Category Archives: Bitcoin
Ban All Ransomware Payments, in Bitcoin or Otherwise – CoinDesk – CoinDesk
We all know its illegal to kidnap someone and ask for a ransom payment. But should it also be illegal for the victim to pay the ransom?
Earlier this month the U.S. Treasury Department did just that. It notified the world that certain ransom payments are illegal, specifically those to sanctioned ransomware operators. Should a victim pay a ransom to a sanctioned entity, that person may face a big fine.
J.P. Koning, a CoinDesk columnist, worked as an equity researcher at a Canadian brokerage firm and a financial writer at a large Canadian bank. He runs the popular Moneyness blog.
Punishing ransom victims seems heartless. But it may be one of the best ways to protect the public from extortionists. And if it wants to make a serious dent in the growing ransomware market, the Treasury Department will have to go much further than putting a few entities on its sanctions list.
On Oct. 1, the U.S. Treasurys Office of Foreign Assets Control (OFAC) published a notice reminding everyone that several ransomware operators have been put on OFACs list of sanctioned entities, otherwise known as its Specially Designated Nationals (SDN) List. The agencys letter clarifies that should a victim make a ransom payment to an OFAC-sanctioned ransomware operator, that person could be breaking the law.
The ransomware wave
Ransomware is malicious software that blocks access to a computer system by encrypting data. Once the data is locked, the ransomware operator demands the victim pay a ransom in exchange for a decryption key.
The emergence of bitcoin, a digital, uncensorable asset, has made it particularly easy for ransomware operators to profit from their attacks. The earliest bitcoin ransomware strains targeted regular consumers with $300 or $400 ransoms. In 2019, operators like Sodinokibi, Netwalker and REvil began to move on to attacking corporations, municipal governments, school boards and hospitals.
The ransoms have gotten much larger. This summer, the University of Utah paid $457,059 in bitcoin for a decryption key. CWT, a travel company, paid $4.5 million to Ragnar Locker ransomware operators in July. The list of victims grows longer by the hour.
The damage involves more than just the ransom fee. Many organizations bravely refuse to give in to the ransomware operators demands. Rebuilding their network often costs more than the actual ransom payment. The crippled system will likely remain down for days, even weeks. The Government of Nunavut, a Canadian territory, couldnt serve citizens for almost a month after it refused to pay Dopplemayer ransomware operators.
A collective action problem
Societys response to ransomware is an example of a collective action problem. The public would be better off if everyone cooperated and refused to pay money to ransomware operators. With no incoming ransom income, the ransomware business would be unprofitable, attacks would cease and the collateral damage would stop.
Unfortunately, spontaneous cooperation between thousands of corporations, governments, and nonprofits is difficult to achieve. Any attempt to boycott ransom payments must rely on appeals to solidarity. But organizations will face pressure from shareholders or citizens to recover as quickly as possible, and so they will secretly pay. If 10% or 20% of victims defect from the boycott and pay the ransom, then the ransomware industry will be profitable and so everyone suffers as the blight continues.
Banning ransomware payments may not be the perfect option for stopping the growing ransomware wave, but it may be the best option weve got.
One way to fix the collective action problem is for the government to help push the public towards the best solution. The government can do this by declaring ransom payments illegal, and setting a penalty for rule breakers. The punishment for breaking the law would be a $20 million fine, or something like that.
Now when a ransomware operator attacks, all the victims cooperate by default. No, we cant pay you. If we do, well have to pay an even larger fee to the government. Ransom payments will stop, ransomware operators will cease their attacks and the damage ends.
The market for bribes as an analogy
Using the government to arrive at the best solution to a collective action problem isnt without precedent. Another type of shady payment, the payment of bribes, provides a useful analogy.
If companies must habitually bribe foreign government officials for contracts, then that drives up the costs of doing business. The public would be better off if everyone refused to pay a bribe. But cooperation is difficult.
Until the 1970s and 80s, foreign bribes were valid tax deductions in many countries. But efforts like the U.S.s Foreign Corrupt Practices Act of 1977 (FCAP) made it unlawful to bribe foreign government officials. Multinationals can now push back against bribery requests by pointing to FCAP. This helps push society arrive at the no-bribe solution.
The U.S. Treasurys recent clarification about the illegality of certain ransom payments only goes part of the way. It prohibits payments to a few bad actors, but there are many ransomware operators that do not appear on OFACs SDN list. To help solve the collective action problem, OFAC would have to be more proactive in designating ransomware operators.
Sussing out the names and identities of all the producers and distributors of ransomware seems like an impossible task, however. It would be much easier to declare a blanket ban on all ransomware payments, just as how FCAP bans bribery. Ransom bans arent without precedent. In response to a wave of kidnappings by organized crime, Italy prohibited ransom payments in 1991. Colombia and Switzerland have also made ransom payments illegal. The Group of Seven has a long-standing policy of refusing to pay ransoms for hostages of terrorist groups.
The knock against prohibiting either bribes or ransom payments is that it forces the market to become more opaque. If it is legal to make a bribe, then the bribe payer can report the bribe taker. This serves to limit the market for bribes. Ban bribes and the bribe payer is incentivized to cooperate with the bribe taker to keep things secret.
This is why Kaushik Basu, the former chief economist at the World Bank, has long advocated for legalizing bribe payments.
As for ransomware, victims who pay a ransom can report the attack to law enforcement agencies like the Federal Bureau of Investigation without fearing a fine. This allows the FBI to follow up. But if it is illegal to pay a ransom, then victims that choose to pay will keep their actions a secret. Lacking accurate data, the FBI will do a poorer job of defending against ransomware.
The other knock against banning ransomware payments is the perceived inhumanity of it. Try telling a mother or father that it is illegal for them to pay a ransom to free their kidnapped child. The same goes for ransomware. A school board that has been crippled by ransomware can immediately resume classes by paying a $20,000 bitcoin ransom. But under a prohibition, children may have to go a week or two without classes as the school board rebuilds its systems.
There are also civil liberties concerns. Businesses will argue that a ban on ransoms infringes on their ability to control their property.
Bitcoin isnt Green Dot
When extortionists find profitable ways to bilk the public, one way to fight them is to make changes to the underlying payments platform that the scammers are using. Internal Revenue Service scammers converged on Green Dot MoneyPak cards in the mid 2010s as a useful way to extort innocent Americans. The chosen solution wasnt to tell victims that paying ransom was illegal. Rather, Green Dot Bank pulled the product for a year and reprogrammed it. And it worked. Criminals have moved on from using MoneyPaks to do IRS scams.
Unlike MoneyPaks, bitcoin cant be reprogrammed. That leaves society with one less option for protecting itself from ransomware attacks. And so the no payment solution to the collective action problem beckons. Banning ransomware payments may not be the perfect option for stopping the growing ransomware wave, but it may be the best option weve got.
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Ban All Ransomware Payments, in Bitcoin or Otherwise - CoinDesk - CoinDesk
World Gold Council Survey Shows Cryptocurrency Investment the 5th Most Popular in Russia – Bitcoin News
According to a recent research survey, cryptocurrency investment is a touch more popular than gold in Russia. An organization called the World Gold Council surveyed 2,023 investors and cryptocurrency turned out to be the fifth-largest investment next to gold.
The World Gold Council (WGC) is considered an authority on the gold industry as the market development organization works with all types of industry leaders in the precious metals field. WGC also manages the very popular web portal gold.org and it often publishes research studies concerning safe-haven investments.
Just recently, WGC published a report concerning gold investments in Russia and the study also touched upon cryptocurrency investments as well.
The WGC surveyed 2,023 Russian investors that stem from all around the country. 68% of the surveyed participants said gold is seen as an effective store of value.
Most Russian investors believe [gold] holds its long-term value and protects against currency and inflation fluctuations, the WGC study details. In a chart that highlights the investments in Russia over the past 12 months, cryptocurrency investment vehicles represent a higher percentage than gold.
Cryptocurrency is listed as the fifth-most popular investment vehicle with a percentage rating of around 17%. Meanwhile, gold is roughly 16% among the 2,021 WGC survey participants.
Ahead of cryptocurrency investments include things like savings accounts, foreign currencies, real estate, and life insurance respectively. Below cryptocurrencies and gold on the WGC list are investments like collectibles, gold coins, stocks, and government-issued bonds.
Additionally, the WGC authors wrote that crypto investment is taking place in Russia even though regulations are quite gray in the region.
The rise of cryptocurrencies demonstrates that there is a desire for choice and appeal among retail investors. As the Russian investment market takes shape, opportunities for different investment products will emerge and gold will need to respond, the WGC authors said.
What do you think about the WGC report which shows cryptocurrencies as being Russias fifth-most popular investment? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, WGC report
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Ethereum Q3 Volume Dwarfs Bitcoin’s, Fueled by DeFi – Decrypt
In brief
The Ethereum blockchain is now processing more than twice the daily transaction volume of the Bitcoin blockchain, riding a massive wave of growth in stablecoins and the DeFi apps that use them.
A new report from crypto research firm Messari on Q3 activity in DeFi and stablecoins has revealed that the current rolling 30-day average for Ethereum is around $7 billion; Bitcoins is under $3 billion.
If current rates hold, Ethereum is on track to see more than $1 trillion in annual transaction volume, a major reversal from 2019, when Bitcoin transaction volume was more than double that of Ethereum.
Though Bitcoins price has climbed over the last three months from the mid-$9,000s to above $13,000, Bitcoin volume has remained mostly steady since October 2019, indicating that attention has shifted toward Ethereums unstoppable decentralized application platform, and away from the more straightforward store of value utility offered by Bitcoin as digital gold.
The Messari report pegs the impressive growth in Ethereums transaction volume on the accelerated use of stablecoins, most commonly used in interactions with DeFi applications. DeFi stands for decentralized finance, a group of blockchain-based applications running primarily on the Ethereum chain. DeFi apps use automatically executed blocks of code known as smart contracts to perform financial operations like issuing loans or generating interest on user deposits.
Many DeFi loans are issued in stablecoins, or crypto tokens pegged to an asset such as the US dollar; doing so makes financial reckoning more compatible with existing calculations on aspects like interest rates or liquidity ratios.
Most stablecoin loans are issued with cryptocurrency holdings put up within DeFi apps as collateral, requiring the value of the underlying crypto assets to remain above a certain threshold to avoid a margin call, in which part of the crypto collateral is sold to pay off a portion of the outstanding loan.
Of all stablecoins, by far the most numerous is Tether, a centralized, at times controversial, dollar-pegged token with more than $16 billion currently in circulation. Its no surprise, then, that Messari research found Tether to be the most-transacted stablecoin in the crypto landscape. Tether, however, isnt just the most traded stablecoinMessari found that over the summer, it grew to surpass even Bitcoin with a rolling 30-day average transaction volume of nearly $3.5 billion.
DAI, a product of DeFi lending service MakerDAO, also had a strong Q3, growing its supply more than 600% from the start of July through September according to the Messari report.
Unlike Tether, which issues new Tether stablecoins in partnership with large-scale customers like crypto exchanges, DAI is generated through MakerDAO users taking loans against their crypto holdings in a decentralized system. DAI is thus more resistant to censorship or control by its issuing entity, but it also requires different incentives to keep the tokens stable at $1, like community-controlled interest rates.
While different stablecoins take different approaches to deliver security and utility to their users, its clear the emerging asset class will play a key role in the ongoing development of the crypto economy. Stablecoins could have the potential to crowd out cash as the best way to transact on a day-to-day basis, provided similar tokens distributed and controlled by national central banks dont eventually make them redundant.
As Ethereum transaction volume takes off, Bitcoins simple design could hold the original cryptocurrency backor it could just as likely follow the DeFi herd, as cross-cross chain transfers that allow access to Bitcoin value in DeFi apps become increasingly common.
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Ethereum Q3 Volume Dwarfs Bitcoin's, Fueled by DeFi - Decrypt
Crypto fans rejoice: Bitcoin rallies to the brink of $12,000 – Aljazeera.com
The worlds largest digital currency rose as much as 3.4 percent on Monday to about $11,835.
Bitcoins biggest rally in more than a week has pushed it to the brink of $12,000, a key level watched by chartists and technicians.
The worlds largest digital currency rose as much as 3.4% on Monday to around $11,835. Crypto fans are closely watching the $12,000 level as a major hurdle to cross before it can embark on a bigger rally.
The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital coins, also rose, gaining 4.5% at one point. Dash and Monero were among the biggestadvancers, each rising more than 5%.
On Monday, the International Monetary Fund hosteda virtual panelon cross-border payments and digital currencies which featured BIS General Manager Agustin Carstens as well as the Federal Reserve Chairman Jerome Powell, among others. Powell said the central bank is evaluating the costs and benefits of a digital currency but has not decided yet on whether to issue one. He also nodded to Facebook Inc.s Libra as a catalyst for focusing more attention on the issues.
The discussion at least partly helps explain Bitcoins move higher as it was closely watched by the crypto community, said Mati Greenspan, founder ofQuantum Economics.
Comments from Jerome Powell and the other participants made it clear just how far apart the various countries are when it comes to CBDCs, said Greenspan, referring to central bank digital currencies. Many on social media were quick to point out that a truly global and decentralized digital currency already exists.
The coins trading Monday also helped it buck a recenttrendof moving in tandem with U.S. equities, whereby it was often rising when they were and falling on risk-off days. The S&P 500 Index dropped as investorsweighedthe latest progress on a new government spending bill meant to help shore up the economy.
Many analysts remain bullish on the cryptocurrency, heartened by its limited supply and comforted by greater institutional acceptance in recent weeks. Square Inc., for instance, said earlier this month that it has made an investment of about $50 million in Bitcoin.
We see Bitcoin emerging as a relative oasis of calm and outperformance, wrote Mike McGlone, an analyst with Bloomberg Intelligence, in a note. There should be little doubt technology and digitization will continue advancing, yet Bitcoins supply will keep shrinking, supporting its price.
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Crypto fans rejoice: Bitcoin rallies to the brink of $12,000 - Aljazeera.com
187,000 BTC Drained: Over $2 Billion in Bitcoin Leave the Top Exchanges Since June | Exchanges – Bitcoin News
Cryptocurrency reserves held on digital asset exchanges have been dropping to new lows, as some of the top exchanges have seen significant bitcoin reserve balance drops. A few months ago trading platforms had a lot more bitcoin reserves on hand and onchain data shows a few exchanges have seen customers steadily drain 187,000 bitcoins ($2.1B) from exchange-owned cold wallets.
In February, Coinbase had 1 million bitcoin under management and today reserves are down over 9% as 92,000 bitcoin ($1B) has left the exchange. Today, according to Bituniverses online exchange balance rank tracker, the San Francisco trading platform has 908,560 BTC under management.
36,000 BTC ($408M) left Coinbase since news.Bitcoin.coms reserves report published on June 30, 2020. A number of top exchanges below Coinbase have also seen cold wallets drained during the last three months.
The second-largest exchange in terms of bitcoin reserves held is Huobi and the trading platform is down over 53,000 BTC ($601M) since June 30. Binances balances remained the same as the exchange holds 266,000 BTC today and three months ago, Binance held 269k BTC. Similarly, the fourth-largest reserve holder, Bitfinex, didnt see much movement in the last three months.
Three months ago, Okex had 240,000 BTC on hand but today, Okex only has 198,000 BTC in reserves. This means 42,000 BTC left Okex since June as 17.5% left the exchange in the last three months.
Statistics show out of the top five crypto trading platforms over 187,000 BTC ($2.1B) has left these exchanges since the June report.
Just recently, Bitmex had some legal troubles with the U.S. government and since the incident, a lot of bitcoin has left the derivatives exchange. Three months ago Bitmex had 224 BTC in reserves and today the exchange only has 113,000 in cold storage. Onchain data indicates Bitmex lost a whopping 49.55% in BTC reserves since June 30.
At the time of publication, Glassnodes Exchange Balance vs. Bitcoin stats show that theres 2.7 million BTC held on exchanges today. Glassnodes stats indicate that out of the 21 million BTC cap, exchanges hold 12.85% of all that will exist, and 14.59% of the 18.5 million BTC in circulation.
1.8 million BTC out of the aggregate 2.7 million BTC held on exchanges sits in the worlds top five crypto trading platforms. The top five custodial platforms by BTC reserve status include Coinbase, Huobi, Binance, Bitfinex, and Okex.
Exchange balances have been riding lower consecutively for the last 15 months and the last time balances were this low was around May 2019.
To many crypto enthusiasts and traders, the low balances on exchanges suggest users are storing assets in a noncustodial fashion as opposed to leaving funds with a third party. The data from Bituniverse and Glassnode also suggests that liquidity and selling pressure may lower.
What do you think about the low number of bitcoins held collectively on global exchanges today? Let us know what you think about this subject in the comments below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Bituniverse, Glassnode,
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
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187,000 BTC Drained: Over $2 Billion in Bitcoin Leave the Top Exchanges Since June | Exchanges - Bitcoin News
A Former Goldman Sachs Hedge Fund Chief Has Predicted Bitcoin Will Surge To $1 MillionHeres Why – Forbes
Bitcoin has found fresh support this year, bolstered by growing disquiet among investors over central bank and government stimulus measures.
The bitcoin price, up around 50% since January to $11,400 per bitcoin, has rallied in line with equity markets since a coronavirus-induced crash in March.
Now, after the bitcoin and cryptocurrency community was set alight by a bold $1 trillion prediction from a major Tesla TSLA investor last month, a former Goldman Sachs GS hedge fund manager has said the bitcoin price could hit $1 million in as little as five yearsa whopping 10,000% increase.
The bitcoin price has already surged so far this year--though something bitcoin proponents think it ... [+] could be poised to move much higher soon.
"I think [$1 million per bitcoin is] about right; whether its five years, six years," Raoul Pal, the founder and chief executive of Global Macro Investor, told Stansberry Research in a recent interview, published on YouTube.
"Just from what I know from all of the institutions and all of the people I speak to, there is an enormous wall of money coming into this," Pal said, pointing to "coming" improvements in "the pipes" that will allow investors to buy bitcoin as the driver behind the expected investment.
"Its on everybodys radar screen and theres a lot of smart people working on it," added Pal, who revealed he has now dedicated more than 50% of his portfolio to bitcoin.
Bitcoin has been pushed into the limelight in recent weeks by a number of high-profile companies investing in the cryptocurrency, with payments company Square SQ , led by Twitter TWTR chief executive and outspoken bitcoin advocate Jack Dorsey, buying $50 million worth of bitcoin1% of its cash reserves.
"My trading positions are relatively small, because I don't think there's as much opportunity as there is in bitcoin. So really, mainly, a bit of cash, some gold, and bitcoin," Pal said. "And I'm even toying with the idea of selling my gold to buy bitcoin, more bitcoin."
The bitcoin price has added some 40% over the last 12 months.
Meanwhile, other bitcoin and cryptocurrency proponents have also been out in force over recent weeks, talking up bitcoin's prospects.
"Investor activity is picking up considerably with various on-chain metrics and ongoingand heighteningglobal political, economic and social turbulence suggesting that there will be a [bitcoin] price surge before the end of the year," Nigel Green, chief executive of independent financial advisory deVere Group, said via email, pointing to "an avalanche" of interest in bitcoin in recent weeks from "household-name investors."
"Like gold, bitcoin can be expected to retain its value or even grow in value when other assets fall, therefore enabling investors to reduce their exposure to losses. Investors will increase exposure to decentralised, non-sovereign, secure digital currencies, such as bitcoin, to help shield them from the potential issues in traditional markets."
Earlier this month, another Goldman Sachs veteran, the former billionaire hedge fund manager-turned bitcoin and cryptocurrency investor Michael Novogratz, warned Goldman it will soon be scrambling to catch up with its head start in bitcoin and crypto.
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A Former Goldman Sachs Hedge Fund Chief Has Predicted Bitcoin Will Surge To $1 MillionHeres Why - Forbes
Bitcoin minings future is green, and Russia has the best chance – Cointelegraph
Last month, Chinese President Xi Jinping, declared that China has plans to become carbon neutral by 2060, calling for a green revolution.
If the plan is properly implemented, it could help China to finally shed its biggest-polluter status and significantly improve the global ecosystem, which could also drastically shake up the countrys eminent Bitcoin (BTC) mining industry.
The most well-known mining hub of China is the Southern province of Sichuan, which has an abundant hydroelectricity sector. However, the electricity there is especially cheap only during the wet season, which takes place between May and September. Outside of that period, most miners migrate up north to Xinjiang and Inner Mongolia, which currently generate over 40% of the total Bitcoin hash rate. Unlike Sichuan, however, those desert regions depend mainly on non-renewable sources of energy such as coal. If the government proceeds to push for net-zero carbon dioxide emissions, mining there will become inefficient, and local players will be left with much fewer options.
As the world has finally learned the hard truths of climate change and human-caused emissions of carbon dioxide, having constant access to renewable energy is going to become one of the most important factors in Bitcoin mining. But are there any locations that can cater to this requirement?
Lets take a look at the Bitcoin Mining Map that indicates a close estimate of the geographic distribution of the global BTC hash rate. China, of course, is the uncontested king, making up more than 65%. Following China are the United States, Russia and Kazakhstan, which are neck and neck at 7,24%, 6,90% and 6,17%, respectively.
The Commonwealth of Independent States, or the CIS region, which includes both Russia and Kazakhstan, seems to be particularly overlooked by international players, mostly due to a lack of information about local mining scenes.
Akin to Northern China, Kazakhstans electricity is produced mostly by coal power plants. Its cheap, but not sustainable. Also, the local government has been interfering with the electricity market by lowering tariffs and cost, meaning that they might eventually bounce back.
Russia, on the other hand, has lots of natural prerequisites for cheap renewable electricity, as well as a more stable economic environment.
If you ask me to name one thing that the Soviet Union was good at, Id say industrial infrastructure.
Most of Bitcoin mining in Russia takes place in the famous Siberian region, which has also been a key spot for aluminum production since the 1960s. Because energy is consumed at all stages in the production of aluminum, the USSR chose to build Siberian smelters along with hydropower plants (Russia hosts as much as 9% of the worlds hydro resources, mostly in Siberia and the far east).
Aluminum smelting technology has evolved since then, making production much more energy-efficient. That, along with the fact that the Soviet government often left room for future growth when building infrastructure, is the key reason why the region has so much excess power these days. According to RusHydro, the worlds second-largest hydroelectric power producer, the total installed capacity of hydropower units in Russia is currently approximately 45 million kilowatts. More specifically, hydropower plants in Siberia are estimated to produce almost 10% of the total output of all power plants controlled by the Unified National Energy Network.
Another key aspect is Siberias infamous climate, where its cold nine months of the year. If theres anything that this kind of weather is good for, its hosting a datacenter stuffed with large ASIC units running at full capacity. Anyone who has ever tried running a mining rig at home during summer will likely know what I mean.
Russias vicinity to China is also a big plus, as the best mining hardware is produced there.
Historically, Moscow has had a strong economic relationship with Beijing, which continues to strengthen to this day. The shipping between the two countries is cheap, fast and constant: Freight trains and cargo aircraft continue to run despite the COVID-19 pandemic.
Now, imagine shipping thousands of mining rigs to the state of Texas from Beijing, considering that the U.S. is in a trade war with China and has slapped a hefty 25% tariff on imported mining equipment.
Related: China and US must learn from one another and collaborate on CBDC
Continuing the comparison to the U.S., operating expense and capital expense costs of maintaining a data center are considerably lower in Russia, mostly because local labor and construction costs are cheaper.
Furthermore, if your rig breaks down, you dont even have to send it back to China, wasting several weeks (which is considered ages in Bitcoin mining). Institutional-scale Russian facilities tend to have in-house repair centers with technicians trained directly by top Chinese mining hardware manufacturers, so they can quickly get everything up and running again.
Russia has been the third-largest Bitcoin mining country in the world for quite a while now, and the local industry has developed significantly.
Hearing all of this for this first time, one might argue: But the Russian government has banned crypto. Well, thats not factually correct. Lets take a closer look at the countrys major crypto-related law, called On Digital Financial Assets, or DFA, that was signed into law in July.
The bill prohibits Russian residents from making payments in cryptocurrencies starting from January 2021 but legally recognizes them as digital financial assets. It does not mention cryptocurrency mining in any form, meaning that currently, there are no legal restrictions.
In early September, however, Russias Ministry of Finance reportedly proposed to amend the DFA law to prohibit miners from receiving payments in crypto for their activities. As the authority reportedly stated:
While no one knows if the amendments will get approved, what they imply is pretty straightforward: Russians cant sell the coins that they mine, but they can legally host their hardware and other infrastructure for foreign players. Most likely, the change will affect mom-and-pop operations, since large-scale miners are normally paid in fiat currency. Moreover, operations whose clients are overseas can still be legally paid in crypto from abroad even if the proposed bill comes into effect.
Besides, regional authorities in Siberia are growing highly supportive of large mining operators because they pay taxes, create jobs, and put that excess energy to use. The truth is that the government is pro-business and has no interest whatsoever in destroying something that contributes to the economy.
At this point, the government has already met all the local large-scale mining operators mostly because the consumption of several megawatts of power is easily detectable by the electric grid operator (and naturally requires some sort of explanation). Earlier in August, the Ministry of Digital Development, Communications and Mass Media published a proposed bill that would establish additional control over data centers in Russia.
A skeptic would continue: But surely you will get scammed if you choose to mine in Russia. While doing business is never a risk-free activity, especially when it comes to the cryptocurrency industry, there are actually no reported cases of crypto mining-related scams in Russia. The police regularly shut down illegal operations that steal electricity, but the authorities never scour compliant operations who pay due taxes and costs.
Curiously, most stories about inconsistent mining players come from North America, which is generally considered to be a highly-regulated market. In fact, the region is littered with carcasses of mining companies that either suddenly went bust or turned out to be scams, disappearing with investors money in both cases.
The most recent example would be the Toronto-based HyperBlock, which abruptly closed down its 20-megawatt data center in May, saying that it had to cease operation due to the Bitcoin halving despite the fact that it is a regular event that companies can prepare for well in advance. Similarly, in early 2019, U.S.-based major crypto mining and blockchain firm Giga Watt closed access and power to its facilities after allegedly failing to pay $300,000 in utility bills.
Sure, Russia could use some clearer regulation on mining (like most countries in the world), but this process will likely take some time. The most important thing is that the government has finally communicated its general attitude, which could be summarized in the following way: Were skeptical about the use of cryptocurrencies as a payment method, but are fine with the related activities that stimulate our economy.
Consequently, it seems like Russians are getting ready for a mining boom similar to the one that happened in 2017. Local retailers have recently reported a 49% spike in crypto mining-related sales of graphic cards in August, and GPU sales registered from June to August are up 470% compared to last year, so things are clearly heating up.
The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Igor Runets is the founder and CEO of BitRiver, the largest colocation services provider for Bitcoin mining in Russia and the CIS region. After completing his MBA from Stanford, Igor returned to Russia to utilize his more than 10 years of experience in enterprise-class data centers and the excess hydroelectric power of Siberia to bring institutional-grade Bitcoin mining to investors around the world.
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Bitcoin minings future is green, and Russia has the best chance - Cointelegraph
Has Bitcoin Finally Met Its Match? – Forbes
Bitcoin has reigned as the undisputed king of cryptocurrencies since it was created a little over ten years ago.
The bitcoin price has soared, with some ups and downs, over the last decadeclimbing to around $11,300 per bitcoin today and giving bitcoin a total value of over $200 billion.
Now, as the market for stable coinscryptocurrencies pegged to traditional currencies or assetshas doubled in the last three months, a new report has predicted the largest stable coin, the controversial tether, could become the second most valuable cryptocurrency after bitcoin as soon as next yearwith "the still deflating broad crypto-asset bubble ... migrating assets toward tether."
Bitcoin remains the most valuable cryptocurrency by a considerable margin--but the stablecoin tether ... [+] has begun to dominate crypto exchange trading.
"Tether represents what many of the so-called cryptocurrencies aren't: a stable form of payment," Bloomberg senior commodity strategist Mike McGlone wrote in the company's Crypto Outlook report for the fourth quarter of 2020.
Over recent years, bitcoin's primary use case has evolved from a payments system to a store of value and more recently as a hedge against the inflation some see in on the horizon. McGlone expects recent unprecedented central bank stimulus spending and rising debt-to-GDP levels around the world to act as a strong tailwind for the bitcoin price, putting it on course to reach a whopping $100,000 per bitcoin by 2025.
"Indicating demand for a digital version of gold (bitcoin) and a crypto-asset like the dollar, if current trends prevail, the market cap of tether may surpass ethereum next year," McGlone wrote, adding it "should take something significant to stall the increasing adoption of tether" which has been growing "rapidly" in contrast to "the stagnant market cap of ethereum."
Ethereum currently boasts a market capitalization of a little over $40 billion, compared to tether's relatively paltry near-$16 billion. However, tether's total value has ballooned 300% over the last 12 months, while ethereum's has merely doubled.
Bitcoin's market value has risen at an even slower pace than ethereum, adding just under 40% since this time last year.
Meanwhile, tether's cumulative transaction volume has increased by around 20% over the past 30 days to climb above $600 billion, according to blockchain analytics firm Glassnode. Tether's daily transaction volume is around $35 billion according to an average from cryptocurrency data sites CoinGecko and CoinMarketCap, with bitcoins average daily transaction volume put at between $20 billion and $25 billion.
Elsewhere, data from analytics provider Skew has found futures contracts based on tether are now "almost on par" with those based on bitcoin.
As much as 70% of exchange trade volume is now denominated in tether, up from only a tiny fraction of the trade volume in 2017 when bitcoin accounted for 50% of trades, according to data from CryptoCompare.
Tether's cumulative transaction volume has soared by around 20% over the past 30 days to over $600 ... [+] billion, according to on-chain analytics provider Glassnode.
Tether's management, which shares considerable overlap with the Hong Kong-based and British Virgin Islands-registered Bitfinex bitcoin and cryptocurrency exchange, is keen to play down any suggestion tether is aiming to eventually displace bitcoin at the top of the cryptocurrency pile.
"Aside from bitcoin, of course, which is the king of all cryptocurrencies, tether is in some respects the digital asset of our times," Paolo Ardoino, the chief technology officer at Tether Limited, said in response to the Bloomberg report, adding: "We definitely see tether as a complement to bitcoin rather than a competitor."
"Of course, we dont see ourselves as competing with ethereum. Nevertheless, eclipsing ethereums market capitalization ... will be a powerful statement. Tether once again proves itself to be one of the most trusted assets in the crypto space."
Tether has had its fair share of problems, however. Over the summer, a New York court allowed the states attorney general to pursue a claim that Bitfinex, hid the loss of over $800 million in client and corporate funds. Tether Limited has also failed to satisfy critics that have suggested tether tokens aren't fully backed one-to-one by U.S. dollars.
Looking ahead, the rise of stable coins in recent years has been taken as a sign of coming central bank adoption of digital currencieswith some suggesting central bank take up could provide the market with much-needed support.
"Increasing adoption of stable coins is likely a precursor for central bank digital currencies and promises to be more enduring than alt-coin speculative excesses," wrote Bloomberg's McGlone.
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Has Bitcoin Finally Met Its Match? - Forbes
Bitcoin rips and cruise ships: Bad crypto news of the week – Cointelegraph
Its been a good week for the crypto markets. Bitcoin finally burst through the $11,000 ceiling, and kept going. According to some experts, the coin could be on its way to a full 2017-style bull run. Other analysts have identified five events that could move the markets this week, including the elections effect on the dollar, Europes struggles with Brexit and the coronavirus, and Bitcoins high hash rate.
The investment experts at Stone Ridge Asset Management have been paying attention. After executives had made personal investments in cryptocurrencies, the company created a billion-dollar spinoff with a $115 million investment in Bitcoin. Square has been just as forward-thinking. The payments company has now put 1 percent of the company's assetsabout $50 millioninto Bitcoins.
The growth in cryptos popularity has led some people to speculate that crypto banks are likely to overtake fiat banks within the next three years. In Italy, the banking system is trying hard to stay ahead. Some 100 banks there now use the blockchain network Spuntato speed up data transfers and settlements. In China, the city of Shenzhen gave away $1.5 million worth of a digital currency controlled by the countrys central bank, the Peoples Bank of China. And the Winklevoss twins Gemini exchange is continuing to roll out regulated payment options for customers in the UK.
Closer to home, things are well, a bit more cautious. The G7 has said that it will oppose Facebooks Libra project until more oversight is in place. And Elon Musk has denied that his Tesla Gigafactory has Bitcoin ATMs.
In the world of DeFi, things are looking more fluid. Chainlink might be about to lose its leadership of the ecosystem. Competition is heating up. Constellation Network is building a DeFi project on its Hypergraph protocol and has announced the support of early backers, including FBG Capital and Alphabit Fund.
Cornell University has revealed that the most downloaded dissertation over the last eight years is Adem Efe Gencers proposal for Aspen, an algorithm for spreading the workload over a peer-to-peer network. (If youre looking for a good place to read that paper, you can do worse than choose the crypto cruise ship Satoshi. It will soon be moored in the bay of Panama.)
That certainly rounds off a good week.
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The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Bitcoin rips and cruise ships: Bad crypto news of the week - Cointelegraph
Where Does Bitcoin Fit in the Global Reserve Currency Game? – CoinDesk – Coindesk
On thisSpeaking of Bitcoinepisode, join hosts Adam B. Levine, Andreas M. Antonopoulos, Stephanie Murphy and Jonathan Mohan for a look at the past, present and future of global reserve currencies
In the beginning there was the global reserve currency (U.S. dollars), national currencies like the Japanese yen, alternative currencies like Ithaca hours and just one cryptocurrency, bitcoin.
But what a difference a decade can make. Today there are thousands of cryptocurrencies, many created by enthusiasts who have ideas on how to make something even better than bitcoin, but also currencies that use some of the technology that makes bitcoin so powerful, but which pairs it with the authority of a national government like the digital yuan in China, the digital euro out of Brussels, or even a globe-spanning corporation with billions of customers like the libra, backed by Facebook.
In this emerging picture, is bitcoin still interesting? First attempts, which bitcoin very much is, are often not the successful attempts. And, importantly, as the world changes and we get closer to something other than the dollar standard, where does bitcoin fit?
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Where Does Bitcoin Fit in the Global Reserve Currency Game? - CoinDesk - Coindesk