Weekly News (Bitcoin $1,000, IOSCO Research, Arizona, etc.)
Every week that I have been writing the weekly news summaries, here on Coinstaker, I always make a mention of how it seems that there are always more and more state governments, national governments and big named companies that keep popping up in the news regarding Bitcoin or the block chain. I normally cover the top 7-12 news stories each week and this week, it will be right on par with the past weeks, except for one thing: Every Single Story this week involves a US State, national Government or corporation that I guarantee you have heard of. Bitcoin and the block chain are now main stream news. There is no denying that fact. So, let us get on with it then; here is this week’s Bitcoin News Summary.
Bitcoin Hits the $1,000 USD Mark, Yet Again!
Up and down and all around. The volatile nature of Bitcoin is nothing new to any of us, but it is scary to think that the most recent roller coaster ride was due to the Chinese government, and their ‘Smack-Down’ of the Chinese Bitcoin Exchanges and markets.
I understand that China has the largest population on the planet. I understand that up until now, they have had the most leeway when it came to how they handled digital currencies. I understand that the new sanctions and changes that are being made due to those regulations are causing people to consider other options, try news services and in some cases, even panic.
However, it is hard to believe that there has been this much movement due to one Nation’s government deciding to impose regulatory measures. If this is what will happen any time a government of any standing decides to regulate digital currency markets within their borders, hold on because we are in for a rough ride.
As I said above, more and more governments are taking a pro-active stance on Bitcoin and the block chain. Bitcoin is no longer considered play money to the politicians and bureaucrats. No. It is now a serious currency, even if sometimes they will not acknowledge it legally. You can bet the farm that there are going to be a lot more regulations from a bunch more governments that are big enough to make the market go up and down like it’s on a trampoline. So, grab a hold and get ready for the ride!
IOSCO Research Shows Challenges, Risks & Possibilities
The International Organization of Securities Commissions (IOSCO), released a massive, seventy-page report that summarized the findings of a yearlong research project aimed at studying the block chain more closely. Areas of interest, judging from the content contained within the re4port, seem to be the world of FinTech in general, specifically robo-advisors and p2p lending networks.
While the research and findings were extremely broad in scope, and IOSCO gives no final recommendations, it does talk about challenges that the security industry faces, such as smart contracts. After the collapse of the Ethereum–based smart contract, the securities commission has taken a deeper look into smart contracts in general. Part of the report states:
“Smart contracts in theory reduce human error through automation. However, if an error occurs, it is more difficult to resolve as the operations are linked and embedded in the blockchain, and are self-executing according to the code written in the smart contracts. Also, smart contracts introduce a different type of human error: coding error.”
Other concerns addressed potential risks of regulatory arbitrage and the difficulty in surveillance. While it cites the risks and challenges, IOSCO appears to be moving forward still.
Illinois: Can We Benefit from the Block Chain?
State Representative, Michael Zalewski has proposed House Resolution 120, asking the rest of the government to approve a working group that will focus on how the state can benefit from block chain technology. The proposal seeks to find out how both local and state level governments can implement the block chain in to their daily tasks and if doing so would benefit the productivity and efficiency of government as a whole. Part of the proposal reads,
“…the Illinois Legislative Blockchain and Distributed Ledger Task Force [will] study how and if State, county, and municipal governments can benefit from a transition to a blockchain based system for recordkeeping and service delivery…”
The research would look into areas of how the block chain can be implemented, as well as what state laws would need to be amended to accommodate any such implementations.
Swedish Telecom Company Begins Mining Endeavor
GoGreenLight, sister entity to BorderLight, a major telecom and internet provider in Uppsala, has finally began mining bitcoin months after it bought out bankrupt KnCMiner last summer. The now defunct and bankrupt miner filed for bankruptcy just before the reward happening that saw the block reward drop from 25 BTC down to 12.5 BTC.
The company announced this week that they have a team of 25 working on the project and have begun firing up the hardware resources they have. The company’s representative told reporters that they have enhanced the facility they are using for mining with improved technology for cooling and maintenance.
Since they launched their efforts on February 2, 2017, they have mined six blocks with the most recent being on February 7th. They accounted for 0.6% of the total hash rate in a 24-hour period that ended February 8th.
Arizona proposes to legalize smart contracts
The State of Arizona is poised to vote on a bill that would validate ‘Smart Contracts’ as legal under the state’s laws. HB 2417, which was introduced to the Arizona state legislature by state representative Jeff Weninger on February 6th proposes that:
“Smart contracts may exist in commerce. A contract relating to a transaction may not be denied legal effect, validity or enforceability solely because that contract contains a smart contract term.”
The bill also goes on to include a stipulation with regards to the ownership of the contract once it is on the block chain, giving explicit rights of ownership to the original offer, recognizing that information on the block chain can be officially claimed under copyright and ownership laws. A similar measure was approved in Vermont earlier this year.
The proposal goes up for a vote in the near future. This is the second proposed bill involving the block chain to emerge from Arizona this year, the other submitted by representative Paul Boyer aimed to prohibit use of the block chain to track firearms.
Arizona Wants to Block Blockchain Firearm Tracking
And as I was saying… House Bill 2216, which was first proposed on January 17th would make it illegal to require a person to use or be subjected to firearms tracking with specific mention of tracking using the block chain. If approved, it would be a felony under Arizona law if the law was violated.
The proposed law is a result of a 2016 project that sought to have firearms fitted with hardware devise that would broadcast a transmission every time a fire arm was used, effectively announcing to the world which gun was fired, where and at exactly what time it was fired.
The law does make some provisions in certain situations; such as when law enforcement obtains a warrant to assist their investigation of a criminal case or if the person in question willingly consents to the tracking action.
The bill has already made it through two legislative committees with a final vote expected within the month.
Philippines Exchanges are Official Companies
Months after the Bangko Sentral ng Pilipinas (BSP) announced their intent of enforcing regulatory guidelines on exchanges based in the Philippines, those regulations have finally been laid out. Exchanges that operate within the small island nation will now be required to follow the same guidelines as other financial institutions in the country. This includes annual fees, membership in anti-laundering groups and official registration with the occupational governing bodies of the nation.
Exchanges are now also required to file quarterly and annual reports with the financial regulators. Other requirements specific to virtual currency exchanges include mandatory cyber security programs that meet with the government’s approval.
Seized Bitcoin to be Auctioned Off in Illinois
The Village of Vernon Hills, Illinois, just outside of the Chicago city limits has a bunch of Bitcoin and no use for it, according to city manager Nikki Larson. The Bitcoin, which was seized as part of a criminal drug investigation, became the property of the Village when the case was finalized. Just like automobiles and other property and assets, the Bitcoin too was seized.
Traditionally, governmental bodies within the jurisdiction of the arrest have sole claim to the assets seized due to the result of a criminal action. The cash, they keep and it goes into the town coffers. Material items like cars and boats get auctioned off. Ms. Larson stated that since the Village has no use for Bitcoin, it was decided that they would sell it via Coinbase to convert it into US Dollars.
It is a move that they will likely get more practice at very soon. They are expecting the finalization of another case that will also see them the beneficiaries of more Bitcoin.
South Africa’s CSD, ‘Big 4’ Banks Bet Big on Block Chain
The South African Central Securities Depository (CSD), along with the Central Bank of South Africa and the 4 largest financial banks within the wealthiest nation on the African continent held meetings this past week and have announced that they are going all in on block chain tech.
The 6 entities sat down and established a working group that saw the election of a chairman, had their goals outlined and set strategic objectives for the next twelve months. Monica Singer, CEO of Strate, which is South Africa’s CSD, eluded to the ever increasing popularity of distributed, shared ledgers and called the decision a matter of survival, rather than opportunity. She went on to say that,
“My mission is to ensure that Strate can continue operating forever. But it will have to change its role. It’s like, if you’re a taxi operator you better embrace Uber because I don’t know how long you’re going to operate as a taxi.”
Hosted by Strate’s FinTech division, the working group includes members from Strate, and the ‘Big Four’ banks; FirstRand Group, Standard Bank, Absa/Barclays Africa and Nedbank.
French Central Bank to Entice Blockchain Start-ups
Banque de France governor Villeroy de Galhau wants you! That is, if you are a Bitcoin start-up. The bank, which has a publicly known interest in exploring the tech, has announced the creation of a new innovations lab, with the goal of collaborating with Block chain start-up companies.
The bank wants to promote more FinTech innovation and feel that by opening the lab and extending a welcome to block chain companies, they can work side by side and benefit from knowledge they gain, while at the same time imparting knowledge and resources that the companies most likely need.
Galhau was very open about the intentions of the bank, telling the people in attendance at the recent announcement of the lab, “we are learning from you”. France’s Central bank is looking to expand their knowledge in the tech to better implement the strategies into its operational activities. De Galhau went on to say,
“The digitalisation of the financial sector can accelerate this positive process: it helps to disseminate technological advances such as electronic signatures, solutions to defend against cyber-attacks or distributed ledger technologies. Innovative and secure payment solutions, such as tomorrow’s blockchains, are also helping to speed up the development of e-commerce and modernise physical trade.”
While no time frame was given, as to the opening of the lab, he did go on to say that the bank would be “fully mobilized towards this goal.”
Dubai, IBM, Banco Santadar, Emirates NBD, DU & Aramex: The Dream Team?
It almost sounds like the guest list of a royal wedding or New Years’ Eve gathering, but it isn’t. it is actually the members of a very high profiled partnership that aims to perform a very expensive test of the block chain.
With the purpose of providing proof of concept to potential investors, IBM, The UAE Government, Du, a UAE based telecom, Aramex, a shipping and logistics company, two major banks; one from UAE and one from Spain; Emirates NBD and Banco Santander and an as of yet ‘unnamed’ airline company want to show that they can ‘harmonize international trade financial lifecycle within a specific platform.
The proposal calls for a heaping dose of block chain ledger technology, a few dashes of Internet of Things enabled devices, a great deal of IBM cloud computing power and a pinch of Watson to rule them all.
- Load a whole lot of fruit onto a container ship in India and bring it to Dubai
(Aramex to handle that part)
- Unload all of that fruit, truck it the processing plant and juice it.
- Truck the juice to the airport, put it on a plane to Spain. (Never thought I would ever type that in a public forum…)
- Leave Dubai and head towards Spain.
- Arrive in Spain and deliver the juice to the waiting Spanish distribution company.
The reason that this may seem like the normal way it is done is simply because, well, it is how it is normally done. From all outwards appearances, not much will change. It what will be going on behind the scenes that makes this expensive trial run so significant.
The paperwork shuffling, logistics of scheduling with the shipper, the airlines, the distributor, etc… that is the truly hard part and the part that this trial hopes to make just a bit easier. The best part is that is it works, it will almost completely automate the whole process, providing a very economic an unprecedented international logistics solution that will streamline the way the entire planet handles trade.
The trial is to be executed using self-executing code, or smart contracts that will be reported by Du’s IoT devices to Watson, who will validate the information.
According to James Wallis, IBM’s vice president for blockchain markets and engagements,
“We don’t know exactly where it’s going to end up, but the collaboration across different government entities around the world is going to have to happen.”
This is a proof-of-concept, but I would say this one is of the most significant ones, if not the most significant one we’ve been involved in, because of the number of players and the whole flow, both import and export.”
China, China, China… Why China, Why?
If you were hoping that either China did not make the major news this week or that they had somehow taken everything they have done back all of a sudden, I am going to have to disappoint you. I decided to save the most news worthy, most impactful and most talked about news story for last.
We all know the various things that have been going on in China; exchanges stop withdrawals, fees springing up all of a sudden and regulation, regulation, regulation. In a 24 hour period of time, we were bombarded with multiple stories of the PBOC (Peoples bank of China) and its enforcement activities.
It began with the news on the 8th that rumors of meeting between the PBOC and 9 Chinese start-ups were true. PBOC wanted to reiterate that they will be monitoring to ensure that all anti-money laundering laws will be enforced. This news directly affected BTC Trade, Yunbi, HaoBTC, CHBTC, BTC100, BitBays, Yuanbao, Dahonghuo and Jubi.
February 9th saw the announcements by OKCoin and Huobi, the two largest exchanges in China, that they were immediately suspending Bitcoin and Litecoin withdrawals for one month to strengthen their anti-money laundering measures. Bitcoin prices fell fast and far at the news.
The $100 price drop in a matter of a few hours was huge and caused a small panic in some markets.
Later that same day, the 9th, BitBays, BTC100, BTCTrade, CHBTC, HaoBTC and Yunbi all announced that they too would be halting withdrawals, but none except CHBTC would give a time frame.
Bitcoin’s price has rebounded since the news first knocked it over a cliff, but the exchanges are still without most services and the long lasting effects are yet to be seen.
Another very exciting week in Bitcoin comes to a close. This week saw every single major story with a big name company and/or a national or localized level governmental body involved. We had seized Bitcoin auctions, Gun control via the block chain and even a little case of, “you wash my back, and I will wash yours” from the French.
Bitcoin dropped severely, but even with the largest nation in turmoil, she bounced back strong as ever. Bitcoin can and will survive due to the sure strength of the technology and the will power of the people who use it.
Gene is an avid Bitcoin enthusiast and computer programmer who is currently studying to be a software engineer. He is 40 years old and lives in Daytona Beach, Florida with his girlfriend and their son.