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The Wyoming state government has been expanding its status as a hub for crypto and blockchain technology by passing several new bills this February.

According to Wyoming-based blockchain advocate Caitlin Long, the state of Wyoming has recently passed resolution SF0125 on February 14, 2019, claiming that Wyoming “law recognizes property rights in the direct ownership of digital assets.” The bill plainly states “that digital assets are property within the Uniform Commercial Code” and goes on to elaborate some of its ramifications.

Long gave a succinct rundown of the bill’s most salient points, stating that “In other words, you're not forced to own digital securities through an intermediary. Blockchain tech enables direct ownership of assets, and now the law does too.” Since property law in the United States is in the hands of state jurisdiction, this new step is not only safe from the federal government but also can serve as a model for other states.

“It makes perfect sense that Wyoming is the epicenter of blockchain law in the US,” said Long, a Wyoming native. “That's also why institutional investors, which are prohibited by federal law from directly owning the assets they manage, can rest assured that Wyoming's digital asset custodians are actually solvent.”

This is not the only accomplishment made by pro-crypto voices in Wyoming, however. On February 2, 2019, the Wyoming State Senate also passed a bill updating the classification of crypto assets, including a clause to formally label them as currencies.

According to the text of the bill, crypto assets can be considered to have three different statuses for legal purposes: digital consumer assets, digital securities and virtual currencies. All three of these definitions are specifically registered as personal property rather than private property, formally upholding a stance that other jurisdictions overseas and abroad have taken.

More significantly, however, the bill also further elaborates on the specific terms and conditions for each of these three statuses. In addition to the respective classifications of “general intangibles” and securities, the bill also states that “virtual currency is intangible personal property and shall be considered money.”

In redefining the legal status of crypto in this way, it formally opens up the possibility for ordinary citizens to treat crypto as an actual currency on a daily basis. This, in turn, could provide the impetus for a more comprehensive tax code or new business use cases.

Wyoming has been cultivating a reputation as a major crypto haven in the United States, in a bid to angle itself as the blockchain hub of the nation. In addition to enabling blockchain into stock certificates with bipartisan support in January 2019, Wyoming has also helped make banking laws more friendly for blockchain companies last December. Many Wyoming legislators are evidently, at the very least, sympathetic to making blockchain a new Wyoming industry and further friendliness can be expected in the future.

This article originally appeared on Bitcoin Magazine.

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A group of lawyers from some of Canada’s top law firms convened in a court in Halifax, Nova Scotia, today to secure the right to represent creditors in the ongoing QuadrigaCX litigation. By the end of the hearing, the presiding judge wouldn’t make a decision on which firm would play counsel for QuadrigaCX’s clients, though he promised a decision within the week.

“The decision to delay appointment of representative counsel is a sound one. The Court needs to be able to select the right firm that can present Canadians across the country with expertise and in a cost-effective manner. Most users are in British Columbia and Ontario and so firms with solid representation there would be key, so that customers from those provinces have access to the process,” Christine Duhaime of Duhaime Law told Bitcoin Magazine.

During the session, the Honorable Justice Michael Wood heard testimonies from the four law firms that creditors have turned to for counsel, namely, Bennett Jones LLP; Osler, Hoskin & Harcourt LLP; McInnes Cooper LLP and latecomer Goodmans LLP.

Jack Julian, a reporter for Canadian news outlet CBC, live-tweeted the courtroom proceedings, tallying up a total of 18 lawyers who were present at the hearing. One of these, Maurice Chiasson, represented QuadrigaCX while another represented Ernst & Young, the firm that has been appointed monitor over the case; the rest represented some 200 clients affected by the exchange’s inability to honor withdrawals. These clients reportedly have $50 million CAD tied up in the exchange in the aftermath of the death of its founder and CEO, Gerald Cotten. The $50 million CAD represented today is just a piece of the $250 million CAD debt that the exchange owes its customers.

“There are many complicating factors in this motion,” notes blockchain lawyer Chetan Phull of Smartblock Law. “The ‘creditors’ are spread out all over the world, QuadrigaCX is running low on funds for its defense, and Justice Wood has one week to decide who will represent all the creditors. This must be a difficult decision for Justice Wood. Relevant considerations will likely include competence with cryptocurrency and international resources. The first factor will be important to address solvency matters as they relate to the accessibility of various cryptocurrency reserves of QuadrigaCX. The second factor will be important to cost-effectively triage client-intake and evidence management for a litigation with such a global scope.”

“Justice Michael Wood says all contenders are ‘eminently qualified’ to be representative counsel. They all claim to represent similar numbers of clients with similar total losses. He says he ‘won’t be flipping a coin’ and will have to analyze the submissions closely,” Julian tweeted.

One of the firms, Goodmans, which Julian says has a client with a $1 million claim on the exchange, suggested creating a “steering committee” of seven individuals, which would consist of two lawyers from the other three law firms competing for representation and one from Goodmans. The committee would then be in charge of appointing legal counsel for the affected creditors. Justice Wood ultimately dismissed this proposal, saying it would amount to the firms having to “duke it out,” tweeted Julian.

According to Julian, Raj Sahni, an attorney for Bennett Jones, lambasted the use of online chat rooms as “completely inappropriate” for disseminating information in this case. In the fallout after Cotten’s death, Reddit (particularly the subreddit QuadrigaCX2) has become a hotbed of activity for QuadrigaCX customers to swap information, air grievances and cook up what most would consider conspiracy theories.

To cut through the noise and give this information legitimacy, one firm, Miller Thomson, suggested curating a website that would aggregate creditor information and answer questions these affected users have in public or private.

The proceedings highlighted that most of the creditors are individuals with fewer than $50,000 CAD in the exchange. These affected users are already down significant capital, and the legal counsels stressed the importance of making this process as frictionless as possible to mitigate legal costs for the already cash-strapped creditors. The monitor, Ernst & Young, has proposed a $100,000 CAD cap on fees beginning today, which would exclude fees calculated to this point.

Even as lawyers are seeking to expedite the counsel appointment process to the capital benefit of their representatives, it became apparent early on that Justice Wood might not reach a decision today. The case is murky and unconventional, he said, and Julian tweeted that the robustness of each law firm contending for legal counsel hasn’t made “life any easier” for the judge regarding his decision.

“Wood says this [is] an odd situation. We don’t have secured and unsecured creditors, third party suppliers, employees etc. Only clients. So it’s unlikely there will be parties clamouring for changes on the next court date of March 5,” Julian wrote.

After a midday recess, the court reconvened and Justice Wood revealed that he would not decide on representative counsel today, as choosing between the four will be difficult. While he said that each is "eminently qualified," Chetan Phull of Smartblock Law said that the ideal counsel will have to have a stellar report card for handling the technological nuance and international breadth of the case.

"Relevant considerations will likely include competence with cryptocurrency and international resources. The first factor will be important to address solvency matters as they relate to the accessibility of various cryptocurrency reserves of QuadrigaCX. The second factor will be important to cost-effectively triage client-intake and evidence management for a litigation with such a global scope.”

Outstanding Issues

At the end of the hearing, the court also addressed a number of outstanding issues in the case, including the absence of $30 million CAD worth of bank draft notes that QuadrigaCX claims that it is owed by its payment processing partners. QuadrigaCX is making haste to secure these funds as most of the $300,000 CAD it has in its possession for legal fees are nearly depleted.

“The Court learned today that the advisors are almost out of the money allocated, having spent $250,000 in fees in a short time. It remains unclear how additional funds will be secured because there was only $300,000 set aside that was a secured debt to Mr. Cotten’s widow, approved by the three new directors, the Court heard. I think they will have to solve the cash crunch soon by securing banking relationships quickly to deposit the over $20M in bank drafts they said they have,” Duhaime commented to Bitcoin Magazine.

As monitor, Ernst & Young commented that it was close to reaching deals with some of these nine processors, though the firm was vague on the progress it has made toward decrypting Gerald Cotten’s hardware, which allegedly holds the keys to the company’s inaccessible cold storage, or in retrieving the $460,000 CAD that QuadrigaCX “inadvertently” sent to one of its cold wallets on February 6, 2019.

Bitcoin Magazine recently broke news that multiple QuadrigaCX users have reported receiving deposits from Robertson Nova Consulting Inc., a company, CBC claims, that Gerald Cotten’s widow, Jennifer Robertson, presides over as president, secretary and director. Bitcoin Magazine’s sources commented that email addresses appearing to belong to Robertson were listed on the reply-to lines of deposit confirmations. The same sources also told Bitcoin Magazine that they had received mass amounts of cash, at times amounting to thousands of dollars, in the mail as part of the withdrawal process.

With additional notes from Jessie Wilms

This article originally appeared on Bitcoin Magazine.

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Even in a bear market, Morgan Creek Digital has no problem swimming upstream.

The crypto asset management firm just bagged a $40 million dollar investment and what appears to be the first blockchain/crypto investment by a major pension fund. Two pension plans from Fairfax County, Virginia, the $1.43 billion Police Officer’s Retirement System and the $3.9 billion Employee’s Retirement System, were the lead investors in what was originally projected to be a $25 million dollar raise. Besides the two funds, a hospital system, an insurance company, a private foundation and a university endowment also invested in the raise.

An offshoot of Morgan Creek Capital Management LLC, Morgan Creek Digital is a cryptocurrency asset management and investment firm founded by Anthony Pompliano, Jason Williams and Mark Yusko, and it has invested in such industry heavyweights as Coinbase and Bakkt.

With this latest influx of capital, Morgan Creek Digital will invest in early seed-round crypto and blockchain startups, as well as digital tokens and other cryptocurrencies.

The raise is the largest for a crypto firm in 2019, and it’s one of the largest to occur during a bear market that is going on two years now. Speaking to Bloomberg, Pompliano said that the price is just a temporary distraction from what could be a lucrative long-term game, and institutions are starting to take notice.

“There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable. The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.’’

The Chief Investment Officer of one of the raise’s participating pension funds corroborated Pompliano’s claim that institutions are attracted by the digital assets market. In a statement on the raise, Chief Investment Officer of the Fairfax County Police Officer’s Retirement System Katherine Molnar commented, “Blockchain technology is being applied in unique and compelling ways across multiple industries.”

Molnar continued, “We feel it is important to be opportunistic and are excited to participate in this emerging opportunity, due to the attractive asymmetric return profile that it represents.”

At the time of publication, Morgan Creek had not responded to Bitcoin Magazine’s request for comment.

This article originally appeared on Bitcoin Magazine.

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According to the latest court documents in the ongoing QuadrigaCX case, the exchange sent roughly $470,000 CAD (approximately $355, 000 USD) worth of bitcoin from a hot wallet to a cold-storage wallet on February 6, 2019.

Ernst & Young’s first report as monitor of scrutinized Canadian bitcoin exchange QuadrigaCX (QCX) complicates the story the exchange has given for its lack of access to company funds following the death of its founder and CEO, Gerald Cotten.

The court document states, “On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 to Quadriga cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”

Regarding the liquidation process for distribution of QCX funds to the exchange’s users, the report says that Ernst & Young has established a “Disbursement Account” per the Nova Scotia court’s orders, “and [it] received $150,000 from Ms. Jennifer Robertson” (Cotten’s widow) to kickstart the account.

The document continues to clarify that the exchange’s remaining hot-wallet funds (some $902,000 CAD, of which $700,000 CAD is in bitcoin, $130,000 CAD in ether and the rest in bitcoin fork coins and litecoin) will be transferred to cold storage under Ernst & Young’s management.

In an affidavit that comprises part of the ongoing legal proceedings in the Court of Nova Scotia, Robertson swore that the exchange had no access to the cold storage because the keys and passwords are stored in one of Cotten’s encrypted wallets.

According to the document, Ernst & Young has also seized Cotten’s computer hardware and accessories, which Robertson originally turned over to retired cybersecurity professional Chris McBryan of McKalian Sensors Inc. to crack.

“The devices taken into custody from Mr. McBryan include two (2) active laptops, two (2) older model laptops, two (2) active cell phones, two (2) older ‘dead’ cell phones and three (3) fully encrypted USB keys. … The Monitor’s forensic group is currently working with Mr. McBryan to better understand actions that have been taken in respect of the devices and what information has been obtained from the devices to date to determine what forensic next steps will be employed. In addition, the Monitor was made aware of and took steps to retrieve Mr. Cotten’s desktop,” the report reads.

Recovering Lost Funds

The document also confirms that Ernst & Young has contacted nine of the known payment processors that served as QuadrigaCX’s makeshift banking partners. The firm has not yet received the $30 million CAD in bank draft notes that both the court affidavit and the report say are under the auspices of Stewart McKelvey, the law firm representing both Robertson and QuadrigaCX. One of these processors allegedly owes the exchange $25.2 million of the $30 million in bank notes QuadrigaCX holds. Once the banks that these processors work with clear wires for these bank notes, the funds will fall under Ernst & Young’s management.

QuadrigaCX had been using these payment processors as a stand-in for proper banking relationships. As sources close to the matter, who asked to remain anonymous, told Bitcoin Magazine, QuadrigaCX has a long history of problems in maintaining banking relationships, a tribulation best represented by CIBC freezing $25 million CAD of funds associated with the exchange in 2018. This freeze was one of many unhappy incidents that have come to define the exchange, including losing millions in ether in 2017 to a smart contract bug and a reputation for month-long withdrawal times.

Speculation and Rumors

Since Gerald Cotten’s death, wild speculation over QuadrigaCX’s solvency, the identity of a since-distanced cofounder Michael Patryn and whether Cotten is actually dead have surfaced in the community. A purported QuadrigaCX contractor, one of the seven that made up the company’s employee structure until recently, posted a reddit AMA on r/QuadrigaCX2 with potentially damning accusations that Cotten and Robertson worked in tandem to scam the exchange’s users. These accusations remain unsubstantiated thus far.

Canadian lawyers will convene on February 14, 2019, in Halifax in a bid to represent some 111,000 users affected by the exchange’s misfortune, Bloomberg reports. In its February 5 ruling, the Court of Nova Scotia granted QuadrigaCX creditor protection, guarding it from further court action until the exchange and Ernst & Young are able to investigate its financial situation.

This article originally appeared on Bitcoin Magazine.

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Switzerland is an international bitcoin and blockchain mecca, known for its crypto culture and concentration of crypto businesses. Now, it is the new home to 21 Lectures, a school for bitcoin developers founded by Lucas Betschart. The school is registered in Zug but courses are taught in the capital, Zurich.

21 Lectures (named for the bitcoin cap of 21 million) is the only course for bitcoin core developers in Switzerland, and Betschart is hoping that the high-profile nature of the teachers — including James Chiang, Christian Decker and Jonas Schnelli — will attract students from around the world.

For Betschart, starting a program like this is an expression of confidence in the future of Bitcoin.

“Bitcoin itself didn't change,” he told Bitcoin Magazine. “It's still the censorship resistant, internet-native alternative to central bank money and, therefore, still very appealing to me from a technological as well as ideological point.”

He added, “People who understand the value of Bitcoin (not just the price) don't care too much about these short-term market swings.”

Schnelli, Bitcoin Core maintainer and Shift cryptosecurity expert, says, "In Switzerland, the Bitcoin ecosystem is becoming more and more established and has a growing international appeal. I am pleased to be involved in a modern and future-oriented further education with 21 Lectures."

Developing a Sustainable Business Model

Betschart says that the program’s primary goal is to get more software developers to contribute to Bitcoin’s open source projects: He and his team are “not interested in making a profit.”

A statement on the program’s website lays out its philosophy:

“We believe in the power of open source software, creative commons and that all people should be able to access information freely. This is why we publish all our teaching materials freely available to use, share, copy, distribute and modify.”

Betschart told Bitcoin Magazine, “The plan is to have a sustainable business model to cover the costs of the teachers, rooms and expenses.”

The three main sponsors — Xapo, Shift and BitConsult — are all contributing to this project.

Xapo, the Hong Kong-based bitcoin wallet and storage company, contributed startup funding. This contribution, paired with Betschart’s own bitcoin earnings, was able to create a self-sustaining school with courses costing $1,500 or the equivalent in bitcoin.

Shift, the Bitcoin software company that introduced the first U.S. bitcoin debit card, is lending four of its developers as lecturers including Marko Bencun, Jonas Schnelli, Kaspar Etter and Henrik Jonsson.

BitConsult provides free hardware wallets and other tools to students in the program.

Only Bitcoin Taught Here

The courses only cover Bitcoin — general knowledge, protocol, cryptography and Lightning — and use libbitcoin and the command line tool libbitcoin-explorer for exercises.

There are two course levels: a two-day basic course for people with a technical background and some training as developers and a four-day advanced course for graduates of the basic course.

Applicants will be required to attend in person and the requirement to qualify is “technical knowledge and familiarity with the command line.”

“The current advanced course of 21 Lectures gives an extensive insight into Bitcoin, but it’s only a starting point: The developers will have to learn and practice more by themselves, although our teachers, as well as the open-source community in general, are always very helpful to get new contributors up to speed,” Betschart said.

“We hope to collaborate more with other courses in the future, exchange ideas, content and attendees. A good next step from the 21 Lectures course is probably the ChainCode Labs program.”

The next course begins March 4, 2019.

Course materials can be found here: https://github.com/21Lectures

This article originally appeared on Bitcoin Magazine.

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Blockchain firm Bitfury will develop a bitcoin mining center in Paraguay. The new mining operation is in partnership with Seoul-based research and development firm Commons Foundation.

The collaboration is backed by the government of Paraguay, whose goal is to make the South American country a cryptocurrency mining hub.

The new center, which is a part of Commons Foundation’s “Golden Goose” project, will help to facilitate the innovation of blockchain technology and cryptocurrencies across Spanish-speaking countries. Bitfury will provide product and technical support for the project.

The facilities used for the implementation of the mining center will sit on about 200,000 square meters of real estate, and it will be powered by two hydroelectric power plants — Itaipu, one of the largest power plants in South America, and the Yacyreta power plant. Paraguay is known for its supply of cheap and available electricity. At one point, the country generated so much hydropower its factories could barely absorb them, forcing the state to sell the surplus units to neighboring countries at below-market rates.

The Golden Goose project is backed by both the government and tax authorities of Paraguay. The mining operations being developed will also benefit from tax relief, an incentive added to encouraging bitcoin mining operations in the country.

The site will also be powered by BlackBox AC, a mobile data center owned by Bitfury. The data center provides an amalgamation of efficient design and low cost, which is expected to provide for more effective and affordable bitcoin mining.

John Mercurio, chief communications officer at Bitfury, told Bitcoin Magazine that Bitfury's mobile data centers have the capacity needed to operate a bitcoin mining center at scale.

"Bitfury’s BlockBox AC mobile data centers have the capabilities of a full-size bitcoin mining datacenter, making this the ideal solution for mining bitcoin on a large scale with ease. The efficient design and low operating cost of the BlockBox AC datacenter make bitcoin mining more productive and affordable, and allow for the easy expansion of bitcoin datacenter sites."

The project was also lauded by Sandra Vera, a Paraguay-based attorney who acts as legal counsel to the Commons Foundation. According to Vera, the exploration of emerging digital technologies is a priority of the government of Paraguay, and an alliance with innovative and technologically progressive companies is sure to provide a wide array of economic benefits for the country as well.

The total number of mining centers to be opened under this project will be determined by Commons, as the firm is expected to provide further details as time goes on.

“We are looking forward to our project in Paraguay with the Commons Foundation, and we believe that this site, powered by Bitfury’s innovative hardware, will help decentralize and further secure the Bitcoin Blockchain for its users,” Mercurio added.

This article originally appeared on Bitcoin Magazine.

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Announced at the end of January, Bitfury’s production-ready suite of Lightning Network products and services, Peach, appears to offer everything a developer, user or merchant could want from a Lightning implementation. It comes with built-in, e-commerce plug-ins, has a hardware component for point-of-sale, a toolkit for developers and its own Lightning node to ground the whole outfit.

The suite, with its many uses, has a wide reach … a bit too wide, one crypto analysis group thinks.

Block Digest, “a bi-weekly podcast covering the latest technical and market news related to Bitcoin,” argues that Bitfury’s Peach infringes on its users’ privacy to a disturbing degree. To them, the Peach Lightning node is a panopticon from which no data escapes, and each Peach application is the cell through which Bitfury can see personal and financial information about its users.

Do I Dare Trust a Peach?

“Stay the !#@& away from it,” Rick, one of the Block Digest ensemble, cautions during the group’s breakdown of the technology.

An offshoot of the World Crypto Network podcast, the Block Digest cypherpunks treat the subject with earnest disgust, arguing that Bitfury is being disingenuous and even purposefully misleading about how it manages user data.

“Having read both versions of the terms of use and privacy policy, there are a number of inconsistencies. A lawyer has said that there are a few things that, if not compliant with GDPR [the EU’s technology privacy regulations], would be violating GDPR for vagueness alone. So yes, we would say there are violations of privacy going on,” Janine, another Block Digest member, told Bitcoin Magazine.

In separate correspondence with Bitcoin Magazine, Bitfury push backed on the allegation that it is in violation of GDPR, asserting that it “[complies] fully with all applicable regulations, including GDPR. We believe that our terms of service and privacy policy are indeed compliant with those regulations.”

Still, after Block Digest and other community voices started raising the alarm about Peach’s privacy implications, Bitfury seemed to take notice and revised their terms of use and privacy policy for the Lightning suite on January 30, 2019.

Nevertheless, Block Digest says that the new versions, even with the alterations ,still fall shy of reassuring users that their data is safe from view — or of even fully explaining how it is used.

“They don’t just say they don’t collect it; they say they don’t have access to it,” shinobi, one of Block Digest’s crew, told Bitcoin Magazine.

“There are two things in the code for ability to collect data. The first one is event logs that go through Google analytics, and that’s for navigation in the application.” This first function, he told us, was nothing noteworthy: It just logs events and doesn’t collect information.

The second part, however, does collect information. “For these streaming payments and the payments that use a lightning id without an invoice, all of those are being coordinated through [the] Bitfury server. They can see everything: who’s paying, who’s paying whom, how much they’re paying.”

Bitfury’s Lightning Peach suite allows users to transact with anyone using Lightning through payment invoices, where a recipient requests payment from a sender. Or, they can send payments through the Lightning Peach node, a Bitfury-centralized process, with a lightning id or streaming payment, both of which can only be executed between two Peach users.

At the very least, Block Digest acknowledged that Bitfury won’t collect data from a “regular lightning invoice payment." So if you receive an invoice from a non-Peach user, even if you’re using Peach’s wallet, that payment isn’t routed through the Peach node and is out of their purview.

But anyone using Peach’s streaming payments and Lightning ids will forfeit transaction information, including IP and wallet ID, to Bitfury so that Peach’s Lightning node can facilitate the payment for the user. Given that Bitfury is providing a centralized service, this isn’t out of the ordinary, and Bitfury updated its policy to say this information “is not stored.”

Questions and Contradictions

Most of Block Digest’s most pointed accusations are leveled at what they see as contradictions in Bitfury’s terms of use and privacy policies, as well as a now-omitted clause that originally claimed to keep tabs on user data.

In a document shared in confidence with Bitcoin Magazine, Janine recorded changes in Peach’s terms of use and privacy policies. At one point, she says, “In the older version of the policy, they claimed to collect: ‘traffic data, location data and other communication data, and the resources of the software that you access and how you use them; time that user spent in wallet (session time); number of sessions within the time unit (for example, month); number of payments within one session; amount of payment; payment type (regular/stream); successful/failed payments; periodicity of channel opening (times per month); lifetime of a channel; number of simultaneously open channels; channel capacity; waiting time for channel opening; waiting time for lightning transaction; number of nodes, which user pays to.’"

This could be justified as crash report data collection — aggregated network data to diagnose the reason for a crash or bug. Shinobi had a friend run an audit, and he allegedly found no evidence of collecting data for this purpose in the code.

Block Digest argues that this retracted list embodies the looming contradiction that Bitfury’s terms simultaneously say they won’t collect, store or see data and that they may share, consult or leverage this data under certain circumstances.

The most apparent contradiction, Block Digest argues, comes from Bitfury’s claim in the updated version that data collection is optional, something Bitfury reiterated to Bitcoin Magazine when we inquired about the privacy allegations.

Pavel Prikhodko, head of Lightning Peach, told Bitcoin Magazine, “That data is only collected if users proactively confirm they would like to provide anonymized information via Google Analytics. It enables us to better understand how users interact with our website and software. That data cannot be traced back to an individual user and is a standard optional setting present in the vast majority of modern consumer software products.”

Block Digest is unconvinced, mainly because the same terms simultaneously tell users that they don’t have to provide information unless they acquiesce while it also says that, upon generating a wallet, users will “be required to provide contact information that may include a phone number, email address, username and other information as appropriate.”

Bitfury, clarifying the terms in a Medium post, claims that it doesn’t collect these data points. This is in conflict with the terms of use, Block Digest observes. In the agreement, it says very clearly that “providing the required data is necessary for you to use the Software. If you do not wish to provide the required data, you cannot use the Software.”

Bitfury also claims that it “does not collect, nor have access to … information on the transactions you perform through the use of the Software,” something that, Block Digest says, doesn’t align with their claims that user data can then be shared or sold to subsidiaries or people buying aspects of Bitfury’s business.

“In the policy that was active before January 30th, they say that they would be willing to share or pass over this data to entities who were looking to buy any aspect of Bitfury’s business,” Janine said.

The new policy says the same, indicating that data may be shared “to the purchaser or seller (or prospective purchaser or seller) of any business or asset which we are (or are contemplating) selling or purchasing. Except as provided in this privacy policy, we do not intend to sell, share or rent your information to third parties.”

Janine makes the point that, “legally, saying you intend not to do something is not the same as saying you will not do something.”

The outfit worries that, at worst, Bitfury could sell information to stakeholders in Bitfury’s companies, or at best, share information between its subsidiaries, including its blockchain analytics platform Crystal, one of Bitfury’s compliance-focused side projects.

Bitfury denied that they intend to share data with Crystal:

“… none of the data processed is shared with Bitfury’s public blockchain analytics division, Crystal. The Crystal platform provides a more user-friendly interface for analyzing public blockchain data.”

It should be noted that, in the terms of use, Bitfury includes a termination clause in the event a user would prefer to get out of the software’s data agreements:

“When you use the Software, and provide the required data, you can contact us (please see paragraph 11 below) to exercise any of the rights you are granted under applicable data protection laws, which includes (1) the right to access your data, (2) to rectify them, (3) to erase them, (4) to restrict the processing of your data, (5) the right to receiving a file of your personal data and (6) or the right to object to the processing, and where we have asked for your consent, to withdraw this consent. These rights may be limited in some situations. We may, for example, deny your request for access when necessary to protect the rights and freedoms of other individuals or refuse to delete your personal data in case the processing of such data is necessary for compliance with legal obligations.”

The Consequence of Big Business

Block Digest has other secondary concerns, such as that Bitfury doesn’t want anyone under 18 using their software, but the bulk of their qualms come from the company’s seemingly contradictory and tenuous stance that it doesn’t collect your data — but could if it wanted to. Most of all, the group disapproves of how this data could be used (for legal and enforcement reasons) and that Bitfury is simultaneously telling people they do and don’t store data.

“Your personal data will be stored no longer than is necessary for the purpose they were obtained for, our compliance with legal and fiscal obligations, or for solving any disputes but not longer than 6 (six) years.”

“We collect, use and store your personal data to provide services to you, to comply with the legal obligations we are subject to, if necessary, for our legitimate interests or on the basis of your consent.”

These two separate clauses contradict the earlier statement that Bitfury doesn’t store data, Block Digest points out.

Other than sharing this data among subsidiaries or selling it in the case of a business transaction, Bitfury “may be required by law to collect and share personal information provided by you with public or governmental organizations for the purpose of compliance with the law, a court order, or to respond to any government or regulatory request, the privacy policy indicates.” This was one of Block Digest’s greatest causes for alarm, but it’s the same regulatory compliance that makes Bitfury comply with GDPR — and maybe even why it doesn’t want adolescents using its software.

This is getting at the crux of it. As Janine said in our talk, no other Lightning service providers “have data collection policies or terms of service like this,” claiming that “they’re not big enough organizations to provide one.”

Bitfury is big enough, and the corporation, like many monolithic crypto companies, plays regulations close to the chest and stays hyper compliant to stay out of trouble in an already internationally stigmatized industry.

“As far as the terms, Janine’s right,” shinobi said about data collection in our talk, “but architecturally … other [softwares and services] are capable of gathering detailed information on your activity, but again, like Janine said, none of them have terms like that. I also don’t really see the kind of history in the space and the move towards more surveillance and regulatory compliance that Bitfury is making with Peach.”

Bitfury told us that it uses “the minimum amount required for the products to work,” for example, IP address and Lightning ID for streaming payments and Lightning ID payments. Anything else is either optional or only stored for as long as it needs to be for the software to function properly, something that Block Digest says is contradicted in the legal literature.

Some of these contradictions appear to have been cleared up in the revisions, which could indicate that Bitfury simply fumbled the first drafts of their terms and privacy policy and needed to make some of the language more precise.

So who’s right and should you trust Peach? Really, it depends on who you are and what your desired level of privacy is.

The Implications of Peach:

  • There are contradictions in the terms of use and privacy policy (and in Bitfury’s statement on Medium) about whether or not Bitfury asks for/accesses your personal information and data. In a previous draft, Bitfury mentioned that it collects a host of transaction data, which it now claims it doesn’t collect.
  • The legal language gives them the right to access the data if they want to for the purpose of selling aspects of their business, sharing data between subsidiaries or legal compliance.
  • Bitfury says that they only have access to limited data (IP and Peach ID) for a short time while they route transactions through the Peach node and claims to not store data thereafter (you can transact without data collection implications by using Lightning invoices).
  • The truth is, Bitfury has (and admits to having) access to some data if they need it for legal or business reasons. Which data they have access to and to which extent they would use it is not very clear.
  • That said, most of this data is benign in nature (basic transaction details, for example), but some of it (IP address, phone number, etc.) is not.

If you’re not too concerned with privacy, whatever data collection might happen will likely go unnoticed. It’s not unlike the information that, say, Coinbase already has in terms of transaction details and the personal data Facebook and Google have (and are selling, by the way).

If you are privacy conscious, however, the structure (and contradictory explanations of) Peach’s data collection structure will likely be off-putting, enabling the panopticon for data that the modern internet has become.

All things considered, though, you can transact without your data being apprehended through Lightning invoices, and the amount of data that Bitfury could have on you is pretty negligible. It’s ultimately down to over your tolerance/comfort levels for how the business operates and shines a light on these operations.

This article originally appeared on Bitcoin Magazine.

Bitcoin Price Analysis

Shortly after the London Open, the entire crypto market saw a strong round of buying. Some coins broke their highest volume seen since the beginning of the bear market, and several others broke straight through overhanging resistance levels. Bitcoin, too, enjoyed a nice rally, rising almost 11% in just a few short hours:

Figure_1.png

Figure 1: BTC-USD, 4-Hour Candles, Early Morning Rally

This rally was very strong and sudden, running the stops of many late shorters in the crypto market. Zooming out to the daily view, we can see just how strong the move was as it nearly tripled the previous day’s trade volume on very high spread:

Figure_2 (9).png

Figure 2: BTC-USD, Daily Candles, Daily Volume and Spread

Although the daily candle has yet to close, it looks pretty promising for the bulls. The market is currently in the process of testing overhanging resistance and is currently testing the strength of both the bulls and bears.

Even though the move was strong, it should be noted that we are still trending downward as we continue to make lower highs and lower lows on the daily trend. That’s not to say the trend won’t be broken, but it should be a matter of consideration as we take an objective view of the current market structure.

As the price continues to rally, the outlined resistance levels will serve as great milestones to judge the health of the bullish pressure. If we can close the two resistance levels, it seems entirely likely we will see a retest of the overhanging resistance in the low $4,000s:

Figure_3 (8).png

Figure 3: BTC-USD, Daily Candles, Important Zone for Changing Market Structure

Looming just above the outlined zone in blue is a very important and potentially market-structure changing zone, outlined in red in the figure above. The market has been unable to close above this level for months and has been continuously pushed down with every attempt to rally into the region. If we can see a close inside the red zone, we can anticipate strong buyer interest as this represents a change in the market behavior. This will be a very important level to watch as we continue to see upward momentum push this rally further.

Again, it should be noted that we have yet to close the current daily candle above overhanging resistance, but given the spread and volume behind the current move, it seems logical the market is good for a bit of a continuation before the bulls lose steam. The outlined resistance levels in Figure 3 will serve as points of interest in the coming days in order to judge the health of the current market. It’s important to wait for the daily close as the market is known for massive slippage due to relatively low liquidity on some exchanges.

Summary:

  1. Shortly after the London Open, the entire crypto market rallied on very high volume with relative ease compared to the previous weeks of attempted rallying.
  2. Several coins have seen record-setting volume for the current bear market, while others have blown straight through their prior resistance levels.
  3. Bitcoin is currently in the process of testing its overhanging resistance as the current daily candle has yet to close. There are major resistance levels to consider when viewing the health of the market, but given the strength of the current move, it seems likely we will see a continuation of the uptrend before bears begin to test their hand against the bulls.

Trading and investing in digital assets like bitcoin is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

Abra trading.jpg

“Investing in stocks can be a daunting, complex and decidedly exclusionary activity,” says Bill Barhydt, Abra's CEO. To that end, his company’s mobile cryptocurrency wallet app has announced a new feature which will allow investors to purchase traditional stocks using bitcoin. The new feature is built into the existing Abra app that enables users to buy and sell cryptocurrencies.

Crypto investors in the 155 countries where Abra has its presence will be able to invest in traditional stocks, such as Apple or Amazon, as well as in exchange traded funds (ETFs), using both cryptocurrencies and fiat directly from their mobile app.

According to Barhydt, everyone should have access to capital markets, regardless of where they live in the world or the amount of capital they have at their disposal. This is where Bitcoin comes in.

The world's most popular cryptocurrency has shown its capacity to serve as a democratic form of money by creating an open financial system, and he believes his company's app could change how smaller investors access publicly traded companies and other securities.

"We are building Bitcoin-backed investing products because, for the first time, we can truly democratize access to investment opportunities at global scale. It shouldn’t matter where you live or how much you earn to be able to make investments and participate in capital markets. We’re excited to allow anyone to start investing in global equity products and take control over their savings.”

Cryptocurrency exchanges have been offering features that allow traders to do more than buy and sell crypto of late. Last year, social trading platform eToro launched a mobile trading app that will enable investors to invest in fiat currencies, stocks and cryptocurrencies.

"Abra is different by offering this on a global scale," Barhydt pointed out, in correspondence with Bitcoin Magazine. He said that the Abra app makes it easy for investors to make fractional investments in stocks, commodities, ETFs and indexes.

“These are not tokenized securities,” he added. “We are not creating an ERC 20 chain. All investments in stocks, ETFs, indexes, etc., are collateralized by bitcoin.”

Crypto Collateralized Contracts

The new feature will leverage Abra's Crypto Collateralized Contracts (C3s), a model that allows an investor to convert their bitcoin into different investment options, without having to move money from one wallet to another. The C3s act rather like a stablecoin whose value can be pegged with a reliable price feed to the value of bitcoin.

For every security purchased on Abra, the investor enters into an investment contract, a multi-sig smart contract based on P2SH scripts on the Bitcoin blockchain, which automatically determines whether or not an investor has made money based on the price of the asset. For instance, if an investor wants to purchase $200 worth of Amazon shares, he will place $200 worth of bitcoin into a contract and the movement of the stock's price will determine the addition or subtraction of bitcoin from the contract.

According to Barhydt, Abra takes all the risk here, which it hedges in the open market, the instant a user creates the investment.

Barhydt also touts the broad crypto and fiat offerings on Abra as a unique selling point, as well as its non-custodial nature — so users hold the fate of their funds in their hands.

"Abra does not collect, store, or have access to its users’ funds. So individual users hold their private keys in the Abra app on their smartphone," Barhydt said.

For investors who register for the early access program, Abra is offering zero trading fees, with a $5 minimum investment.

This article originally appeared on Bitcoin Magazine.

Blockstream Open Sources Development of Its Proof of Reserves Tool

On February 4, 2019, blockchain tech company Blockstream announced the development of a “proof of reserves” tool to standardize the authenticity of exchanges’ crypto reserves. The Bitcoin development company has submitted a Bitcoin Improvement Proposal (BIP) to the bitcoin-dev mailing list for consideration.

Blockstream stated that it is “open-sourcing the development of the tool for feedback from the industry.” Citing high-profile hacks as a reason why such services would be in demand, Blockstream is hoping to create a “best-practice standard Proof of Reserves for the industry, that offers broad compatibility with the way most Bitcoin exchanges are storing their users’ funds.”

Blockstream stated that it the original idea for the tool was to build a means for its Liquid functionaries to prove their Liquid bitcoin (L-BTC) reserves to third-party auditors. But it soon recognized that there were further applications that could reach beyond Liquid and be useful to cryptocurrency exchanges in general.

“Put in as simple terms as possible, Proof of Reserves allows an exchange to prove how many bitcoin they could spend, without needing to generate a ‘live’ transaction or exposing themselves to the risks of moving funds.”

Reducing Security Risks

As the technology is envisioned currently, the tool will be able to circumvent some of the typical problems associated with proving cash reserves, namely the security risks associated with current verification methods that exchanges typically employ. With the help of the tool, an exchange “first constructs a single transaction which spends all of an exchange’s [unspent bitcoin].”

Basically, this function aggregates all of the cryptocurrencies sitting in the exchanges wallets into a transaction, but instead of sending this transaction — and creating a potential attack vector — the tool deliberately “sabotages” it. The transaction still shows that the wallets in question have all of the assets, but none of the assets get moved around. In this way, none of the exchange’s actual assets are at risk of being spent or attacked, and the amount of currency is still verified.

“This transaction data can then be shared with anyone that needs to verify reserves. They simply import the data into their own Proof of Reserves client to confirm the exchange’s total holdings and the addresses associated with those holdings.”

Removing the Need for Trust

The other problem that the Proof of Reserves tool is intended to alleviate is the technical barrier that prevents users from checking on the reserves of an exchange they may want to transact on. In other words, it’s difficult for non-technical users to verify the reserves for themselves, forcing them to trust that the exchange is operating in good faith.

And there have been plenty of questions surrounding the veracity of reserve claims in the crypto space which could make customers uneasy about placing their trust in an exchange. On February 5, 2019, for example, a Canadian court granted cryptocurrency exchange QuadrigaCX bankruptcy protection and appointed Ernst & Young as monitors to help the exchange locate any funds it could use to reimburse its customers.

Following the death of QuadrigaCX’s co-founder and CEO Gerald Cotten, the exchange claims to have lost access to some $190 million in deposited funds, alleging that Cotten was the only one able to access his encrypted laptop where the keys and passwords are stored. This has caused many users to question whether or not the exchange actually has the stated funds in reserve.

Third-party verification of actual cash reserves could help potential users identify whether or not an exchange is operating in good faith and under acceptable standard practices.

Privacy Concerns

Thus far, however, Blockstream’s verification tool has at least one area of significant concern: it reveals the entire transaction history of the participating exchanges. If this problem were to persist, the tool could be used to unmask all of users’ transactions with the exchange in question. Although this glitch would obviously be completely impractical for confidentiality reasons, the underlying premise of the tool does work, and the blog post states that Blockstream hopes to create a fully confidential version with the help of the new open-source development process.

This article originally appeared on Bitcoin Magazine.