companies vent or flare enormous quantities of natural gas year after year. According to the World Bank, 5.3 trillion cubic feet (150 billion cubic meters) of natural gas is flared annually, which amounts to 25% of the total consumption in the United States. An analysis conducted by General Electric claims that 5% of the global gas production is flared annually. It has been estimated that the stranded natural gas accounts for up to 60% of the planet’s reserves.

EZ Blockchain is another company expanding its operations in the sector. It has designed a mobile flare mitigation system which can be deployed on oil well pads and mine digital coins using energy from the flared gas. Its EZ Smartbox portable mining units are powered by gas-electric generators to convert associated gas into electricity used in data processing including crypto mining. The Chicago-based company has already delivered 13 mobile units to three locations, with 6 MWs under operation and 64 PH/s of hash power. To find out more about these operations and get further insights about the industry, news.Bitcoin.com contacted Sergii Gerasymovych, founder of EZ Blockchain.

Bitcoin Helps Oil Companies Reduce Carbon Footprint
Sergii Gerasymovych

“Our primary area of operation and target market is the Bakken region in North Dakota, which has very rich gas being flared, with over 1,500 BTU/ft3. Raw gas is dirty, it consists of methane, butane, hexane, pentane, ethane, and other gases. NGL companies are required by law to clean it before it can be burned and producers spend money to do that,” the entrepreneur explained.

In the smallest configuration of the EZ Smartgrid solution, a 350 kW datacenter can be equipped with 250 S9 miners and utilize up to 100 MCF of gas daily with a gas-electric generator. “This is a drop in the ocean for oil producers, but we worked hard to solve the scaling problem. We strategically partnered with a distributor of generators from Jenbacher with a power range of 200 kW to 10 MW and flexibility to run either on natural gas or a number of other gases,” Gerasymovych noted. He thinks this is a game changer as the average small well in North Dakota produces around 350 MCF of gas daily, and an oil pad can have five or more wells.

The company is currently working with one oil producer in the Bakken region and is about to start operations with another. Its team is also evaluating a 10 MW location in the Appalachian Basin. EZ Blockchain’s founder believes there’s huge opportunity for the expansion of this type of crypto mining, particularly in North America where due to the shale boom, there are many wells where gas is flared. This fuel isn’t going anywhere and building pipes is not economically feasible.

There is enough wasted gas in North Dakota alone to power a third of Bitcoin’s whole network. Bitcoin mining can be done completely off-grid, solving an environmental problem.

Sergii Gerasymovych expects more drilling companies to install and operate on-site mining equipment to utilize the excess gas that would otherwise be wasted. However, this will not happen quickly as the oil and gas industry is very conservative. It’s going to take time for small to midsize companies to look for a new, innovative approach. “They are in the business of pumping oil, not mining bitcoin. That’s why EZ Blockchain usually runs the mining operations,” he remarked.

Gerasymovych emphasized that these operations generally require a lot of investment into gas generation equipment upfront. “This is another obstacle we face with oil producers. Small companies can operate tens of wells and midsize companies – hundreds or even thousands. That means very big mining operations have to be built and funded in order for the flaring problem to go away completely,” he explained. Oil and gas companies are a bit hesitant to invest money in an industry which they do not know well and it may take more time before the technology becomes a mainstream solution.

Bitcoin Helps Oil Companies Reduce Carbon Footprint

The expansion of the shale oil industry in North America and the scale of gas wastage have created ideal conditions for services such as those offered by Upstream Data and EZ Blockchain, and they are not the only companies that are working to utilize the abundant byproduct in crypto mining applications. The U.S.-based Crusoe Energy Systems is developing its own solutions in the niche, helping oil and gas producers to reduce gas flaring while making a profit by verifying crypto transactions. This spring, the startup raised $4.5 million in a seed funding round led by Bain Capital Ventures and Founders Fund Pathfinder, bringing its total funding to $5.1 million.

The capital will be used to finance the production of Crusoe’s mobile datacenters designed to mine digital coins at oil drilling sites. The goal is to provide a large-scale flare mitigation service for oil and gas extraction companies across North America. Crusoe’s modular datacenter units are installed in shipping containers and can be quickly deployed on any oil well site in the U.S. and Canada to start mining within days. The systems not only reduce flaring but also eliminate most of the smog-forming emissions of volatile compounds such as nitrogen oxide (NOx) and carbon monoxide (CO).

Bitcoin Helps Oil Companies Reduce Carbon Footprint

Decentralizing Power Consumption in Bitcoin Mining

While cryptocurrency mining has become more and more centralized over the years, there’s a strong case that the generation of power used in the process will be gradually decentralizing, thanks to solutions like these. Datacenters running on stranded gas do mine on pools, but they are mobile units that can be installed anywhere. As the hunt for cheap energy intensifies, with electricity being the main expense in bitcoin mining, more and more businesses are likely to develop products allowing for the use of energy close to its source.

Companies specializing in flare gas utilization have some challenges to overcome. Datacenters require maintenance, rigs need to be restarted sometimes, fuel pipes can freeze, and it can be hard to establish a reliable internet connection in remote places. Add to that the low efficiency of gas engines used to power the mining modules – it’s less than 30% and most of the energy is still lost as heat and through the exhaust pipe. Bans imposed on shale oil and gas extraction and fracking also pose a threat to the business.

Bitcoin Helps Oil Companies Reduce Carbon Footprint

Nevertheless, bitcoin mining remains a viable option for energy companies operating far from potential markets and under strict regulations on venting and flaring. Mining containers can also be installed at ordinary natural gas fields and exploited whenever coin minting is more profitable than selling the fuel to other consumers. Along with Canada and the U.S., Russia, China, Iran, and Saudi Arabia are among the largest natural gas producers in the world. Global proven reserves have been estimated at 6.95 quadrillion cubic feet.

Do you expect to see a rapid development of other crypto mining technologies utilizing excess or wasted fossil fuels? Share your thoughts on the subject in the comments section below.

Images courtesy of Shutterstock, Upstream Data, Crusoe Energy Systems.

Do you want to maximize your Bitcoin Mining potential? Plug your own hardware into the world’s most profitable Bitcoin mining pool or get started without having to own hardware through one of our competitive Bitcoin cloud mining contracts.

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Indian Government Breaks Silence on Crypto Regulation

The Indian government has finally spoken up about the regulatory framework for cryptocurrency it has been deliberating, providing answers to questions presented in the upper house of the Parliament of India. The government also confirmed that the report with the recommended crypto regulation has already been submitted by the interministerial committee tasked with drafting the regulation.

Also read: G20 Leaders Issue Declaration on Crypto Assets – A Look at Their Commitments

Crypto Not Prohibited in India

At a sitting on July 16 of the Rajya Sabha, the upper house of the Indian Parliament, five questions were directed at the Minister of Finance by Parliament member Shri Dharmapuri Srinivas regarding the “Prohibition of cryptocurrency” in India.

The set of questions begins with: “Will the Minister of Finance be pleased to state: (a) whether [the] government has prohibited cryptocurrency in the country; (b) if so, the details thereof.”

Indian Government Breaks Silence on Crypto Regulation

A document containing answers to these questions started circulating on social media Thursday. It shows that the answers were provided on July 16 by Shri Anurag Singh Thakur, Minister of State in the Ministry of Finance.

Answering the first two questions above, Minister Thakur simply wrote: “No, Sir.”

Government Confirms Crypto Report Submitted

The next two questions request information regarding “(c) whether [the] government has taken note about [the] prevalence of cryptocurrency in the country; (d) if so, the details thereof.” The Minister of State replied:

Taking note of the issue, the government has constituted an interministerial committee (IMC) under the chairmanship of Secretary (DA). The IMC has submitted the report to the government.

Indian Government Breaks Silence on Crypto Regulation
Finance Secretary Subhash Chandra Garg (left) and Finance Minister Nirmala Sitharaman (right).

The interministerial committee tasked with studying all aspects of cryptocurrency and providing a recommended crypto regulatory framework is headed by Secretary of Economic Affairs Subhash Chandra Garg who is also the country’s finance secretary. The committee has representation from the Ministry of Electronics and Information Technology (Meity), the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Central Board of Direct Taxes (CBDT).

Action Taken on Crypto-Related Issues

The last question requests information on “(e) the action taken against the persons who are responsible for running the cryptocurrency in the market?” The Minister of State answered:

Presently, there is no separate law for dealing with issues relating to cryptocurrencies. Hence, all concerned departments and law enforcement agencies, such as RBI, Enforcement Directorate and Income Tax authorities, etc. take action as per the relevant existing laws.

Indian Government Breaks Silence on Crypto Regulation

The minister continued: “Similarly, police/courts take action on IPC offences. Further, in view of the risks and dangers associated with cryptocurrencies, [the] government and RBI have been issuing advisories, press releases and circulars to the public.”

Besides public warning notices regarding the risks of investing in cryptocurrencies, the central bank has issued a circular banning regulated entities from providing services to crypto businesses. The ban went into effect on July 6 last year.

Similar Answers to Lok Sabha

On July 8, Minister Thakur also answered some questions in Lok Sabha, the lower house of the Indian Parliament, about whether there is a plan to ban cryptocurrency in India. “Will the Minister of Corporate Affairs be pleased to state: (a) whether the government has any proposal to ban cryptocurrency in India,” Parliament member S. Gnanathiraviam asked.

At that time, Minister Thakur stated that “The issue of permitting trading in cryptocurrencies is currently under examination” by the aforementioned interministerial committee. He then repeated the answers his ministry provided Lok Sabha on Dec. 28 last year:

In absence of a globally acceptable solution and the need to devise technically feasible solution, the department is pursuing the matter with due caution. It is difficult to state a specific timeline to come up with clear recommendations.

Indian Government Breaks Silence on Crypto Regulation

Supreme Court Hearing Coming Up

In response to the banking restriction imposed by the RBI, a number of industry participants filed writ petitions to challenge the ban. The Indian supreme court is scheduled to hear the case on July 23.

The court was originally set to hear all the writ petitions against the RBI ban in September last year, but it continually postponed hearing the case in full. Meanwhile, the banking restriction continues and at least four crypto exchanges in India have had to shut down for this reason. Zebpay, formerly one of the largest crypto exchanges in the country, closed its Indian exchange operation in September last year. Coindelta followed suit in March, and Coinome made a similar announcement in May. Last month, Koinex also decided to shut down its exchange.

Indian Government Breaks Silence on Crypto Regulation

In February, the Indian supreme court gave the government four weeks to submit the report containing the crypto regulation recommended by the Garg committee. However, when the time was up, the court adjourned without addressing this matter.

Rumored Bill to Ban Crypto

Since the Indian government has been tight-lipped about its recommended legal framework for cryptocurrency, rumors of what the Garg committee’s report entails are rampant. In particular, the Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 has been heavily cited by the media such as The Economic Times and Bloombergquint. Among others, the bill proposes prohibition of a range of crypto activities.

However, experts have analyzed the bill’s content and agreed that, if this is the bill recommended by the Garg committee, it is nowhere near final. News.Bitcoin.com recently provided experts’ analyses and comments on this bill, as well as a preliminary analysis of its original leaked content.

Indian Government Breaks Silence on Crypto Regulation

“This document cannot be claimed as the final recommendation of the expert committee to the Ministry of Finance. The document contains no mark of authentication on it nor it has come out from any official source,” Advocate Mohammed Danish, co-founder of Crypto Kanoon, an Indian platform for blockchain and crypto regulatory news and analysis, told news.Bitcoin.com. Varun Sethi, founder of Blockchain Lawyer, shares a similar sentiment. “This looks like a very very rough draft of a proposed bill,” he opined, adding that it might just be “a random discussion paper and it may not actually become [a] bill in the same manner and mode in which this has been stated.”

Impact of G20 and FATF on India’s Crypto Regulation

Garg said that his committee’s report with the recommended crypto framework for India was ready in early June, a week before he attended the G20 Finance Ministers and Central Bank Governors Meeting in Fukuoka, Japan, on June 8 and 9.

Indian Government Breaks Silence on Crypto Regulation
Finance Minister Nirmala Sitharaman (left) and Finance Secretary Subhash Chandra Garg (right) in Fukuoka, Japan.

Both Garg and India’s new finance minister, Nirmala Sitharaman, attended the meeting where all G20 finance ministers and central bank governors jointly declared their commitments to applying the crypto standards set by the Financial Action Task Force (FATF), an intergovernmental standard-setting body in areas such as money laundering. The FATF released its updated guidance for crypto assets on July 21, almost two months after Garg said his committee’s report was ready.

Furthermore, during the G20 leaders’ summit in Osaka, Japan, Indian Prime Minister Narendra Modi and leaders of the other G20 nations jointly declared their commitments to applying the FATF standards.

The G20 meetings this year were hosted by Japan, where cryptocurrency has been legalized as a means of payment since April 2017. Crypto exchanges in the country are regulated by the Financial Services Agency (FSA), which has so far approved 19 of them to legally operate in the country.

How do you think India will eventually regulate cryptocurrency? Let us know in the comments section below.

Images courtesy of Shutterstock and the Japanese government.

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Market Outlook: Crypto Bulls Rally After Bearish Downturn

Market Outlook: Crypto Bull Market Still in Play After Bearish Decline

Since July 13, digital currency prices have dropped in value significantly, but most coins have since experienced some recovery. While many crypto supporters are optimistic on where the markets are headed, traders and analysts have noticed a bullish-to-bearish trend. BTC and a slew of other currencies spiked more than 10% at 11 a.m. EST on Thursday, however, indicating the bull market is still in play.

Also read: Ignore Crypto Twitter – Life as a Nocoiner Isn’t That Bad

The Bulls Are Back in Town

On Wednesday, cryptocurrency bulls were seemingly exhausted and bears had temporarily taken the reins, clawing back prices over the last week. Currently, the overall market capitalization of the entire cryptoconomy is $281 billion with around $83 billion worth of 24-hour global trade volume. The leading digital asset by market valuation, bitcoin core (BTC), is down over 8% over the last seven days. One BTC is trading for $10,622 after touching a low of $9,165 on Wednesday. BTC is followed by the second largest market cap held by ethereum (ETH) which has dipped by 17% this past week.

Market Outlook: Crypto Bulls Rally After Bearish Downturn

ETH is swapping for $225 per coin at press time as the cryptocurrency recovered 5.2% of its losses over the course of the earlier morning trading sessions. Following ethereum, ripple (XRP) is trading for $0.32 per XRP, down by 2.3%. Litecoin (LTC) is swapping for $101 per coin and down 1% over the last seven days. Bitcoin cash (BCH) is below litecoin’s market cap in fifth position as each coin is trading for $318, down 7% for the week.

Market Outlook: Crypto Bulls Rally After Bearish Downturn
Bitcoin cash (BCH) price on July 18, 2019, at 1 p.m. EST.

Analyst Insists Libra Scrutiny Pushed the Price of BTC Down

This week has been interesting as U.S. congressional leaders discussed cryptocurrencies at great length to attempt to understand and regulate Facebook’s upcoming Libra coin. Public blockchains like BTC were described by politicians and cryptocurrency advocates over the last two days. Financial columnist and market analyst Naeem Aslam thinks the Facebook Libra investigations and politicians probing BTC pushed crypto prices lower. Most of the questioning and debate in Congress this week revolved around the creation of Libra, the cryptocurrency Facebook plans to launch in 2020.

Market Outlook: Crypto Bulls Rally After Bearish Downturn
Alexandria Ocasio-Cortez (D-NY)

For instance, many Democrat representatives including Alexandria Ocasio-Cortez seem to be against Facebook’s coin concept during the hearings. The New York Democrat representative asked Libra CEO David Marcus who backs the financial underpinnings of the planned Facebook currency. “So we are discussing a currency controlled by an undemocratically selected coalition of largely massive corporations,” Ocasio-Cortez said to Marcus, unimpressed with his testimony. Financial Services Committee representative Patrick McHenry (R-N.C.) commended Satoshi Nakamoto’s creation, meanwhile. However, Aslam writes this week that the congressional hearing and “the scrutiny of Facebook’s cryptocurrency has hit bitcoin’s price.” Sharing his opinion on July 17, the analyst stated:

Speaking purely from a price action perspective, the Bitcoin price declined as much as 8.9 percent during the hearing and for the week it is down nearly 16 percent. The price has found its support near the 50-day moving average which is trading at $9,311. If the price falls below the 50-day moving average, it is likely that the price may continue to move lower and find support around the area of $7,418. The 242-day moving, which has an impressive track record, is something that I am looking at closely. It is trading at $6,983 and the price must stay above this line in order for the bulls to keep their hopes alive.

Market Outlook: Crypto Bulls Rally After Bearish Downturn
Bitcoin Core (BTC) price on July 18, 2019, at 1 p.m. EST.

The Dotcom Era

Ceteris Paribus from the crypto analytics firm Messari believes the current BTC market cycle is very similar to Amazon stock during the dotcom bubble. “Not all bubbles are created equal — The latest BTC cycle mirrors Amazon during the dot-com bubble, but the recovery has been much more swift — Even with the recent sell-off, bitcoin is 54% down from its high, vs. the 85% Amazon was trading at over a similar timeframe,” Paribus tweeted on July 17. “Why is this relevant? While different assets, they both traded on pure speculation — Bubbles follow similar patterns, but the quick BTC breakout has been extremely bullish. Only natural to see a bit of a pullback here — Still much further ahead than most people imagined in December.”

Market Outlook: Crypto Bulls Rally After Bearish Downturn
Ceteris Paribus says BTC market cycle is very similar to Amazon stock during the dotcom bubble.

Miners Will Defend the Price of BTC

According to trader and analyst Filb Filb, miners will defend the price of BTC if it sinks to a certain point. “I have seen a lot of hysterical calls for bitcoin to find new lows and want to revisit a logical economics-based approach which helped me call the 2018 bottom to near perfection and why I do not believe bitcoin will find new lows,” the trader wrote on Wednesday.

Market Outlook: Crypto Bulls Rally After Bearish Downturn
Will miners defend the price at a certain point?

By using certain tactics, miners will always maximize their rate of returns. “As Satoshi said himself rightly pointed out that commodity costs are likely to gravitate to production cost. Why? Because miners will sell into demand where revenue per unit > MC. Likewise, collectively they are disincentivized to sell when revenuedeclared. The popular trader added:

We have also seen the pre halving hype bottom out at 2x the cycle bottom historically — Go look for yourselves. Coincidence? I think not.

Money Managers Scour Forums and Social Media for Cryptocurrency Price Clues

According to a Reuters interview with Bin Ren, CEO of Elwood Asset Management, hedge funds and money managers are using algorithms capable of identifying cryptocurrency price clues throughout forums and social media platforms like Twitter. Reuters reports that the use of these algorithms has been growing fervently among traditional market managers. “It’s an arms race for money managers — Very few players are able to implement and deliver it, but I believe it is highly profitable,” Ren told the news outlet. Moreover, Bitspread, the digital asset management service based in London and Singapore, also uses social media algorithm techniques to profit.

“It’s a matter of gathering all the info, trying to understand who is trading where, what kind of liquidation can appear,” Bitspread CEO Cedric Jeanson said. “It’s a strategy that makes sense.”

Market Outlook: Crypto Bulls Rally After Bearish Downturn
Reuters reports that money managers are combing social media posts and forums for leads toward crypto price clues.

Despite the Possibility of BTC Prices Declining Below $7K, Market Parabola Is Still in Play

Well known Twitter cryptocurrency analyst Mr. Anderson detailed that BTC has very strong parabolic trend lines and the lowest band is under $7K. Essentially this means that despite BTC’s current price decline, the bull run could still be in play. For instance, despite the 10-25% dips for most digital assets within the cryptoconomy, the majority are still way up in comparison to the December 2018 lows.

Market Outlook: Crypto Bulls Rally After Bearish Downturn
Mr. Anderson’s Parabolic Curve chart.

Any of the parabolic trend lines could act as a support for BTC but calling large ones is very difficult according to Mr. Anderson. “BTC Parabolic Curve: Calling the end of a large Parabolic Curve is NOT EASY — It seems obvious and that is why it is hard. We already have a couple of fairly logical para-trend lines that we had to cancel and we have a couple more that may end up being canceled as well,” Anderson explained on Twitter in reference to his parabolic trend line chart.

Worldwide Economic Fears, Cut Interest Rates and a No-Deal Brexit

Overall, digital asset markets have still gained significant value in the midst of worldwide economic fears. However, retail sales in June were better than expected according to economists and the jump in spending has given them hope. However, in the U.S. some speculators believe that the Federal Reserve might cut interest rates when members of the Fed convene on July 30-31. According to reports, the U.S. Treasury has already priced in the rate cuts in order to bolster loans and lending rates for mortgages.

Market Outlook: Crypto Bulls Rally After Bearish Downturn
After someone succeeds Prime Minister Theresa May, many believe Brexit will happen.

Moreover, the possibility of a no-deal Brexit is being debated across the U.K. and EU. Economists fear that the U.K. will finally leave the EU monetary system, but waiting for Prime Minister Theresa May’s successor has paused an impending Brexit. With economists watching the global economy closely and politicians scrutinizing digital currencies, how all of this madness will affect cryptocurrency markets going forward is anyone’s guess. Today’s price breakout at 11 a.m, however, suggests that the crypto bulls are still in the game.

Where do you see the price of BCH, BTC and the cryptoconomy going from here? Let us know what you think in the comments below.

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

Images via Shutterstock, Trading View, Bitcoin.com Markets, and Coinlib.io.

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Money Laundering Fines Worth Billions Help Bankers Avoid Prosecution and Unpleasant Labels

Money Laundering Fines Worth Billions Help Bankers Avoid Prosecution and Unpleasant Labels

The recent seizure of a cargo ship owned by JP Morgan, a vessel loaded with 20 tons of cocaine according to latest accounts, highlighted the risks of banks’ involvement in illicit activities, inadvertent or otherwise. And although U.S. authorities released the MSC Gayane after the owner, JP Morgan’s asset management arm, and the operator, Mediterranean Shipping Company, paid a $50M in cash and surety bond, the stain remains and this is not the only stain. Money laundering for drug cartels and moving funds for terrorists, arms dealers and dictatorial regimes are among the sins banks have accumulated through the years. However, court settlements and billions of dollars in fines often help major financial institutions avoid prosecution, conviction, and labels like ‘Drugbanks.’

Also read: Money Laundering Scandals Bring Court Charges and Record Job Cuts to Euro Banks

Money Laundering Pandemic

According to a study conducted by the International Monetary Fund (IMF) and the United Nations Office on Drugs and Crime (Unodc) in 2017, up to $2.1T dollars is being laundered by criminals each year. Although it remains extremely difficult to estimate the exact amount, Unodc believes it’s between 2 and 5% of the global gross domestic product (GDP).

The advancement of financial technologies, including cryptocurrencies, has undoubtedly increased the speed and ease with which money moves around the world. However, the organization singles out developments related to the traditional financial system to explain why finding, freezing and forfeiting criminal assets have become harder. Unodc says the “dollarization” of black markets, financial deregulation, and the spread of financial havens are the main factors.

Money Laundering Fines Worth Billions Help Bankers Avoid Prosecution and Unpleasant Labels

Many banks have invested in implementing expensive transaction monitoring systems that should by design detect suspicious behavior on the part of their clients. They are programmed to raise the alarm whenever predetermined patterns are observed, such as large cash deposits, multiple transfers through a bank account in a quick succession, and other complex financial transactions.

In reality, however, the great majority of the automated alerts, 95% in the U.S., are being evaluated as “false positives,” according to research by the Thomson Reuters Regulatory Intelligence published last year. Around 98% never make it into a report on suspicious activity. At the same time, the billions buried in these software systems fail to stop the big money launderers who employ sophisticated techniques and manage to avoid detection. That includes drug cartels, terrorists and rogue states.

Swedbank Accused of Moving Funds for WMD Program

Since 2018, a number of large banks, mostly European, have been dogged by money-laundering accusations. Swedbank, one of the financial institutions implicated in the scandal centered on the Danish Danske Bank’s operations in the Baltics, now has to deal with another chapter in the ordeal. A new report by the Dagens Industri newspaper reveals that Sweden’s leading bank has identified transactions from its customers to the FBME bank, shut down two years ago after being connected to the Syrian chemical weapons program.

Money Laundering Fines Worth Billions Help Bankers Avoid Prosecution and Unpleasant Labels

The suspicious transfers were discovered during an internal investigation last year and, according to the publication, were brought to the attention of the bank’s top management. It’s unclear when exactly they were carried out, which makes it hard to determine whether they breached sanctions imposed by the United States and the European Union on the regime in Damask.

The transactions were made between account holders in Swedbank’s Lithuanian branch and one or more clients of FBME. The Dar es Salaam-headquartered bank had previously been linked to arms and drugs trafficking, terrorist financing and money laundering. It was denied access to the U.S. financial sector and its license was revoked by the central bank of Tanzania in 2017.

Dagens Industri’s article comes during a difficult period for Swedbank. A documentary aired in February by the Swedish national broadcaster SVT provided details about the bank’s involvement in money laundering transactions with Danske Bank in the Baltic states. Following the revelations, Swedbank’s Chief Executive Birgitte Bonnesen and Chairman Lars Idermark left their posts.

Banks Fined Billions for Money Laundering Violations

The crypto industry is often criticized by the establishment for not doing enough to prevent risks associated with money laundering and terrorist financing that come with the use of decentralized digital currencies. But it’s actually the traditional financial sector that has a much longer track record of such violations. Scandals with banks providing services to bad actors are not a new occurrence and failure to prevent money laundering and the movement of illicit funds are not a recent phenomenon.

Banks often pay huge fines for breaches of anti-money laundering (AML) and counter terrorist financing (CTF) regulations. Multiple cases involving major financial institutions were recorded in 2018 alone, indicating either the inability of their AML systems to cope with the challenges or simply the lack of will to prevent criminal activities.

The list of banks punished by regulators last year is pretty long. ING Bank paid $900 million in the Netherlands for its failure to prevent money laundering and other bad practices between 2010 and 2016. One of the cases involved $55 million in bribes paid to the daughter of Uzbekistan’s president by the Russian mobile operator Vimpelcom, as reported by the Global Financial Integrity portal.

Another Dutch institution, Rabobank, paid $369M to the U.S. government for allowing hundreds of millions in cash from Mexico to be deposited in its branches in California and then transferred elsewhere. That happened despite obvious signs that the funds were linked to drug trafficking and other organized crime-related money laundering.

Money Laundering Fines Worth Billions Help Bankers Avoid Prosecution and Unpleasant Labels

Last year again, US Bancorp agreed to pay $613M in fines which went to settle two criminal charges after the bank was accused of failing to prevent money laundering by investigating only a limited number of suspicious transactions. According to the U.S. Department of Justice, as much as 80% of these transactions had to be examined. The bank, however, did not take steps to increase the funding and the size of its AML team.

The Swiss banking giant UBS was fined $15 million in the U.S. for failing to file suspicious activity reports. Between 2011 and 2013, its branch in San Diego transferred $9 billion for around 6,000 accounts of non-U.S. residents from Mexico, Venezuela and Panama. The U.S. Securities and Exchange Commission (SEC) found that the bank’s analysts were allowing transactions despite multiple red flags.

Elsewhere, Australia’s largest bank was found responsible for no less than 50,000 breaches of AML and CFT laws between 2012 and 2015. They were related to a type of smart ATMs called intelligent deposit machines (IDMs) which allowed users to anonymously credit cash deposits to their accounts with an unlimited number of transactions. Regulators believe they were used by criminals who laundered $75M. The Commonwealth Bank of Australia agreed to pay $534M in penalties.

Other notable examples from the past couple of decades include JP Morgan Chase which paid over $2B in a 2014 court settlement for ignoring alerts about Bernard Madoff. The Wall Street financier had an account at the bank and used it to run his Ponzi scheme. Citigroup is another entry in a list compiled by Bloomberg, with $237M in fines for the operations of its subsidiary Banamex USA. It processed transactions worth some $8.8B with limited oversight in a five-year period until 2012.

Drug Cartels Use US Banks to Launder Illicit Proceeds

Wells Fargo-owned Wachovia was fined $160M for processing $373B in wire transfers from Mexican currency houses between 2004 and 2007. U.S. authorities believe drug cartels used accounts at the bank to launder illicit funds and finance their criminal operations. According to a federal investigation into the notorious Mexican crime syndicate Los Zetas, covered in media reports in 2012, accounts at Bank of America were allegedly used to launder proceeds from cocaine trafficking. HSBC, the largest European bank, was also used for money laundering by Latin American drug cartels. It had to pay $1.9B for failing to implement proper monitoring of over $670B in transfers from Mexico and $9.4B in USD purchases.

Money Laundering Fines Worth Billions Help Bankers Avoid Prosecution and Unpleasant Labels

Standard Chartered, another London-headquartered bank which operates in more than 70 countries, was fined $967M in total for violating U.S. sanctions on Iran in 2012 and for weak AML controls in 2014. Deutsche Bank, which is the largest German bank, paid authorities in the U.S. and U.K. fines worth $670M for allowing Russian citizens to expatriate billions of dollars in mirror trades conducted through its Moscow office. Commerzbank, another German giant, was fined $1.45B in 2015 for failing to share with U.S. authorities information about the dealings of clients that were subject to sanctions. The institution was accused of processing over $250B in transactions ordered by Iranian and Sudanese entities between 2002 and 2008.

In so many of these cases, the fines have been paid as part of court settlements that helped the banks avoid further prosecution. The absence of prison sentences for bankers involved in facilitating money laundering schemes on behalf of drug traffickers and entities under sanctions also makes a strong impression. It turns out that crime syndicates and bad actors have less trouble accessing regular bank services than crypto companies with perfectly legitimate businesses, which continue to face difficulties when trying to open a bank account in many jurisdictions.

Are fines enough of a punishment for banks in cases of large-scale money laundering via traditional financial channels? What are your thoughts on the subject? Tell us in the comments section below.

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