Bitcoin news roundup, August 27, 2017
This week’s summary of various cryptocurrency news and developments:
SegWit is now active on the Bitcoin blockchain
Segregated Witness (SegWit) is now active on Bitcoin’s blockchain. Essentially, SegWit rearranges how data is stored on Bitcoin blocks, boosts capacity, and removes transaction malleability. Various cryptocurrency experts, including Blockstream executives, Lightning founder Elizabeth Stark, and Litecoin creator Charlie Lee, expressed optimism toward the activation, as it improves security and scalability.
Elizabeth Stark noted that Lightning, a micropayments solution, might finally be implemented by Bitcoin applications and platforms. According to its development team, Bitcoin-to-Litecoin cross-chain swaps might now be possible, as both networks have SegWit enabled.
Notably, most users expected the upgrade to optimize the network and reduce transaction fees. However, these actually increased. According to some, this might have happened due to politically motivated groups clogging the network with spam transactions. Bitcoin’s scaling debate goes on, as some don’t agree with the upgrade and forked the Bitcoin blockchain so as to create a new version. That new version, Bitcoin Cash, favors other scaling tech over SegWit. As CoinDesk puts it:
- “Now, Bitcoin and Bitcoin cash are competing, putting two ideologies to the test – with real money on the line.”
Hackers stole $500,000 from Enigma investors before its ICO date
Enigma, a project started by a group of MIT graduates, was compromised this week after hackers managed to access the CEO’s email and hack its website, mailing list, and Slack group. The project’s ICO was scheduled for September but as soon as the CEO’s email was compromised, the hackers started posting Slack messages and emailing Enigma’s community, claiming the startup had just opened its pre-ICO. Enigma’s team quickly took down the website and attempted to warn users of what was going on, but the hackers still managed to earn over 1,500 Ether (over $500,000) from the hack. At press time, the project’s website is now back up, and the company claims it is going to refund users who sent their money to hackers thinking they were investing in Enigma.
2/3: We will restore funds to everyone that lost money in this recent scam attempt after our token sale concludes.
— Enigma Project (@EnigmaMPC) August 24, 2017
The IRS has been using Bitcoin tracking software for the last two years
According to contract documents obtained by Washington publication The Daily Beast, the U.S. Internal Revenue Service (IRS) has been using transaction analysis software, developed by startup Chainalysis, since 2015. The document, revealed thanks to a Freedom of Information Act request, revealed that the IRS has paid Chainalysis over $88,000 to use its software to “trace the movement of money through the Bitcoin economy”, so as to identify, and obtain evidence on people who use Bitcoin to launder money or conceal income, the IRS explained.
Tracing transactions on a blockchain doesn’t provide the IRS the identity of Bitcoin address owners, but as soon as they see a transfer going to an entity subject to anti-money laundering / know your customer compliance, a subpoena could be issued in order to obtain the customer’s identity.
Estonia is looking to issue its own national digital currency through an ICO
Estonia, a country that has offered e-residency to foreign entrepreneurs looking to virtually site their business in its country, might soon launch its own national digital currency through an ICO, according to a blog post published by Kaspar Korjus, the managing director of the country’s e-residency program. The digital currency, named “Estcoin”, could be used to pay for public and private services in the country, and one day be a viable currency worldwide. The money raised through the ICO would be managed by a public-private partnership that ringfences part of the funds for the development of Estonia’s digital infrastructure, according to Korjus.
The project is still in its infancy, as the country’s e-residency program is still trying to get feedback. Through social media, it hopes people will use the hashtags #eresidency and #estcoin to help out, and once enough feedback has been gathered a whitepaper will be written, before a pilot project is launched. Users can sign up do track Estcoin’s progress.
Vietnam may soon legalize Bitcoin
According to local publication VNA, Vietnam may soon legalize Bitcoin and other cryptocurrency, as the country’s Prime Minister Nguyen Xuan Phuc recently asked the Minister of Justice to coordinate with top advisors, including the Ministry of Finance, to “scrutinise the current legal framework, provide a comprehensive assessment and propose suitable solutions and revisions in the framework to the Government” so as to legalize cryptocurrencies. Vietnam’s prime minister also told his advisors to assess what the best way to tax cryptocurrencies would be, and to create regulations to penalize violations – these are to be completed by June and September 2019.
The article reads:
- “It is expected that once the legal framework for the currencies is finalised, Bitcoin and several other cryptocurrencies will be officially recognised in Vietnam, opening up possibilities in financial technology and online payments.”
China’s biggest exchanges reportedly used millions of idle user funds
According to a report published by China’s state news agency Xinhua, two of China’s “big three” Bitcoin exchanges, Huobi and OKCoin, recently used 1 billion yuan ($150 million) of idle user funds to invest in Wealth Management Products (WMPs) to generate revenue. WMPs are considered risky investments that yield returns of 3 to 5 percent, as they typically include bonds and properties, among other things. The move was revealed after an investigation by China’s central bank, the People’s Bank of China (PBoC).
According to Finance Magnates, in response to the report, OKCoin’s CEO Star Xu stated:
- “We at OKCoin have a strict policy of placing idle client funds into lower-risk banking products. This policy is in keeping with general practices in the banking and securities industry, for both the purpose of safeguarding clients funds, as well as assuring proper record keeping and segregation of funds. We refute allegations to the contrary as patently false.”
Bitcoin at $4,279.65 following the SegWit soft-fork
Bitcoin’s SegWit soft-work recently activated, and even though the upgrade seemingly didn’t put an end to the scaling debate, or to its transaction problems, the cryptocurrency still holds a dominant spot in the cryptocurrency ecosystem, as it has a $70.7 billion market cap, about 45.8% of the ecosystem’s total market cap (currently of $154 billion), according to data from CoinMarketCap.
Bitcoin Cash at $627.61, after last week’s record high
Last week, DeepDotWeb reported on Bitcoin Cash’s record high of nearly $1,000, as one token was worth $930.86. Since then, the cryptocurrency’s price plummeted, as now one Bitcoin Cash token is worth $627.61, according to CoinMarketCap. The cryptocurrency’s total market cap is of $10.3 billion.
Monero surged to $146.96, as Bithumb added it to its platform
Bithumb, a leading Korean cryptocurrency exchange, recently added Monero to its platform and, as a result, the privacy-centric cryptocurrency’s price surged to $146.96 per token. Monero started surging back in August 2016, when now-defunct darknet marketplace AlphaBay started accepting it as a payment method. Although Bithumb’s platform is the number one factor behind Monero’s price surge, the IRS hiring Chainalysis to track down Bitcoin tax evaders, as reported above, might’ve also led investors to the privacy-centric cryptocurrency. Monero’s market cap is of $2.19 billion.