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The founder of defunct cryptocurrency exchange Cryptopia, which entered liquidation following a hack in January 2019, has launched a new exchange called Assetylene.

The LinkedIn employment history for the founder of the failed New Zealand exchange, Adam Clark, indicates that he’s been working on Assetylene since September 2018, which is also when the exchange’s Twitter account went live. With fewer than 100 followers, the account is billed as representing “New Zealand’s most advanced crypto-currency exchange [sic].”

Once a highly prominent exchange in New Zealand, Cryptopia lost nearly 10 percent of its entire liquidity in a hack earlier this year. Attempts to salvage the business ultimately failed. On May 15, 2019, its liquidators formally announced that the company was defunct. At the time of this writing, hundreds of thousands of dollars worth of Cryptopia’s assets are still circulating in an easily tracked manner.

Seeing as Cryptopia did not fully close until May 2019, and Assetylene’s date of founding is listed in the preceding September, it may be that Clark had moved on to this new business well before Cryptopia’s collapse began. However, there’s also reason to believe that Clark set up the new exchange quickly, after Cryptopia’s hack had already occurred.

For one, an archived copy of the Assetylene site shows that it is based on the TradeSatoshi platform, which can set up exchanges within minutes. Furthermore, Clark’s own LinkedIn shows that he was TradeSatoshi’s senior software development engineer when Assetylene was first set up. More damningly, Assetylene has zero liquidity, is not listed on CoinMarketCap and its about page is empty with no trading data found on the site.

Assetylene may very well become a full-fledged exchange with time. However, given the time period that it has apparently remained inactive while Cryptopia was still viable and its current insufficiency, the jury’s still out.

This article originally appeared on Bitcoin Magazine.

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More crypto users can now walk into their local grocery store and purchase cryptocurrencies, thanks to the expansion of a partnership between Bitcoin ATM operator Coinme and coin-cashing machine purveyor Coinstar.

The expansion, announced in a press release, means that bitcoin will be available for purchase at over 2,200 locations in 21 states and the District of Columbia. The partnership began in early 2019 and grew to offer bitcoin purchases at kiosks in 19 states in late April.

Specifically, the kiosks allow users to enter their phone numbers and deposit cash in exchange for bitcoin redemption codes, which can be redeemed on Coinme’s website with an account. Users can purchase up to $2,500 worth at a time and are subject to a 4 percent flat fee.

This article originally appeared on Bitcoin Magazine.

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The Dutch Financial Intelligence and Investigation Service (FIOD) has shut down cryptomixing site Bestmixer.io.

According to local media, Dutch authorities moved to shut down the site on May 22, 2019, as part of a joint operation with police agencies from several European nations, including France, Latvia and Luxembourg. Following concerns originally raised by the online security company McAfee in 2018, the FIOD has claimed that the service was used for money laundering.

As Dutch media reported, no arrests have yet been made in the Bestmixer case, as Europol officials attempt to determine the extent to which criminal money laundering was used on the site.

McAfee also released its own report on the FIOD’s action against Bestmixer, describing the site’s possible connections to cybercrime and usage as an easy way to launder money.

The “bitcoin laundering” technique described by McAfee is fundamentally the same as the CoinJoin protocol, which allows multiple users to pool transactions into a single group, scrambling funds and obscuring links between sending and receiving addresses. CoinJoin has, over the last year, come to occupy a substantial percentage of all crypto transactions in the space. As such, it may be cause for concern that this legal action against Bestmixer could come to affect other, similar crypto services.

“Today’s Bestmixer seizure shows an increase in law enforcement activities on pure crypto-to-crypto services,” Dave Jevans, CEO of blockchain forensics company CipherTrace, told Bitcoin Magazine. “This is the first public seizure of a bitcoin mixing service and shows that not only are dark marketplaces subject to criminal enforcement, but other services are as well.”

But Bestmixer may have been particularly egregious in leveraging its coin mixing services to help bad actors skirt financial regulations.

“Bestmixer has blatantly advertised money laundering services and falsely claimed to be domiciled in Curacao, where it claimed it was a legal service,” Jevans added. “The reality is that they were operating in Europe and serviced customers from many countries around the world. Bestmixer is also known for its ‘crypto dusting’ activities, where it sends small amounts of bitcoin to tens of thousands of addresses in an attempt to defeat cryptocurrency anti-money laundering tools.”

While it’s still unclear how the FIOD will proceed, authorities have seemingly replaced Bestmixer’s site header with a notice that the domain has been seized.

This article originally appeared on Bitcoin Magazine.

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This article was originally published by 8btc and written by Vincent He.

Nearly 100 victims from various parts of China have reported to the Hangzhou police bureau, claiming that they were deceived by two young men, named Zhou Yi and Li Xiang, who allegedly stole nearly 7,000 bitcoin through exchanging or borrowing.

According to the victims, Zhou and Xiang had claimed on the internet that they could exchange bitcoin as futures and provide interest. The victims trusted them, as some preliminary orders in small amounts were delivered on time. As the pair could offer bitcoin at prices lower than the market rate and delivery seemed stable, they soon collected several thousand orders.

“I began OTC [over-the-counter] Bitcoin trading since 2017, unexpectedly I was cheated by more than 2 million yuan this year,” Mr. Wang, one of the alleged victims, said. “As a senior bitcoin speculator, I always buy low and sell high, I trust my peers.”

But Mr. Wang was not alone, as there appear to be more than 100 victims in this case. It has been reported that more than 7,000 BTC, equating 300 million yuan (≅$43.4 million), was involved.

This apparent bitcoin trade scam was conducted in two WeChat groups. If someone wanted to buy bitcoin, they could negotiate privately in the groups and transfer the money to a designated bank account after confirmation. One or two days later, Zhou Yi would send bitcoin to the buyer’s designated wallet.

”I had been trading with them for more than a year,” Mr. Zhang, another one of the victims, said. “I first traded with them last summer and then bought bitcoins from them three times a week until they lost touch in April. The amount of each transaction [was] about two or three million yuan. In nearly a year, the volume of transactions has reached billions of yuan. Their price [was] very low. I earned nearly one million yuan before.”

Aside from trading bitcoin as futures, the pair was also borrowing bitcoin and promising interest. They gave 100 to 120 yuan worth of BTC to victims as interest, so 90 percent of the victims would deposit bitcoin into their account. When victims pushed them for the release of these bitcoin, they would always transfer some money as compensation before disappearing.

Now Zhou and Xiang have been arrested for “illegal public deposit absorption” and the case is pending further investigation. The biggest concern for victims is how to determine the nature of the case. Some of the victims are not satisfied with the initial charges.

“We just want to give the police more information to prove that they knew at the beginning of March that they couldn’t issue coins, and that the subsequent transactions were not only illegal public deposit absorptions, but also a fraud,” a victim said.

So, where is the legal boundary for OTC Bitcoin trading?

“It is legal to own bitcoins in China,” said Sa Xiao, a council member at the Bank of China Law Research Association, as cited by The Beijing News. Additionally, Xiao considers the occasional exchange of bitcoin between individuals as legal.

This article originally appeared on Bitcoin Magazine.

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The Australian Federal Police (AFP) has charged a government employee alleged to have misused government IT infrastructure for personal cryptomining operations, per a press release.

In the release, the AFP states that the unnamed 33-year-old man is an IT contractor with the Australian government, who took advantage of his access to “manipulate programs to use the processing power of the agency’s computer network for cryptocurrency mining.”

For his effort, the report claims he earned AU$9,000 (around $6,200) from the mining operation.

He was subsequently charged for the unauthorized modification of restricted data and the unauthorized modification of data to cause impairment. The charges mentioned carry a maximum sentence of 2 years and 10 years, respectively.

Speaking on the matter, Acting Commander Chris Goldsmid, manager of cybercrime operations, said the civil servant in question will be prosecuted for his actions.

“Australian taxpayers put their trust in public officials to perform vital roles for our community with the utmost integrity,” Goldsmid said, per the release. “Any alleged criminal conduct which betrays this trust for personal gain will be investigated and prosecuted.”

Earlier this year, Matthew McDermott, an IT manager for the Florida Department of Citrus (FDoC), was arrested for using the department’s computers to mine cryptocurrencies. According to the report, McDermott used his employer’s computers to mine various digital assets, particularly bitcoin and litecoin. His actions were said to have cost the State Department about $825 in additional utility bills from October 2017 to January 2018.

This article originally appeared on Bitcoin Magazine.

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Bitcoin was barely a year old and trading for less than a penny. Excitement for the world’s first cryptocurrency was still largely bottled up in the infant hobbyist forum Bitcointalk, itself barely half a year old. Here, OGs effervescent with enthusiasm compared notes on economic philosophy, technical knowledge and the new cryptographic beast that Satoshi Nakamoto created. Satoshi himself was still active on the forum, too, as the earliest adopters shared their visions for the future of money.

Though, if that future was going to be realized, something was still missing: No one had ever spent bitcoin on anything. Darknet markets wouldn’t exist for a few years and the only transactions users facilitated (besides peer-to-peer ones on the network) were done in cash.

Perhaps this is why Laszlo Hanyecz decided it was time to make history. On May 18, 2010, the Bitcoin Core contributor asked fellow enthusiasts on Bitcointalk if someone would “make [two large] pizzas yourself and bring it to my house or order it for me from a delivery place.” He offered 10,000 BTC for the service and, though it took four days, he got his wish.

One prescient user cautioned that 10,000 bitcoin was “quite a bit” — around $41 at the time. And, of course, “quite a bit” sounds like an absurd understatement today; seven years later, at bitcoin’s all-time high, that sum would be worth $200,000,000.

To Hanyecz, who told Bitcoin Magazine that he spent something near 100,000 BTC on pizza that year, the purchase was just another drop in the bucket.

“We would just give people bitcoin on the forum,” he said — sometimes 100, sometimes 1,000 BTC at a time.

“I wanted to do the pizza thing because to me it was free pizza,” Hanyecz explained. “I mean, I coded this thing and mined bitcoin and I felt like I was winning the internet that day. I got pizza for contributing to an open-source project. Usually hobbies are a time sink and money sink, and in this case, my hobby bought me dinner.”

Not Just “That Pizza Guy”

The May 22, 2010, transaction would be etched in stone, as much for the symbolic significance of the purchase as the gaffe in Hanyecz spending the future-equivalent of Kanye West’s net worth on two large Papa John’s pizzas.

But there’s more to Hanyecz’s story than this transaction, even though the legendary pizza purchase has overshadowed his other achievements in the Bitcoin space. The developer is doing just fine despite the purchase, actually, mainly because of his other (and vastly more important) contribution to Bitcoin’s development: GPU mining.

Before revolutionizing mining, the software engineer, who was introduced to Bitcoin in late 2009, was a member of its first class of contributors. As he humbly put it, Hanyecz “had been working on [bitcoin], fixing bugs and things like that.” His “minor” contributions include building and deploying the first macOS Bitcoin Core release.

They also include revamping the landscape of mining. Hanyecz first introduced the community to GPU mining in May 2010, which he saw as simply contributing to something that was very much still an experiment and not yet a movement.

“On [Bitcointalk] at the time, there weren’t really any users,” he recalled. “There were 50 people, maybe 100. It was a lot different then. It was like, ‘Hey, do you want to contribute to an open source project?’ It wasn’t ‘Hey, do you want money to change the world?’”

At that time, the only bitcoin mining was done on the backs of CPUs — the processors that make personal computers tick. No one had contrived of a more efficient way to produce hashes. As he set out to improve this efficiency, Hanyecz admitted that he didn’t fully comprehend “how fast the [mining] difficulty adjusted” (because no one had created a miner powerful enough to truly test this mechanism). Still, he stewed over a way to produce more hashes more quickly in the hope of extracting more value from the network.

This is what led him to devise a mining code using GPUs. Graphics cards, as they are commonly called, animate our computer screens with color and, well, graphics. Hanyecz deduced that these pieces of hardware could do more computation at once than a CPU and so “fit well with trying to brute force hashes” to mine blocks.

“GPUs, what they’re good at, is they can do a lot of things in parallel, but they have to be very simple things and it has to be the same thing,” he explained. “So, you can add 10 to a thousand different numbers at the same time. Whereas a general, regular CPU is much more flexible. It can do a lot of things, but it has to do these one at a time. The mining problem lent itself perfectly to GPUs.”

His discovery was lucrative. It gave him a tenfold increase in hashpower — and this using a 2010 Macbook!

But his discovery didn’t go over so well with crypto’s progenitor. Satoshi was always a bit “at arm’s length” in that day, Hanyecz said, but after he shared the GPU mining code with the creator, Satoshi made his opinion known that he thought it was too advanced for Bitcoin’s development.

“A big attraction to new users is that anyone with a computer can generate some free coins,” Satoshi wrote in an email to Hanyecz. “GPUs would prematurely limit the incentive to only those with high-end GPU hardware. It's inevitable that GPU compute clusters will eventually hog all the generated coins, but I don't want to hasten that day.”

“That’s when I was like, ‘Man, I feel like I crapped up your project. Sorry, dude,’” Hanyecz told Bitcoin Magazine with a laugh. “He was concerned that come people might be discouraged because they can’t mine a block with a CPU. So, I stopped advertising it after that.”

Even though he tried to pull the plug, Hanyecz’s invention began to propagate, opening up a Pandora’s box of hashrate on the network. Soon after he debuted the code on Bitcointalk, other users repurposed it to create standalone versions for Windows, Mac and Linux. Hanyecz released the seminal code as a patch into Bitcoin Core’s source code “because that was the easiest way to hack it in,” he said. These new versions, though, were separated from Bitcoin Core entirely and existed as their own clients.

The cat was out of the bag, and Hanyecz no longer had the competitive edge he was looking for when he coded the new mining method.

“I thought that having more processing power would secure the network. But I didn’t understand that I should have kept it to myself. It would have made more sense to be greedy,” he joked.

Life After Pizza

Despite misconceptions that Hanyecz eschewed Bitcoin following the pizza transaction, he’s still around. He just isn’t active in Bitcoin’s development anymore.

“I’m just another bitcoiner,” says the man who changed the mining landscape indelibly.

Bewilderingly, nearly 10 years later, that same man is hardly recognized for this contribution. Instead, most people know Laszlo Hanyecz for the historic pizza transaction, an industry meme that dwarfs the more groundbreaking work he delivered in Bitcoin’s stumbling infancy. This might be a consequence of his invention coming at a time when Bitcoin’s following was no more than a few hundred enthusiasts. Or perhaps it’s that the shock value of his purchase, in the age of clickbait, outweighs the technical achievements on his cypherpunk résumé.

Hanyecz, when asked if he ever tires of people asking him about the purchase, says that he sees it differently.

“I think it’s funny when people look at it that way,” he explained. “I think it’s one of those things where it’s a good catchy thing to get people’s attention. But I think anyone who gets genuinely interested [in Bitcoin] understands. It’s the same thing as, oh, let me go back in the past and buy Apple stock.

“At the time it was Monopoly money. Nobody cared — people would just give you some, so I didn’t figure I needed to be greedy with it.”

The father of GPU mining seems to approach the infamous pizza purchase, and questions surrounding it, the same way he approaches Bitcoin: with good-humored aplomb, rather than bitter regret. In fact, he doesn’t see it as a loss at all; he sees it as a win.

“A trade happens because both parties think they’re getting a good deal,” he said. “I felt like I was beating the internet, getting free food. I was like, ‘Man, I got these GPUs linked together, now I’m going to mine twice as fast. I’m just going to be eating free food; I’ll never have to buy food again.’”

Hanyecz has maintained this upbeat outlook even as bitcoin has catapulted past all-time high after all-time high throughout the years. This is probably because his treatment of Bitcoin hasn’t changed since he first joined the open-source community in 2010. To him, it’s still a hobby, not a career.

“Honestly, I just kinda stay out of it because there’s so much buzz,” he said. “I don’t want that kind of attention, and I certainly don’t want people thinking I’m Satoshi … I just figure it’s better to keep it as a hobby. I have a regular job. I don’t do Bitcoin full time. I don’t want it to be a professional thing that I’m on the hook for. I’m glad that I was involved to the extent that I was.”

We’re glad he was, as well. After all, he gave us Bitcoin Core for MacOS and GPU mining — oh, and all the pizza memes, too. They may not be as significant or impressive as Hanyecz’s other contributions, but they do make every May 22 for this community memorable (and delicious).

This article originally appeared on Bitcoin Magazine.

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Tether, a stablecoin tied to the dollar that is meant to mediate the volatility of other cryptocurrencies, is partly backed by bitcoin.

As detailed in court documents obtained by The Block, Tether admitted to using some of the cash reserves meant to back its stablecoin to purchase bitcoin, among other assets.

This revelation is the latest in legal proceedings between the New York Attorney General (NYAG) and Bitfinex, a leading cryptocurrency exchange which shares management with Tether. Bitfinex and the NYAG have gone back and forth in a battle of legal letters after the NYAG petitioned the New York Supreme Court to stop the exchange from drawing on a $900 million line of credit it established with Tether to cover $850 million in losses it incurred when its fiduciary relationship with payment processor Crypto Capital went south.

The war of words has offered a rare glimpse into Tether/Bitfinex’s shared business practices, including the revelation that Tether’s reserves are only 74 percent backed following the $850 million loss. Additionally, Bitfinex used Crypto Capital to commingle business and customer funds. Now, Bitfinex’s legal counsel is saying that some of these funds were used to buy bitcoin.

“Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin,” David Miller, Bitfinex’s attorney, testified, adding that it is a “small amount.”

Presiding Judge Joel M. Cohen responded by saying that, while it “may be a little beyond the issue,” that “Tether sounded to me like sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate,” then that supports the NYAG’s argument.

The rest of the document outlines an argument for why the NYAG’s injunction has grounds under the Martin Act, an anti-fraud law that gives the NYAG legal leeway to bring action against allegedly fraudulent securities issuers. The NYAG argues that, under the Martin Act, it has jurisdiction to pursue Bitfinex/Tether because neither offered sufficient disclosure to stakeholders (namely, Bitfinex users and tether holders).

But the judge opened up his remarks questioning this legal basis, stating that “it [isn’t] 100 percent clear what the violation [is].”

“The petitioner [NYAG] ... very clearly and correctly said that the Attorney General’s Office is not a regulator, so there is no general mandate in the Martin Act to maintain the financial stability of any given company unless there is a statutory violation to pursue,” Judge Cohen said. “So the petitioner ... has to show why in this particular case instability or failure to have enough coverage in terms of dollars constituted by itself a violation.”

Miller criticized the NYAG as having a “lack of jurisdiction” in the matter, arguing that the attorney general is only going after Bitfinex/Tether because it dislikes bitcoin as an asset. He also argues that Tether made proper disclosures regarding its fractional reserves in a February website update.

The May 16 hearing followed a temporary injunction granted by judge Cohen that would freeze Bitfinex’s line of credit for 90 days, a timeframe Bitfinex/Tether sought to reduce to 45 days.

In the background of the courtroom battle, Bitfinex launched a token sale to the tune of $1 billion to aid fund recovery efforts. The token, LEO, sold out and is currently trading; the $1 billion raised will go to cover some of the $850 million lost to Crypto Capital, with Bitfinex planning to buy back and burn outstanding supply until all tokens are out of circulation.

This article originally appeared on Bitcoin Magazine.

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To Bitcoin or Not to Bitcoin

During the “scaling debate” before the SegWit2X user-activated soft fork (UASF), Bitcoin businesses were getting their first bitter taste of Bitcoin’s censorship resistance. They wanted change to be easier. They wanted their influence to be effective. They wanted to take shortcuts. Unfortunately for them, Bitcoin was created to resist control. Entities that seek to position themselves against Bitcoin are choosing a path of perpetual hypocrisy and frustration.

Those who follow me in interviews might be tired of hearing this, but each Bitcoin business has the choice of making Bitcoin its best friend or its worst enemy. The signers of the New York Agreement chose to make Bitcoin their biggest problem and, to this day, most of them have only gotten worse in this regard.

How can you tell the difference between a genuine Bitcoin business and an enemy? It’s simple! Sincere Bitcoin businesses focus on providing utility to Bitcoin and Bitcoiners, whereas antagonistic businesses maximize their ability to exploit their customers by securing as much of their value into their own custody as possible. That is the battle line. They are actors that want to compete with the old system, but there are true Bitcoin entities that work to delete the old system instead.

Back then, the big blockers claimed they merely wanted lower fees to make room for the billions of people clamoring at the imaginary gates of Bitcoin. But most of these businesses waited forever to activate SegWit, and some major ones still don’t even batch properly. They pollute our blockchain, withholding these efficiencies from their customers. Instead, they barrage new entrants with traps upon arrival, literally bribing them to learn about useless shitcoins and tokens.

Custody-preferring KYC businesses are wolves in sheep’s clothing seeking to liberate you from your BTC, but they should be seeking to liberate you from custodial banking.

Bitcoin is here to delete custodial trust and provide a new circular economy.

We’re Gonna Eat Their Lunch

Exchanges and other custodians basically acted as Bitcoin’s primitive second layer. They added central efficiencies, but the risks were exchange hacks, exit scams, closed accounts, censorship and surprise-KYC requirements.

Fast forward to the present and we have a new paradigm that has grown on top of Bitcoin. The Lightning Network anchors onto Bitcoin, providing a new way to transact. It is faster, less expensive, and capable of handling higher capacity. This is the first time we can truly use Bitcoin in a peer-to-peer fashion, instantly, within a much, much different protocol environment, an environment where you simply do not need to give trusted custody to receive centralized services.

But the former NYA SegWit2X players are mostly ignoring Lightning, with the most notable exception being Bitfury and their Peach project. More than 50 businesses supposedly wanted better Bitcoin scaling and supported forking Bitcoin. Now the great majority of those businesses aren’t helping with development, funding, products or services for the Lightning Network.

I’m not convinced fiat businesses like Coinbase can convert from being enemies into allies of Bitcoin. They are deeply invested into the State and traditional finance, employing strategies that leverage their relationships with them. They don’t understand how to design a new type of business that can actually profit from providing utility to Bitcoin. Thankfully, some of us do get it, and we’re gonna eat their lunch.

I’m so excited about all the ways we can build on Lightning. The fact that most Silicon Valley, VC-backed businesses aren’t interested in Lightning is embarrassing. We have a huge head start, but we need to start behaving more intentionally and strategically to capture it.

Dude, Where’s My Revolution?

Big blockers like to taunt Lightning supporters by pointing out how Lightning Network completion seems to perpetually be 18 months away. It’s an unfair perspective considering how far we have come. It’s probably silly to think programmable money will ever be “done” at all.

However, we have to be careful not to prove them right. In my opinion, Bitcoin and Lightning are at a turning point, and it is finally time to begin the Bitcoin Revolution. We have to ride the line between endlessly making tech and endlessly making toys. It’s time to start solving problems for people with actual products and stop making features for the sake of demonstrating tech. It’s time to start helping people break the rules with Bitcoin and to make Lightning irresistible to businesses and consumers.

The war to delete custodial Bitcoin as a concept has begun. The foundation for a circular Bitcoin economy is being laid out as I type. Pick up a hammer and get in here!

We keep saying that blockchain-not-Bitcoin is stupid. We keep mocking ICOs. But these projects keep getting all the investment dollars! That is about to change.

The Agile Bitcoin Business

In this new economy, a new type of Bitcoin business is emerging that will address following product cycle: Trust > Hybrid Trust > Trustless.

Until now, many businesses focused on providing trusted services that require or encourage the customer to relinquish custody of their coins. Lightning expands business opportunities to enable hybrid, or momentary, trust, as well as trustless services.

I believe this will result in an environment where smart entrepreneurs can identify products that people need in the interim between now and when all commerce can be trustless, advancing their products to require less and less trust over time with new technologies.

The Center for Decentralization

Lightning removes the trust aspect of centralization and creates new dynamics to leverage trust, reducing risks to mere inconveniences. This is a design tool for us to utilize. This is what Bitcoin commerce has been waiting for.

Familiarize yourself with the concept of hybrid trust: the temporary trust a business earns via reputation and their incentive to maintain it. This might sound like babble upon first reading it, but you can look at Bitrefill’s Thor Turbo channels for a great example.

People need to trust that Bitrefill will actually deliver the turbo channel when they purchase it, that Bitrefill will deliver the correct amount of Bitcoin in their channel, and that Bitrefill will relay any attempts to use the channel. But all of that happens in a moment. Then, Bitrefill delivers the channel instantly, and lets you spend your coin instantly. If you get skittish or Bitrefill doesn’t relay your spends, you can close the channel. You are free to opt out or in at any time, and Bitrefill only has custody of your BTC for the brief moment when you are purchasing the channel.

Thor Turbo channels can also follow the product path I mentioned earlier by going from a service purchased within the Bitrefill.com platform, to a Bitrefill white label API service, to a native protocol service in every node that could also be mapped when routing to instantly open new paths. Still with me?

Bitcoin was always a push payment system, but Lightning allows businesses to get creative with it because we don’t have to break the protocol to change rules for new products and services.

Consensus Is Not Required in the Lightning Network

The landscape on the Lightning Network is such that it allows for subnetworks and external networks to be interoperable. While there is a BOLT specification process, it is only necessary if you want to get a feature into the consensus of cooperating developers, not the consensus of users.

The nature of the Lightning Network being truly peer-to-peer allows for you to have special rules with any peer or set of peers. This is a feature Bitcoin’s base layer isn’t very good at. Use it.

The Lightning Network Protocol Is Market Driven

Here is an example of a recurring question I overheard at the New York Blockchain Week conferences last week:

“When do you think they will raise the Lightning channel size limit?”
“When Lightning Labs is ready, I guess.”

I have tons of respect for Lightning Labs and everyone on that team. I met many of them for the first time last week, and it was truly a delight to talk shop with them. I have so much to thank them for, but I cannot allow this misconception to grow.

There is no such thing as consensus on the Lightning Network; instead, we have compatibility. That means you can literally break the rules of the majority, as long as there are other people that have an incentive to break the rules with you.

If you want bigger channels, make them bigger. You do not need permission, you need cooperation. You do not need consensus, you need incentive.

Let me let you in on a little secret. Objectively speaking, Bitrefill is running the most economically relevant nodes on the Lightning Network and demonstrating the concept of a Lightning Service Provider (LSP) in its early stages by creatively leveraging hybrid trust to provide utility to real consumers.

Lightning payments are currently at 5 percent of unique payments received by Bitrefill, growing at a rate of ~35 percent monthly.

People are asking a lot from us and putting some pretty big expectations on our shoulders. A little bit of that is our fault for being Lightning cheerleaders in the media, but most of it is just pure natural market-demand behavior. Users are using our platform to secure real utility.

I am surrounded by all of this every day, and now all kinds of cool observations are becoming apparent to me. We don’t have to perform acrobatics to route transactions because everyone already likes being connected to us. We don’t have to question whether to do more with Lightning because the market is quite literally demanding it.

We don’t have to wait for permission to make new Lightning products.

It sounds scary, doesn’t it? Bitcoin has a playground now, and it’s kind of a big deal.

While decentralization is very necessary to make Bitcoin work, it is not necessary to advance Lightning’s usefulness.

Competition, Cooperation and Consolidation

I see a LOT of Lightning projects, wallets, games, labs and businesses popping up, but I’d like to see some consolidation and cooperation, both for efficiency and for the users’ sake. I do not want to use a different app for everything, nor do I want any of my favorite apps to be abandoned.

If Lightning is a marketplace of implementations and services, that means there will be winners and losers. Entities are competing for funding, users and overall uptake within the network.

These dynamics are evident at Bitrefill already. Some of our nodes use the Eclair implementation because the other implementations don’t support the tech necessary to provide Thor Turbo channels. Turbo channel buyers have to use Bitcoin Lightning Wallet on Android for the same reason. Should Bitrefill lobby all wallets and implementations to add support? Should we submit a BOLT when we already know some developers don’t appreciate this feature? Should we wait for Bitcoiners to complain to their favorite wallet providers to implement support? Should we make our own wallet and skip these concerns?

I’m not sure if cooperation will merely result in consolidation or if it can transcend competition in this environment, but I’m sure everyone will try all angles to stay agile.

Now that Bitcoin and Lightning can actually advance in a path that the market demands, we should be more strategic about the projects we choose to invest our time and money on. Start thinking like a product manager, UX designer and business development person all at once. Zoom out, plan and be intentional.

I hope no one sees this post as hostile to Bitcoin or anyone involved in Lightning Network development. I’m trying to share my observations in hopes they will accelerate Bitcoin’s inevitability.

If I have time, I will do a follow up post going deeper into the interesting kinds of products you can create if you leverage a little centralization and some of Lightning’s unique qualities.

… Or, I will keep the ideas to myself and get back to work!

This article originally appeared on Bitcoin Magazine.

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The U.S. Internal Revenue Service (IRS) is planning to overhaul its methods for determining the federal taxes due on cryptocurrency payments to improve clarity for taxpayers.

The decision stems from the recent attempt by Minnesota Representative Tom Emmer to pass legislation reforming the way that hard forks and the resultant “forkcoins” are viewed by tax agencies. Joined by members of his “Blockchain Caucus,” Emmer’s initial attempt to pass the bill failed in September 2018 and he has promised to reintroduce a similar bill in May 2019.

On April 11, 2019, Emmer and the Blockchain Caucus sent an open letter to IRS Commissioner Charles Rettig drawing attention to their concerns about forkcoins under the U.S. tax code and raising more general questions about crypto tax reform.

On May 16, 2019, Rettig responded with an open letter to Congressman Emmer, thanking him for his request for more clarity around cryptocurrency taxes.

“I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions and have made it a priority of the IRS to issue guidance,” Rettig wrote. “Specifically, your letter mentions (1) acceptable methods for calculating cost basis; (2) acceptable methods of cost basis assignment; and (3) tax treatment of forks. We have been considering these issues and intend to publish guidance addressing these and other issues soon.”

As a show of good faith, Rettig also invited Emmer and the members of the Blockchain Caucus to contact him and his office with any questions they may have about the IRS’ future efforts.

This article originally appeared on Bitcoin Magazine.

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On March 21, 2019, Dutch news outlet NL Times reported that “Berry van M.,” a 33-year-old Dutch businessman and the operator of now-defunct trading platform Koinz Trading, has been arrested on charges of deceiving investors with a bogus bitcoin mining scheme.

The report claims that van M. was the director of companies that sold “computers for mining Bitcoin” since 2017 and that he “managed the computers in a so-called ‘mining farm.’” He convinced investors that they would receive returns of 0.3 BTC per month. But when the investors did not receive these funds and found that they could not get their hands on the hardware they had invested in, they contacted the police.

In total, the report claims that van M. raised investments totaling about €100 million (approximately $111 million). But instead of using the investments to purchase mining rigs, he used them to bankroll a lavish lifestyle.

“The man spent the money received from investors on all kinds of luxury items like cars, motorbikes, traveling and gambling,” per the report.

This article originally appeared on Bitcoin Magazine.

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