Showing posts with label Russia. Show all posts
Showing posts with label Russia. Show all posts

December 22, 2017

Belarus legalizes cryptocurrency payments & ICO's

By Alexander Lukashenko - December 22, 2017 (www.ccn.com)


Belarus, a country wedged between Russia and the European Union, recently legalized cryptocurrencies and Initial Coin Offerings (ICOs), in a move that’s set to drive private sector growth and attract foreign investors to the country, a former communist republic that’s still dominated by its state, filled with inefficient enterprises, and dependent on its neighbor Russia’s money and subsidies.

Bitcoin’s current crash, that’s already led the cryptocurrency below the $11,000 mark before it bounced back to $12,401 at press time, seemingly didn’t put off the country’s president, Alexander Lukashenko, who signed the decree on Friday while on the move.

The decree notably gives cryptocurrency enthusiasts tax breaks and legal incentives, as its goal is to help turn Belarus into an international tech haven, Bloomberg reports. In a statement Lukashenko, a former collective farm manager who’s in the past labeled the internet “garbage,” said:

“Belarus will become the first government in the world that opens wide opportunities for the use of blockchain technology (…) We have every chance of becoming a regional center in this area.”

Designed to attract cryptocurrency entrepreneurs looking to avoid regulatory scrutiny over cryptocurrency transactions and ICOs, the decree also exempts revenue and profits from all operations using cryptocurrencies for the next five years.

Speaking to Reuters, Anton Myakishev, the head of Microsoft’s offices in Belarus, stated that “the decree is a breakthrough for Belarus” as it gives the industry the “possibility to make a leap forward in its development,” while allowing foreign capital to enter it in comfortable conditions.

Creating a “Tech Nation”

Earlier this month, Lukashenko said that his goal in signing the decree is to turn Belarus into a “tech nation.” Not only does it legalize cryptocurrencies and ICOs, it also allows local IT companies to partly operate under English law, so it’ll help foreign investors who struggled to navigate the country’s legal system.

Denis Alinikov, a senior partner at private law firm Aleinikov and Partners, who helped draft the decree, stated:

“We regularly faced legal problems. When a Western company buys a Belarussian company they try to structure the deal outside Belarus. Investors don’t want to deal with Belarussian legislation.”

The decree further establishes a direct legal link between token issuers and their obligations towards its holders. To protect against fraud, it sets capital requirement for cryptocurrency exchange operators, while introducing smart contracts in the country.

The IT sector is one of the few that’s thriving in Belarus, as it attracts foreign workers who work for about five times the country’s average wage in its so-called Hi-Tech Park. It’s arguably the most prominent sector of the country’s economy, which is set to grow by 1.7 percent this year, according to Reuters.

Notably, Belarus was home to popular messenger application Viber, as well as the online gaming service World of Tanks, which made its founder the country’s first billionaire.

In an interview, Vsevolod Yanchevsky , head of the Hi-Tech Park, said:

“The decree has been written exactly the way our tech community wanted it. Belarus will be one of the best jurisdictions in the world for cryptocurrencies and blockchain.”

Belarus’ move may have been influenced by its neighboring country Russia, who’s upcoming draft law on cryptocurrency and ICO regulations is set to come on December 28. The law will reportedly consider cryptocurrencies as “other property,” and introduce possible limits on individual ICO investments.

The bill, which will prioritize the protection of retail investors, is likely going to be passed in March 2018. Back in October, President Putin approved a timeline for a framework on cryptocurrency regulations. Reportedly, the country may also soon be launching its own state-sponsored cryptocurrency, the Cryptoruble.

Alexander Lukashenko image from Shutterstock.

December 01, 2017

Russia Developing Global ICO Ratings Standard With 30 Countries

By Kevin Helms - December 01, 2017 (news.bitcoin.com)


The Russian Association of Blockchain and Cryptocurrency has partnered with representatives of 30 countries to develop a global ratings standard for initial coin offerings (ICOs). The association is also in talks with the Russian central bank to impose limits on ICO investments.

Russia Developing Global ICO Ratings Standard


The Russian Association of Blockchain and Cryptocurrency (RACIB) has announced that they will be developing a uniform ratings standard for ICOs, Izvestia newspaper reported this week.

The association was established with the participation of Herman Klimenko, the adviser to the President of the Russian Federation on Internet development. Its goal is to unite blockchain participants as well as owners, miners, and investors of cryptocurrencies and ICOs.

The director of the association, Arseny Shchetsin, told the news outlet that this development “will become the first in the world standard of ratings in the field of ICO,” noting that it will be applicable to not only Russian companies but also foreign ones. Currently, the industry operates on a self-regulation basis with each ratings agency adopting its own ratings system. RACIB decided to develop a standard because there is “a large number of scammers who manipulate the ratings” in the ICO market, using “unknown methodology and for a fee to raise the score,” he explained.

To develop this global standard, RACIB entered into partnership agreements with 30 organizations, which it considers “the largest players in the industry from different countries,” the publication conveyed, adding that:

"The association cooperates with representatives of Germany, Switzerland, Australia, Singapore, India, Bahrain, Kazakhstan, Ireland, Poland, Czech Republic, Turkey, Latvia, Indonesia, Lithuania, Malaysia, Estonia, etc. The requirements of the Russian standard are planned to be coordinated with the international community".

Restrictions on ICO Investments


Also this week, Vladimir Putin’s advisor on Internet development, Herman Klimenko, said that the association is discussing ICO investment restrictions with the central bank, Rambler News Service reported. According to him, an investment ceiling as low as $1,000 per project and $10,000 per year are being discussed.

“Collecting an amount of $2-5 million with such restrictions is very easy. The state, naturally, will not legalize the crowdfunding projects in the amount of $200-300 million for one project,” he elaborated. “But some reasonable limitations for medium-sized businesses, I think, are quite realistic for them,” he emphasized and was quoted saying:

"What we are now talking about with the central bank is a certain restriction on the maximum amount of attracting, for example, from a person, and restrictions in general per person per year".

Images courtesy of Shutterstock and RACIB.

November 29, 2017

1 Million Yen, 100 Million INR – Bitcoin sets new price milestones on International Markets

By Samuel Haig - November 28, 2017 (news.bitcoin.com)


With all eyes on bitcoin’s meteoric break of $10,000, less attention has been paid to the price milestones recently established on leading international markets. In recent weeks, the CAD, AUD, NZD, and SGD pairings also surpassed $10,000, whilst a single bitcoin exceeds 500,000 RUB in Russia, 1 million JPY in Japan, 10 million KRW in South Korea, and 100 million IDR in Indonesia.

The Price of Bitcoin Exceeds 1 Million Yen in Japan


As Japan is currently host to more than 60% of global trading volume, reaching the seven-figure milestone on the JPY markets is a big deal for bitcoin. According to cryptocompare, bitcoin broke above one million JPY at approximately 7 pm on the 25th of November EDT. The current JPY/BTC price as of this writing approximately (1:30 am November 29th EDT) is roughly ¥1,300,000

Seven hours after bitcoin broke above one million JPY, the South Korean bitcoin markets reached 10,000,000 KRW for the first time ever. Currently, the Korean markets account for 10% of 24-hour trading volume, comprising the third-largest bitcoin market behind the United States. The current KRW/BTC price is approximately ₩12,600,000.

Bitcoin Tests $15,000 in Australian, Canadian, and Singaporean National Markets


With the exception of an anomalous spike in the AUD/BTC price at the end of October, cryptocompare’s price index indicates that AUD trade convincingly exceeded $10,000 for the first time on November 16th at 4 pm EDT. AUD trade comprises the fifth largest national market with roughly 0.45% of 24-hour bitcoin trade. The current AUD/BTC price is approximately $14,400.

Singapore hosts the seventh largest national bitcoin market equating for roughly 0.34% of total trade. The SGD/BTC price broke above $10,000 for the first time at 11 pm on November 15th EDT and is now currently trading for $14,300 approximately.

Canadian trade presently accounts for 0.2% of 24-hour trading volume, comprising the ninth largest national market. The CAD price of bitcoin broke above $10,000 for the first time at 2 am on November 17 EDT, with CAD/BTC currently trading for $13,300.

Other Major Price Milestones on International Markets


At approximately 11 pm on the 25th of November EDT, the price of bitcoin exceeding 150,000 ZAR in South Africa for the first time. ZAR trade comprises the eighth largest national bitcoin market – comprising 0.25% of 24-hour trade.The current ZAR/BTC price is approximately ZAR167,000.

Indonesia’s bitcoin markets comprise approximately 0.1% of 24-hour trading volume, currently making such the fourteenth largest national market. The IDR/BTC price broke above 100,000,000 rupees at 9 am on November 1st EST, and at approximately midnight on November 29th EDT established a new milestone of over 150,000,000 rupees.

Russian bitcoin prices broke above RUB 500,000 for the first time at 11 pm on November 25 EDT. RUB/BTC trading presently comprises the fifteenth largest national market, representing approximately 0.1% of 24-hour trading volume. Bitcoin is currently trading for approximately RUB 600,000 in Russia.

Images courtesy of Shutterstock



Samuel Haig

Samuel Haig is a cryptocurrency and economics journalist who has been passionately involved in the bitcoin space since 2012. Samuel has written about the disruptive potential of cryptocurrency with regards to the dialectical relations within contemporary neoliberal capitalism.

November 24, 2017

Russian billionaires invest in cryptocurrencies

By Joshua Althauser - November 24, 2017 (cointelegraph.com)


Russian billionaires Roman Abramovich, Aleksandr Frolov and Aleksandr Abramov are reportedly investing large amounts of money into digital currencies like Bitcoin through the European fund called Blackmoon Crypto.

The fund, which is a subsidiary of Blackmoon Financial, is intended to establish and maintain the best framework for tokenized funds around the world.

Meanwhile, another Russian billionaire Roman Trotsenko is planning to launch a platform for exchanging digital currencies and organizing initial coin offerings (ICO). Based on a report by local newspaper The Bell, Trotsenko claimed that he wants to meet the demand by investors who want to invest in the virtual currencies.

“We had an interest in investing only in Bitcoin and we’re developing the infrastructure; we’re not going to move passengers, but rather service them on the ground.”

Position of the Russian government on cryptocurrencies


Trotsenko’s proposed digital currency platform, however, is facing uncertain future before it has even started its operation. This is because the Russian government has a confusing position on how it will handle the virtual currencies. The government is scheduled to issue official regulations on cryptocurrency mining and initial coin offerings (ICO) in July 2018.

However, in late November 2017, Communications Minister Nikolay Nikiforov has claimed that the government will “never” legalize the virtual currencies.

Because of this pronouncement, Trotsenko said that he is awaiting further developments before launching his already fully functional platform. He further claimed that he already raised the issue of regulating and legalizing the cryptocurrency market with Russian President Vladimir Putin in September.

In early November, the Russian central bank has launched its digital currency CryptoRuble, which is designed to be the only virtual instrument to be recognized in the Russian market.

The CryptoRuble is also intended to enjoy some degree of regulatory freedom. In 2016, revenues from Russian ICOs have totaled more than $300 mln.

November 16, 2017

World Gold Council Head: “Nothing to suggest gold is suffering from the popularity of crypto”

By C. Edward Kelso - November 16, 2017 (news.bitcoin.com)


Neil Hume, Mining and Commodities Editor for Financial Times, was quick to have World Gold Council Head of Market Intelligence, Alistair Hewitt, dismiss bitcoin’s ascendancy as a reason for gold’s third quarter (Q3) performance woes. He paraphrases Mr. Hewitt as having said, “there was nothing to suggest gold was suffering from the popularity of cryptocurrencies such as bitcoin, which have experienced explosive gains this year.” There is reason to be skeptical of that claim.

Gold Currents Might Turn Trends


Fortune’s David Meyer writes, “More people are now searching online for how to buy bitcoin than they are searching for how to buy hold,” according to Google Trends. Gold is the classic hedge against stock market volatility, especially during downturns.

That might be changing if Q3 figures are to be extrapolated into a full-fledged movement or current.

It certainly doesn’t help to have a booming stock market at the moment along with a new commodity asset in cryptocurrencies. Leaving out the entirety of the legacy markets, bitcoin alone has appreciated many hundreds of percentages in just 2017.

“Demand for gold slumped to an eight-year low in the third quarter,” Mr. Hume reports, attributing the record fall to “the prospect of higher US interest rates and tighter monetary policy” which  “resulted in less [gold] buying from institutional investors.”


Gold demand falls 9% to 915t in Q3 as ETF inflows slow from unprecedented highs in 2016, the latest World Gold Council report of 8 November 2017. It “showed demand for bullion fell to 915 tonnes in three months to September, down 9 per cent from the same period a year ago.”

“The latest figures were hit by ‘significantly’ lower inflows into gold exchange traded funds, which fell to 19 tonnes from 144.3 tonnes, and a softer jewellery market in India,” Mr. Hume detailed. (India is second only to China in gold consumption).

The “world’s biggest consumer of gold after China — dropped 25 per cent year-on-year in the quarter to 114.9 tonnes,” Financial Times notes.  

Quoting Mr. Hewitt, “It was a tough quarter for gold demand,” and, paraphrasing again, “Mr. Hewitt said net inflows had remained weak during October with just three tonnes added to ETFs as investors chased higher returns from assets such as equities and bonds.”

Central Banks are the Health of the State


And here is the a-ha! moment: Mr. Hewitt anticipates gold’s rebound due to “buying from central banks. Led by Russia and Turkey, central banks added 111 tonnes to their gold reserves in third quarter, 25 per cent more than in the same period in 2016,” Mr. Hume claims. Quoting Mr. Hewitt approvingly, “We now have another central bank that is buying 10 tonnes a month,” in reference to Turkey. “That’s a significant development that hasn’t been picked up by people looking at the gold market.”

Things have become so desperate in the gold market, the metal’s heroic past of taming governments, of spiting them, has given way to alms: hands out, begging for central bank acceptance.


Central banking is contrary to peace. Once such power was consolidated around the world by the early 20th century, even gold standardization of currency fell out of favor, and the rush toward inflation became all the rage. The power for governments to control money supplies is too tempting to trust with gold, but it is a way to stay relevant beyond circuit boards and jewelry. And central bank inflation is often overlooked for its keen martiality, its propensity for war and state expansion generally.

Governments in the inflation age can promise all sorts of goodies to subjects, march them off to war without a financial care (much less lives loss), and generally consolidate while also expanding power. If there is one takeaway from the entire 20th century and our present time, an inverse relationship exists between human freedom and government growth.

Gold no longer offers hope in this regard.

Bitcoin as Hope for Peace


The swirling debate at present is what bitcoin constitutes as a currency and network. It’s clearer to me bitcoin of the BTC variety, segwit bitcoin or whatever you’d like, is going to remain, if it does at all, a store of value and ultimate unit of settlement. Bitcoin cash (or a variant) might very well become the fungible, everyday currency of Satoshi’s digital cash ideal. With well-known transaction fees ever-rising and processing times thudding it along, BTC doesn’t in the near-term figure to be a currency in the easiest sense of that word.

This means there’s a chance bitcoin could replace gold as the future hedge, a way for people to fight inflationary warmongers and chiefdoms.


With CME’s entrance into the bitcoin foray, and if institutional investors bring whales, along with blockchain dreams, BTC could very well reach price highs pegged by Fundstrat’s Tom Lee of 25,000 USD and beyond.

Images courtesy of: Pixabay, ET online magazine.

C. Edward Kelso

C. Edward Kelso is a long-time fintech journalist, passionately covering the cryptocurrency space since 2014.

November 14, 2017

Chinese hydroelectric crackdown could herald the demise of cheap Bitcoin Mining

By Kai Sedgwick - November 14, 2017 (news.bitcoin.com)


Chinese bitcoin miners are the latest tranche of the country’s cryptocurrency community to be hit by restrictions. This time it’s not the government but a subsidiary of the State Grid Corporation that has issued the decree, in a move which calls into question the country’s ability to sustain bitcoin mining operations. At present, both the bitcoin and bitcoin cash networks are heavily dependant upon the efforts of Chinese miners, who hold over 80% of the hashrate distribution

A Major Miner Incident


The notice posted by Sichuan
Electric Power Company
The cryptocurrency space has grown accustomed to the words “Chinese crackdown” being appended to one another. This year they’ve already been applied to ICOs and exchanges within the country, and it is no secret that the government isn’t enamored with mining either. According to Beijing’s Caijing magazine, hydropower stations have been ordered to cease all supply of electricity to customers involved in bitcoin mining.

Bitcoin mining has long been beyond the preserve of hobbyists, meaning that the only entities affected by the utility company crackdown will be operators of large mining farms. Sichuan Electric Power Company, a national supplier based in Chengdu in the southwest, has issued an edict declaring that it is henceforth illegal to supply electricity for bitcoin mining operations. Hydropower stations found to be flouting this order will be subject to “punishment”.

The End of Cheap Power?


Sichuan province is China’s bitcoin mining heartland. It is here that warehouses filled with row upon row of ASIC miners, mainly powered by cheap hydroelectric, can be found. The province is prized for its mountainous regions and vast flowing rivers and tributaries that have given rise to hydroelectric dams large and small.

During times of peak electricity generation, hydro plants have been left with a surplus. Up until recently, that excess water had gone to waste. Bitcoin mining provided a solution to that wastage, enabling hydro stations to make money and providing miners with cheap electricity. It was a symbiotic relationship that worked for both parties until now.

Shut It Down


The decree issued by Sichuan Electric Power Company doesn’t outlaw bitcoin mining, it should be noted. What it does do is signal an end to direct deals being cut between hydro plants and mining farms. If hydroelectric plants heed the warning, it could herald an end to cheap bitcoin mining in China. Without a steady supply of cheap power, mining profits may dwindle until eventually it is no longer profitable to keep rigs running. The crackdown shouldn’t affect larger mining operations such as Bitmain, who already have a deal in place to acquire electricity at competitive rates. For smaller mining operations which make the most of Sichuan’s rainy season, however, it could be game over.

Current hashrate distribution. Notable Chinese pools include BTC.top, Antpool, BW, and ViaBTC

With winter approaching, a time when many hydroelectric plants power down, Sichuan’s mining farms would have been gearing up for a switch to more expensive sources of power in any case. The latest proclamation from Sichuan Electric Power Company won’t herald the end of Chinese mining, but it may hasten its retreat to pastures newly equipped with cheap power sources and zero state-level intervention.

There has been speculation for some time that given the legislative uncertainty surrounding bitcoin mining in China, the major pools may jump ship and take their operations overseas. Uprooting a major mining farm is no mean feat however and is an inconvenience and expense that miners could do without. With the mining climate becoming increasingly unfavorable in China, the door is open for another region to emerge as the new frontier in bitcoin mining. The smart money is on Russia to heed that call and take the reins.

Images courtesy of Shutterstock.

November 12, 2017

Sberbank apologizes for buying nearly all graphics cards on the Russian market

By Kevin Helms - November 12, 2017 (news.bitcoin.com)


Russia has been suffering from a shortage of graphics cards that can be used to mine cryptocurrencies, causing their prices to almost double. However, it was not ordinary households that purchased most of these cards. State-owned Sberbank has come forward, admitted to buying them, and apologized for causing the shortage.

Sberbank Apologized for Buying Up Graphics Cards


Sberbank, the largest bank in Russia and third largest in Europe, is majority-owned by the Russian government. According to senior vice president, Alexander Vedyakhin, the bank’s research lab was behind the dry spell. Ria Novosti reported on Saturday:

"The reason for the deficit in the video card market was Sberbank, buying up video cards for its laboratory of artificial intelligence".

Alexander Vedyakhin
“We invest very much in technology, and we should, incidentally, apologize for that shortage in the video card market, which occurred recently, because we bought them for the laboratory of artificial intelligence,” Vedyakhin said at the Sberbank international conference on data analysis, machine learning and artificial intelligence. However, he indicated that soon the shortage will be over “because we [have] satisfied our need.”

Is Sberbank Mining Cryptocurrency?



Stanislav Kuznetsov
While Sberbank has said that it is “not yet ready” to use cryptocurrency, the bank admitted to studying it in detail, according to Stanislav Kuznetsov, Deputy Chairman of the Executive Board of Sberbank.

“Sberbank does not intend to use cryptocurrency in business yet, but is studying them to protect itself from scammers,” Tass reported and quoted Kuznetsov saying last month at the World Festival of Youth and Students in Sochi:

"We are not afraid of cryptocurrencies, but in order to defend ourselves, we must understand in detail how scammers operate, we must study each step…Today we are deeply studying this topic, but, unfortunately, there are no solutions yet, how to proceed further, and we are not yet ready to use the cryptocurrency".


Shortage of Graphics Cards in Russia


The Chinese online trading platform Aliexpress, an Ebay-like subsidiary of Alibaba, reported in June that there was a surge in demand for video cards in Russia for cryptocurrency mining. “Aliexpress associated a surge of interest in video cards with the desire to use them to generate cryptocurrency,” the publication emphasized, adding that:

"The trading platform reported that its users began to look more actively for specific models of video cards that are most suitable for creating crypto-farms (GeForce GTX1060, GTX1070 and Radeon RX480), and the number of bitcoin miner requests increased 150% in a month".


Prior to Sberbank’s confession, RT reported that “the recent surge in the value of bitcoin has caused a jump in demand for video cards, which are used in cryptocurrency mining.” In addition, “people buy up to 600 video cards at once,” the publication detailed, noting that this has caused “a nearly 80 percent price surge since the spring.”

According to Vedomosti, the spike in demand has caused the price of graphics cards to rise “by an average of twice: for example, a device that cost in spring 16,000-18,000 rubles now costs more than 30,000.” The news outlet added that one store promised that the cards can be ordered within a week while another said it would take 10 days.

Images courtesy of Shutterstock and Sberbank.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

40 foreign companies ask to allow Bitcoin production in Russia

By Olga Novikova - November 12, 2017 (freedman.club)


Many companies in China and the European Union asked the Russian authorities to give permission for Bitcoin mining in the country.

In Russia, at the moment, the production of crypto currency has become quite a common occupation, but there are still large energy capacities that will suffice for foreign mining companies.

The Russian Association of Crypto-Currency and Blockchain (RACIB) has received 40 applications from various companies and individuals for the placement of mining equipment in the country for Bitcoin mining. The president of the association, Yuri Pripachkin, said: "In Russia, there are hundreds of companies in our country and enough resources to accommodate other companies."

RACIB is an association formed in August, created to unite the owners of Blockchain and miners, as well as investors of crypto-currencies. On its formation, adviser to the President of the Russian Federation Herman Klimenko.

Pripachkin commented on crypto-currency production in Russia: "In fact, this is a completely new market for companies. But it is necessary to make the platform at the legislative level and work out possible tax options for foreign investors. "
According to the director of the association Arseniy Sheltsin, "The organization created a committee of participants in the mining market with the participation of representatives of Slovakia and China". Pripachkin believes that Russia can become the world capital of the mining markets.

November 10, 2017

Bitcoin reaches end of an era - Expert Blog

By Rhett Creighton - November 10, 2017 (cointelegraph.com)


Expert Blog is Cointelegraph’s new series of articles by crypto industry leaders. It covers everything from Blockchain technology and cryptocurrencies to ICO regulation and investment analysis. If you want to become our guest author and get published on Cointelegraph, please send us an email at mike@cointelegraph.com.

Calling off 2MB blocks marks the end of a 3-year effort between different political groups inside Bitcoin trying to come to a compromise. Core developers may feel like they have won the battle, but a silent majority will leave quietly, selling their coins and driving down price over time.

At the same time, it marks the beginning of a new age in human history. One where individuals have a freedom of choice, and a freedom of exit.

”New York Agreement” called off


I was fully expecting Nov 16th to be an apocalypse for Bitcoin. Over 80% of miners were signaling support for 2MB blocks, and several hundred of the largest Bitcoin exchanges and companies had signed an agreement to support the block size increase. Despite businesses planning for 2MB blocks, much of the Bitcoin user community and core development team was prepared to reject the software change, which would split the Bitcoin network in a most disruptive way.

The split would have been a disaster for Bitcoin. However, the price of Bitcoin has been reaching new all-time-highs because uninformed investors have been conditioned to think that a fork in Bitcoin means that you get free coins. That was the case with Bitcoin Cash, but the chain split planned for Nov 16th would have been very different.

Under the SegWit2x split scenario, I don’t think it would have been possible for anyone to agree which was the “real” Bitcoin chain anymore. Large companies like Coinbase had agreed to support both chains. The 2MB chain planned to launch with no replay protection for users, which would have caused massive confusion and loss of funds. As the first clean fork of Bitcoin, with a clear plan and goal of being business-friendly, I expected Bitcoin Cash to be a big winner. The price of Bitcoin Cash has gone up nearly 100% in the past two weeks with many investors speculating on a “Cashening.”

Bitcoin will lose market share


Joseph Poon, inventor of Bitcoin’s still-in-development lightning network, said recently:

“When a party starts to suck, you leave. You can try to fix it, but the cleanest solution is to just get out… A lot of Blockchain is increasing the freedom for individuals, and part of that is having the flexibility to leave, and to make the choices that you want to, at any point in time.”

 Two large factions of the Bitcoin ecosystem reached an impasse. For individuals and corporations who no longer find the transaction fees and scalability acceptable in Bitcoin, the simplest solution is to leave. Those individuals will dump their $7,500 (down to $6,600 at press time) Bitcoin on first time buyers as they slowly get out.

“Dumb Money” pouring into Bitcoin


People are exuberant about the price of Bitcoin increasing to nearly 7x the price it was at the beginning of the year. Real-life meetups are full of new faces and first-time investors. The Bitcoin subreddit is full of people cheering each other on about buying their first 0.1 BTC and expecting a 10x annual ROI.

One of the bullish pieces of news driving the mania is that the CME Group plans to add Bitcoin futures this year, potentially making Bitcoin available to billions of dollars worth of new investors. However, Wall Street hedge fund investors are not suckers. Even if a hedge fund wants to buy into Bitcoin, they might try to short it first to drive the price down and shake out weak holders. If they can cause a few billion in losses from the people who bought the top by shorting it all the way down to $3000 (where it was a few months ago), they will.

Blockchains: New kind of entity


Blockchains are a new kind of entity, much in the same way that corporations with shareholders were a new kind of entity invented 400 years ago. Today, corporations are able to lobby Congress and have many of the same rights as humans. We will see Blockchains also gain access to these rights in the near future.

I fully expect the market cap of all crypto tokens to increase exponentially over the next few years, but this is not a winner-take-all scenario. Today, mainstream media financial advisors are touting Bitcoin as “the new gold,” but it can’t ever be that. To get a sense of how it’s different, imagine a universe where anyone could create a new kind of metal with essentially the same properties of gold.

Expecting Bitcoin to have the majority market share of Blockchains in the future is about as ridiculous as expecting the East India Company to be more valuable than all other corporations combined today.

Demand for Bitcoin and rise of crypto-ruble


Through much of 2014–2015, the price of Bitcoin declined. However, in 2016–2017, we started to see some larger demand for Bitcoin driven by ransomware, Ponzi schemes like “MMM,” Chinese citizens evading capital controls, and a means of transferring value into other Blockchain tokens (“ICOs”).

Russia has recently announced that they are looking into developing their own “crypto-ruble.” The crypto-ruble will feature a 13% tax into and out of paper fiat if the redeemer is unable to provide documentation of the transaction history.

Because Russia will be much more centralized and efficient than Bitcoin at processing transactions, I expect the crypto-ruble to be an attractive alternative to Bitcoin for ransomware, people escaping hyper-inflation, and Chinese citizens circumventing capital controls (especially in the event of a Bitcoin bear market).

The Chinese government shut down the BTCC exchange last month with rumors that they may pursue a crypto-yuan as well. It’s clear that some very big players are ready to enter this market, and they aren’t interested in sharing their money with Mr. Nakamoto.

Disclaimer: The views and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.

Rhett Creighton
helped create the Zclassic and Zen forks of Zcash (Over $50M market cap) and more recently, Whalecoin. He contributed to the Bitcoin Core test suite and is an MIT alum.

October 24, 2017

Putin confirms Russia will regulate ICOs, Mining by July 2018

By William Suberg - October 24, 2017 (cointelegraph.com)


Russia’s President Vladimir Putin has signed off on regulation of ICOs and cryptocurrency mining by July 2018.

Quoted in local news outlet RNS, the Kremlin’s press service formally announced the move Tuesday which will see ICOs included in regulatory statutes “on the basis of” longtime regulated IPOs.

In addition, the government may now legally define the status of various terms related to what the Kremlin describes as “digital technology.”

These include so-called ‘distributed ledger technology’ alongside ‘cryptocurrency,’ ‘token’ and ‘smart contract.’

Ideas for a dedicated regulatory sandbox for fintech in partnership with the central bank should also surface by Dec. 20, RNS reports.

VTB Bank: consumers not interested in ‘very dangerous’ crypto


Russian state-owned VTB Bank “has not seen a lot of interest in Bitcoin” from the country’s consumers.

Speaking to CNBC, the bank’s CEO Andrey Kostin joined its international arm CEO Riccardo Orcel in saying that contrary to popular belief, real-world usage was low and cryptocurrencies were “very dangerous.”

"There was some interest reported in the press, but I've not seen in Russia a lot of interest in Bitcoin, to be honest," Orcel told the network.

Kostin added he was “a little bit skeptical” about cryptocurrency.

"We see a lot of high speculation factor in cryptocurrencies and I think it's dangerous," he warned.

"Until the governments decide how to regulate this area I think it will be very, very dangerous for investors to invest in cryptocurrencies."

Kostin’s perspective has been widely echoed in Russian political circles. A current package of regulations is due for release by the end of year, while politicians have expressed a desire to strictly limit cryptocurrency availability to regular consumers.

Conversely, Bitcoin, Ethereum and ICOs have conspicuously entered mainstream consciousness in the country, with everything from restaurant menus to vodka emerging with a crypto theme.

Burger King Russia was the world’s first example of a global fast food giant issuing its own cryptocurrency, Whoppercoin, this year.

In addition, Russia’s largest bank Sberbank announced it had formally joined the Enterprise Ethereum Alliance last week.

October 20, 2017

The next generation of currency wars - Private vs. State-backed Crypto

By Tho Bishop - October 20, 2017 (mises.org)


Recently Russia announced that it will be unleashing a CryptoRuble, just a week after Vladimir Putin strongly criticized Bitcoin and other private cryptocurrencies.  When announcing the move, Minister of Communications Nikolay Nikiforov acknowledged that it was in part inspired by the aim of getting ahead of other governments:

"I confidently declare that we run CryptoRuble for one simple reason: if we do not, then after two months our neighbors in the EurAsEC will".

In doing so, Russia is following the lead of another country that too has become hostile to private crypto, China. Last July the People’s Bank of China became the first central bank to announce it had developed a crypto-prototype that it plans to offer alongside the traditional renminbi.

That the first forays into state-backed cryptocurrency comes from two countries with a history of restricting a free and open internet is not surprising. While Bitcoin originated as a way to opt out of government control of money supply, increasingly governments see the underlying technology as a way to increase their control of the economy.


"For example, if the government plans to subsidize certain farms, say some corn farms, to support this sector of agriculture, they can directly add a certain amount of money to the wallets of some farms, for instance 100 million dollars and program this money to be sent to certain fertilizer merchants at a certain time, and that each can only spend maximum of 10 million dollars per year, and in this way, they can make sure that the farmers won’t squander the windfalls, and that this money won’t flow to other sectors, for instance, the stock market or real estate market.

Even though this kind of monetary policy is bound to fail, from the perspective of government officials, CBDC provides them a better tool. For them, with the help of the CBDC, they can plan and manage the economy better".

Not to be left behind, the IMF – who some analysts, such as Jim Rickards, believe is prepared to step up to replace the US dollar as the next global reserve currency – recently opened the door to issuing their own cryptocurrency in the future. While some crypto-advocates have naively celebrated recent comments by Christine Lagarde on the future potential of digital currency, such praise simply reflects the increasing awareness of technocrats that the finance is changing and they must be prepared for it. Considering central banks around the world have continued to advance their war on cash, it is not surprising to see Lagarde and others come adapt to the concept so quickly.

Exchange Regulation


The usefulness of state-controlled crypto is why we should expect increased scrutiny and regulation on private cryptocurrency exchanges.

It's been reported that the Chinese government, which shutdown private crypto-exchanges in September, is looking into reopening exchanges with increased regulation. Russia, too, is working on exchange regulation, rather than an outright ban.  This apparent change in direction may be the consequence of China’s exchange ban resulting in an increased use of peer-to-peer platforms in the face of the government crackdown. 

For the same reason that government prefers regulated bank accounts to cash and safes, state officials may recognize the benefit to propping up licensed exchanges. Already we have seen numerous cryptoexchanges be willing to collect and hand-over sensitive customer information in exchange for government-issued licenses. Much like banks, these exchanges are increasingly being enlisted as tax collectors for government.

Calm Before the Storm?


While this loss of privacy may outrage Bitcoin’s initial supporters, it’s understandable why many current holders may be perfectly happy with these developments. After all, while much of Bitcoin’s initial appeal was its usefulness in black markets, a major reason for its astronomical rise in value is its increasing appeal among average customers who were never all that concerned with financial services regulation. Not only has it helped its appeal as an investment, but also its daily use. Japan, for example, saw a major surge in retailers accepting Bitcoin once a firm regulatory framework was implemented.

It is worth wondering whether this harmony between government and consumers will continue, however, once state-controlled crypto truly ramps up.

After all, we’ve already seen government rely upon traditional boogeymen of terrorists, drug dealers, and other criminals as justification for their increased control. The increasing use of Bitcoin by hackers and extortionists provides a modern-day twist to these age-old scare tactics. Is it all that difficult to foresee a scenario where governments attempt to freeze all regulated exchanges in the aftermath of some terrorist attack or other scenario? Or go one step further, and legally mandate replacing a privately-held asset for a government-issued currency?

The example of China demonstrates the inherently decentralized nature of Bitcoin will likely always ensure a degree of functionality beyond the reach of government. At the same time however, the increased popular appeal of crypto-currency also means increasing reliance on third-party services, and fewer individuals securing their investments in private wallets.  Since the most popular – and thus most lucrative – exchanges and other services have an inherent incentive to maintain a good relationship with legal authorities, it is easy to see how this easily plays to the benefit of government officials.

Already within the industry debate is raging between those who prioritize “efficiency” and mainstream appeal – even at the expense of crypto's decentralized-origins. Luckily, Bitcoin’s original Austro-libertarian ethos means that we are likely to see major industry influence pushing back on state-control.

A Preemptive Strike for Monetary Freedom 


In the meantime, this is yet another reason why what little political capital libertarians on monetary policy have should not be wasted pursuing moderate reforms such as forcing the Fed to embrace rules-based monetary policy. There is no hope to ever transform the Federal Reserve into a useful – or even non-harmful – institution. That hope does exist, however, in crypto.

As future monetary policy is soon to become a major topic of conversation as President Trump rolls out his Federal Reserve nominations, it would be a major loss for the cause to not see Senator Rand Paul and other Fed-sceptics use the opportunity to push discussion about the need for competition in currencies. Further, the recent surge in states that have legalized the use of gold and silver for the payment of debt means there has never been a stronger political case for the elimination of legal tender laws and the taxes imposed on alternative currencies like Ron Paul proposed when in Congress. Such a move now could help set the stage for America being a true safe haven for private crypto in the future. 

Doing so may give the cryptocurrency industry the freedom to give us a fighting chance to truly end the Fed, and their clones around the world.

Tho directs the Mises Institute's social media marketing (e.g., twitter, facebook, instagram), and can assist with questions from the press.