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Bitcoin rose by as much as 1k USD this week. It didn’t rise as high as its 90-day high, but it’s a promising sign for BTC loyalists. My concern is that we don’t see good applications for how to migrate people to cryptocurrency. That is, Square’s Cash app will allow you to buy without requiring an exchange, but it’s still difficult to know what to use it for. Without that side of the equation, converting people over is slow. There are some cool projects taking place that may ease that sort of conversion from paper currency to digital, and we’ll be watching for them in the future.
Separately, we hear a lot about identity and blockchain, without really hearing about practical business cases. This week, we look at one that seems to make more sense. The coin has utility, the blockchain is used for proof, and it has a real business case. Solving “identity” is hard. Solving for document verification is a little easier, and just as real a need.
Two token sales to watch 👁️
Code of Talent is a micro-learning startup, that wants to create 7 minute lessons. They set out to solve for classroom inattention, lack of student motivation, access to good teachers, and the disconnect between skills and theory. By having short lessons that are approachable, they can keep students engaged, and they want to have direct interaction between student and teacher, as well as integration with employers. Students and teachers will be rewarded in token, and proof of accomplishment will reside on the blockchain. They have a proof of concept, and the whitepaper is available to read.
Evident Proof is an identity and documents group that believes putting documents on the blockchain in immutable storage creates a system of decentralized data verification. In a situation where there’s a claim, an audit, the arguments about the claim should rely on evidence. Evident Proof wants to be able to store and hold the evidence to be used in settling these claims. The token is received by a user when storing a document, and when the user needs to recall it as proof, they submit the token back. One example they provide is, “A pharmaceutical company stores its test results for new drugs on the Evident platform. It gives a governing body (a 3rd party) permission to view proof of the test results (data events) to prove that the drug is safe to go to market. Where permission is given to view an event to a 3rd party either the 3rd party or the data owner must present an EPT or part of an EPT to the Evident platform. In this case the 3rd party governing body gets its EPT from a digital exchange and presents this to the Evident platform to receive the service.”
The Good, the Bad, and the Ugly 😊😠👹
Crypto Education: LSE Offers an Online Crypto Investing Course
Starting this August, LSE will offer an online course titled “Cryptocurrency Investment and Disruption.” It promises to teach both the necessary practical skills and the theory to understand the infrastructure behind crypto assets. LSE pledges to teach students how to “make sense of, and accurately evaluate, cryptocurrencies and their uses,” producing specialists ready meet the market demand.
EU Parliamentary Report: Officials “Should Not Ignore” Crypto
The new report released by the EU’s Policy Department for Economic, Scientific, and Quality of Life Policies boldly says “no” to ignoring and banning cryptocurrency by policymakers.
The report examines the functionality of virtual currency (VC) and its ramifications for governments and central banks. It acknowledges a possible future increase in the number of users and transactions, not debunking the notion that cryptocurrencies may become a “fully-fledged substitute of sovereign currencies in the future” or just a “full-fledged private money.”
Crypto community can breathe easily. The authors call out the “economists who attempt to dismiss the justifications for and importance of VCs.” The report specifically points to Robert Skidelsky and Robert Shiller, who called the cryptocurrency as the invention of quacks and cranks, “a new incarnation of monetary utopia or mania (Shiller, 2018), fraud, or simply as a convenient instrument for money laundering.” The report puts predicts that cryptocurrencies will most likely “remain with us for a while.”
Malta Passes Three Blockchain Bills, Becoming the “Blockchain Island”
Passing three bills into law, Maltese Parliament has established a regulatory framework for the country’s fast-developing blockchain sector. The move “will put Malta on the international map for blockchain and crypto regulation,” the Parliamentary Secretary for Digital Innovation and Finance Silvio Schembri told CNN.
Maltese Prime Minister Joseph Muscat tweeted “We will be the global hub for market leaders in this new sector” and he just might be right. Invited by the friendly crypto-environment, many crypto and blockchain businesses have already set up shop in Malta, including OKEx, Binance, and BitPay.
Study Claims 80 Percent of ICOs are Scams
According to a study issued by the ICO advisory firm Statis Group, more than 80 percent of ICOs conducted in 2017 can be considered frauds. By breaking down the ICOs into six categories (Scam, Failed, Gone Dead, Dwindling, Promising, Successful), the study found that “approximately 81% of ICO’s were Scams, ~6% Failed, ~5% had Gone Dead, and ~8% went on to trade on an exchange.”
Earlier this month, TechCrunch reported that more than a thousand crypto projects are “already dead” as of June 29, 2018. With a large number of scams and a high rate of failure, make sure you consider the risks before you invest in an ICO.
Bancor Exchange Gets Hacked for $23.5 Million
Bancor, a decentralized cryptocurrency platform, recently announced a security breach. A wallet used to upgrade Bancor smart contracts was compromised and, as a result, the hackers managed to withdraw $12.5 million of ETH, $1 million of NPXS, and $10 million of BNT.
Following the theft, Bancor went offline to conduct its investigation and froze the stolen BNTs, which cause an onslaught of criticism on Twitter. Charlie Lee, the creator of Litecoin, accused the exchange of giving “a false sense of decentralization.”
As a consequence of the theft, Bancor promised to tackle the threat of cryptocurrency hacks. In a blog post, the exchanged informed of its plans to create “a coalition of crypto defenders who will pledge to contribute resources and capabilities to fight criminals together.” Its “members will collaborate on mechanisms to warn and assist each other in times of peril, coordinate around shared blacklists, and contribute open-source tools aimed at creating a safer world for all stakeholders.”
Malware Targets 2.3 Million Bitcoin Addresses Through Windows Clipboard
Addresses are long and difficult to memorize. After all, they consist of 26 to 35 alphanumeric characters. And you can have as many of them as you want to. It’s no wonder that not many (if any) crypto-users commit the entire string to memory. Copy-and-paste is how you fill in the address section.
Unfortunately, hackers have recognized this tendency. They have created a type of malware called CryptoCurrency Clipboard Hijackers which replaces the user’s Bitcoin address with one belonging to the attacker. As a result, oblivious users send their own coins to the thieves. This week BleepingComputer noticed a sample of this type of malware. It’s monitoring over 2.3 million cryptocurrency addresses!
12 Russian Intelligence Officers Indicted for 2016 Election Interference
The U.S. Department of Justice (DoJ) released an indictment, charging twelve Russian nationals for “committing federal crimes that were intended to interfere with the 2016 U.S. presidential election.” The aim of the operation was to hack into the computer networks associated with the Democratic Party and the presidential campaign of Hilary Clinton.
Concealing their connection to Russia and posing as “American hacktivists,” Russian intelligence operatives released stolen emails in the months before the election to undermine Clinton’s campaign. The hackers’ used cryptocurrency to purchase servers and the necessary equipment. They also mined Bitcoin to help fund their operation.
To explain the role of cryptocurrency, DoJ informs in an official press release:
“To avoid detection, defendants used false identities while using a network of computers located around the world, including the United States, paid for with cryptocurrency through mining Bitcoin and other means intended to obscure the origin of the funds. This funding structure supported their efforts to buy key accounts, servers, and domains.”
Head of the Bank of International Settlements Slams Crypto
In a speech reported by BIS on July 4, the head of the Bank of International Settlements, Agustin Carstens, warned “young people” against “trying to create money.” Carstens noted that the greatest interest in the virtual coin have the people who produce it. He believes that this flawed logic “is not compatible with maximizing the usefulness of money.”
According to Carstens, cryptocurrencies are simply speculative assets. “They are neither a good means of payment, nor a good unit of account, nor are they suitable as a store of value,” he states. “They fail dramatically on each of these counts.”
Carstens arguments are in line with the analysis offered by BIS in 2018 Annual Economic Report. Published in June, the document caused quite a stir with its criticism of cryptocurrency and shallow understanding of the industry. Placed side by side with the recent EU’s Parliamentary Report, the differences of the quality of documents are striking, to say the least.
Philippines Grant Three Licenses to Crypto Exchanges
The Philippine’s Cagayan Economic Zone Authority (CEZA) granted provisional licenses to three foreign-based crypto exchanges, the Manila Times reports.
The CEZA attempts to create a “Global Fintech and Offshore Cryptocurrency Exchange Hub” by inviting various fintech companies and services to the region. This move will no doubt stimulate the economy in the Philippines with more employment opportunities for the locals and a new infrastructure built in the area.
Moreover, CEZA requires companies to invest an initial $1 million within two years of operations and pay $100,000 in non-refundable license fees (to be renewed every year), “probity checks,” and “application programming integration (API)” that cost an additional $100,000. All that money will be added to the coffers of the government-owned and controlled corporation CEZA.
According to Manila Times, over seventy companies have already applied to operate in the Cagayan Economic Zone.
EU Fifth Anti-Money Laundering Directive to Regulate Crypto
The EU Fifth Anti-Money Laundering Director came into force on July 9. The new regulations aim to investigate, detect, and prevent financial crimes in the region, with a special note of the use of cryptocurrency by criminals. This new legal framework is set to protect against money laundering, combat financial crime, and prevent terrorist financing.
The key changes revolve around increasing transparency. The Directive aims to limit “the use of anonymous payments through pre-paid cards, including virtual currency exchange platforms under the scope of the anti-money laundering rules.” It also strengthens “customer verification requirements” by “requiring stronger checks on high-risk third countries as well as more powers for and closer cooperation between national Financial Intelligence Units.”
The IRS Goes International to Fight Crypto Tax Crimes
The United States, United Kingdom, Australia, Canada, and the Netherlands joined hands and formed “The Joint Chiefs of Global Tax Enforcement” (J5) to combat tax crimes, including cryptocurrency tax crimes.
The J5 pledges to “work together to investigate those who enable transnational tax crime and money laundering and those who benefit from it” and to “reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime and to make the most of data and technology.”
The initiative marks a change in approach to sharing information. As the chief of IRS Criminal Investigation Don Fort explained to Forbes, “We cannot continue to operate in the same ways we have in the past, siloing our information from the rest of the world while organized criminals and tax cheats manipulate the system and exploit vulnerabilities for their personal gain.”
BitConnect Class Action Lawsuit Adds Youtube As Defendant
Youtube has been dragged into a class action lawsuit against BitConnect. The video giant is accused of negligence, failing to protect its users from fraudulent promotional content. According to the legal documents, the top ten BitConnect YouTube affiliates posted more than 70,000 hours of unedited content, generating about 58 million views.
The lawsuit was initially filed in January by the law firm Silver Miller on behalf of investors, accusing BitConnect of running “a wide-reaching Ponzi scheme that defrauded investors, made a mockery of state and federal securities laws, and employed an army of social media mercenaries who were paid to bring more unsuspecting victims into the fraud.”
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