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Tab Sweep – 6 March 2018

Bitcoin Blackmail by Snail Mail Preys on Those with Guilty Conscience – extortion for extramarital affairs, with ransom to be paid in Bitcoin. In the USA this is mail fraud.

Bitcoin Is the New Gold – Noah Smith writes an interesting piece, because he thinks it isn’t going to replace fiat money (lots of businesses have stop accepting it as a payment method), and neither is it going to zero.

Technological limitations:

Technologically, Bitcoin tends to be slow and laborious to use because it verifies transactions in small blocks. That problem isn’t particularly hard to overcome – just use bigger blocks, or use a form of temporary credit to ease the burden on the network. More ominously, Bitcoin relies on people known as miners to verify all transactions, and compensates them by creating new Bitcoins. But soon, this will stop, since the total number of Bitcoins is capped at 21 million – at that point, transaction fees will be needed to pay miners.

Economic limitation:

Things that are good financial investments don’t make good currencies, and vice versa.

if you got your paycheck in stock, or real estate, or Bitcoin, you wouldn’t even know at the beginning of each month if you’d be able to afford your rent, food and other necessities at the end of the month.

Cogent arguments, read the whole thing.

Prediction #4 — Bitcoin stays crazy until traders learn it is not a currency – Robert X. Cringely says, “It means Bitcoin isn’t a currency at all but traders are pretending that it is. 2018 will see investors finally figure this out.” And has some advice:

If you notice Bitcoin is down, buy it. When you’ve made as much profit as you need, sell it, then wait for Bitcoin to inevitably go back down again. Those who have a very high risk tolerance or think they can time the market will hold on longer and be more likely to lose their shirts. It’s a much better Bitcoin trading strategy to not be greedy, living instead on the crumbs of oligarchs and conmen.

Decentralized Blockchain-Based Electronic Marketplaces

NYT reports Bitcoin Thieves Threaten Real Violence for Virtual Currencies.

In the beach resort of Phuket, Thailand, last month, the assailants pushed their victim, a young Russian man, into his apartment and kept him there, blindfolded, until he logged onto his computer and transferred about $100,000 worth of Bitcoin to an online wallet they controlled.

“This is now becoming more pervasive and touching more law enforcement divisions that deal with organized crime and violent crime on a local level,” said Jonathan Levin, the founder of Chainalysis, which has worked with several law enforcement agencies on virtual currency crimes.

From a more personal view, this part made me a little sad:

The Thai police tracked the victim’s laptop, which was also stolen, to Kuala Lumpur. That’s where the trail went cold.

Michael Arrington writes, THE REAL HISTORY OF TECHCRUNCH. The interesting part here is about Keith Teare, whom:

But more recently Keith has gotten into the cryptocurrency world, and he has been wholesale selling out to advise, from what I can tell, over a dozen companies during their token sales. Sometimes they list him as the founder of TechCrunch (as above), sometimes as the cofounder.

He is neither founder nor co-founder.

From Malaysia: Cryptocurrency a tax headache for regulators.

In Malaysia, cryptocurrency transactions are currently tax-free as digital currencies are yet to be recognised for tax purposes. Nevertheless, there have been several cases of businesses and individuals using digital currencies as payment.

These include the recently suspended Proton dealership in Seri Kembangan, Selangor, which went viral on social media after it announced that it would be accepting bitcoin and ethereum as a form of payment for car purchases, to the chagrin of national carmaker Proton Holdings Bhd.

Just remember that there is no capital gains tax in Malaysia, with the exception for property. The article talks about how the USA and Australia handle crypto taxes, touches a bit on Luno’s bank account freeze, but the reality is there’s no such treatment for taxation (yet? forever? will there be a GST? Only time will tell).

The Singapore University of Social Sciences (SUSS) FinTech and Blockchain Group just had a workshop and their materials are online.

In this two-day workshop conducted by Andras Kristof, the Chief Technology Officer of Yojee, he elaborated the basics of blockchain systems and ICOs, explained the key concepts of smart contracts, their benefits and limitations, and demonstrated the process of token swaps with the use of a hardware wallet.

The articles are slowly making their way online, but you can already read Blockchain basics, and Blockchain Technology Evolution.

I look forward to seeing the remaining four articles too.

Trouble cashing out your cryptoasset fortunes?

Via the FT: Bitcoin investors struggle to cash out new fortunes (paywall).

Mortgage lenders and brokers are avoiding cryptoasset riches. Even after converting to sterling, lenders wanted to know the source of income. However nothing in law prevents this, so, “Many lenders including Coventry Building Society, Skipton and the Yorkshire Building Society said they would accept deposits derived from bitcoin sales.” All that said and done, banks really do ask for your previous six months bank statements, so if you had money before, this really shouldn’t be a problem.

In addition, via the FT, Investors face barriers trying to turn bitcoin profits into pounds (paywall), it seems that there are hurdles to bringing money back into the UK, since exchanges lack banking relationships with UK banks. There seems to be more comfort with European banks and cryptocurrencies. Interesting to see banks like Standard Chartered not allow bitcoin-related transactions, while Barclays may do a crime investigation, and NatWest may alert customers of potential fraud.

Seems a matching exchange, i.e. Bittylicious, seems like the workaround. It seems quite a bit like Remitano. Go back to peer-to-peer.

Singapore Airlines private blockchain for loyalty

The Edge reports, SIA’s KrisFlyer programme to launch blockchain-based digital wallet app, and Daniel Yap also adds on, SIA’s “blockchain Krisflyer miles” is not pointless, but it’s not spectacular. What they’re doing:

  • blockchain-based airline loyalty digital wallet
  • SIA-owned private blockchain involving only merchants and partners
  • goal: “unlock the value of KrisFlyer miles to enable everyday spending at retail partners”
  • digital KrisFlyer miles (what a point is called), to be used at Point-of-Sale (POS) transactions across participating merchants

Why not use a traditional database? A good analysis by Aaron Wong, from the perspective of a frequent flyer, Why Singapore Airlines’ Krisflyer blockchain initiative worries me. Scroll down to So what is Singapore Airlines doing?.

Yes, it is called a license violation, and with things like Github these days, you might not just want to run sed through someone else’s source code and replace strings! See the github issue, and the commit fix.

Irrespective of other accusations of plagiarism, if people are thinking about open sourcing their code, they need to abide by open source rules. Some of this is legal (like this case), some of it is governance related, and some of this is community related.

As always, for consulting about open source, don’t hesitate to drop me a line.