Law Decoded: Governments vs. blockchain privacy, Sept. 4-11
Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law.
One of the most persistent myths about Bitcoin is its supposed anonymity. More properly termed pseudonymity, BTC wallets are permanently tied to their public keys. Most of you know that. But it took government investigators years of trying to corral Bitcoin transactions on dark web marketplaces like the Silk Road to figure that out.
Now, however, blockchain analysis is a growing industry, catering to a range of clients including many of the most shadowy of government agencies. This was inevitable. At the same time, much of the appeal of effective blockchain programming — beyond cryptocurrency applications — is their ability to protect dispersed data. But as government actors get more sophisticated with blockchain technology and indeed look at onboarding it themselves, they seem determined to short-circuit the whole privacy protection side of things.
This week, we’re looking at updates in government use of analytics and KYC to trace crypto. We’ll also see some issues with what may be the largest use of blockchain for remote voting yet — a pretty key example of where everybody involved needs their identity protected. Surveying the scene, adoption is only accelerating. All the world’s biggest monetary authorities are even considering “minting” digital currency using blockchain tech. The current signs are ominous however, suggesting that the authorities will take steps to keep the keys for themselves.
Kollen Post, Policy Editor, @the_postman_
Yesterday, the U.S. Treasury released new sanctions on employees at a Russian firm involved in disinformation campaigns. Later that day, the Department of Justice publicized criminal charges against several of the same people, alleging that the sanctioned parties had stolen the identities of U.S. citizens to pass Know-Your-Customer checks at U.S. banks and crypto exchanges.
The operation, Project Lakhta, is an affiliate of St. Petersburg’s notorious Internet Research Agency. Various U.S. investigations have tied both to a widespread campaign to stoke partisan hostility among Americans via social media campaigns — wide-scale trolling, in other words.
None of the U.S. agencies involved openly addressed the comedy that Project Lakhta used fake U.S. identification to access American financial services to fund its use of fake U.S. social media user accounts to scupper American discourse.
The net influence of Russia’s social media campaign is hard to quantify. Attitudes about how much Project Lakhta and its ilk have had impacted U.S. polarization often say more about the political views of the person speaking. Many in the U.S. blame the results of 2016 elections and especially the presidency of Donald Trump on Russian interference.
Jarringly, every investigation notes the effectiveness of these social media campaigns at fanning the flames of long-smoldering issues in American society. While these campaigns may have stolen U.S. identities, worse seems to be that we’ve all turned into trolls.
The IRS continues pouring money into tracing crypto transactions. The agency announced a $625,000 campaign to track privacy tokens, a puzzle that has bedeviled the analytics industry and, frankly, delighted the crypto community to no end. The same week, the IRS signed a $250,000 contract with a relative newcomer to the crypto analytics industry.
Many of the most effective privacy tokens depend on ever-adapting open-source software. For fans, it’s a David-and-Goliath story. For the tax agency, it likely seems like a technological insurgency.
Time will tell, but $625,000 is unlikely to actually “crack” Monero. But the IRS is hardly alone among agencies trying. As of yet, privacy tokens have not seen a ton of circulation in areas like terror financing, which are always sure to draw mass attention. But as Bitcoin transactions have become something of an open book for investigators, privacy tokens are clearly on everyone’s radar.
Depending on the scale of final implementation, Russia’s in-progress voting system may well end up the largest yet to run on a blockchain. The country’s Central Election Commission (CEC) has uploaded elements of the system’s source code to Github alongside extensive explanations of concerns.
There is a catch, however. The elections, which CEC had put off until 2021, were rescheduled to this month, and while the internal side of the programming was set to become public yesterday it remains unavailable. Besides which, Cointelegraph has previously commented on issues with centralized control of the keys in this electoral system.
For a nation with a patchy record for running fair elections, the rushed development and limited scrutiny on the new remote voting system is concerning. Moreover, the authorities may well be able to link votes to voter identities — something proper democratic processes take pains to prevent.
While adding part of the voting system to Github for public scrutiny is a nice gesture at transparency and public accountability, the integrity of the system is questionable at best and may continue to undermine local faith in elections as well as in blockchain’s potential to keep them honest.
A team of attorneys breaks down an appellate court’s decision that the New York Attorney General has the authority to investigate crypto.
A handy visual timeline from Perkins Coie maps out the SEC’s work in crypto since the 2017 DAO report made the landmark claim that a virtual asset could be a security.
Writing in the Wall Street Journal, Acting Comptroller of the Currency Brian Brooks and Columbia Economics Professor Charles Calomiris encourage fintech to step into the spotlight.
Author: by admin
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Ethereum Fractal From 2019 Says 2020 Top In Crypto Could Be In
Ethereum is at a pivotal, make or break it moment. While Bitcoin has set a higher low, Ethereum’s higher high implies things are a lot more bullish for the altcoin.
But could a fractal matching the trajectory of the 2019 crypto rally and top hint that the top for the year is in for altcoins?
Litecoin’s halving took the industry out of bear market lows and help to begin the long thaw out of the extended crypto winter. Although altcoins led the rally, Bitcoin eventually stole the limelight, and all the capital out of the crypto market.
During 2019, Bitcoin exploded from $3,200 to $14,000 in just over three months flat. Along the way, Ethereum rallied also, but performed poorly compared to Bitcoin and others.
The leftover negative sentiment surrounding the ICO fallout kept Ethereum prices at bay, Sudden fears of regulation spreading due to a change in Binance allowing US customers to trade on its flagship promoted and altcoin apocalypse.
Ethereum fell from a high of $370, back down to $10 higher than its bear market bottom at $80. Now, the top ranked altcoin is trading at the exact same price in an eerily similar pattern.
Could the top of 2020 already be in?
ETHUSD Weekly 2019 Versus 2020 Fractal Comparison | Source: TradingView
A fractal taking place two years in a row on ETHUSD price charts could suggest another deep fall for the altcoin and potentially the entire crypto market.
Bitcoin very well could get caught up in any selloff, or another rally like last year could keep the top crypto asset pumping while the rest of the market dumps in exchange for BTC.
Alts would see another apocalypse, and could be in danger of new lows. Some may go to zero.
The big difference this time around, that could cause the fractal – as similar as it is – to play out differently. The previous top is currently acting as resistance turned support. Ethereum is now trading at that same level, but after a fall from $490.
ETHUSD Weekly 2019 Versus 2020 Fractal Comparison | Source: TradingView
The same percentage drop from $490 as the asset fell from $370 the year prior, would result in a retest of support back at $150.
With how bullish the DeFi space has been, a drop like that in Ethereum seems unlikely. But with risk of the US election, and a stock market bubble bursting potentially dragging down crypto, anything is possible.
Another fractal where the second-ranked crypto asset follows Bitcoin, could also say otherwise.
Author: Tony Spilotro
Bad crypto news of the week
It’s been a tough week for Bitcoin. The price has fallen more than 8 percent and dipped below $10,000 on three consecutive days. Analyst Willy Woo, though, thinks it’s all looking good. He believes that on-chain indicators, such as the NVT ratio, suggest a bullish outlook, while Su Zhu of Three Arrows Capital believes that a surge to $100,000 is more likely than a fall to $5,000.
The son of gold investor and Bitcoin critic Peter Schiff is convinced. The 18-year-old college freshman just bought some more Bitcoin, against his father’s advice. Asked whether they want to follow the student who’s never had a job or the 30-year investment professional, Twitter picked the Bitcoin fan.
At least the young Schiff will be set for the end of the world. Podcaster Adam Curry has told comedian Joe Rogan that the apocalypse is coming, and as you hide in your bunker and battle the zombies, you’re going to need a Bitcoin. It’s no wonder that Bitcoin is now the world’s sixth-largest currency. And that’s despite dying again. As the cryptocurrency lost value this week, the Bitcoin Obituary got to add another eulogy to its list.
As you’re mourning the 382nd death of Bitcoin, you might want to hold off on loading up on Bitcoin Cash, though. It turns out that Tim Draper didn’t recently buy some or thank Roger Ver. It looks like his Twitter account was hacked or a paid ad went wrong.
But if the apocalypse does come, maybe the GoodDollar will save us. The eToro token will set aside a daily amount as a basic income for the platform’s participants. Andrew Yang would like it. Or alternatively, you could just hack a wallet. Crypto Twitter user Alon Gal has declared that he has a wallet containing 69,000 Bitcoins. He just doesn’t have the password. Hackers have been trying to crack it for two years with no luck. Did they try “password123”?
The number of active decentralized autonomous organizations, or DAOs, has jumped over the last year. It’s up 660 percent, from ten a year ago to 76 now. At the same time, the first phase of the MakerDAO debt auction is reaching its final stages. Bidders have already committed to buying $2 million worth of Maker tokens using Dai.
It’s not only DAOs that are on the up, though. Starbucks is now getting ready to deploy a blockchain to trace its coffee beans and enable greater product transparency. China’s Hainan Wenchang International Aerospace City will use a blockchain to support its Smart Brain Planning and Design Institute. And Bangladesh is about to get its first blockchain-powered remittance service. The service will let Bangladeshi expats in Malaysia send their money home.
There have been a few setbacks too this week. The Texas State Securities Board has detected some more cryptocurrency scams. Texas Securities Commissioner Travis J. Iles named Kumar Babu Bondesi and Darwin Eric Balusek as the alleged operators of the Forex Birds and PEK Universe scams. They could face up to ten years in jail. Balusek is also known as “Bitcoin Pope.”
And YouTube pulled the plug on Sunny Decree’s crypto livestream. The platform said the video violated its policy against “harmful and dangerous” content.
Finally, Jay Cassano, Cointelegraph’s editor-in-chief, has been promoted to CEO. His position will be taken by Jon Rice, previously the managing editor of Cointelegraph Magazine. Congratulations to them both.
Check out the audio version here:
Joel Comm is an internet pioneer, New York Times best-selling author, futurist speaker and co-host of The Bad Crypto Podcast. That’s a fancy way of saying he writes words, says things and loves to play with cryptos.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Author: Published 8 hours ago on September 12, 2020