Bitcoin Mining Legalized in Venezuela But Being Centralized with National Digital Mining Pool

  • Venezuela has fully legalized bitcoin mining.

According to a recent decree from the National Superintendency of Crypto Assets and Related Activities (SUNACRIP), the use, commercialization, import, and creation of mining equipment in the country is regulated under the new law, as per the local media reports.

As per the decree that came into effect this week, those residents interested in mining bitcoin and other cryptos must apply for a license with the Comprehensive Registry of Miners (RIM), which will facilitate the processing of licenses.

A special license will be granted to those users who wish to manufacture using ASIC equipment or built mining farms. Such users are required to provide information about the type of mining activities they are carrying out.

Besides supervising the creation and import of mining equipment, the authorities will also inspect the mining farms, without any exceptions. Additionally, those involved in mining in Venezuela must keep their documentation and records for ten years.

The cost of managing these licenses is not known yet but will be published later by RIM.

The document further confirms creating a National Digital Mining Pool to bring together all the miners in the territory, and those operating outside the pool will be subject to sanctions and infractions.

By making mining centralized, the government would be the one to control the income earned in the form of rewards from mining BTC and further distributing it among the contributors. This means, the government can impose taxes on the payments and even freeze them altogether.

Venezuela is currently going through an economic and political crisis on top of the hyperinflation and sanctions led by the US. Previously, President Nicolas Maduro launched an oil-pegged crypto called petro, which the US Department of Justice alleged is used to circumvent the sanctions and conceal illicit drug-related transactions.

Also Read: Venezuela Blocks Access to Coinbase & Currency Exchange Platform MercaDolar

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Author: AnTy

Russian Parliament Pushes Forward With the Waves-based Blockchain Voting; Despite ID Issues

  • Russia’s blockchain-oriented voting system set to be used in the upcoming national elections is yet to be fully efficient but will be implemented nonetheless.
  • According to the country’s Central Election Commission, this initiative’s user tests have been successful, although some improvements need to be made on voter identification.

First reported by Russian media, Kommersant, the newspaper, highlighted that Yaroslavskaya and Kurskaya parliamentary elections scheduled for September 13 would leverage this blockchain solution for remote voting. So far, around 15,000 people have registered to vote through this blockchain-based ecosystem, while at least 3,500 had participated in the project’s testing.

The Technical Underpinnings

This project was developed under Russia’s state back telco giant, Rostelecom, which will also host the blockchain nodes on its company servers. Built on the enterprise version of Waves blockchain, the e-voting system leverages some advanced solutions, including encrypted tech that is yet to be battle-tested. Dubbed ‘homomorphic encryption,’ this tech keeps the votes encrypted until voting is over when they can finally be decrypted.

While the value proposed is better than what was used in Moscow’s e-voting, homomorphic encryption poses a challenge when it comes to voter identification. MixBytes Co-founder and Cybersec expert, Sergey Prilutsky, told Coindesk that authorities could meddle with the votes if they are in control of the list. In addition to this, the embedded encryption in homomorphic ‘elliptic curves’ is not considered secure by Russia’s counter-intelligence agency, FSB.

“It uses elliptic curves that are not considered secure by the FSB,” said the Chief Product Officer of Waves, Artem Kalikhov.

He, however, went on to assure stakeholders that the firm is working on this and noted progress with other functions such as e-signatures, which have already been certified by the FSB. Also, Kalikhov said that getting the ‘homomorphic encryption’ certification is unlikely to be a challenge that might stall development.

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Author: Edwin Munyui

US Regulator Authorizes National Banks and Federal Saving Institutions as Crypto Custodians

U.S. regulator, the Office of the Comptroller of Currency (OCC), allows federal banks and national savings institutions to officially custody cryptocurrencies for their customers. The statement released on July 22, confirms that any national bank or savings facility can now hold on to unique cryptographic keys of cryptocurrencies in their vaults pertaining to custody services.

According to the statement, the decision to allow banks to offer crypto custodial services follows a growing demand by investors to safely store their cryptographic keys, which, if lost, capitulates the value of the assets. This news opens up the field to large banks to provide these services, relieving current state-chartered crypto custodians such as Coinbase and Gemini.

Nonetheless, crypto custodial services differ from the traditional custody services banks offer, the statement explained. Given that the digital assets are not physical, digital wallets will be required to safely store the cryptographic keys.

The release, which comes a month after the OCC asked for public input on Crypto and DLT, further states that the increasing technological innovations in the financial world call for “banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers.”

A modern form of traditional banking activities

Discussing the new regulation, the author of the statement, Jonathan V. Gould, the Senior Deputy Comptroller & Chief Counsel, claimed that cryptocurrency custodial services Is a new form of already existing asset custodian businesses of national banks.

The OCC permits national banks and savings to hold their customers’ cryptocurrencies in both a fiduciary and non-fiduciary role. Banks holding crypto in a fiduciary capacity will need to manage them in the same way as they manage other assets while non-fiduciary capacity targets holding cryptographic keys that control the actual transfer of the cryptocurrency.

Manage your cryptocurrency risk

Brian Brooks, the current head of OCC and a former executive at Coinbase, however, warns on the risk management of custody services across national banks. Focusing on customer assets protection, Brooks said,

“This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”

The statement concludes by warning custodians to focus on risk management techniques, due diligence, and KYC/AML compliance as they begin the operations on holding crypto assets. No specific recommendation of customers was provided in the statement with banks open to deal with crypto institutions, as recently seen with JPMorgan onboarding Coinbase and Gemini.

This, however, should be done with the thought that cryptocurrencies do hold their risks and challenges. It states,

“A national bank or FSA engaging in new activities should develop and implement those activities consistent with sound risk management practices and align them with the bank’s overall business plans and strategies as set forth in OCC guidance.”

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Author: Lujan Odera

China’s Supreme People’s Court Releases Guidelines On Protection Of Digital Assets As Property

China’s Supreme People’s Court and the National Development and Reform Commission (NDRC) released a joint statement on the expansion of property rights around various items, including virtual property, data, and digital currencies.

The guideline released on July 22 aims at improving the socialist market to offer a stronger protection stance for private ownership of property. This document opens up regulation and legal protection for new classes of property such as digital assets, virtual currencies, and data.

The new laws focus on seven major areas, including property protection, market order, fair trade, and livelihood guarantee, He Xiaorang, a member of the judicial committee, said. The new guidelines further aim at “protecting private enterprises’ properties from illegal seizing or freezing as well as preventing wrongful rulings by public or judicial systems.”

Despite the mention of digital assets and virtual currencies, the guideline did not define fully what constitutes a digital currency. However, with the digital yuan (CBDC) development in place, the current changes point to the government setting up a solid regulation structure before its launch.

China: Digital assets as property

China’s efforts in developing a CBDC are well beyond what most of the nations across the globe have considered. The government passed its first crypto law in November 2019, aiming at standardizing the application and management of passwords. The law, adopted earlier in the year, protects cryptographic intellectual property rights and promotes the progress and innovation of cryptography and public/private key technology.

Digital assets have been classified as property in a couple of instances across China too. A court judge in April declared Ethereum (ETH) as property in a legal theft case presented. Notwithstanding, back in 2018, another judge ruled on Bitcoin being treated as virtual property across the country.

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Author: Lujan Odera

China’s National Blockchain Service Network Integrates Chainlink; Pushes LINK Prices Near ATH

Chainlink is back to recording gains, up nearly 12% on the back of partnership with China’s national Blockchain Services Network.

The recently launched BSN will be integrating the Chainlink oracle function to its network that enables governments and enterprises to incorporate real-world data such as IoT data, weather, location information, and financial asset prices into their BSN applications. SNZ pool, a PoS operator, will run nodes to support the operation.

Chainlink will be integrated into BSN via the interchain service hub of IRITA, a consortium blockchain product. It will allow BSN blockchain to receive external off-chain data through Chainlink oracles.

The interchain service hub is the first step toward achieving easy and convenient interoperability among all the decentralized applications (Dapps) deployed on the network. Xiang Dai, Deputy Secretary of the BSN Development Association and Director of Planning and Consultation with the China Mobile Group Design Institute Co., Ltd. said,

“We believe that this integration will transform blockchain applications and foster greater growth of the BSN ecosystem – in China and around the world.”

Providing Interoperability to all DApps

This integration is said to provide BSN users reliability, interconnectivity, and additional security to help fuel the growth and adoption of blockchain applications in China and around the world. Sergey Nazarov, co-founder of Chainlink said,

“We’re excited to help build out BSN’s global infrastructure project by providing secure and reliable oracle services. By connecting BSN applications to real-world data, smart contracts can bring new levels of automation and trust to global agreements.”

A working prototype using Chainlink oracle is already underway, and BSN and SNZpool have also allocated resources to support the development of node infrastructure to run IRITA and Chainlink nodes.

BSN is designed to be a one-stop-shop for companies to access ultra-low-cost blockchain cloud computing services. It is used by the likes of China’s State Information Center, China Mobile, China Unionpay, and Red Date Technologies.

“One of the main purposes of BSN is to provide interoperability to all DApps, regardless of whether they are for permissioned chains or public chains,” said Yifan He, CEO of Red Date Technology and BSN co-founder. Also stating,

“On BSN, each Dapp should be able to call any other Dapps in a very convenient and low-cost way.”

More Bullishness

Today, Chainlink also announced that the Ontology network is working towards a mainnet deployment of Chainlink to securely access off-chain data feeds, web APIs, and traditional bank payments. Andy Ji, Co-founder of Ontology said,

“Chainlink has demonstrated a stellar track record in providing bespoke oracle solutions to leading global enterprises including Google, Oracle, and SWIFT.

This experience underlines Chainlink’s credentials as the undisputed, market-leading decentralized oracle network.

This collaboration marks another milestone in our platforms’ long-standing and fruitful relationship, and we are excited to see this integration come to life.”

LINK is today’s biggest gainer among the top 50 cryptocurrencies. The 13th largest cryptocurrency by market cap of $1.6 billion is currently trading at $4.80, just a little off from its all-time high of $4.95 hit on March 4, 2020. In 2020 so far, this hot cryptocurrency is up 160%.

Amidst this price action, people are removing their LINK from cryptocurrency exchanges. Over 285k LINK has been withdrawn from the Huobi exchange in the past 24 hours.

But this isn’t anything new. The total amount of LINK on exchanges has been declining since May 2019.

chainlink-link-tokens-on-exchange-wallets

This behavior, however, is further bullish for LINK as this indicates the investors are preferring hodling instead of taking profits.

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Author: AnTy

Cambodia’s Central Bank Rolls Out Blockchain Payment System Whitepaper; It’s Not A CBDC

After three years of development, the Cambodian national digital currency may be out later this month, according to a recently released whitepaper.

The permissioned blockchain-based payments system differs from the central bank digital currencies, also known as CBDCs, being offered by several states, including China and Russia, the paper states.

Cambodia Launches “Project Bakong” Blockchain

The Kingdom has taken massive steps in introducing blockchain systems into its economy since the National Bank of Cambodia (NBC) set up a commission to look into distributed ledger technologies (DLTs) in the latter half of 2016. Project Bakong is permissioned, based on the Hyperledger Iroha, a business-oriented DLT platform.

A year later, the commission drafted a solution in different sectors of the economy that a quasi-digital currency may be useful under the auspice of “Project Bakong.”

According to the white paper, the project allows the country to transition from a heavily dollarized financial system to a real-time funds transfer system across the population, offering interbank transfers too.

“The implementation of Bakong would connect all financial institutions and payment service providers under a single payment platform which will allow for fund transfers to be processed on a real-time basis without the need of a centralized clearinghouse.”

Notwithstanding, the platform will also offer Cambodians a P2P platform that allows retail transfers and payment options as quickly as sending an email. The system is mobile-based to ensure reach and accessibility to open up the digital finance ecosystem to Cambodians, lifting them from extreme poverty levels.

‘Not a CBDC’

Despite NBC’s blockchain payment system being compared to CBDCs developed by China, Sweden, and the U.S., Cambodia’s system is quite different. While the CBDCs are developed and issued by the central bank, the quasi-digital currency will need to be “exchanged” for Khmer Riel, the official currency of Cambodia.

The paper describes the development of a blockchain payments system as a detour from the long-running use of the dollar. Given the relatively young population, the turn to digital payment systems may well be the key turning point, with over 5 million citizens already having e-wallets to transact digitally.

The paper states the platform was set to launch in early 2020 but is yet to. NBC announced in the fall of 2019 that the payment system could also take on international payments in the future.

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Author: Lujan Odera

U.S Federal Government Subsidiary Releases A $255k Funding For “Crypto Dollar” Development

  • The U.S. National Science Foundation is funding a blockchain project aiming to introduce a “Proof-of-Balance (PoB) consensus mechanism platform.
  • The project aims to directly convert the current supply of circulating dollars into a scarce cryptocurrency allowing users to divert from the volatile cryptocurrencies to the dollar-based digital coin.

In an official announcement by the Key Retroactivity Network Consensus (KRNC), the National Science Foundation, an independent organization under the U.S Federal government is awarding the blockchain project a $225,000 funding from the American Seed Fund to develop a crypto dollar. The American Seed Fund disburses over $200 million to financial and technology startups showing potential in the technical and commercial field.

The crypto dollar will be very much alike to Bitcoin (BTC), given it is scarce, secure and quick to send between peers. However, the project aims to replace the whole crypto market by allowing holders of the dollar to transact on blockchains without the need for BTC, ETH, and other altcoins.

‘A Bitcoin-like platform’

The blockchain will employ a new consensus mechanism, the proof-of-balance (PoB) to replace the ‘wasteful” proof of work (PoW) used on Bitcoin and also the proof of stake set to be implemented on Ethereum 2.0, KRNC CEO and chief scientist Clint Ehrlich said.

According to Ehrlich’s statement, the KRNC’s proof of balance system will enhance the security and management of the platform. Here’s how it works;

The proof of balance system calculates the current wealth of dollars circulating in the global economy and transforming it into a scarce digital asset. Ehrlich explains,

“If today, there is $15 trillion when the currency is launched, it will be possible to only ever unlock 15 trillion [crypto] dollars.”

To ease the transition to the crypto dollar standard users will be able to deposit fiat cash and receive these crypto dollars in return. Users will then be able to use these dollars digitally in a similar way to fiat/ physical dollar that they hold.

Transfer of power to the rich?

The need for blockchains has always been a transfer of power from the centralized rich entities, corporations and governments. However, the proof of balance employed by the KRNC may see the control remain to whoever can pay the most on mining costs.

“Currency is asymmetric so even if an adversary tries to purchase a larger stake, as long as the initial majority of all the fiat money is owned by honest agents the system can remain secure. It’s a way to provide superior security at zero cost.”

Ehrlich believes the current system offers a fairer market giving the billions of people able to access dollars, a voice on the direction of platform. He concludes,

“The playing field is not limited to a few buyers and minors but the billions of people who own fiat money.”

Despite the funding, the National Science Foundation program manager in charge of the grant, Anna Brady-Estevez, emphasized that the National Science Foundation does not endorse the transformation of the dollar into cryptocurrency.

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Author: Lujan Odera

Hong Kong Residents Rushing to US Dollars as the US-China Cold War Intensifies

China is moving closer to impose a new national security law in Hong Kong following months of violent pro-democracy protests last year.

This has expats and anyone who can afford to flee Hong Kong and move to other countries. Amidst this, the residents of Hong Kong have been exchanging more and more of their HKD holdings into US Dollars at banks and money exchange counters.

This rush for USD is forcing many exchangers in Hong Kong to turn away hundreds of customers after they ran out of currency amidst the fears that the US could end the preferential status of the city.

Last week, President Donald Trump said the US will end its preferential treatment of Hong Kong as a customs and travel territory from the rest of China. This announcement came just days after the Secretary of State Mike Pompeo said Hong Kong was no longer autonomous from China to warrant special treatment.

China said on Monday that any attempt by the US to harm China will be met with countermeasures.

“Any words or actions by the U.S. that harm China’s interests will meet with China’s firm counterattack,” said Chinese foreign ministry spokesman Zhao Lijian.

HKD’s 36-year-old peg to the US dollar

There are also fears that the Trump administration might break the 36-year-old peg system that fixes the exchange rate of currency at 7.8 Hong Kong dollars per US dollar. HKD was first pegged to USD in 1983.

City’s finance secretary Paul Chan said on Monday that they have no plans to change its currency peg to US dollar and the Asian financial hub hasn’t seen any “obvious” capital outflows yet.

The Hong Kong Monetary Authority (HKMA) along with local banks and investors, all can buy and sell US dollars in the open market.

Moreover, a temporary repurchase agreement was introduced by the US Federal Reserve in March that made it easier for central banks to get USD. This arrangement which is to last six months is part of the efforts to combat the economic effects triggered by COVID-19.

In April, the HKMA introduced a $10 billion liquidity facility to provide all 162 banks in the city with access to USD made available by the Fed.

US dollar is out of stock

Last week, the demand for US currency surged after Chain’s new legislation endorsed to craft a law for Hong Kong that would criminalize acts and activities of secession, subversion of state power, terrorism, and foreign interference.

In response, HK residents rushed to convert their local currency into US dollars, which they view as more stable.

Demand for currency actually increased 10 times last week. More and more customers are looking to switch large sums, “hundreds of thousands or even millions of Hong Kong dollars – at a time.”

“The US dollar is out of stock everywhere. We’ve offered every last bit of our supplies to our customers,” said Eric Wong Wai-lam, who runs Rich Bird Currency Exchange in Sham Shui Po and was forced to turn away 600 customers.

Residents are also looking for alternatives like the pound, Euro, and Australian dollar. “People will take anything you have,” he said.

City’s largest banks, HSBC also had some of the automated teller machines run out of US dollars.

Increased adoption for Bitcoin and Stablecoins

Last year, when protests surged in Hong Kong, the city turned to bitcoin, which traded at a premium. On Paxful, the demand for BTC in the city has been growing throughout 2020 which like last time could see another spike.

Now that there are uncertainties over the city’s economic future, Hong Kong residents may flock to the decentralized, censorship-resistant cryptocurrency and even to USD pegged stablecoins which have been seeing immense adoption during the recent market sell-off.

During the first quarter of 2020, as the USD became a hot commodity so did the stablecoin in the crypto market. One of the reasons for the increased adoption of USD-pegged digital currencies was the global shortage of US dollars.

Moreover, the stock and crypto market could see the effect of the US-China jitters, although for now, both are stable.

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Author: AnTy

China’s National People’s Congress (NPC) Suggests a Government-Backed Blockchain Fund

The National People’s Congress (NPC) in China has proposed the creation of a government-backed blockchain fund in its ongoing annual meeting.

The Chinese legislative body began consultative meetings last week as part of its political advisory role. According to its Deputy Director, Jieqin Tan, a blockchain fund would help spur growth in the industry.

This milestone comes shortly after the People’s Political Consultative Conference (PPC), during which a regional stablecoin was proposed. Basically, the PPC operates as a lower legislative body compared to the NPC; proposals tabled by delegates of the latter are more weighty and likely to be considered.

However, going by the recent blockchain and crypto sunrise wave in China, a regional stablecoin would not be completely out of the picture.

The Government Blockchain Fund Proposal

Jieqin Tan suggested that the blockchain fund could be steered by the Chinese government. Once up and running, the fund would focus on nurturing innovations within the blockchain space. More especially, unicorns and startups with a promising outlook given the current state of blockchain integration and emerging challenges.

Should this initiative be successful, Tan is optimistic that it will improve China’s odds in capitalizing on a first-mover advantage. In addition, blockchain tech has the potential to push China’s oversight towards ‘smart governance’.

Tan, therefore, thinks that funding and supporting the industry would increase the security and sovereignty of the Chinese people. In his view, the industry should be consolidated based on a three-dimensional strategic plan:

“From the bottom technology standard, middle industry application development to the top-level system design, the national blockchain technology, industry and supervision three-dimensional strategic planning system should be well coordinated.”

Despite touting the proposal as a good initiative, Tan was keen to highlight that blockchain tech has had its fair share of challenges. Particularly, scaling issues have emerged as more players join existing ecosystems. Furthermore, the industry is still short of talent and operates on a huge knowledge gap making it hard for information to be impactful.

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Author: Edwin Munyui

Iran’s Fiat, Rial, Becomes Another Victim of Hyperinflation As Govt Releases ‘Toman’

Iran’s national fiat, Rial, has become the latest victim of hyperinflation due to constant trade sanctions from the United States even in times of the pandemic. Now the Iranian government is looking for an alternative to replace Rial in the coming years.

In a report published in a local daily on 4th May, the Iranian parliament has passed a bill titled ‘Reforming Monetary and Banking Law’ which would see the country move from their national fiat rial to the new alternative called toman in the next two years. Each toman is valued at 10.000 rials.

Hyperinflation has wreaked havoc on the economies of many countries in the past, especially those who are not an ally to the United States.

Just a couple of weeks back, Libya saw the value of its national fiat fall by 50% causing a series of protests and the riot-like situation on streets where the citizens were seen attacking the central bank.

Venezuela has become a default example of how hyperinflation can bring even a wealthy country to its knees, and as of today, their national fiat bolivar is not even worth the paper they are printed on.

Iran, on the other hand, has been mostly faced the wrath of the US sanctions which prohibit them to make trades in the international trade market.

Even during these conditions where a virus outbreak has ruined the economies of even developed nations, many thought these sanctions would be lifted on humanitarian grounds, however, that did not happen. In 2018 the official exchange rate for 1 US dollar was set at 42,000 rials and it has continued at the same rate even today.

However, bark markets are seeing exchange rates as high as 156,000 rials due to the ongoing economic crisis created by the sanctions and ongoing pandemic.

LocalBitcoins Selling BTC at $35,000 as per Local Exchange Rates

While BTC is trading under $9k on all of the foreign crypto exchanges, the inflation has skyrocketed the local value of BTC at around $35,000. 1 BTC on LocalBitcoins is available at 1,445,658,900 rials which when converted to USD comes around $34,500.

The new alternative Toman is set to take a couple of zeroes from its inflated currency but, it won’t really change the overall proposition of Rial.

Iran has been also keenly following the crypto space in hopes of regulating it and utilizing it to access the international trade markets. Last year, the country also regulated mining given it has an abundant supply of clean energy and many are hopeful that they would also regulate the use of cryptocurrencies soon.

Decentralized Currency Can Help Countries Overcome Hyperinflation and Trade Sanctions

The recent condition of Iran, Libya, Venezuela and many other nations highlights the flaws of fiat systems and how the monopoly of one currency can ruin several nations.

These issues can be easily overcome with the help of decentralized currency like Bitcoin whose value is not controlled by one particular organization, and since there is only a finite number of these digital assets the chances of hyperinflation is also near impossible.

Iran was discussing Central Bank Issued Digital Currencies (CBDCs) to as an alternative to its existing fiat system, however, the present situation has forced it to look for an immediate alternative at present in the form of toman.

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Author: James W