Op Ed: Bitcoin Is a Declaration of Our Monetary Independence

Nick Spanos is an early adopter and innovator in the blockchain space. He is best known for launching Bitcoin Center NYC, the world’s first live cryptocurrency exchange, in 2013, right next to the New York Stock Exchange — as immortalized in the Netflix documentary “Banking on Bitcoin.” As part of Bitcoin Magazine’s series of interviews and op eds leading up to the 10th Anniversary of Bitcoin, Nick shares his thoughts an early Bitcoin adopter.

Before Bitcoin, I worked tirelessly for liberty-minded political candidates for many years. These candidates, the most prominent of whom was Dr. Ron Paul, spoke out against the Federal Reserve Bank because of its role in inflating the money supply which devalued the life savings of hard-working people. In almost every case, the mass media would sharply (and often unfairly) attack the image of the candidate with half-truths and misinformation, decimating our poll numbers, until they were sure that we would be defeated on Election Day. No matter how hard we worked or how much money we raised, we were no match for what I call the political bosses of today, the mainstream media.

After two decades of struggle, I thought I had wasted my life fighting unwinnable battles. Then one day, I read the Bitcoin white paper. I read it half a dozen times and I thought, “Finally, I have a weapon that cannot be destroyed on Election Day.”

Bitcoin for me is not an instrument for financial investment. Bitcoin for me is a declaration of our monetary independence.

When I started the Bitcoin Center in 2013, I had a flourishing real estate business in downtown New York. I had an established career in developing technologies for political campaigns. Because of bitcoin’s reputation in the mainstream media back then, I knew that many of my relationships would be destroyed if I emerged as a public figure in the cryptocurrency space.

When I launched the center, a press release was sent out revealing me as the founder even though I never wanted that information to go public. Immediately, concerned friends and family started calling me, asking me what I was getting myself into and wondering if I had lost my mind. Bitcoin was for illicit activities on the internet, they told me. This is nothing but video game money, said others.

My life mission of personal freedom was more powerful than anything anyone could ever say to me.

I knew I had to bring Bitcoin out of the back alleys and onto Wall Street for the world to take it seriously. So, for many years, by day, we taught reporters, stockbrokers, students, technologists and tour groups about bitcoin, for free, and by night, bitcoin and other cryptocurrencies were traded on the world’s first live cryptocurrency trading floor (also for free).

Every day, we made our stand, not knowing which government agency might walk through the doors or what papers they might serve us, or even worse. Yet we stood there, like David with his slingshot up against the modern day Goliaths, in an open and notorious manner, unwavering and unafraid.

For years, we fought tooth and nail and spread the ethos of decentralization far and wide, with a team of lawyers at the ready. Licenses were created against us to thwart the rate at which we were growing. Agencies worked tirelessly to figure out how to turn people off from adopting bitcoin, and yet the little bitcoin thrived against all odds.

Then one day, we looked up and we realized something: Many big companies are attempting to bamboozle us. Microsoft, IBM, Goldman Sachs, JP Morgan, even Google and Facebook — overnight, all these goliaths of centralization are attempting to enter “blockchain.” 

They are touting what they call “blockchain,” but what they are actually peddling is another iteration of centralized control in, what is for many of them, a last ditch effort to stay relevant.

Many people in our community were excited by the invasion of these goliaths because they had thought it might lend us legitimacy. But that’s only because they had been brainwashed into thinking that our community was otherwise illegitimate. We, the open, permissionless blockchain believers, are the legitimate ones.

The reality is that the educational work we began at the Bitcoin Center is more important now than ever before as we continue to teach people the true meaning of decentralization. As many have said, and as I have said in forums in dozens of countries throughout the world, from Saudi Arabia to Sri Lanka: There can be no transparency, immutability or accountability without decentralization.

The internet grew by leaps and bounds because it was permissionless. A permissioned internet would probably have been nothing in comparison. The same is true for the blockchain. Despite these powerful institutions and regulators who are shoving their centralized agendas down our throats, I am confident in the resilience and fortitude of our ever growing community to withstand these attacks.

If we don’t all stand for something, we will fall for anything. We have made too many compromises and have retreated too many times without a fight. Goliaths hire many of us to tout their Trojan horse projects. Lobbyists working for the goliaths convince governments to regulate us into the ground while promoting their own unqualified, unseasoned friends. They change the tax code to tax us over and over with every little trade, even within our own portfolio, and we still do nothing. Are we to just give up? Are we to just lay down and let this happen to all of us?

Why do we fuel infighting within our own community? We are all in the same boat. Big torpedoes are aimed at us. Shots over the bow have turned into direct hits. If we don’t finish freeing ourselves with the open, permissionless, decentralized blockchain, they are going to imprison us with the closed, permissioned, centralized blockchain.

We have to look in the mirror every day and ask ourselves: What have we done to help Bitcoin? I don’t know about you but before I die in this cage, I want to run free in the wild, and Bitcoin is the key to our freedom after we fight for it.

This is a guest post Nick Spanos, an early adopter and innovator in the bitcoin and blockchain space. Views expressed are his own and do not necessarily reflect those of Bitcoin Magazine or BTC Inc.

This article originally appeared on Bitcoin Magazine.

Finland Hands Over Info for 2,700 Danish Traders to Denmark’s Tax Agency

Finnish tax authorities have handed over information on 2,700 bitcoin traders to its Danish counterpart, Skattestyrelsen (SKAT).

According to a press release, the traders used an undisclosed Finnish exchange to collectively purchase and sell some $15.65 million worth of bitcoin (102.7 million kronor) between 2015 and 2017. A handful of these investors traded amounts between $1,105 and $110,450 (10,000 to 1,000,000 kronor), while the overwhelming majority traded an amount equal to or less than $1,105. Very few traded amounts over $110,450.

“Right now we are identifying the individual citizens … If something does not match, we will contact them and ask for more information,” SKAT tax director Karin Bergen said in a statement.

“This is probably just the tip of the iceberg. Although it is a relatively small bitcoin exchange, the information is a very valuable source, which clearly shows trends and patterns in the area. The knowledge we gain about data mining, segments and methods in general will make us wiser in the area and benefit from our guidance and control work,” Bergen continued.

Bitcoin is a taxable asset under Denmark’s 1903 Tax Act, which requires that taxes be paid on any goods purchased and resold for profit, and it is subject to a 53 percent capital gains tax, a hefty sum in line with other investments.

The news calls to mind a 2016 order the IRS issued to Coinbase, which asked that the U.S.-based exchange turn over the trading records and personal information of more than 480,000 of its users.

After a 12-month legal battle Coinbase won a partial victory and recognition of its customers’ right to privacy. When the court proceedings came to a head, the original order was reduced from 480,000 customer records to 14,000 who traded above $20,000.

In 2014, the U.S. IRS declared that bitcoin was a taxable property that is subject to capital gains tax. In fact, any cryptocurrency trade, such as trading bitcoin for ether, is treated as a taxable event, something that crypto investors have grappled with ever since.

This article originally appeared on Bitcoin Magazine.

After $4M Funding Round, BlockFi Eyes Savings Account, Crypto Credit Cards

BlockFi

https://bitcoinmagazine.com/articles/blockfi-gives-hodlers-another-option-borrow-against-crypto-assets/

, the New York-based startup that provides crypto collateralized loans, has raised additional funds to expand its services. The startup announced that it has received an additional $4 million in its recent funding round in a company blog post.

The recently revealed funding round comes some months after the company raised $52.5 million in a round led by Galaxy Digital, including $1.55 million in funding from ConsenSys Ventures and PJC prior.

Akuna Capital led today’s funding round, with participation from other investors, including Digital Galaxy Ventures, Susquehanna Government Products, Morgan Creek Digital and others.

The startup, who recently expanded overseas, says the funding would be used to grow its workforce and launch exciting new products, including a crypto savings account that earns interest and crypto-backed credit cards.

Zac Prince, BlockFi CEO, spoke with Bitcoin Magazine, on the funding and the new product lines.

He said the company plans to launch two separate credit cards. One would be similar to a prepaid card, where users will be able to spend funds that they receive from taking out a crypto-backed loan from BlockFi’s platform.

“[The first] is like a debit or prepaid card where users can receive and spend loan proceeds from BlockFi. The amount they have access to will vary based on the amount of crypto they hold with BlockFi — similar to how our loans work now.”

The other would be an unsecured card with a credit line.

“Think of it like the Amex card, except that instead of cash back or airline miles — you would receive Bitcoin rewards,” he said. Both cards would be available in selected locations where BlockFi operates, though the firm has yet to choose a credit card company partner.

For the savings account, BlockFi would be using Gemini’s custody solution, which is the solution it uses currently for holding the cryptocurrency collateral for its loans. The company hasn’t decided on the exact interest rate, but Prince said it would be higher than the interests that accrue on a traditional bank-held savings account.

For Prince, the funding is a testament to BlockFi’s growth. Despite a gloomy market that has seen trade volumes drop and prices fall, BlockFi has continued to improve its business on all fronts, he claims.

“We have continued to grow all of our core metrics rapidly despite the bear market. We continue to operate with a long-term outlook and thoughtful approach — that generates confidence and trust from our investors and clients,” he remarked enthusiastically.

This article originally appeared on Bitcoin Magazine.

The Lightning Network’s First ERC-20 to Bitcoin Atomic Swap Has Taken Place

At the December 7, 2018, TenX Summit, a group of developers showcased an industry first: an atomic swap on the Lightning Network between a non-native asset, TenX’s PAY token, and a native asset, bitcoin.

By non-native, the team is referring to an asset/coin that is not the base currency for the network. For Ethereum, for example, the native asset is ether, while any token that is built on the protocol is considered a non-native asset.

CoBloX, a TenX research and development lab, is responsible for the achievement. Demonstrating their work to a tightly packed audience of summit goers, the team used the Lightning Network and their open-source software COMIT to swap 10 PAY for 71,240 satoshis. The team published a blog post on December 12, 2018, to confirm the news and satify what it calls “the gossip factory” of he-said-she-said following the summit.

In the post, the team delves into their process, explaining outright that this swap was not as simple as the first-ever ether and bitcoin atomic swap on the Lightning Network, which they tested nearly six months ago. Whereas this swap’s hashed time lock contract (HTLC) only required a single use smart contract, the PAY to bitcoin swap took an extra step.

Reason being, the PAY token itself is managed with an additional smart contract known as the transfer ownership function. Because of this, the HTLC had to be separated into two transactions: one to deploy the swap contract and another as a transfer call for the PAY tokens.

“Unfortunately, we couldn’t figure out how to combine these two steps. The ERC20 transfer function uses msg.sender for authentication. However, calling transfer from a contract deployment sets msg.sender to the address of the yet-to-be-deployed contract which obviously has no tokens,” the blog post reads.

Having used the Lightning Network Daemon (LND) implementation for the swap, the team continues to explain in the blog post that the swap is a one-way ticket. They could only execute the trade by starting with the ERC-20 token and going through Lightning — not the other way around.

“An atomic swap cannot always be expressed through this model of invoices and payments. In LND, which is what we used for our PoC, receiving a payment requires an invoice which requires knowledge of the secret. As a result, we were only able to do ERC20 to Lightning and not the other way around.”

The technical milestone is the latest in CoBloX’s technical successes. As mentioned previously, the team also completed the world’s first ether and bitcoin swap. The young lab’s GitHub also features a couple of Rust clients for a Bitcoin Core interface and a JsonRPC API plug-in, as well as a tool for testing blockchain applications.

COMIT, the software used in the ERC-20 swap, is also open-source. With a focus on blockchain interoperability, COMIT is meant to act as a bridge between networks to facilitate cross-chain asset swaps. In addition to the work that has been done with Ethereum and its ERC-20 tokens, the team plans to expand its use with additional features and currencies down the road.

An earlier version of this article misrepresented the swap as the first of its kind, failing to specify that it was the first on the Lightning Network. The Komodo platform performed the industry’s first successful ether to bitcoin and ERC-20 to bitcoin atomic swaps earlier in 2018.

This article originally appeared on Bitcoin Magazine.

Bitwala Is Offering German Citizens Joint Crypto and Fiat Banking Accounts

German blockchain startup Bitwala has launched crypto banking in Germany.

After securing €4 million (roughly $4.5 million) from VC firms Earlybird and Coparion in September of 2018 to develop a crypto banking solution, the company has allegedly amassed a waiting list of 30,000 potential users.

Bitwala’s new banking solution, which it claims was built to “close the gap between crypto and traditional banking,” was developed in partnership with local fintech startup SolarisBank, which has a banking license and is fully regulated by the German financial regulatory authority Federal Financial Supervisory Authority (BaFin) and the European Central Bank (ECB).

With the launch of this new banking solution, users would be able to manage “both Bitcoin and Euro deposits in one place with the safety and convenience of a German bank account.”

The accounts would also come with the usual perks that accompany bank accounts like a debit card, as well as a bitcoin wallet with added functionality to swap between bitcoin and the euro freely.

“We built the new account putting our customers first. No longer do you have to wire your liquidity to separate exchange accounts with frail fund protection measures outside of Germany. No longer do you have to accept excessive fees for trading. Trading with Bitwala is fast and reliable and our pricing highly competitive,” Bitwala’s chief technical officer and co-founder, Ben Jones, said in a statement.

The announcement didn’t give details on the cost for running the bank account, but a 1 percent fee will be applied for every bitcoin trade. It also remains to be seen if other crypto assets will be included in the future, and the announcement didn’t specify where the service would source its pricing data for trading.

All fiat deposits of up to €100,000 are insured by the German Deposit Guarantee Scheme (DGS). But while the fiat is protected to a certain degree, there were no indications on the insurance of the bitcoin.

Bitwala has begun on-boarding proceedings for the thousands of users who had pre-registered to use the service and will be accepting new users over the coming days.

This article originally appeared on Bitcoin Magazine.

This New Lightning Wallet Allows You to Receive Tips Without Running a Node

A new program to set up Lightning Network micropayments, tippin.me, has recently entered beta testing.

The developer for this project described some of its details on a Reddit thread to the r/Bitcoin subreddit. The dev says that it “allows you to receive tips (micro-payments) over the Lightning Network, anytime, anywhere, without needing a LN node,” by means of “a simple web custodial wallet.”

Upon signup, tippin.me “gives you a personal tippin’ link to be shared that contains a fresh QR Invoice with an undefined amount to be paid. If anyone sends you money to that QR Invoice, this amount will appear in your tippin.me dashboard.” The overall plan is for people to “share it to receive tips across webs, blogs, patreons, forums, etc. using Lightning Network.”

It should be noted that, since payments must be routed through the program, the wallet is custodial. If you’re going to use it, you’re temporarily trusting your funds to the developer, so some might find it less secure than a trustless, non-custodial solution.

The project is still in beta and, as a result, it hasn’t been adopted by or extended to blogs, forums or other third-party platforms. However, the developer claimed that such functionality can be implemented later down the line if there is sufficient demand.

Shortly after the project’s announcement, the lone, semi-anonymous developer announced that the website was operational, as his “personal contribution to push Lightning Network adoption.”

The Lightning Network has attracted a large level of interest from the crypto space for its ability to send micropayments over the Bitcoin Network and tackle the blockchain’s latency and scalability issues. The developer of tippin.me claimed that he is “doing it for free, with no support, and on [his] own servers,” with the express purpose of streamlining Lightning’s adoption. Additionally, he later announced a free airdrop of 500 satoshis to the first 500 users to request it, all using the Lightning Network.

The project is in beta currently, and it is unclear where exactly the roadmap will go from here. Nevertheless, it is important to note that this project is not part of a startup company and is instead a totally free program made by a single developer.

This article originally appeared on Bitcoin Magazine.

The World’s First ERC-20 and Bitcoin Atomic Swap Has Taken Place

At the December 7, 2018, TenX Summit, a group of developers showcased an industry first: an atomic swap between a non-native asset, TenX’s PAY token, and a native asset, bitcoin.

By non-native, the team is referring to an asset/coin that is not the base currency for the network. For Ethereum, for example, the native asset is ether, while any token that is built on the protocol is considered a non-native asset.

CoBloX, a TenX research and development lab, is responsible for the achievement. Demonstrating their work to a tightly packed audience of summit goers, the team used the Lightning Network and their proprietary software COMIT to swap 10 PAY for 71,240 satoshis. The team published a blog post on December 12, 2018, to confirm the news and satify what it calls “the gossip factory” of he-said-she-said following the summit.

In the post, the team delves into their process, explaining outright that this swap was not as simple as the first-ever ether and bitcoin atomic swap they tested nearly six months ago. Whereas this swap’s hashed time lock contract (HTLC) only required a single use smart contract, the PAY to bitcoin swap took an extra step.

Reason being, the PAY token itself is managed with an additional smart contract known as the transfer ownership function. Because of this, the HTLC had to be separated into two transactions: one to deploy the swap contract and another as a transfer call for the PAY tokens.

“Unfortunately, we couldn’t figure out how to combine these two steps. The ERC20 transfer function uses msg.sender for authentication. However, calling transfer from a contract deployment sets msg.sender to the address of the yet-to-be-deployed contract which obviously has no tokens,” the blog post reads.

Having used the Lightning Network Daemon (LND) implementation for the swap, the team continues to explain in the blog post that the swap is a one-way ticket. They could only execute the trade by starting with the ERC-20 token and going through Lightning — not the other way around.

“An atomic swap cannot always be expressed through this model of invoices and payments. In LND, which is what we used for our PoC, receiving a payment requires an invoice which requires knowledge of the secret. As a result, we were only able to do ERC20 to Lightning and not the other way around.”

The technical milestone is the latest in CoBloX’s technical successes. As mentioned previously, the team also completed the world’s first ether and bitcoin swap. The young lab’s GitHub also features a couple of Rust clients for a Bitcoin Core interface and a JsonRPC API plug-in, as well as a tool for testing blockchain applications.

COMIT, the software used in the ERC-20 swap, is also open-source. With a focus on blockchain interoperability, COMIT is meant to act as a bridge between networks to facilitate cross-chain asset swaps. In addition to the work that has been done with Ethereum and its ERC-20 tokens, the team plans to expand its use with additional features and currencies down the road.

This article originally appeared on Bitcoin Magazine.

Prosecutors Seek 10-Year Jail Sentence for Karpeles Over Mt. Gox Embezzlement

Former Mt. Gox CEO Mark Karpeles has run into trouble in the Japanese legal system, and prosecutors are pursuing a 10-year jail sentence for alleged embezzlement during his tenure at Mt. Gox.

According to a local Japanese news outlet, Karpeles is under indictment for embezzling 341 million yen ($3 million USD) of customer funds into his own personal account. The indictment apparently also alleges that Karpeles “manipulated data on his company’s trading system to pad the balance.”

As Mt. Gox was based in Tokyo, it has been the responsibility of the Japanese legal system to prosecute Karpeles, just as it placed Mt. Gox into bankruptcy proceedings in 2014. By the end of the company’s shutdown, they’d lost 48 billion yen worth of bitcoin and 2.8 billion yen in fiat. Karpeles has claimed that such losses were due to a hack.

Mark Karpeles is a notorious name in the crypto space, a long-term player who has been involved with some of the most infamous business ventures of bitcoin’s first major price spike. In Mt. Gox’s heyday in 2013, it was the largest functional crypto exchange.

In addition to his stewardship of Mt. Gox, of particular note to Karpeles career is his alleged bankrolling of the Silk Road, the now-defunct darknet marketplace. As federal agents began trying to take down the website for narcotics trafficking violations, agents on the case directly notified Karpeles who was able to cover his involvement.

Now, however, Karpeles seems to have run into more direct legal trouble. In Tokyo, prosecutors alleged that the French-born Karpeles “diverted company funds to such uses as investing in a software development business for personal interest” and “played a great role in totally destroying the confidence of bitcoin users.”

In response to this, Karpeles pleaded innocent to these charges in July 2017, saying during his first hearing that “I swear to God I am not guilty.” The trial is apparently set to move forward in the immediate future, with unclear prospects for Karpeles.

This article originally appeared on Bitcoin Magazine.

Bitcoin Price Analysis: Bear Pennant Breakout Puts $1,700 Price in Sight

Another week, another low. Bitcoin’s market has been bleeding relentlessly for weeks and now, after falling 50% in value in just one month, the market has managed to break south of a major bearish consolidation pattern called a bear pennant:

fig1Figure 1: BTC-USD, 4-Hour Candles, Bear Pennant Breakout

This is a massive bear pennant with a staggering $2,000 measured move. In layman’s terms: The price target for this breakout would be approximately $1,700, after all is said and done. Now, it’s important to note this is just a projection and it isn’t a guaranteed trajectory, but this setup should not be underestimated. However, if we look at a macro view of bitcoin price levels, the $1,700 price range is confluent with a strong support level:
fig2Figure 2: BTC-USD, Daily Candles, Price Target

As mentioned in previous market analyses, bitcoin has begun to march down all its previous untested support levels, one by one. As each support level proved to be unsustainable, the market has decided to test lower and lower throughout the current downtrend with very little relief for the eager bulls:
fig3Figure 3: BTC-USD, Daily Candles, Previous Support Levels

Figure 3 shows all the previous support levels and how they have also coincided with the previous shakeout periods during the parabolic run-up last year. Although we have yet to test new lows this week, something that is slightly concerning is the general lack of volume on these drops. While this can be a sign of temporary bearish weakness (or lack of supply), overall, this likely doesn’t bode well, as it hasn’t represented capitulatory volume — something that would be a clear sign that buyers are interested at these levels. For now, the market remains content to just chop sideway and, at the moment, is failing to gather momentum to break the previous overhead resistance:

fig4Figure 4: BTC-USD, 4-Hour Candles, Resistance Test Rejection

Until the market is able to crack the overhead resistance, the next likely move would be a test of the current support level, which is likely to fail given the current, overall lack of bullish enthusiasm. The narrative could change shortly, but for now it’s “Chop City” until we can break the overhead resistance levels.

Summary:

  1. Bitcoin has dropped 50% in one month.
  2. It continues to test previous support levels but has failed respect the prior levels.
  3. We are currently experiencing a breakout of a massive bear pennant that has a price target of $1700. If the current level fails to hold, the next move would likely be a strong move to the downside as we continue to test deeper and deeper support.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


This article originally appeared on Bitcoin Magazine.

Coinbase Might Be Behind Those 856,000 BTC Worth of Transactions

Last week, it was reported that a Bitcoin whale had moved thousands of bitcoin into different wallet addresses. Between December 1 to December 6, 2018, the whale split 856,000 bitcoin between 107 wallets, sending an equal 8,000 BTC into each wallet.

Speculators have formulated different hypotheses since the monstrous sum was moved. Was it a market whale moving funds to Over-the-Counter (OTC) markets? Could the sender be the Foundation for Economic Education (Fee.org)? (This second theory is highly improbable as the listed address on the organization’s website reveals it has only ever received a total of 2.2 BTC.)

According to a report published on 8BTC, it’s likely the “whale” was merely Coinbase conducting routine maintenance on its infrastructure. 8BTC’s hypothesis is based on a Coinbase announcement that mentioned the exchange was going to make “monitored movements” two days prior to the transactions being made.

U.S digital asset platform Coinbase had announced a scheduled maintenance on November 29, 2018.

“Over the next seven days, Coinbase will be running scheduled maintenance across our platform that may cause movements on all Coinbase-supported blockchains. These are controlled, closely monitored movements that are being performed in order to provide enhanced security and protection for our customers.”

Inactive Address

The commotion surrounding these coin movements began on December 4, 2018, when 66,452 BTC was transferred from a wallet address that had not sent funds since 2014. The funds were then distributed evenly across 100 wallet addresses.

Once that transfer was complete, a new transaction of 66,379 BTC was transferred from another whale address and distributed equally between 101 wallet addresses. A few days after this, another transaction was initiated, followed by another round of distributing the bitcoin into different wallet addresses. This time, 8,000 BTC was transferred into 107 addresses for a total of 856,000 BTC: a total that accounts for over 5 percent of the total bitcoins in circulation.

The report also suggests that the exchange might have used the SegWit “bc1” addresses to chop off the transactional costs while splitting the funds, which is a standard security protocol used to hedge risk and protect funds from a single point of failure.

Other Big Moves

Large sums of ether, ripple and bitcoin cash (BCH) have been moved in the last 30 days, as well, though there is no indication thus far that these transfers are related. In one instance, a day before BCH hard forked on December 5, 2018, a wallet address transferred over 1 million BCH ($300 million) to another address. Six days ago, 100,271 BCH, worth over $14 million, was moved.

This article originally appeared on Bitcoin Magazine.