Gold and Blockchain: A Budding Financial Romance at the Perfect Time

Gold and Blockchain: A Budding Financial Romance at the Perfect Time

A renewed demand for gold amid shaky money and bond markets is perfect timing for blockchain to bring transparency to holding and trading.

If you’ve been following Peter Schiff for his prediction of the 2008 financial collapse or strictly because of his affinity for gold, then you’re probably aware that he is not a fan of Bitcoin (BTC), but would he be interested in gold-backed smart contracts?

The United States Federal Reserve cut interest rates by another quarter-point on Sept. 18 following the European Central Bank’s Sept. 12 announcement on its negative interest rates and decision to re-introduce quantitative easing. With negative-yielding bonds looking like a shaky refuge from the storm looming on the horizon, prominent investors such as Ray Dalio, Paul Tudor Jones and Stan Druckenmiller have been suggesting gold as a safe haven from what has been called a world war of currencies, with China and Russia appearing particularly keen to weaken the U.S. dollar’s political hegemony. 

Meanwhile, central banks around the world have been on the largest gold-buying spree since Nixon took the dollar off the gold standard in 1971 — but what about everyone else? How does one go about purchasing gold?

Although the easiest way to invest in gold today is through gold futures, exchange-traded funds or mining stocks, gold is usually bought under the assumption that it will act as a hedge against broad economic instability. If the institution that is trading or issuing these contracts becomes insolvent (such as Bear Stearns during the 2008 financial crisis), the value of their investors’ gold contracts subsequently disappears.

Many financial advisors suggest purchasing gold bullion instead of so-called “paper” gold because the physical metal itself is not inextricably tied to the financial system. However, owning gold bullion comes with its fair share of inconveniences: physical gold is bulky and cumbersome, it’s not easily divisible nor is it easy to transport. The insurance required for transport is expensive and so are the costs of transforming a kilo of gold into smaller, more liquid chunks. In addition, many people do not want to store large quantities of gold at home, which results in having to find a vault or custodian that is trustworthy.

How do you know that the gold held in a vault is real and not counterfeit and that the people managing your gold aren’t exploiting their contract? It’s no one’s liability, as there’s no centralized authority for gold. If you take your gold to someone for appraisal, you really have to trust them not to swap your coins or undervalue them like with JPMorgan’s precious metals desk, or when we learned that there are millions of dollars in counterfeit gold circulating, some of which was also found in JPMorgan’s vaults.

While blockchain technology has been touted as a panacea for problems that are outside of its scope, transparent accounting for contracts is one function that it performs to a tee. PAX Gold (PAXG) — recently cleared by New York’s Department of Financial Services — as well as Digix Gold Tokens (DIGX) from Singapore and OneGram (OGC) are all digital representations of gold that is tied to physical gold optionally held by a bank or third party, but the record of gold ownership will always show how much an individual owns, and that cannot be negated.

To create a gold smart contract — first, a bullion exchange or mint certifies that a piece of gold held in its vault has a guaranteed purity of 99.9%. This certificate is then insured against the plethora of damages or liabilities that could ensue (such as being counterfeit), virtually guaranteeing that the certified value of gold will be backed in the event of any unforeseen events. These assurances are then programmed into a smart contract that is published on a public digital ledger. Since this process is encoded and executed using cryptography, the contents of the agreement remain private, thereby enabling the owner to independently verify and prove their legal title to ownership using public internet infrastructure without disclosing their personal information. 

Instead of representing gold as a derivative, a gold smart contract is, in effect, a digital legally-bound title. By using a public network, a tangible asset like gold becomes untethered from its physical constraints and can enjoy the versatility afforded by digital assets such as being movable, divisible and tradeable with drastically less overhead. If a customer wanted to retrieve their physical gold bars or coins, they simply present their proof of title (using their private cryptographic keys) at the institution that is holding their gold, such as a bullion exchange or mint.

Related: Is Bitcoin a Store of Value? Experts on BTC as Digital Gold

The marriage of blockchain technology’s open truthfulness with gold’s alluring scarcity makes for a highly transparent, secure and liquid financial instrument with which to hedge against currency depreciation, allowing average consumers and retail investors to hold onto the value of their savings. Going out and finding a buyer for physical gold can be arduous and time-consuming, but tokenizing gold under a legal smart contract increases its portability, giving the vendor immediate access to a worldwide market, which drastically increases its liquidity. 

By leveraging blockchain technology, gold can be traded on cryptocurrency exchanges, opening new markets for the gold industry. As precious metals and cryptocurrencies share a common vision of hard money, the synthesis of these markets has the potential to create a powerful economic counter-force should currency devaluation continue unabated.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk. You should conduct your own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Rob Odell is the vice president of product and marketing at SALT, the pioneer of crypto-backed loans, where he is responsible for managing the product and marketing teams, gathering insight into business problems, obtaining user feedback, and turning stakeholder ideas into products and features. Prior to his role at SALT, Rob held product manager roles at Skookum and Search Scientists. Rob has been a Bitcoin believer since 2013 after being introduced to it by a Bali-based coffee roaster selling his beans for Bitcoin.

Ripple, Coinbase Invest in Mexico’s Biggest Crypto Exchange Bitso

Ripple, Coinbase Invest in Mexico’s Biggest Crypto Exchange Bitso

Ripple, Coinbase invested an undisclosed amount in the first Mexican crypto exchange to help it expand to Brazil and Argentina.

Ripple, the firm behind the third biggest cryptocurrency XRP, has led an investment round in Bitso, one of the biggest crypto exchanges in the Spanish-speaking world.

The first Mexican crypto exchange

An early partner of Bitso, Ripple has led the new investment round to support the first cryptocurrency exchange in Mexico, the company officially announced on Oct. 14.

As reported by crypto publication The Block, the new investment round also involves major investors including United States-based crypto exchange and wallet provider Coinbase, Jump Capital as well as existing investors such as Digital Currency Group and Pantera Capital. The amount of investment has not been disclosed.

Expanding to Argentina and Brazil

According to the report, the raised funds will help Bitso expand its business to Argentina and Brazil, among other Latin American countries.

As noted by Ripple, Bitso is the largest Mexican crypto exchange that was established in 2014 with a purpose to provide financial services for both banked and unbanked with blockchain technology and digital assets. To date, the customer base of the exchange accounts for 750,000 users.

Noting that its partnership with Bitso takes roots from the company’s beginning in 2014, Ripple says that the firm plays an important role in RippleNet’s United States-Mexican corridor by providing liquidity for payments. Earlier in 2019, Ripple launched On-Demand Liquidity (ODL) capabilities with MoneyGram into Mexico, where Bitso was a key exchange partner, Ripple added.

In July 2019, Bitso announced that its platform will become regulated by the Gibraltar Financial Services Commission (GFSC) in early August. The exchange clarified that the GFSC will be overseeing Bitso’s custodial service, withdrawals, deposits and trading of cryptocurrencies under a special framework designed for regulating businesses in the distributed ledger technologies industry.

N. Korean Hackers’ New MacOS Malware Hides Behind Fake Crypto Firm

N. Korean Hackers’ New MacOS Malware Hides Behind Fake Crypto Firm

The notorious North Korean hackers known as the Lazarus APT Group have created another malware targeting Apple Macs and cryptocurrency users.

The notorious North Korean hackers known as the Lazarus APT Group have created another malware targeting Apple Macs that masquerades behind a fake cryptocurrency firm.

Apple Mac security specialist and principal security researcher at Jamf Patrick Wardle published a blog post on Oct. 12 outlining the nature of the malware, revealed by MalwareHunterTeam (MHT) researchers the previous day.

Closely related to earlier macOS crypto-malware

MHT and Wardle have warned that at the time of their warning, the malware was undetected by any engines on VirusTotal and that the sample appears to be closely related to a strain of Mac malware created by the Lazarus Group and identified by Kaspersky Labs back in summer 2018.

Like the previous strain, the hackers have set up a fake cryptocurrency firm — this time dubbed “JMT Trading” — through which to perpetrate their attack. Having written an open-source cryptocurrency trading app, they uploaded its code on GitHub, concealing the malware within it.

Wardle analyzed the installation process for the app, identifying the suspicious package and launch daemon concealed within it and analyzing the malicious functionality of the hackers’ backdoor script. 

While the backdoor affords a remote attacker complete command and control over infected macOS systems, Wardle notes that open-source security tools and manual detection processes by alerted users should have no issue detecting the malware. However, he reiterated his warning that VirusTotal engines were not picking it up at the time of writing.

He also considers that the most likely targets of the malware are crypto exchange employees, rather than everyday retail investors.

Cyber villains

As reported, the allegedly North Korean state-sponsored Lazarus Group has achieved infamy for its malign activities. As of fall 2018, the group was estimated to have stolen a staggering $571 million in cryptocurrencies since early 2017 and was accused of involvement in the industry record-breaking $532 million NEM hack of Japanese exchange Coincheck.

This September, Anne Neuberger — director of the United States’ National Security Agency (NSA) Cybersecurity Directorate — singled out North Korea as being particularly creative in its cyber warfare strategy, pointing to the rogue state’s alleged use of cryptocurrency to compile funds for President Kim Jong-Un’s regime.

Coinbase CEO: Senate’s Pressure on Libra Association Is ‘Un-American’

Coinbase CEO: Senate’s Pressure on Libra Association Is ‘Un-American’

Coinbase CEO Brian Armstrong says the U.S. Senate’s action to pressure Libra participants is “very un-American.”

Coinbase CEO has criticized United States’ senators for asking Stripe, Mastercard and Visa to leave Facebook’s crypto project Libra.

“Something feels very un-American about this”

After U.S. Senators Brian Schatz and Sherrod Brown apparently pressured the payment giants to leave Libra, Brian Armstrong, co-founder and CEO of major U.S. crypto exchange Coinbase, called the action “un-American” in a tweet on Oct. 13.

Armstrong wrote:

“Something feels very un-american about this. Two senators writing to Visa, Mastercard, and Stripe to ask them to withdraw from Libra.”

Senators’ letter pushes payment giants to leave Libra

On Oct. 8, senators Schatz and Brown sent public letters to Stripe CEO Patrick Collinson, Mastercard CEO Ajaypal Banga and Visa CEO Alfred Kelly regarding their participation in Facebook-led stablecoin project Libra. 

In three separate letters, the senators have threatened the payment giants to enforce more regulatory scrutiny not only on Libra-related payment activities, but all their payment activities. The senators wrote:

“Facebook is attempting to accomplish that objective by shifting the risks and need to design new compliance regimes on to regulated members of the Libra Association like your companies. If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities, but on all payment activities.”

Senators cite child sexual abuse content reports on Facebook

In the letters, the senators have cited reports on Facebook’s alleged involvement in facilitating the distribution of child sexual abuse content as a reason to not trust the social media giant to lead an initiative like Libra. 

The senators claimed that 12 million out of the 18.4 million reports of child sexual abuse photos and videos over the world in 2018 were attributed to Facebook Messenger.

The letter reads:

“It is chilling to think what could happen if Facebook combines encrypted messaging with embedded anonymous global payments via Libra. Your companies should be extremely cautious about moving ahead with a project that will foreseeably fuel the growth in global criminal activity.”

Following the letters from the senators, Visa, eBay, Stripe and Mastercard announced that they are leaving Facebook’s Libra Association and its stablecoin project on Oct. 11. Another important payment processor, PayPal, officially withdrew from the association on Oct. 3.

As reported, Facebook CEO Mark Zuckerberg will testify before the House of Representatives Financial Services Committee on Oct. 23 regarding the proposed Libra stablecoin project.

Italian Banks Successfully Test Data Reconciliation Via Blockchain

Italian Banks Successfully Test Data Reconciliation Via Blockchain

The reconciliation data of an entire year of Italian banking activity on a blockchain platform, announced the local banking association.

The Italian Banking Association (ABI) successfully processed the reconciliation data of an entire year of local banking activity on a blockchain platform.

The association announced the successful test of the Spunta Project’s system in a press release published on Oct. 12. The successful test of the framework has been first announced by Italian media at the end of September though with little details. 

Platform viability has been demonstrated

Now ABI reveals that the test has seen 200 million data entries being processed by the blockchain banking reconciliation system, effectively simulating one year of Italian banking activity. 

The successful test allegedly demonstrates the sustainability of the verification procedure and the platform itself.

The data has been introduced to the platform through 35 nodes distributed throughout Italy. Eighteen Italian banks — comprising 78% of the country’s banking workforce — are part of the project.

Implementation to come in 2020

The recently amended banking agreements will reportedly allow for the system to be implemented by March 1, 2020. As Cointelegraph reported, ABI first announced the intention to deploy blockchain technology in mid-June. 

The Spunta Project is coordinated by the association’s research organization, ABI Lab, and sees participation from system integration firm NTT Data, decentralized data storage platform Sia and enterprise blockchain firm R3 with its Corda network.

Kik Announces It’s ‘Here to Stay’ in Apparent Reversal of Fortunes

Kik Announces It’s ‘Here to Stay’ in Apparent Reversal of Fortunes

Social media and messaging app Kik has revealed it’s “here to stay,” in an apparent reversal of earlier plans to shut down amid legal difficulties.

Canadian social media and messaging app Kik has revealed it’s “here to stay,” in an apparent reversal of earlier plans to shut down amid legal difficulties.

In an official tweet posted on Oct. 13, the company announced:

“Great news: Kik is here to stay!!!!AND there’s some really exciting plans for making the app even better. More details coming soon. Stay tuned.”

“More soon” and “stay tuned”

As previously reported, Kik had been embroiled in a costly legal battle with the United States Securities and Exchange Commission (SEC) over its initial coin offering’s designation, with the regulator suing the company for having conducted an allegedly unregistered $100 million token offering.

Having pared down its workforce from 151 to just 19 and mulled a complete shutdown — according to a blog post from CEO Ted Livingston late last month —  the company closed the Kik X beta platform on Sept. 27. 

Yet the first hint of a turn in fortunes emerged on Oct. 7, when Livingston tweeted:

“Some exciting news: we may have found a home for Kik! We just signed an LOI [letter of intention] with a great company. They want to buy the app, continue growing it for our millions of users, and take the Kin integration to the next level. Not a done deal yet, but could be a great win win. More soon” 

Down to the bone 

With further details of the game-changing deal still to be announced, Kik’s apparent decision to close had meanwhile been harshly criticized among community members. The Kin cryptocurrency has also seen a steady decline — no doubt in part due to broader market conditions, yet unlikely helped by the company’s seemingly intractable difficulties.

Kin token 3-month chart, as of Oct. 14, 2019

Kin token 3-month chart, as of Oct. 14, 2019. Source: Coin360

As reported, at the peak of the firm’s stand-off with the SEC, Livingston had pledged to fight the SEC until we don’t have a dollar left.”

Report: Telegram’s ‘Force Majeure’ Clause Curbs Investor Compensation

Report: Telegram’s ‘Force Majeure’ Clause Curbs Investor Compensation

Telegram’s pledge to return money to investors in the event of a delay to the launch of its blockchain network may be superseded by a “force majeure” clause in its purchase agreement.

Telegram’s pledge to return money to investors in the event of a delay to the launch of its blockchain network may be superseded by a “force majeure” clause in its purchase agreement.

As an Oct. 14 report from Russian media agency the Bell emphasizes, the force majeure clause — which encompasses natural disasters, terrorist threats and the eruption of war — also includes legal or regulatory actions on the part of the authorities.

Following an abrupt move by the United States Securities and Exchange Commission (SEC) to declare that the $1.7 billion initial coin offering (ICO) for the Telegram Open Network (TON) was illegal, this could mean that Telegram will not be required to return money to its investors, even should it choose to postpone the network’s launch.

“Force Majeure”

As Cointelegraph has previously reported, a leaked purchase agreement for TON’s native Gram tokens indicated that if the network would not be launched by Oct. 31, 2019, token contracts would be deemed null and void and investors would be paid a termination sum denominated in U.S. dollars, unless otherwise agreed by the involved parties. 

Beneath this pledge, the force majeure clause then clearly states that Telegram “shall not be liable or responsible to the Purchaser […] for any failure or delay” in circumstances that include:

“(d) applicable law or regulations; (e) action by any Governmental Authority.”

SEC concerned about sale of Grams on open US market

In February 2018, Telegram’s creators had filed a “Notice of Exempt Offering of Securities” — also known as a Form D — with the SEC for the first round of its offering, followed by a second such notice in March.

The specific exemption used by Telegram, Form D 506(c), had authorized the offering to be exclusively sold to accredited investors. 

However, in its choice to pursue stringent action against the firm, the SEC expressed concern that “once Telegram delivers the Grams to the Initial Purchasers” — i.e. the accredited investors — “they will be able to resell billions of Grams on the open market to the investing public.”

As reported, TON’s developers have outlined in a letter to investors that they are assessing the best ways to respond to the agency’s action in the interests of relevant parties, including but not limited to evaluating whether to delay the network’s launch date. They said:

“We were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances, and we disagree with the SEC’s legal position.”

In addition to declaring the token offering illegal, the SEC has also issued a temporary restraining order on the issuance of Gram tokens, with a court hearing scheduled for Oct. 24.

Bitcoin Price: Sudden Sunday Drop Has Analysts Eyeing $7.8K Support

Bitcoin Price: Sudden Sunday Drop Has Analysts Eyeing $7.8K Support

A test of resilience for Bitcoin price now revolves around an area with $7,400 as its bottom, one market analyst suggests.

Bitcoin price (BTC) returned to sideways trading on Oct. 14 after a sudden dip on Sunday evening saw markets lose 2% in minutes.

Cryptocurrency market daily overview

Cryptocurrency market daily overview. Source: Coin360

Bitcoin claws back lost ground

Data from Coin360 showed the largest cryptocurrency fluctuating around $8,300 at press time, having made up some of the ground lost during the downturn.

BTC/USD spent much of the weekend grinding upwards, reaching local highs of $8,460 before dramatically reversing to bottom out at $8,200 minutes later.

Since then, a slow recovery has been underway, paring 50% of the losses.

Bitcoin seven-day price chart

Bitcoin seven-day price chart. Source: Coin360

The behavior mimics multiples occasions in recent weeks and months, during which Bitcoin punctuated periods of flat activity with sudden volatility either up or down. 

Various theories blamed traders and institutional investor settlements for the erratic behavior. This time, analysts told Cointelegraph, it was likely combined selloffs by significant bagholders, which triggered the momentary market slump.

For regular Cointelegraph contributor filbfilb, the short-term performance of Bitcoin revolves around whether support above $7,800 holds. The weekend uptick fizzled when it encountered Bitcoin’s 200-day moving average.

“If this thing really is bullish I don’t really want us to lose the lows on this wick from last night,” he told subscribers of his dedicated Telegram trading channel about Sunday’s dip.

Fellow contributor Michaël van der Poppe held similar feelings. For him, an area near $7,400 remained crucial.

“Overall not the worst,” he summarized on Twitter.

Altcoins see a glimpse of promise

For altcoin investors, the picture was one of rare contrast to Bitcoin, with many assets making modest gains overnight. 

Ether (ETH), the largest altcoin by market cap, began the week up 0.8% to just over $183. 

Ether seven-day price chart

Ether seven-day price chart. Source: Coin360

Others put in a stronger performance, with XRP up 4.3% to $0.29, and Binance Coin (BNB) gaining 3% to pass $18 per token. 

By contrast, Bitcoin SV (BSV) fell 3.5% to $86 over the same period. 

The overall cryptocurrency market cap was $226.1 billion at press time, with Bitcoin’s share at 66.4%.

Keep track of top crypto markets in real time here

Crypto IRS Audits: Hire Professionals or Do it Yourself?

Crypto IRS Audits: Hire Professionals or Do it Yourself?

The IRS is hunting crypto user identities. If you are audited, should you hire a professional or do it yourself?

Do it yourself or outsource it? Rightly or wrongly, most people seem to fear the IRS, and an IRS audit can be daunting, even if it is entirely by correspondence. Most considerations are arguably the same in many different kinds of tax audits. However, crypto tax matters can be even more sensitive than many others. One reason is return filings and records. 

Let’s face it, many crypto investors have not been exactly scrupulous about filing taxes on time, reporting consistently, and keeping good records. After all, doing all of that isn’t easy, although it has gotten easier over the last year or two. 

Related: The IRS Is Blindly Coming After Cryptocurrency Traders — Here’s Why

Another reason is the IRS focus on crypto. The IRS has said that virtual currency is an ongoing focus area for IRS criminal investigations, following its announcement on a Virtual Currency Compliance campaign to address tax noncompliance related to the use of virtual currency through outreach and audits. For some time now, the IRS has been hunting crypto user identities with software too. The IRS keeps stressing noncompliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits to criminal investigations. 

A wake-up call

Remember the IRS summons for John Doe to get Coinbase user accounts? More of those could be coming. More recently, the IRS sent thousands of letters to people with virtual currency transactions stating that they may have failed to report income or pay taxes properly. The IRS says it identified these targets through various IRS compliance efforts. IRS Commissioner Chuck Rettig seems to think this should be a wake-up call, and a warning. 

The most frightening part of the IRS is the Criminal Investigation Division, although its involvement in an audit is rare. Even so, it is important to have a sound understanding of how criminal tax issues arise, so you can be prepared. Many people are surprised to learn that the vast majority of IRS criminal tax cases arise because of so-called “referrals” from the civil division of the IRS. 

It happens from plain civil audits and civil IRS collection activity. One IRS Agent spots or hears something fishy and passes it on. It can start innocuously. During the course of an audit or a tax collection matter, a civil IRS auditor discovers something that seems odd and refers it to the Criminal Investigation Division. You may not even know that you are being investigated. Of course, many investigations do not lead to prosecutions. However, if you are contacted by the IRS Criminal Investigation Division, whether as a target or as a witness, you should politely decline to be interviewed. Refer them to your lawyer.

Related: IRS Expands Penalties: Which Tax Mistakes Are Better Not to Commit

Many people think that cryptocurrency could be the next big thing for the IRS, which has been training its criminal agents for Bitcoin and other virtual currencies — and that should tell you something. If the IRS is suspicious, they can require you to produce records, even ones that may incriminate you. With offshore bank accounts, the IRS refined this technique by seeking a grand jury subpoena to produce your offshore bank records. 

Many Americans have a knee-jerk reaction to this. “Just take the Fifth,” lawyers tend to say. The Fifth Amendment says you cannot be forced to incriminate yourself. However, the IRS can make you produce these required records even if they will incriminate you. You may be able to refuse to speak under the Constitution, but sometimes, you cannot refuse to produce certain records. 

Getting professional help vs. DIY

To return to more normal tax audits and notices, if the IRS audits you or has begun sending you notices and so on, should you handle it yourself or get professional help? The answer can vary, but getting help is often the wiser path. If the IRS visits you in person, hire a lawyer. No personal visit should be taken lightly. You have no legal obligation to talk to the IRS, whether it is the civil or the criminal part of the IRS contacting you. Politely tell them that your lawyer will contact them, and ask for their business card.

It is unlikely that the IRS will push you to talk after you say this.  But even if they do, politely decline. Even if the IRS says you are just a witness and that it is someone else they are pursuing, you do not have to talk. Besides, who is a witness and who is a target of an investigation can be quite fluid — it can and does change. Written notices and other materials are obviously considerably less threatening. However, even if the query or audit is all in writing, most people feel a chill when dealing with the IRS. 

You might receive a letter from the IRS asking about some aspect of your tax return. You might want to handle it yourself — but be cautious and reflective if you do, especially in more serious matters. The point at which you may need a representative is often early. In fact, some taxpayers spend large sums with tax professionals precisely because they initially tried to handle the case themselves. Sometimes, you can dig a hole that runs deeper than if you had handed the case to a professional from the start.

One reason to have a tax lawyer or accountant handle your audit is to get some distance. Even in a civil audit, talking to the IRS can be dangerous and can put you in a disadvantageous position. The IRS may ask you about things you don’t want to answer, but not answering is awkward if you are handling it yourself. Having a representative means you will have time outside the IRS presence to prepare appropriate responses that put the issues in the best possible light.

Some taxpayers even represent themselves beyond an audit at the IRS Appeals Division or in the United States Tax Court, although many of those cases seem to be poorly handled. Even the once-famous lawyer, F. Lee Bailey, represented himself in the U.S. Tax Court in a $4 million dispute with the IRS. Bailey won one issue but lost most of them, including claimed loss deductions for his yacht. Worse, the court approved significant negligence penalties against him that he probably could have avoided with tax counsel. Seeing to your own case clearly isn’t easy, but it usually pays to hire someone to handle it.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. This discussion is not intended as legal advice.

Robert W. Wood is a tax lawyer representing clients worldwide from offices at Wood LLP, in San Francisco. He is the author of numerous tax books and writes frequently about taxes for Forbes.com, Tax Notes and other publications.

BMW, General Motors, Ford to Start Testing Blockchain Payments in Cars

BMW, General Motors, Ford to Start Testing Blockchain Payments in Cars

Tests of a blockchain car identification and payment system deployed by automakers Renault, BMW, General Motors, Ford and Honda will start next month.

Five major automakers — BMW, General Motors, Ford, Renault and Honda — will start testing a blockchain car identification and payment system next month in the United States.

Automakers envision self-paying cars, digital IDs

Nikkei Asian Review reported on Oct. 14 that the partnership aims to test the vehicle ID system developed under the Mobility Open Blockchain Initiative. As part of the project, cars are assigned digital IDs linked to ownership, service history and a wallet allowing the vehicle to automatically pay fees without specialized hardware.

The alliance reportedly envisions the system being applied to connected electric vehicles so tolls, maintenance and rest stop purchases, for example, can be recorded and paid automatically when the car is plugged in to charge its battery.

Mercedes also testing blockchain transactions in cars

In September, Mercedes-Benz parent company Daimler AG and mechanical engineering firm Dürr AG have conducted a pilot transaction on blockchain software firm R3’s Marco Polo trade finance network. 

In August, the automaker also tested blockchain-based machine to machine payments with trucks in partnership with Frankfurt bank and Commerzbank.

As Cointelegraph reported in September, Indian automobile manufacturer Tata Motors wants to integrate blockchain solutions into its internal processes as part of a newly launched program for startups. Blockchain-based solutions envisioned by the firm include a parking marketplace, demand prediction algorithm and real-time monitoring of fuel quality.

Sudden Cyworld Shutdown Puts Clink Crypto Investors at Risk: Report

Sudden Cyworld Shutdown Puts Clink Crypto Investors at Risk: Report

South Korean social media platform Cyworld has shut down operations prompting concerns about the future of its Clink cryptocurrency.

South Korea’s Cyworld social media platform shuttered its services on Oct. 1 without giving any prior notice, English-language local media The Korea Times reported on Oct. 14. What’s more, the website for its Clink (CKCT) crypto-asset has also become inaccessible.

In response to the news, local cryptocurrency exchanges supporting Clink, namely CoinZest and BitSonic, are now considering delisting the token. Moreover, some investors who bought Clink are reportedly considering filing a lawsuit against Cyworld and its CEO, Jeon Jae-wan.

Great losses are expected for investors

Unspecified industry officials reportedly estimate Clink investors to lose least 1 billion won (about $844,000) if the company does not set things straight. 

Twenty-four million units of the crypto asset were sold at 26 won per unit ($0.022) in an Initial Exchange Offering conducted on CoinZest on Jan. 11. Collectively 480 million won ($405,000) worth of Clink has been sold.

Since then, Clink’s price has crashed 96% to 0.7 won on CoinZest, while being traded for 0.19 won on BitSonic as of Oct. 14. 

According to The Korea Times, the company has seen a massive exodus of employees in the second half of this year when it delayed paying them since the end of 2018 after its newly launched online news service QUE failed to attract users.

Cyworld was a popular social media platform until the mid-2000s, having about 13 million users in 2005 according to The Age. Per the report:

“Almost every South Korean in their 20s has been a subscriber to the site, according to the president of SK Communications, Yoo Hyun-oh, who owns it.”

Litecoin Turns 8 — Charlie Lee Says Foundation Not Near Bankruptcy

Litecoin Turns 8 — Charlie Lee Says Foundation Not Near Bankruptcy

As Litecoin celebrated its eighth birthday on Oct. 13, its founder Charlie Lee fended off criticism about LTC and the Foundation’s finances.

As Litecoin (LTC) celebrated its eighth birthday on Oct. 13, its founder Charlie Lee had to fend off crypto Twitter’s FUD — fear, uncertainty and doubt — about the altcoin.

Lee’s original post was the exuberant announcement that:

“Litecoin network has been up and running continuously for the past 8 years with zero downtime. And in that span of time, over $500,000,000,000 worth of LTC have been transacted. Looking forward to the next 8 years and more! ”

“We have enough money to last 2 years”

The first response to the birthday post immediately raised the specter of bankruptcy allegations, to which Lee robustly retorted:

“It’s [the Litecoin Foundation] not near bankruptcy. Don’t listen to stupid fud and lies. We have enough money to last 2 years.”

The allegations were sparked by a TrustNodes report last week that claimed the Foundation was down from $1 million in income in 2018 down to negative $70,000 by 2019.

At the time, Lee had responded to the report with a statement that the Foundation had an estimated 1 to 2 years’ runway — with around $200,000 in its coffers. 

He added that the company’s financial prospects would also be guided by the outcome of the forthcoming Litecoin Summit, to be held at the end of October in Las Vegas.

Speakers will include high-profile industry figures such as Morgan Creek Digital Assets founder and podcast host Anthony Pompliano, Wyoming Blockchain Task Force president Caitlin Long, and the co-founder and former CEO of BTCC exchange Bobby Lee, among others.

Bitter accusations amid the birthday cheer

With Litecoin trading at roughly $57 as of press time, the altcoin is down almost 60% from its 2019 highs this June — reflecting the wider cooling of the crypto markets.

Lee himself had famously sold and donated all his LTC holdings back in Dec. 2017 — at the peak of the crypto markets’ historic bull run: a decision he explained as motivated by a desire to avoid any conflict of interest and a step toward the thorough decentralization of the network.

While some crypto Twitterers’ appeared bitter about Lee’s move to sell at peak prices, others defended Lee, pointing to the founder’s role in warning others against overheated trading as he anticipated a “multi-year bear market” would set in following Dec. 2017.

Growth of BTC Millionaires Now Matches Bitcoin’s Early Years: New Data

Growth of BTC Millionaires Now Matches Bitcoin’s Early Years: New Data

Bitcoin wallets containing more than 1,000 BTC are now increasing at a rate seen only before the Mt. Gox collapse.

The number of Bitcoin (BTC) addresses containing more than 1,000 BTC ($8.3 million) is growing at the same pace in 2019 as before 2014, new data shows.

Woo “super bullish” on wallet trend

Uploaded to social media by Bitcoin statistician Willy Woo on Oct. 11, a chart of Bitcoin address growth by balance shows the network is now repeating a trend from its earliest years.

Addresses by Balance

Source: charts.woobull.com

“The rate of growth of 1000BTC addresses now matches the early growth in Bitcoin’s network,” he summarized.

Woo was expanding on original data from blockchain analysis resource Glassnode

According to him, fresh desire for major Bitcoin balances at vastly higher prices than five years ago speaks to wealthier individuals coming into the space.

If those generating addresses with over 1,000 BTC at that time were doing so out of technical curiosity, the incentives in 2019 are purely financial. Woo concluded:

“IMO we’re likely in a new renaissance of Bitcoin, this one is powered by capital influx of high net worth investors, while the early one was from the tech savvy who were bootstrapping the network. Super Bullish.”

Bitcoin rich list highs

The data suggests the trajectory of balances topping 1,000 BTC picked up at the start of 2019 after a period of flat growth, which began in late 2013 just prior to the implosion of major exchange, Mt. Gox.

As Cointelegraph reported last month, the number of addresses containing more than $100,000 has also hit an all-time high. 

At press time, 3,070 address held more than 1,000 BTC each, representing just 0.01% of the total, according to BitInfoCharts’ Bitcoin Rich List. It should also be noted that many of the richest addresses — specifically the top four — belong to exchanges such as Binance, which hold Bitcoins belonging to millions of users.

Dutch Central Bank: World Will Need Gold if Entire System Collapses

Dutch Central Bank: World Will Need Gold if Entire System Collapses

The Dutch central bank raised eyebrows by admitting fiat could fail and society would then need actual sound money to survive.

Fiat money will become inferior to gold in the event of a total collapse of the world’s financial system, one of Europe’s central banks has said.

Gold will rescue the economy from “collapse”

In comments which have caught critics of fiat by surprise, the Dutch Central Bank, known as De Nederlandse Bank (DNB), said gold would be indispensable in the event of a fiat meltdown.

Retweeted on social media on Oct. 13, a statement from the bank’s website describes gold as “the trust anchor for the financial system.” 

“If the entire system collapses, the gold stock provides a collateral to start over. Gold gives confidence in the power of the central bank’s balance sheet. That gives a safe feeling,” it continues.

Sound arguments

While it is known that central banks have begun buying up gold since the 2008 financial crisis, it is the DNB’s phrasing that has excited Bitcoin (BTC) proponents in particular. 

As a form of sound money with the highest stock-to-flow ratio of any commodity, gold previously ensured the sound functioning of economies before governments uncoupled their national currencies from its backing over the last century. 

Since then, as Saifedean Ammous noted in his popular book, “The Bitcoin Standard,” telltale signs of decay have plagued most countries’ economies.

Central banks, notionally in charge of fiat currencies, use interventions to manipulate their supply artificially, something which is all but impossible to do with gold due to its stock-to-flow ratio. 

This championing of the precious metal’s qualities over paper money thus did not go unnoticed among Bitcoin figures.

“It’s an established central bank! Speaks to the times we live in,” Gabor Gurbacs, digital asset manager at VanEck, tweeted in response to DNB.

He continued:

“I firmly believe that private/non-sovereign moneys have a place in our world. Private moneys should be allowed to compete in the free market with central bank moneys.”

Novogratz: Current economic climate bullish for decentralized “digital gold”

Later, serial investor Mike Novogratz struck a similar tone, telling CNN that both gold and Bitcoin, as sound money, would benefit from current fiat trends.

“We’ve got geopolitical uncertainty, we’ve got negative rates; it’s all bullish for gold and bullish for Bitcoin,” he said in an interview on Oct. 11.

Not everyone agrees, however. As Cointelegraph reported, Apple CEO Tim Cook claimed earlier this month that only governments should control money.

He was speaking within the context of the ongoing difficulties Facebook is encountering with the release of its planned digital currency, Libra. Apple, he said, would not seek to follow its lead.

Around the same time, Germany’s finance minister likewise said that states should be in control of monetary activities.

Past utterances from the DNB meanwhile have dismissed cryptocurrencies, claiming they do not fulfill the functions of money at all.

Crypto ‘Sextortionists’ Turn to Litecoin to Avoid Detection: Report

Crypto ‘Sextortionists’ Turn to Litecoin to Avoid Detection: Report

Litecoin and other alts are becoming increasaingly prevalent among crypto “sextortionists” since they allow to avoid detection more easily, a new research says.

Litecoin (LTC) and other alts are becoming increasingly prevalent among crypto “sextortionists” since they allow to avoid detection more easily, a new research says.

According to cybersecurity firm Cofense’s new report published on Oct. 8, malicious actors are gradually starting to shift their focus from Bitcoin (BTC) to specifically avoid detection by specialized email filters. The report states:

“As enterprises began writing detection rules to block those emails, threat actors modified the text by replacing it with an image, which prevented key words from being identified by Secure Email Gateways (SEGs). The bitcoin address was left as a plain text string in the email, so it could be easily copied.” 

Compromising browser history as leverage

Per the report, perpetrators of “sextortion” usually claim that they have installed some kind of spying malware on potential victims’ devices and gained access to allegedly compromising browsing history and webcam footage.

In the past, scammers usually demanded ransom in Bitcoins — threatening to release damaging information to family, friends and co-workers of the victim. Malicious actors’ claims were further solidified by the fact that they often had access to recipients’ emails from password breach lists which sometimes include passwords to lend authenticity, the report states.

According to Cofense, contemporary email filters are forcing scammers to search for other means of ransom delivery such as Litecoin and other cryptocurrencies, adding:

“This latest sextortion version is using a Litecoin wallet address instead of bitcoin to evade detection. Previous iterations showed a gradual shift away from identifiable patterns and to alternative crypto currencies, in an attempt to foil SEG bitcoin-detection rules. The current emails appear to be crafted to contain very few searchable word patterns.” 

Large variety of crypto assets on demand

It is also noted that scammers will most likely continue switching their chosen means of crypto payments, although they are somewhat limited by any given coin’s availability on major exchanges, the report claims:

“While there are thousands of crypto currencies, only a dozen or so are easily attainable from large exchanges. For the scam to work, the recipient needs an easy way to acquire the requested payment method.”

In conclusion, Cofense states that in most cases users can safely ignore ransom and phishing emails, noting that “if threat actors actually had such access and data, they would include stronger proof.”

As Cointelegraph reported on Sept. 27, scammers asked British citizens for nearly $2.5 million in Bitcoin, claiming that the funds will be spent to maintain the local economy after Brexit.