EU Targets Bitcoin, Anonymous Currency In Fight Against Terrorist Financing

European leaders are planning to crack down on the use of bitcoin, prepaid credit cards and other methods of anonymous payment in response to the Paris attacks last week, Reuters reported Thursday. It's part of a crisis plan that aims to dismantle suspected terrorist financing networks after the massacre, claimed by the Islamic State group, killed 129 people and wounded hundreds.

Interior and justice ministers from throughout the European Union are scheduled to meet in Brussels Friday, where they will encourage the leaders to “strengthen controls of nonbanking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by prepaid credit cards,” according to a draft obtained by Reuters.

Bitcoin is the most popular form of digital cryptocurrency, with users able to transact in relative anonymity with fees lower than those generally imposed by credit card processors. It's frequently used as part of criminal dealings, though it's not clear to what extent ISIS is doing so. The terrorist group also survives thanks to criminal activity, oil sales and donations from officials and wealthy individuals in Arab countries allied with the U.S.

Russian President Vladimir Putin also set up a commission to fight terrorist financing Wednesday. Putin issued a notice to Russia's central bank, prosecutor's office and regional authorities instructing them to immediately report any suspicious financial activity that could be linked to terrorism. Among those encouraged by Putin's stance was President Barack Obama, who, after years of frosty relations over a number of issues, deemed the Russian leader a “constructive partner” in the global fight against ISIS.

IRS has no strategy for bitcoin, inspector general warns

The IRS doesn't have a tax compliance strategy to address the increasing use of virtual currencies like bitcoin, an inspector general warned in a report released Tuesday.

"It is imperative that the IRS ensures that those who engage in activities using virtual currencies comply with all of their tax obligations," J. Russell George, Treasury Inspector General for Tax Administration, said in a statement.

Bitcoin and other virtual currencies, a new technology that has been gaining purchase, face an uneven patchwork of federal regulation.

Although the IRS issued guidance regarding virtual currencies and established a Virtual Currency Issue Team, the inspector general said, the agency still doesn't have a plan for ensuring that it fulfills its responsibilities related to the currencies. The IG said a plan is needed in part because bitcoin and other such currencies allow for anonymous payments, raising concerns about money laundering, illicit transactions and tax avoidance.

In particular, the watchdog warned, the IRS isn't ready to ensure compliance from businesses subject to the Bank Secrecy Act that are required to report on suspicious activities. The IRS is responsible for making sure that some non-banks comply with the law.

Additionally, it said the IRS needs to help taxpayers calculate and pay their tax obligations for bitcoin.

Because the agency defined bitcoin in 2014 as property rather than currency, users incur taxes when they spend or exchange them. For instance, if someone bought a bitcoin at $300 and then sold it for $700, they would owe capital gains taxes on $400. More confusingly, if they spent 0.004 bitcoin on a cup of coffee that cost $3 in U.S. dollars, they would have to calculate capital gains realized in that transaction.

The IRS needs to find out how to help individuals and businesses figure out how to calculate their tax obligations for those scenarios, the inspector general said. It noted that the Australian Taxation Office ruled that there would be no tax implications for personal transactions under $10,000 Australian

Bitcoin Startup Blockchain Adds 10 Millionth Wallet

Wallet service Blockchain has registered its 10 millionth bitcoin wallet.

Data shows that, as of today, 10,053,518 wallets have been created by users of the service. That's 7m more than Blockchain reported in February of last year, a significant jump in the roughly 20 months since that time. The service reported just under 9.4m wallets late last month.

Announcing the 10 millionth wallet on its blog, Blockchain cited factors such as the US presidential election, the devaluation of the Chinese yuan and the vote by the UK to leave the European Union as key drivers of interest in bitcoin.

The company said of the milestone:

"While there's still a lot to do, we can't help but pause this week to give thanks for the millions of users who are helping us build an open, fair and accessible financial future. We are excited and honored to be on this path with you all."

Earlier this month, Blockchain said that it was working with payments startup Coinify to create a new in-wallet bitcoin buying option. Currently in beta, the option is expected to see a wider European release in the weeks ahead, followed by a global rollout sometime next year.

Blockchain has raised $30m in venture funding to date from a single Series A round in 2014.

Learn more about Inchain

With so many cryptocurrency related thefts these days (especially with such a large platform that Bitcoin and all other coins are on), it's important to have the right security to defend your money and investment- but what if even that fails? Inchain has provided something never seen before in the cryptocurrency world to ensure that your losses will be mitigated, should it happen- insurance. Inchain has provided a unique service in the form of insurance for anybody wanting it, but you may be wondering- how does it even work and how much does it cost?

The most simple explanation is that Inchain has placed an ethereum contract that allows for almost completely autonomous operation, while still ensuring that almost nothing can mess with the contract in any way, shape, or form. It may even be more advanced than other forms of insurance, with all of the security that has been added in! Inchain has also planned to give out tokens to ensure that the platform itself is stable- similarly to a more popular token, Iconomi. Inchain will work as an asset that distributes part of profits earned from the platform to investors, thus granting investors a small passive profit. Inchain is perfect for those wanting to diversify their cryptocurrency portfolio or just for those wanting to hold tokens.

Investors can also vote to determine investment strategies - these are the choices that can be voted on for now:

• Dividends paid to investors in the DAO?
• Reinvestments made to the investment fund?
• Additional liquidity reserves placed in cold storages for paying out bond coupons and insurance compensations.

Investment returns are spent on bond coupons and then dividends are paid to Inchain DAO investors. As with most newer cryptocurrency services these days, Inchain has, as you can see, involved the community as much as possible in order to make sure that whatever happens is wanted by the community- the most important decisions, like investments and profit distribution, are all resting in the hands of Inchain investors. It's your choice! Inchain has also planned several bounties and a ICO for investors to hop onto the train. 100 million tokens will be distributed in total, with 85 million distributed to users, and 15 million for core activities. There will be no set rate on how much of the Inchain token will be distributed to each user- it will be determined at the end of the ICO once distribution is set to begin- a perfect opportunity for those wishing to make a quick profit to get in. The bonuses for investors is as follows- note that there is no bonus in investing after day 21. You may invest at https://ico.inchain.io/register - you will need to sign up first.

Discounts  for early investors:

• Day 1-7 20%;
• Day 8-14 10%;
• Day 15-21 5%;

Bounties will also be distributed as follows:

• 250,000 for the Inchain Bitcointalk signature campaign
• 350,000 for translation threads and maintaining national Inchain threads
• 400,000 (200,000 for each) for joining the Inchain Facebook group and for following Inchain on twitter.

There are plenty of opportunities for those that don't even want to spend a penny on the platform itself, so if you want to get a foot in the door, now's your chance!

More information about the Inchain project can be found here

Will Bitcoin Have Its Moment in the Trump Era?

History tells us that no international monetary system lasts forever. And as Barry Eichengreen, the leading thinker in this arena, has repeatedly reminded us, those systems tend to collapse very quickly, whether it was the dominance of Rome's coins, the British pound's status as the common unit of international trade, or the various periods in which the world aligned around the gold standard.

The same will be true for the dollar's unofficial status as the international reserve currency. Its hegemony will at some point disappear and, when it does, the fall will be swift as the world scrambles for a new commercial anchor.

Below I will make the case that the trigger for this decline, whether it happens in the next four years or not, could well have been put in place last Tuesday. A Trump presidency could hold the right ingredients for a dollar collapse.

I will also argue that this time, when the dollar system collapses, it won't be replaced by another outdated fiat currency like the euro, yen or Chinese yuan. Neither will we go back to a precious metals standard, however much gold bugs hanker for it.

In the interim, we may anchor world trade to a transitional, multilateral combination of these paper and commodity currencies, but soon enough it will prove to be too unwieldy and out of touch with a changing global economy.

The fact is we now operate in a digital economy in which economic activity is increasingly decentralized, with transactions happening peer-to-peer and, when the Internet of Things is in place, machine-to-machine. That online, decentralized economic architecture will require a digital, decentralized system of monetary exchange that bypasses the inefficient financial intermediaries of a broken banking system.

The solution might not be bitcoin per se, but the distributed, network-run system of value transfer that it represents will, I believe, provide the template for the future model. It's one possible explanation for why the digital currency got a bump on Tuesday evening through Wednesday.

Change is coming

Why might Trump set this chain of events in play? To be sure, we don't know what changes the next president will introduce, but he has definitely stoked uncertainty around the direction of US policy. And uncertainty, the enemy of efficient markets, can often have a self-fulfilling effect.

That's an unsatisfying answer, however. So let's also break down some of the ideas that Trump has floated and how they might change the international perception of America's commitment to the dollar-based international system:

Rights determined by ethnic background

Trump suggests we should discriminate against external foreigners (Muslim visitors to the US), domestic non-citizens (undocumented Hispanic immigrants) and domestic citizens (judges deemed unfit to serve for being of Mexican descent.) This is not just a moral issue; it goes to the heart of whether the law is impartially upheld in the US.

Blockchain: Why the 'Big Guys' Can’t Win

Matthew Spoke is CEO and founder of enterprise blockchain startup Nuco. He is a bitcoin and ethereum enthusiast, who has previously worked with Deloitte with the aim of advancing the use of smart distributed protocols.

In this opinion piece, Spoke looks at moves by tech industry incumbents to capture the emerging blockchain market, and offers a warning for the eventuality that they succeed. 

Chess pieces

There's a seemingly obvious marriage happening right now between two incredibly important Internet technologies, one that promised to make web businesses more scalable and organizations more efficient (which has happened to a large extent), as well as holding decentralization and disintermediation as the ultimate objective (on which the jury is still out).

Earlier this year, I wrote a piece about the "Race Towards Irrelevance" that seemed to be taking place among traditional organizations whose markets and business models stand to lose from the adoption of decentralized systems. Primarily, I was referring to some intermediary companies in the financial services industry who will struggle to redefine their value propositions as blockchains become more commonplace.

What I failed to include in my prior ramblings was that it's not only traditional industries and businesses who face this risk. Similar to the attention and investment that has poured into the "blockchain industry" from financial services firms, there are a number of global scale technology vendors positioning themselves to dominate this market – or, to a skeptic, centralize it.

I'm referring to "the cloud" and "the blockchain", two terms which should more accurately be used in the plural sense.

Decentralization is key

I'm not suggesting that cloud computing is not well suited to underlie blockchain infrastructures.

On the contrary, in many cases, there's an obvious match that allows for efficient scalability, robust node security and light weight onboarding, among other benefits. But (and this is a big but) these benefits quickly become irrelevant if we forget about the need for appropriate decentralization. Naturally, it's no surprise that the same companies who, to a large extent, brought us the mainframe and the PC, want a piece of the blockchain action. It's also no surprise that these same companies are already in the process of capturing large parts of the emerging blockchain market.

As the old adage goes: "nobody ever got fired for buying [insert big tech company here]."

In general, I think the entrance of big tech companies into this domain has had a positive impact. It has helped bring much needed credibility and reaffirm the importance of these new technologies. That said, as markets consider their adoption, we should encourage an objective analysis as to the appropriate implementation of this technology so as to achieve its intended outcome.

Although there are many reasons to trust the competency of  prominent technology vendors and the integrity of their systems, which have been proven for decades in other domains, let's keep in mind that the intended purpose of this paradigm shift is to eliminate the need for trust. Objectively, this means that a blockchain cannot be dependent on a single vendor's infrastructure or security.