The BitForex case

When Crypto Exchange Ranks analysed the stock BitForex stock exchange platform in a detailed blog post on 16 July, this caused a sensation.

All sorts of evidence had accumulated to accuse Bitcoin formula of Wash Trading

For example, the Singapore-based exchange has risen from 70th to 12th place on CoinMarketCap’s list of the world’s highest-volume exchanges in just a few weeks. With a trading volume of 227 million US dollars, Bitcoin formula is on a par with renowned exchanges such as Kraken and Kucoin:

But let’s take a look at the other inconsistencies at BitForex. The number of BitForex Twitter followers is almost 2,000, while Telegram has 73,000. This big difference suggests that Bitforex worked with bots at Telegram. BitForex also claims to be licensed in the EU on Twitter. However, there is no evidence to support this thesis. On the project’s website, the company states that it is registered in the Seychelles and only works with independent teams in certain countries.

BitForex also made bold allegations that they had 1.8 million users, bringing 15,000 more to the platform every day.

However, Crypto Exchange Ranks said:

“We see that the number of UU [Unique Users] of BitForex is 29,000. In return, Kucoin has 889,000 individual users. Kraken has 666,000 UU. Kucoin’s number of UUs is 30 times higher than BitForex’s, the number of UUs of Kraken is 23 times higher.”

It takes a certain amount of caution and skepticism before you entrust yourself to an Exchange. A possible way for ranking platforms to prevent regulation and at the same time protect investors from fraudsters would be to include as much information as possible in the ranking. In this way, the grievances could become obvious and speak for themselves.

The US authority CFTC has already addressed the problem of price manipulation – the investigations are ongoing.

What happens when all Bitcoin are mined?

“According to the agreement, the first transaction in a block is a special transaction that creates a new coin that becomes the property of the block producer. This creates an incentive for nodes to support the network. This creates an opportunity to distribute and circulate coins for the first time as there is no central authority to do so.

The continuous addition of a constant amount of new coins is analogous to gold mining, where an effort is made to bring gold into circulation. In our case, the effort is the time and electricity consumed by the computing power.

Satoshi writes in the Bitcoin loophole White Paper:

The incentive can also be financed by Bitcoin loophole transaction fees, says onlinebetrug. If the output value of a transaction is less than its input value, the difference is a transaction fee added to the incentive value of the block containing the transaction. Once a pre-determined number of coins have entered circulation, the incentive can swing completely to transaction fees and be completely exempt from inflation”.

By this Nakamoto means that the miners will continue to receive a reward for securing the network even if the Coinbase transaction ceases. As time goes on and Coinbase decreases, transaction fees become more and more important.

The End Game

So Bitcoin’s “End Game” is that the Coinbase is completely eliminated. The reward for the miners then consists exclusively of the transaction costs. It is impossible to determine these transaction fees today. However, we can make some assumptions:

Since the space in a block is finite, broadcasters have to pay a fee for their transactions. The amount of this fee depends on how many other transactions are waiting for confirmation from the miners. If you are in a hurry with your transaction, you can pay a higher transaction fee. This gives the miner a greater incentive. This creates an auction market in which the broadcasters bet for the place in the block chain.

If too few transactions take place, mining may become unprofitable for the miners. In this case, they would probably switch off their hardware or use a different crypto currency. So there is a balance between the hash rate on the network, Bitcoin’s rate and the number of transactions on the network.

Crypto currencies: Value investment or betting investment?

Not only Bitcoin, but crypto currencies in general have risen sharply recently. Bubble or investment? A look at the Altcoin investment.

Especially after the weekend of Ascension Day many people are wondering whether the price increase of the last few months is a sign of greater acceptance by the broad masses or only of greater speculation on the part of a small circle of enthusiasts.

And of course the question arises: within one year until 25 May the total market capital of crypto currencies more than quadrupled. Last week’s big dump faded whether this increase: even after this a rise of 350% was still recorded.

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In the last months many crypto currencies have increased incredibly strongly. The big three (BTC, ETH and XRP) have been talked about a lot, in a recent article I discussed the wildcards NEM and Bytecoin. But a look at the charts shows: partly unbelievable increases can also show crypto currencies, which at least can be seen as experiment (42coin) or even Shitcoin (Infinitecoin, no offense).

As great as such climbs are, so understandable are all the concerns that suspect a bubble in this development.

Tulips reloaded? Consideration of the concerns regarding a bladder

Some people suspect that this growth is primarily due to reinvesting previously generated money in new digital assets, i.e. that it is not greater acceptance but only larger whales that drive the price up.

It is doubtful whether many of these now strongly increased in value can hold these, even if investments such as Ethereum or Bitcoin are certainly to be valued differently than the 42Coin or Infinitecoin mentioned.

Ultimately, there are certain parallels to the South Sea bubble or to the dotcom bubble: there is a growing interest, which develops into an intoxication, which disregards all reason and sobriety, which are necessary in the investment.

In this respect one can already see that a bubble is partly present; currencies whose fundamental value can be disputed gain more value than established crypto currencies or digital assets that have a real countervalue.

It is also understandable that the myth of Bitcoin has been repeated in the Ethereum case: Investors shout “I would have invested earlier! “I should have invested more!” “If I hadn’t sold so early.”

As someone so appropriately wrote on Facebook: “Hätte, Hätte, Blockchain chain. Instead of regretting this, investors now hope for the Black Swan, which rises from the rather unknown crypto currencies. This results in the aforementioned rally to increase transactions for the purchase of some small currencies – in order to experience a sudden break either through a brutal dump or problems on stock markets. This in turn leads to a huge sellout and the partial bubble bursts.

Send Bitcoins via Facebook: Cryptosoft is that easy

“When an average person uses the Bitcoin, they should be able to use it without really noticing that they are using it. All the more the person shouldn’t notice anything about the complicated process in the background.”

The company will initially only integrate the plugin on Facebook and hopes that the Bitcoin will spread rapidly in the social network. However, there are already plans for further partnerships. Marshall Hayner, co-founder of the company, says QuickCoin’s primary goal is to take the complexity out of Bitcoin transfers:

“When an average person uses the Bitcoin, they should be able to use it without really noticing that they are using it. The person shouldn’t even notice the complicated process in the background.”

Keep Cryptosoft simple

QuickCoin is quite simply knitted. The user only sees the following options on the cryptosoft interface optimized for mobile devices: “Send Bitcoin”, “Receive Bitcoin”, “Logout”, and “Unlike Account”. To make it as easy as possible for the new users the cryptosoft wallet shows the current account balance in Fiat currency (USD/EUR etc.) and “bits”. Thus the users are not deterred at the same time by the high price per Bitcoin.

“I hear more and more often that people say they can’t get into Bitcoin because the price is much too high. The Bitcoin is divisible into very small amounts. People don’t have to buy a “whole” Bitcoin,” says Hayner.

The smallest Bitcoin amount is 0.00000001 BTC – this unit is also called “Satoshi”. One bit is worth 0.000001 BTC. That is approx. 0.00058 USD Dollar at today’s rate. So 1,000 bits are about 58 cents.

How does QuickCoin work?

If you want to use the Social Wallet, you only have to register for the service with your Facebook login data. The system then creates a list with the contacts to which the user can send BTC – even if the friends have not registered for the service. To load BTC credit into his wallet, the user must click on “Receive Bitcoin” and he will immediately receive a QR code with the wallet address. He can then send BTC to this address and load his wallet. With the “Send Bitcoin” button the user can easily send BTC to any address. When BTC is sent to a Facebook user, a corresponding message appears in the recipient’s chronicle.

Facebook as the starting platform
Hayner says the integration of a Facebook-based social wallet is the best starting point. This step makes sense when you consider that the social network had more than 1.28 billion registered users in March. Nevertheless, Hayner says he and co-founders William Cotton and Nathan Lands have other plans:

“QuickCoin social Wallet is our first product. Facebook is just the beginning. We have plans for more amazing features and partnerships in the coming months.”

As Bitcoin technology is still in the early adaptor phase, it is important to get Bitcoin into as many hands as possible. For this reason the founders of QuickCoin have kept the service as simple as possible. QR Codes should only be used when absolutely necessary.

“Not everyone has the time to deal with the Bitcoin before using it,” says Hayner. “Many people surf the Internet today and most can’t tell you how DNS works, the same goes for the Bitcoin.

Connections to Grexit

Scigala claims to have found evidence as to why the price increase can only be conditionally linked to the possible Grexite:

“Greece’s growth (+124%) is ahead of Europe (+66%) and Asia (+62%). However, it should also be noted that Greece is a very small country.”

Vaultoro also said that they can hardly crypto trader influence the Bitcoin price

Other European Bitcoin exchanges, such as LocalBitcoins or Kraken, also did not report any particular incidents of increasing crypto trader numbers from Greece like reported here:

“We don’t see any significant increase in Greek user numbers deviating from normal growth,” said Max Edin of LocalBitcoins, adding, “The entire BTC/EUR trade has picked up somewhat but is still in line with the traditional trend.

Edin doubts that rising activity from Greece could in any way affect the Bitcoin price on its stock market. The volume is simply far too small:

“The volume from Greece is so small in comparison to the total volume that it cannot trigger any significant price movement.

Krakens CEO Jesse Powell confirmed this statement. He, too, could not find any significant evidence of a price increase caused by Greece:

“It is difficult to say what influence Greece had on the increased trading volume, or whether it was ultimately a matter of speculation.

Apart from these statements, there are also strong supporters of the theory that there is at least a psychological connection between the price increase and the rumours of a Grexit. The manager of the Crypto Currency Fund Timothy Enneking does not believe in chance:

“It is not 100% certain that the price movement was caused by Greece, but I would say 95%.”

Enneking believes that the current difficult situation in Greece is sending bearish signals to the market as we already know them from the Cyprus crisis.

But Powell warned against a possible misinterpretation of the rise:

“If it turns out that the price rise was purely speculative and the Greek theory does not prove true, the price will probably not be able to continue the current trend.

Long-term price change
This does not mean, however, that the recent price increase has no significant impact on traders.

Even if the Bitcoin price should fall again, the Bitcoin has probably found its firm ground. Enneking also assumes that the current price stability has contributed to the price increase:

“The price has been stable for so long that it was time for a price rise. Greece may have had an additional psychological effect.” co-founder Georg Samman says the Bitcoin price depends heavily on feelings and technical factors. The Grexit in connection with the Bitcoin price increase has once again aroused people’s interest and it remains to be seen whether this is only a short-term price increase or whether it is the beginning of a new trend:

“A typical `wait and see question`,” says Samman.

A new US law and the taxation of crypto currencies

The US tax code is about to undergo extensive changes. The Senate has issued a nearly 500-page decree with legal changes to go there. It is quite possible that this may also affect the taxation of cryptotrades.

The draft law does not explicitly mention the trade in crypto currency and its taxation. According to the following explanations, however, it is likely that the new laws will also affect the taxation of trade in crypto currencies.

Like-Kind Exchanges on the Bitcoin news

The biggest influence on transactions with crypto currencies could be the replacement of “like-kind exchanges” by the “first-in, first-out” procedure. The “like-kind exchanges” have so far enabled traders to save taxes. This is because the Bitcoin news law stipulates that capital or assets can be replaced by similar value carriers without having to pay taxes for the sale or replacement.

If Trader obtained thus bspw. with the holding of Bitcoin profit, they could buy of it Ether, without being able to be prosecuted for the Bitcoin profit. Traders of crypto currencies have thus been able to effectively avoid the taxation of long-term profits and have only had to tax short-term profits.

The law planned for next year, however, now provides for this regulation to be accepted only for real estate transactions. The principle of “first-in, first-out” will then come into force on the stock exchange and presumably also on the crypto market.

“First-in, first-out” and the taxation of cryptos

According to the draft law, the “first-in, first-out” principle is to be applied to “specified securities”. The authorities assume that the respective goods, commodities or securities that were purchased first will also be issued or sold first. When questions arise about the taxation of crypto currencies, the difference between the first coin purchased and the current price would always count.

For example, if you buy a bit coin today for almost 17,000 dollars and in a few weeks a bit coin for 20,000 dollars and later decide to sell one for 37,000, you first have to sell the one you bought for 17,000. You would then have to pay taxes for the difference of $20,000.

Since this principle, however, so far refers to the securities not specified in more detail (at least with regard to crypto currencies), we are on speculative ground here. A more precise definition by the tax authorities is still pending. At the moment the Bitcoin is still classified as a commodity by the U.S. Commodities Futures Trading Commission.

It therefore remains to be seen until the law is finally waved through and whether further definitions will follow. However, since the mainstream adaptation of crypto currencies progresses with each passing day, a classification in the near future is obvious.

If the unfavorable case for US traders occurs that a higher taxation is incurred, possible tax loopholes are pre-programmed. Switching between different wallets, for example, could have an influence on the date of receipt of the coins. In any case, more precise definitions are still lacking. The situation for the taxation of crypto currencies in Germany seems (at least somewhat) clearer in this context.

Taxation of cryptos in Germany
In Germany, transactions with crypto currencies are currently still subject to the regulations of “speculative transactions” in the sense of § 23 Para. 1 No. 2 of the Income Tax Act. As they are not officially recognised as means of payment, they are classified as “ordinary intangible assets”. These are not then used to “pay” – rather it is a matter of a sale transaction.

Time intervals also play a role here. There is an exemption limit of 600 euros profit per year, which is not taxed. So if you buy a coin for 11000 Euro and sell it again for 11600 Euro, this is a tax problem. This regulation applies, if the distance between purchase and sales does not exceed the period of one year. But be careful: the exemption limit applies to all transactions throughout the year, not just one transaction.

However, if the period between purchase and sale is longer than one year, this rule does not apply. Then you do not have to pay taxes.

In all other cases, the standard income tax rate applies.

Crypto currencies and the minimum holding period
However, the minimum holding period of one year does not apply to commercial use – as is the case for companies or self-employed persons. Depending on the individual case, the profits generated may be subject to income tax, corporation tax and/or trade tax. Here m

Last negotiations in India on Bitcoin regulation

On September 11, 2018 the last negotiations between the Crypto Exchanges and the Reserve Bank of India (RBI) will start in India. The end of the negotiations will bring more security for Indian investors – for better or for worse. The arguments at a glance.

In India, the regulatory loop for crypto enthusiasts, traders and exchanges had become increasingly tight. Earlier this year, Indian Finance Minister Arun Jaitley made it clear to the Indian Parliament that he did not recognise Bitcoin as a currency. Some time later, Indian tax offices sent questionnaires to investors in crypto currencies – with the intention of making back taxes. In the course of this, the government formed a committee to discuss possible regulations for dealing with Bitcoin and other crypto currencies. As crypto currencies are still not recognised as a means of payment, companies began to use a loophole. So they switched the Unocoin exchange between themselves and the customers who took care of exchanging crypto for Fiat.

Contra-Bitcoin: fraud, inner values and Bitcoin secret

But the Indian financial regulator also closed this loophole described in this review – RBI had instructed the stock exchanges in April to close all crypto transactions within three months. After the deadline of 6 July, the Indian Bitcoin community had suffered accordingly. The number of Bitcoin secret transactions fell sharply. But in the course of these regulatory restrictions, the stock exchanges decided to go to court.

Now representatives of government, central bank and stock exchanges are facing each other in court. The reasoning should come as no surprise. It is the central bank, for example, that is leading the way in protecting against investors. Here they want to protect against fraud and money laundering. Another problem is the lack of internal currencies – crypto currencies are not secured by assets. Similar arguments come from government representatives – here we go so far as to call Bitcoin a Ponzi scheme.

Pro-Bitcoin: Transparency and the Indian Constitution

The stock exchanges, on the other hand, refer mainly to the Indian Constitution. Article 19, for example, stipulates that all citizens may exercise any profession, trade or business. They also refer to Article 14, which prohibits discrimination and provides the same protection under the law for all.

The stock exchanges also say that they have largely complied with the anti-money laundering directives, which help the authorities to follow the path of money. Now, however, a large part of the trade has shifted to cash transactions, which can lead to illegal activities, a result that has even recently been recognised by the RBI.

Finally, the stock exchanges have declared their willingness to the Central Bank and the authorities to ensure greater transparency.

Public Blockchains

There have been some misunderstandings among investors and businessmen about the differences between public and private blockchains.

Ethereum, for example, has been described as a blockchain solution that does not involve the burden and regulation of Bitcoin – but as a public blockchain (one that is not regulated by a private company and is therefore mostly traded on public exchanges), ETH faces the same virtual currency regulations as Bitcoin (KYC, AML, MTL, etc.).

Only private software that is not traded as a commodity is excluded. However, this category faces other problems, such as security and trust.

I see these trends this year for public blockchains

1. ICOs will exist, increase and diversify
Token Crowdsales (also known as “initial coin offering” or ICO by all others except lawyers) started about two years after the first “Altcoins” appeared. (BitAngels was the largest investor in the first ICO in Mastercoin (now OMNI), which received up to $600,000 in August 2013).

Ethereum was the first big winner of the ICO Marketplace in June 2014. In the amount of financing (18 million US dollars, while Bitcoin stood at 600 US dollars) and appreciation (peak at around 70 times the original ICO price of 0.0005 BTC).

Maidsafe, Factom and Storj also had a successful ICO in 2014. Augur was one of the few winners of an ICO in 2015 (a weak year for Bitcoin and ICOs).

In 2016, immense sums were collected for The DAO (see next punk for more), Waves, Lisk, FirstBlood, Golem Network and Iconomi. Some of them, but not all, saw some good sales at the ICO (Lisk and Augur were best received when they started trading in 2016).

This movement is maintained and accelerated for so long

The average “serious” ICO barely reaches the minimum it wants to collect (which is complicated by the number of ICOs).
ICOs remain a faster financing option than traditional angel investors
Regulators, especially in the USA, maintain their attitude of “attentive observation
While we are counting the first days of 2017, there are at least 35 waiting or ongoing projects on I can imagine that there will be at least 200 ICOs for 2017 – with a total sum in the 9-digit range, of which the top 10 will receive most of the financing.

2. innovation is balanced by caution
Fear and greed are the two driving forces of any market. The DAO ICO has raised an incredible $160 million (almost 9 times the Ethereum funding). The fear to miss the next big train à la Bitcoin and the possibility to pull out his money again, fueled the whole thing.

And then came the hack and the split. And not only the DAO died before it could take action, Ethereum itself has not recovered completely since then.

In 2017 there will be a lot of interesting use cases for public blockchains that will use an ICO to get attention and funding.

Some will be successful, but the bar will be set higher. Those with a suitable history will be preferred (no more anonymous developers). 3.

3. not every blockchain will be funded by an ICO
Zcash was last year’s most controversial listing, yet it was fully funded by private sources and mining is still the larger part of its distribution strategy. Other leading private coins, such as Dash and Monero, also acted in the beginning.

Steem, a digital currency linked to a social media network, reached the top 10 tokens traded in 2016 without an ICO.

Private Blockchains
Private blockchains will also continue to develop this year. Consortia such as the Linux Foundation HyperLedger Consortium, or VC-supported private companies, will target industries such as banking, medicine, insurance and real estate.

The big question that will be asked in 2017, however, is to what extent private blockchains can be successful, as the industry has few talents. Public blockchains have already recruited small armies of developers who are reinventing already known code.

In my opinion, Angel investors stay away from private blockchains for this reason.

Disclaimer: This article was originally published on CoinDesk. CoinDesk sponsors the Bitcoin Investment Trust. Michael Terpin is an investor in digital currencies and assets, including Augur, bitcoin, dash, ether, Factom, Lisk, MaidSafe, monero, Omni, Storj and Waves. This is not an investment tip and is not representative of BTC-Echo.