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What is Bitcoin?

Bitcoin is a digital crypto-currency with no single point of failure due to its decentralized peer-to-peer architecture. The source code is publicly available and changes to the reference Bitcoin client are made via concensus within the community. Advantages of Bitcoin include irreversible transactions (i.e. no possibility of chargebacks as with credit cards), pseudo-anonymous, limited and fixed inflation, near instant transactions, multi-platform, no double-spend and little to no barriers to entry and more. It was created by an anonymous person known as Satoshi Nakamoto. Find out more at WeUseCoins.com.

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Op Ed: Four Challenges to Consider When Launching Your Fund Raise on the Blockchain

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ICOs (Initial Coin Offerings) or token sales have seen a dramatic increase over the past year as a method for raising capital. According to CoinMarketCap, Bitcoin market capitalization sits at around $70 billion at the time of writing (even after the China ICO market correction), up from $11 billion in June 2016. Overall, the cryptocurrency market cap is now over $150 billion, roughly the size of Algeria or Iraq’s GDP.

Many organizations have, therefore, become interested in using token sales (aka ICOs and token generation events) as a way of raising capital. Mostly, companies look at token sales as a way to raise startup capital; they issue “utility tokens” to avoid being classified as a security. This method is in line with traditional “crowdfunding” that companies have been doing for many years.

I also believe there is a lot of pent up demand from traditional asset classes and established companies to utilize the blockchain to raise capital and conduct their business. This is because there are a many benefits for both the issuer and the investor.

For the issuer, it’s a frictionless process of raising capital that opens up a global market of potential investors. Costs of raising capital via this process can be a fraction of what it may cost to address the same size market with a traditional raise.

For the investor, it provides access to a wider range of investment opportunities, which a regular person may never otherwise have access to. Typically, there are zero or very low investment minimums, and one can easily participate in a token sale anywhere on the globe — just set up a wallet, buy some bitcoin or ether, and get in on time. As a bonus, there’s also often the existence of a secondary market where tokens can be traded after the initial token sale, thus providing fast liquidity to those that desire it.

However, the process is not without its challenges, and there are several things to consider when launching your next fund offering on the blockchain.

What are traditional asset classes and why may a blockchain be of benefit to them?

Traditional asset classes are those that generally come up when people talk about investments. They include stocks, commodities, real estate, private equity funds and derivatives, VC funds, REITs and others.

Most, if not all, traditional assets would fall under the SEC’s definition of a security, as stipulated by the Howey test. However, due to the decentralized nature of blockchains, the U.S. is not the only jurisdiction where tokens can be sold from; many countries around the world such as Switzerland, Cayman Islands, Estonia and others are stepping up to welcome ICOs, be they utilities or a securities.

So, how is blockchain technology and tokenization beneficial to traditional asset classes? Consider this example based on the logic illustrated by Stephen McKeon. If we take real estate as an example, it’s estimated that the size of commercial real estate in the U.S. alone is about $11 trillion. Let’s say 10 percent of that can be tokenized; that immediately puts over $1 trillion of liquidity back into the marketplace and removes an “illiquidity premium” which issuers are forced to pay because investors have no way to exit their investment for a number of years. This is a win-win for both the issuer and the investor.

Challenge #1 – Jurisdiction

Even if one decides to tokenize an existing asset, there are several challenges that must be addressed, and finding the right home for your fund is key.  Since most traditional assets may be considered a security, finding the right jurisdiction will be very important during and immediately following your token generating event. Let’s take a look at some of the options available to us today.

The State of Delaware has a newly invoked law that will allow businesses to maintain shareholder lists and other corporate records on the blockchain. This move is even more significant when you consider that this jurisdiction is the corporate domicile capital of America, with 66% of Fortune 500 companies calling it home. If your plan is to make token holders Limited Partners or equity holders of your new fund, this may be a reasonable option.

Also in the U.S., Regulation A, Regulation A+ and Regulation D contain rules that could exempt entities selling securities from registering with the SEC, including a specific look at equity crowdfunding. These rules can be applied to any crowd sale, and potentially encompass token sales as well. It’s also possible to raise under Regulation S, which would exclude U.S. investors altogether, thereby removing the need for protection of unaccredited investors.

Switzerland, one of the leading centers of capital in Europe and known for recently abolishing its banking secrecy laws, has become a fintech hub and is considered a friendly jurisdiction. A number of leading Swiss companies have formed an alliance called Crypto Valley, where one of the most prominent law firms, MME, hosted a recent conversation about the legalities of token sales and what may constitute a security under Swiss law.

The Cayman Islands, a leading offshore jurisdiction with a 0 percent tax rate for foreign-controlled companies, have seen an uptick in ICOs lately. Recent token sales events from the Caymans include EOS, Domain Developers Fund and others. The Cayman Islands and other offshore jurisdictions have taken a friendly view on blockchain assets and have the service provider infrastructure in place, with lots of experience creating and operating traditional funds. I believe incorporating in the Caymans and other offshore jurisdictions have many benefits and is a practice that will continue to increase.

Estonia is another interesting example of a jurisdiction where several ICOs — which would almost certainly be considered securities in the U.S. — have been domiciled. Recently, Agrello, Polybius and a number of other companies completed successful token sales. Estonia is unique because of its e-government initiatives, which encompass e-citizenship, e-voting, e-tax and government blockchains. Further, Estonia recently announced its own cryptocurrency called Estcoin. Estonia currently doesn’t regulate crowdfunding (though some EU laws may apply) and is one of the top friendly jurisdictions for launching tokenized funds.

Challenge #2 – Knowing Your Customer

Another roadblock to conducting legal and compliant token sales is the issuer’s ability to follow KYC and AML regulations effectively. KYC (Know Your Customer) is the method in which issuers verify the identity of its investors. Many cryptocurrencies of choice for token generation events have anonymity features built in (cryptocurrencies such as Monero and Zcash are prime examples, and bitcoin can be anonymized as well). Further, the crypto investment community likes the idea of not having to go through lengthy and intrusive KYC processes. This practice doesn’t bode well for the issuer, however, since KYC is a key requirement for many banks. Strong KYC during the token generating event will make it easier to work with banks and follow AML (Anti Money Laundering) regulations.

Challenge #3 – Tax, Compliance and Custody

There are further complications with taxes, compliance and custody. There are not yet clear standards for cryptocurrency compliance to be followed. Further, if your fund is going to be holding crypto-assets and cryptocurrencies, security and custody needs to be considered. Luckily, there are some players such as Gemini that offer crypto-custody services; some reputable banks such as the Swiss Falcon Private Bank are also starting to offer bank-level cryptocurrency trading services. There are still more challenges around custody and compliance for altcoins.

On the tax side, there are open questions about treatment of virtual currencies. IRS guidance 2014-12 classifies cryptocurrencies as an asset class, imposing capital gains taxes on profits in certain situations. Some other countries such as Vietnam have proposed making digital currencies like bitcoin a form of currency. The world tax authorities still need more time to figure out how to tax this new asset class.

Challenge #4 – What Happens Next?

Once you’ve jumped through a lot of hoops and successfully executed a tokenization event for your fund, the real work starts. If you accepted U.S. investors, think about how you can prevent them from selling your tokens in the first 12 months (if you raised under Regulation D). If you didn’t accept U.S. investors, how do you prevent them from buying your tokens in the future? What exchanges do you want to list on to make sure you can comply with AML and other regulations? This is a complex process that needs to be thought of before you start planning your token generation event.

Looking to the Past

Launching a tokenized fund on the blockchain is a relatively new concept; however, we have some successful precedents. The biggest and most interesting example is Blockchain Capital, founded by Brock Pierce. Their token, BCAP, was sold under Regulation D exemption to 99 accredited U.S. investors (and unlimited foreign investors with many exceptions), who, per SEC regulation, can’t sell their tokens for 12 months. Blockchain Capital has a complex structure, with entities in Singapore, the Cayman Islands and the U.S. According to their memorandum, they spent up to 10 percent of their raise on legal expenses (they raised $10 million), which is a hefty sum. Also, questions remain: What prevents non-accredited U.S. investors from buying BCAP tokens post ICO? How are the 99 accredited investors forced to comply with the requirement to hold these tokens for the time allotted?

Conclusion

Launching token generation events for your fund can be a worthwhile activity, but you need to plan carefully and entrust your process to qualified professionals.

Some things to think about before going ahead with launching a tokenized fund:

  • Is your token a security (Howey test)?

  • Have you chosen the right jurisdiction?

  • Do you comply with the applicable regulations, including KYC and AML?

  • What are tax and custody implications for your cryptocurrency?

  • What happens after the token sale is over?



The post Op Ed: Four Challenges to Consider When Launching Your Fund Raise on the Blockchain appeared first on Bitcoin Magazine.

Posted on 21 September 2017 | 2:48 pm

Nebraska Lawyers Accept Bitcoin Following Ethics Board Approval - CoinDesk


CoinDesk

Nebraska Lawyers Accept Bitcoin Following Ethics Board Approval
CoinDesk
As CoinDesk previously reported, the Nebraska Lawyers' Advisory Committee was asked if lawyers could accept bitcoin from either a client directly or through a third party. That request also queried whether lawyers can hold cryptocurrencies in escrow or ...

Posted on 21 September 2017 | 2:31 pm

Why Bitcoin Could Split Into Three in November: QuickTake Q&A - Bloomberg


Bloomberg

Why Bitcoin Could Split Into Three in November: QuickTake Q&A
Bloomberg
Bitcoin has become so successful that the way it operates needs upgrading, and fast. Trouble is, there are opposing views on how to do that and no all-powerful administrative body to determine which method to adopt. After all, part of bitcoin's allure ...
McAfee at Shape The Future; “Pandora's box has been opened”Bitcoin News (press release)
Bitcoin is likely to split again in NovemberBangkok Post

all 26 news articles »

Posted on 21 September 2017 | 12:33 pm

Zcash Audit Finds No Serious Issues in Launch Ceremony Security

A new audit of the complex and controversial zcash key generation ceremony has found any serious security compromises were unlikely.

Posted on 21 September 2017 | 12:10 pm

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Here's how bitcoin can reward you! - Economic Times


Economic Times

Here's how bitcoin can reward you!
Economic Times
“In spite of China's recent steps, Bitcoin has shown that it is a truly global asset and individual countries are not having influence over its price and sentiment,” said Sandeep Goenka, Co-founder, Zebpay. “We are optimistic that the government will ...

Posted on 21 September 2017 | 11:40 am

Gold Investor John Hathaway: Cryptocurrencies Are 'Garbage'

A notable asset manager who focuses primarily on gold had a harsh word for the cryptocurrency market craze this week: "garbage."

Posted on 21 September 2017 | 11:15 am

Y Combinator President Calls ICOs A 'Bubble' – But His Firm Might Use Blockchain

Y Combinator, Silicon Valley-based startup accelerator, is looking at blockchain in order to boost access to startups for investors.

Posted on 21 September 2017 | 10:15 am

Bitcoin Futures-Based ETF Likely to Be Approved in the US Soon - TheStreet.com


Bitcoin Futures-Based ETF Likely to Be Approved in the US Soon
TheStreet.com
"Yes, you can already trade a derivative in Europe, an exchange traded note which tracks Bitcoin," Nadig adds. "Then the race in the U.S. is the race to see what gets approval first. Will it be a Bitcoin future or a straight up Bitcoin holding ETF? My ...

Posted on 21 September 2017 | 10:14 am

Germany's Central Bank: Consumers Won't Use Blockchain for Payments

Germany's central bank has published a new blockchain research paper.

Posted on 21 September 2017 | 9:00 am

Weak Demand? Bitcoin's Price Rebound May Be Starting to Fade - CoinDesk


CoinDesk

Weak Demand? Bitcoin's Price Rebound May Be Starting to Fade
CoinDesk
The rebound in the bitcoin-U.S. dollar (BTC/USD) exchange rate appears to be stalling out. After rising from a recent low of $2,980 earlier this week, bitcoin is again trading below $4,000, a development that raises doubts as to whether the rally will ...
Can you live only on bitcoin? Some believers try itUSA TODAY
Bitcoin is sinkingBusiness Insider
South Korea in Centre of Bitcoin Universe As It Passes China in Bitcoin TradingCoinTelegraph
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Posted on 21 September 2017 | 8:05 am

Weak Demand? Bitcoin's Price Rebound May Be Starting to Fade

The rebound in bitcoin's price from the recent low of $2,980 has stalled, raising doubts as to whether the rally will continue.

Posted on 21 September 2017 | 8:00 am

Bitcoin Mining Farms Invited to Russian Leningrad Region - CoinTelegraph


CoinTelegraph

Bitcoin Mining Farms Invited to Russian Leningrad Region
CoinTelegraph
“For the production of Bitcoins, first of all, large areas for processing and cheap electric power are required. As you know, the construction of LNPP-2 is being completed in Sosnovy Bor, and large areas of the first nuclear power plant are being ...

and more »

Posted on 21 September 2017 | 7:21 am

Blockchain History? IBM Ventures Is Close to Making Its First Industry Investment

IBM Ventures has its eyes on compliance and supply chain for its first cash investment in the blockchain industry.

Posted on 21 September 2017 | 6:00 am

How bitcoin could overcome its wild reputation - CNBC


CNBC

How bitcoin could overcome its wild reputation
CNBC
A major problem for bitcoin is its extreme volatility, which is a cause of concern for many investors. A lack of liquidity may be to blame for the cryptocurrency's volatile nature, an expert tells CNBC. "The high volatility I think is due to the low ...

Posted on 21 September 2017 | 5:52 am

Australia Cites Blockchain In 'Digital Economy' Strategy Launch

Australia is plotting an ambitious new Digital Economy initiative and blockchain is part of the plan, a new paper reveals.

Posted on 21 September 2017 | 5:00 am

CFTC Chair Giancarlo: Embracing Blockchain Is in the 'National Interest'

J. Christopher Giancarlo, CFTC chair, has called on government agencies to embrace blockchain, saying it's in the national interest to do so.

Posted on 21 September 2017 | 4:00 am

4 Top-Performing Alternatives to Bitcoin - Investopedia


4 Top-Performing Alternatives to Bitcoin
Investopedia
While Bitcoin dominates the headlines, its underlying blockchain technology has spawned a new ecosystem of alternative cryptocurrencies, known as “altcoins.” Following Bitcoin's staggering 1,000% moonshot of the past 12 months, a fresh wave of capital ...

Posted on 21 September 2017 | 1:11 am

Swiss Telecom Giant Launches New Blockchain Business

A major state-owned telecommunications provider in Switzerland has created a new blockchain business.

Posted on 20 September 2017 | 3:05 pm

CFTC Commissioner: Blockchain Will Bring 'Sea Change' to Financial Markets

The CFTC has named one of its leaders as the new sponsor for its technical advisory committee – and he wants to see it work on blockchain issues.

Posted on 20 September 2017 | 12:30 pm

Banks Are 'Afraid' of Bitcoin, Says Wealth Advisor

This wealth advisor believes banks are afraid of bitcoin, according to a new interview.

Posted on 20 September 2017 | 11:30 am

OmiseGo's ICO Token Is Tops in Market Cap, But Heavy On the Charts

A notable ICO token appears to be weathering regulatory concerns, bouncing back this week on a relatively positive newsflow and new developments.

Posted on 20 September 2017 | 9:35 am

GoldMint and the Future of Gold Ownership

GoldMint Header

Reflecting gold’s historical repute as a scarce and valued resource, Bitcoin has become known in many investment circles as “digital gold.” With its unprecedented rise, Bitcoin’s worth is now estimated to be about twice that of an ounce of physical gold.

On August 7, 2017, the startup GoldMint was launched with the intent of ushering in a new digital era of gold as a store of value. This project aims to provide a unique set of gold ownership solutions for cryptocurrency investors and enthusiasts worldwide. It is holding an initial coin offering (ICO) that starts in less than 12 hours. 

The GoldMint project reaffirms the notion that physical gold is a respected method of payment and wealth preservation, all tied to its value and scarcity. Gold ownership, however, requires expensive security, safekeeping and insurance. GoldMint’s innovative approach seeks to address these inherent issues.

GoldMint purchases, sells and repurchases their native digital asset called

“GOLD,” which is 100 percent backed by physical gold. It features an Exchange Traded Fund (ETF) which can be utilized as a payment and investment tool for both companies and individuals in hedging risk.

Capitalizing off of the inherent advantages of its physical counterpart,

GOLD tokens offer a stable, transparent, non-volatile means of buffering one’s crypto portfolio from wild market swings. Here, GoldMint is committed to ensuring that GOLD delivers consistent value through paper assets like ETFs and futures as well as through physical assets. Moreover, GOLD owners will be able to use their tokens to secure guarantees, loans and escrow services, all at a modest 5 percent purchase and 3 percent sale fee.

GoldMint will also deliver a utility token known as “MNT” to facilitate operations, implement smart contracts and incentivize block creation and transaction confirmation.

During the early stages of this project, MNT will be sold and distributed on the Ethereum blockchain. After the MNT distribution has taken place, Goldmint will launch its own Graphene -based Proof-of-Stake (PoS) blockchain that offers a safer, more productive and faster experience.

Minting the Blockchain

GoldMint utilizes a blockchain ledger to execute trades, loans and investments for profit. The following are what make the GOLD crypto asset unique:

  • 100 percent information transparency relative to all GoldMint GOLD. The company discloses its gold reserves, fostering the opportunity to buy back GOLD at its current trading price.
  • GoldMint utilizes the decentralized blockchain for smart contracts and for its crypto assets.
  • ETFs are used for liquidity and elasticity facilitating gold trades which are far faster than those of physical gold.
  • Secured loans can be leveraged with GOLD, like jewelry or coins. GoldMint assists in the storage of this collateral through its unique Custody Bot, a blockchain-connected robot used for inspection, temporary and long-term storage and the transfer of physical gold, jewelry, coins or gold bullion.
  • Members have the ability to earn passive income as the market price of GOLD rises.
  • An option which allows for the buyback of GOLD for fiat according to the current price of GOLD.
  • A fast and efficient user registration and identification system.

To support merchants and developers, GoldMint is in the process of releasing an application programming interface (API) for the development of third-party apps and other interfaces. Use of this API will allow online stores to accept GOLD as a payment method, enable loans to be secured by banks and provide access to services such as escrow accounts and financial guarantees.

The Goldmint Team

Goldmint is led by CEO Dmitry Plutschevsky, who co-founded Lot-Zoloto — a gold trading company based in Russia with trading transactions totaling $100 million in 2017 — with former banker Konstantin Romanov. Serg Umansky, head of portfolio management at Whiteridge Investment Funds, Alex Butmanov, managing partner at DTI and Julian Zegelman, managing partner at Velton Zegelman, are among the advisors of the company

GoldMint founders predict that its unique value proposition will disrupt the billion-dollar gold market, allowing GoldMint to establish itself as a market leader in the coming cryptocurrency revolution.

To learn more about GoldMint and participate in its token sale, visit its website, read the white paper and follow the company’s social media channels on Facebook and Twitter.

The post GoldMint and the Future of Gold Ownership appeared first on Bitcoin Magazine.

Posted on 19 September 2017 | 3:51 pm

Uncertainty Dominates as China Continues to Clamp Down on Cryptocurrencies

Uncertainty Dominates as China Clamps Down on Cryptocurrency

China is clamping down on cryptocurrency, that much is clear. But while the developing story dominates headlines, a notable trend is the lack of official information. Chinese officials seem to systematically decline requests for comments, local sources are willing to provide information on condition of anonymity only, while leaked documents remain unverified.

Despite this lack of clarity, here’s what’s known so far.

Effects on Trading

The most important thing we know for sure is that Chinese bitcoin exchanges will be closing down, or at least exiting China.

BTCC — the oldest bitcoin exchange in the world — was the first exchange to announce they’d be closing shop within the Asian country, by the end of this month. The exchange cited guidelines published by the Chinese central bank (the People’s Bank of China; PBOC), which initially appeared to only affect ICOs, as its reason for closing down.

Other exchanges quickly followed BTCC's lead. ViaBTC and Yunbi both announced that they’d be ceasing operations by the end of this month. Huobi and OKCoin, the two other major Chinese exchanges, announced they would be shutting down too, though not until the end of October. And BitKan, a big over-the-counter (OTC) trading service rather than an order-book exchange, announced it would be shutting down as well.

While the cited guidelines initially did not seem to concern bitcoin, it is likely that Chinese officials have made it clear through separate channels that they do apply to the cryptocurrency. Bloomberg (among others) reports that exchange operators decided to close down after in-person meetings with PBOC officials, and the Wall Street Journal reports — based on anonymous sources — that the PBOC has prepared a set of “draft instructions” that would ban cryptocurrency trading altogether. These draft instructions have also been leaked (translation) but have so far not been verified for authenticity.

The content of the leaked documents is also consistent with warnings issued by a Chinese quasi-regulatory body — the National Internet Finance Association of China (NIFA) — regarding cryptocurrency trading, published shortly before exchanges announced that they would be shutting down.

According to the NIFA, Bitcoin exchanges lack “legal basis” to operate in the country. Additionally, NIFA official Li Lihui told a technology conference in Shanghai on Friday that a goal of China’s monetary regulation is to ensure that “the source and destination of every piece of money can be tracked.”

The Status of Bitcoin

As far as official statements go, Bitcoin itself is not banned in China. Owning, using, and — most importantly — mining bitcoin should technically not be affected by the published guidelines.

However, more unverified reports (translation) consistent with reporting from the Wall Street Journal, claim that Bitcoin itself will be blocked by the so-called “great firewall of China.” Specifically, seed addresses, which help to bootstrap any new Bitcoin node, and Bitcoin blocks, necessary to construct the blockchain, would be filtered from internet traffic into China, using deep packet inspection.

Additionally, major foreign Bitcoin exchanges like Coinbase, Bitfinex and LocalBitcoins would be added to the list of banned domains, which already includes sites like Google and Facebook. And even private trading of cryptocurrency arranged through chat-apps like Telegram and WeChat, for example, could fall under scrutiny, according to the Wall Street Journal.

This much stricter stance on Bitcoin, beyond just exchanges but also concerning Bitcoin itself, seem consistent with comments from PBOC Counselor Sheng Songcheng, as reported by local news sources like Shanghai Securities News. Songcheng was quoted to have said that Bitcoin poses a challenge to China, mentioning money laundering and its potential to curb the nation’s economic policy.

Furthermore, very recent reports indicate that cryptocurrency exchange operators are currently not allowed to leave Beijing. Local news outlet BJ News writes:

“[According to] a number of informed sources, the current special currency trading platform executives and so on are not allowed to leave Beijing, [in order] to cooperate with the investigation. In accordance with regulatory requirements, the trading platform shareholders, the actual controller, executives, financial executives [must] fully cooperate with the relevant work in the clean-up period in Beijing.” (Rough translation.)

What This Means…

Trading bitcoin via dedicated exchange platforms in China is off the table for now — that is clear.

But it’s not yet clear how successful a full Chinese Bitcoin blockade could be. It would technically only require a single Bitcoin block of a maximum of four megabytes to make it into China about once every 10 minutes, potentially even through satellite, for the entire country to be able to access the blockchain. As such, banning individual Chinese citizens from owning and using bitcoin might prove difficult, even if exchange platforms close down.

Perhaps an even more important question is what will happen to Bitcoin mining: It’s likely that most of Bitcoin’s hash power is currently situated in the Asian country. While miners should able to connect to the rest of the world, according to ViaBTC CEO Haipo Yang, it’s unclear if this connection will be allowed for much longer. If Chinese authorities indeed intend to ban Bitcoin from the country entirely, some Bitcoin mining operations — both mining pools and hash power data centers — will be easy targets to shut down.

On the other hand, this is not the first time that fears of China “banning Bitcoin” have been raised. In the past, such concerns have simply been a prelude to stricter regulations by local authorities.

It has been suggested by Bitmain CEO Jihan Wu, perhaps a bit optimistically, that exchanges will simply require a new license to continue operation. Similarly, it’s been speculated that the PBOC may introduce a national digital currency as a sort of gateway to cryptocurrency: This would allow the central bank to better track the flow of funds in and out of bitcoin in order to counter money laundering and capital flight.

Then again, it could make more sense to introduce such a national digital currency as a substitute for Bitcoin, once Bitcoin is effectively banned, as suggested by ZeroHedge.

For now, uncertainty prevails.

The post Uncertainty Dominates as China Continues to Clamp Down on Cryptocurrencies appeared first on Bitcoin Magazine.

Posted on 19 September 2017 | 2:40 pm

Bitcoin Exchange bitFlyer Hopes to Win Big With the Japanese Bankers Association

bitFlyer.jpg

While China tightens its grip on its cryptocurrency community, Japan is openly embracing cryptocurrencies and blockchain technology, legalizing bitcoin, and encouraging and funding blockchain research.

Even Japan’s banks are onboard, working collaboratively to develop a blockchain platform specifically for the financial sector. With its 120 member banks, the Japanese Bankers Association (JBA) is creating a Collaborative Blockchain Platform and is actively looking for a company to supply its blockchain technology on an ongoing basis.

Experimenting with the Collaborative Blockchain Platform, the JBA will initially determine which financial services best lend themselves to the new platform, likely including settlement/transfer services, know-your-customer (KYC) systems and financial infrastructure such as their Zengin System and Densai Net System.

Japanese bitcoin exchange bitFlyer is stepping up to the plate to take on tech giants including Fujitsu, Hitachi and NTT Data to be the supplier of the blockchain platform that will be used by Japan’s banks.

Although it is one of the largest cryptocurrency and blockchain startups in Japan, the Tokyo-based bitFlyer has its work cut out for it if it wants to upset these three corporate heavyweights and win the right to supply the bankers with a blockchain platform using its miyabi technology.

The company’s COO Bartek Ringwelski told Bitcoin Magazine:

“bitFlyer is the only startup in the event, and we have only raised $36mm since 2014, but we have deep expertise in blockchain technology through our virtual currency exchange (the largest in the world by volume, including margin trading) and our ‘miyabi’ product.”

By way of comparison, Hitachi posted $83 billion in revenue in 2016, Fujitsu posted $47 billion on 2015 and NTT Data posted $15 billion in 2016.

Acknowledging a sea change in Japan’s attitude to cryptocurrency, Ringwelski noted that Japan is actively encouraging and supporting both cryptocurrencies and blockchain technology:

“Japan is emerging as a leader in blockchain adoption. Japanese consumers are embracing virtual currencies, regulators are proactive, and banks are recognizing the power that blockchain, and specifically miyabi, can bring to the financial infrastructure.”

Miyabi Blockchain Technology

The name “miyabi” was first coined between the 9th to 12th centuries by Japanese aristocrats to refer to the theme of elegance and refinement.

According to Ringwelski, bitFlyer’s miyabi blockchain platform is the fastest in the world:

“Based on our research, ‘miyabi’ is the fastest enterprise-grade blockchain technology, delivering 1,500 - 2,000 transactions per second on average, and in some cases, even faster,” Ringwelski said.

Their processing speed of 1,500 to 2,000 transactions per second compares with Bitcoin’s two transactions per second and Ethereum’s seven transactions per second. They also estimate that among the other three competing companies, the maximum speed to beat is 1,000 transactions per second.

When it launched the competition, the JBA made it clear that security and immutability were their first priority. In their view, only a private, permissioned blockchain could satisfy this requirement.

Going Global

BitFlyer’s CEO Yuzo Kano has said he wants the company to go global in the near future and will start by expanding to the U.S. market this fall, initially offering bitcoin trading but expanding to other cryptocurrencies within the next year. The company says it has received approval to start trading from 34 U.S. states.

In the meantime, Ringwelski says that they are eagerly awaiting the decision of the JBA:

"The partner ultimately chosen by the JBA will stand to become part of the core Japanese banking infrastructure — it would be a big deal. Beyond the value of gaining the JBA as a new customer, securing a JBA contract would help spread miyabi to new enterprise blockchain applications and customers worldwide."

Investors in bitFlyer include SMBC Venture Capital, Mizuho Capital, Dai-ichi Life Insurance, Mitsubishi UFJ Capital, Mitsui Sumitomo Insurance Venture Capital, Recruit Strategic Partners, Dentsu Digital Holdings, SBI Investment, GMO Venture Partners, QUICK and Venture Labo Investment.

The post Bitcoin Exchange bitFlyer Hopes to Win Big With the Japanese Bankers Association appeared first on Bitcoin Magazine.

Posted on 18 September 2017 | 12:45 pm

Op Ed: How Blockchain Technology Will Disrupt Digital Content Distribution

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The way we consume media content has been on a continual overhaul for the past two decades. Every aspect of media distribution has become more streamlined from the razor-thin devices we use to consume media to the manner in which we purchase and store our coveted content. Books, music and movies have all seen their physical bodies and storage locations dissolve, to be replaced with on-demand downloads and digital copies.

The digital content revolution has done a lot for increasing access and visibility for artists and authors, but the current publishing giants have failed to adequately adjust to the times in a few crucial areas. While it's true that platforms such as YouTube and Medium have granted publishing access to the greater public and eliminated gatekeeping middlemen like talent agents and PR people, the current digital content sharing platforms have built their empires on the skeletons of the publishing giants’ templates that existed before and, unfortunately, have continued operating in ways that fundamentally undermine the artistic control and profits of their contributors.   

YouTube, for example, recently announced they will not allow users to earn any money until they reach 10 thousand views. Medium was recently very candid about the moral dilemmas and growing pains they have faced while trying to balance the selling of advertising space as well as respecting their contributing authors and readership. And it's no secret that Amazon and iTunes take a chunk out of authors’ and artists’ earnings, with iTunes currently pocketing 30 percent of its artists’ profits and Amazon taking a hefty 30–75 percent.

Though it’s easy to be critical, I am more interested in looking for a viable alternative to disrupt the existing system. This will require harnessing the decentralizing nature of emerging blockchain content distribution technologies. Here’s why:

Blockchain could be the solution to making micropayments a reality.

As media consumption has gone digital, a cost-effective way to charge per article or per song has been a limiting factor. Many platforms and publications have opted for subscription-based charging as high transaction costs make pay-per-use charging impossible. Amazon, for example, passes on its internal transaction costs to their clients, which currently equal 2.9 percent of the total transaction as well as a flat fee of 0.30 cents for every transaction.

The pricey transactions make processing small charges inefficient and not cost-effective, which has led many experts, such as editor of TechCrunch John Biggs, to predict that the future of digital publishing will depend on the adoption of micropayments.

Blockchain technologies allow for an incredible number of transactions to be processed at a low cost. Decentralized blockchain systems distribute the collective payment history across the entire network and don’t favor any single “auditor.” The network is maintained by all blockchain nodes as a whole.

Emerging blockchain transaction processing speeds have also recently shot past the leading blockchain currency, bitcoin, and would be capable of processing on a large scale. Where Bitcoin's transaction speeds average 7 transactions per second, new blockchain-based currencies are already approaching thousands of transactions per second; Bitshares claims they can process 100,000 per second.

In fact, a newspaper in Winnipeg, Canada, has already begun to use a micropayment system to charge per article for its news content and projects earning over $100,000 in digital revenue.

Blockchain could tilt the balance of power towards individuals, not publishing powerhouses.

As mentioned previously, YouTube and Medium have dramatically increased content creators’ access to audiences and established a more democratic, popularity-based promotional scheme. Unfortunately, they are both still centralized content distribution entities that can make arbitrary and unilateral decisions. YouTube and Medium both have the right to remove comments, content or entire channels or profiles without leaving a trace.

In contrast, a blockchain content distribution platform preserves an unchangeable record of all actions. The record produced by blockchain systems creates an environment of total transparency for both content creators and media consumers, and it also ensures that all views, comments and ratings reflect the real interactions the content has experienced, leaving no room for subjective, inflated ratings or deleted bad reviews.

With nothing deleted, content producers can create and post with the security that their work and reputation will remain intact, trolls can’t hide their past bad behavior and can easily be spotted via their comment history, and all content fairly reflects its actual popularity.

Blockchain technology could provide instant payouts and security.

Today, freelancers, authors and artists working with publishing platforms are accustomed to waiting multiple months to receive payment for their work. For big-name artists, this is just part of the business. But for smaller artists, it can be difficult to wait for reimbursement without any idea of how much they will eventually be paid. The financial uncertainty, prolonged waiting periods and lack of payment transparency in current digital content media sharing platforms could be discouraging potential artists and authors from seeing content creation as a viable source of income. Instead, the system encourages content creators to seek payment, not for the quality of their content, but through product sponsorships, PR and ad-focused content.

With blockchain-based content distribution, content creators can be paid within seconds of a consumer paying for a download. Consumers would also know their purchase was directly supporting the content creators they enjoy and effectively cut out the publishing middlemen eating up the content producer’s profits.

Though blockchain technology may, at times, sound a bit hard to conceptualize, digital media distribution really shouldn’t be rocket science. While the zeros and ones behind publishing platforms get more complex, the process for content creators and consumers has simplified and should continue to do so.

The bottom line is content creators who make good quality content that people are willing to pay for deserve a simple and transparent digital media sharing platform that fairly compensates them according to the consumer demand for their work. Media consumers equally deserve the ability to directly support the content creators they enjoy. And blockchain technologies may be the disruptive technology that digital media content distribution needs.

This is a guest post by Matej Michalko, founder and CEO of DECENT. The opinions expressed are his own and do not necessarily reflect those of BTC Media or Bitcoin Magazine. 

The post Op Ed: How Blockchain Technology Will Disrupt Digital Content Distribution appeared first on Bitcoin Magazine.

Posted on 18 September 2017 | 12:40 pm

Bitcoin price climbs over $4,000

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Bitcoin reaches new all-time high: $ 3,000

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CRYENGINE now accepts Bitcoin

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Consulting firm EY Switzerland accepts Bitcoin

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Bitcoin Trading Bots

There have been a wide variety of situations in which algorithmic trading programs have proven to be beneficial for investors. However, investors who only trade a cryptocurrency can also take advantage of bitcoin trading bots. Through bitcoin bot trading, traders can become more flexible and prompt, minimize errors and process information more rapidly. At this… Read More »

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Steam accepts Bitcoin

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Major Magazine Publisher to Accept Bitcoin Payments

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PayPal and Virtual Currency

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Wikimedia Foundation Now Accepts Bitcoin

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German Newspaper "taz" accepts Bitcoin

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Expedia to accept Bitcoin payments for hotel bookings

Posted on 12 June 2014 | 12:41 pm

September 21, 2017 -
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