Idelto

Cryptocurrency news website

Bitcoin Magazine

Grayscale Files to Make Bitcoin Trust First to Be Regulated by SEC

by

Grayscale Investment has submitted a filing with the U.S. Securities and Exchange Commission (SEC) that could change the status of its popular bitcoin investment product. 

On November 19, 2019, the company filed a securities registration form with the SEC which, if approved, would see its popular Bitcoin Trust product become the first-ever digital currency investment product to be regulated by the SEC. 

The Bitcoin Trust was initially launched as a way to give more investors exposure to bitcoin with some barriers to entry eliminated, like the need to protect your own private keys. The pursuit of regulation by the SEC through this voluntary filing appears to be an effort in the same vein.

“This filing is the latest step on the road to regulatory maturity for digital currencies,” according to a Grayscale press release sent to Bitcoin Magazine. “After creating the first FINRA-regulated Bitcoin investment product, Grayscale once again is leading the industry in facilitating responsible regulatory oversight of the asset class.

If the SEC approves the filing, the structure of the Bitcoin Trust would not change, nor would its regulatory classification.

“This is a voluntary filing that, if deemed effective, would designate the Trust as an SEC reporting company and register its shares pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),” the press release reads.

An SEC reporting company is also called a “reporting issuer.” By becoming a reporting company, Grayscale would likely be subject to periodic and ongoing disclosure requirements designed to keep investors informed on major updates concerning their investment.

Potential Changes for Bitcoin Trust Investors

Following approval from the SEC, accredited Bitcoin Trust investors would see a reduction in the statutory holding period for their investment from 12 months to six months, giving them liquidity sooner. This means that investors who had previously purchased shares in the trust’s private placement could resell them on the secondary market within six months.

The trust would also be changing how it files quarterly and annual reports. With SEC approval, it would have to file its reports and audited financial statements as 10-Qs and 10-Ks — specific report templates as designated by the SEC.Grayscale’s Bitcoin Trust became the first publicly traded bitcoin fund in 2015 (as the Bitcoin Investment Trust), having received approval on the OTC Markets Group’s OTCQX exchange.

The company, which is behind a significant “Drop Gold” advertising campaign, has seen its bitcoin product rise in popularity since its launch. Per a recent quarterly report, Grayscale attracted $254.9 million in net investments for its products, with two-thirds of the inflows secured attracted by the Bitcoin Trust.

The post Grayscale Files to Make Bitcoin Trust First to Be Regulated by SEC appeared first on Bitcoin Magazine.

The Bolt-A-Thon Sequel to Spark Lightning Innovation

by

From December 6 to 8, 2019, the second edition of the Bolt-A-Thon will take place in the natural habitat of Bitcoin and the Lightning Network — the internet. The Lightning-centered hackathon and conference is a follow-up to the inaugural event in April 2019, where many creative ideas were presented and many Lightning-focused projects made tangible progress — for instance, after the multi-platform payments service Bottle Pay won the Bolt-A-Thon, it went on to raise $2 million to boost development.

Speakers at the event, who will be making their presentations via livestream, include Lightning Labs Infrastructure Lead Alex Bosworth, Blockstream researchers Christian Decker and Rusty Russel and c-lightning developer Lisa Neigut.

A Decentralized, Inclusive Conference Fit for the Technology

For a participation fee of only 100,000 satoshis (about $8.30), Lightning enthusiasts from all around the world can purchase single-session tickets to watch these presentations via Zoom. The event has eight sessions (one for each speaker), so the total cost of watching all presentations will amount to 800,000 satoshis. The event’s ticket page allows attendees to choose sessions individually.

In the true spirit of the Lightning Network, signup only requires payment to generate a participation code used to join the livestreams, with the option to submit an email address as well. There is no mandatory KYC process, no requirement to use a real name and no way to discriminate among potential participants. The price is low enough to encourage enthusiasts from all around the world to learn more and engage with the Lightning community.

“Our goal here is to offer an alternative to physical conferences,” Bolt-A-Thon co-founder Andrew Yang told Bitcoin Magazine. “I’ve witnessed situations where tickets were very expensive, and I also had to take into account housing and travel costs — these were usually more expensive than the ticket. The Bolt-A-Thon allows people from all over the world to participate either by creating a Lightning project or attending sessions.”

Building Innovation at Bolt-A-Thon

Participants in the hackathon will need to pay just 100 satoshis (about $0.0083) and also prove that they’re running a Lightning node. In the final day of the event, they will have to make five-minute presentations about their projects and vote for the participants whose work they consider to be innovative and game changing. Criteria for excellence include theme adherence (must use the Lightning Network for payments), applicability as a real-world use case (the practical dimension) and “wow” factor (an aspect that may woo mainstream audiences and spread adoption).

The winning efforts will be awarded with prizes that amount to 0.45 BTC: 0.2 BTC for first place, 0.15 BTC for second place and 0.1 BTC for third place. Furthermore, the hackathon could serve as a platform for interesting projects to secure external funding from investors and companies interested in innovation — as Bottle Pay did.

The decentralized and merit-based nature of the event means that an innovation from anywhere in the world could receive a spotlight.

“During the first conference, we had attendees from Brazil, South Africa, Thailand, Spain, Argentina, Nigeria and the U.S.,” Yang said. “Bitcoin events, presentations and hackathon opportunities shouldn’t just be for the first-world countries. Bitcoin is for the whole world and that’s why we think making it virtual enables us to reach and foster the global development of Bitcoin and Lightning.”

The post The Bolt-A-Thon Sequel to Spark Lightning Innovation appeared first on Bitcoin Magazine.

Video: Connie Gallippi on BitGive and Bitcoin Charity

by

Connie Gallippi is yet another example of an accomplished professional who discovered Bitcoin, fell down the rabbit hole, and decided to pursue a new life in which her skills and knowledge generate satoshis instead of U.S. dollars. After attending the inaugural Bitcoin Foundation conference with her brother in 2013, Gallippi came up with the idea of creating a nonprofit organization which collects donations in bitcoin and helps various humanitarian causes around the world. She launched BitGive.

“I was at a senior level in my former career, but being in that energy really brought it all together,” she said. “It had all the right ingredients for success. My former career was about working with nonprofits, most of the activity was about getting funding. So I married it with Bitcoin and realized there was a gap I could fill around a foundation which gives back and has social impact.”

Bitcoin Magazine’s first coverage of BitGive appeared in July 2013 and included an interview with Gallippi — albeit a much shorter one than the video above represents. In the years that have passed, the bitcoin-powered charity has managed to support multiple humanitarian causes around the world. Some of the best known cases include the construction of a well in Kenya, the purchase of 644 mobile phones for medical workers in Nepal after a tragic earthquake and the creation of a children’s relief fund for victims of a typhoon in the Philippines. 

BitGive has become one of the most successful and longest-standing Bitcoin projects, and the fact that the foundation is still around to support charitable causes is a testament to their efficient management and willingness to work for good causes. Unlike other projects which emerged during various market phases and then faded away, BigGive is still active and receives donations on a regular basis. Discussing this success, Gallippi stated, “It’s taken a lot of work to survive through all of these ups and downs. I’m very proud of the fact that we’re still here, and the secret is that we’ve received a lot of support and we’ve always been conservative with our investments. The team has always been very small, and we maintained our strategic approach to growth. We’ve grown mostly through contractors so we can expand as needed, we’ve been very careful.”

Choosing a Bitcoin Charity

Though the Bitcoin narrative has changed dramatically since 2013 and more newcomers who understand the value proposition are more interested in HODLing their bitcoin, Gallippi is still convinced that there are plenty of reasons to donate to humanitarian nonprofits. Perhaps her most compelling argument is centered around finding a real use case and spreading awareness through charity. 

“A lot has changed since 2013, but what we feel is that unless we focus on real use cases and demonstrate them, it all largely becomes a speculative exercise — and speculation by definition is that people will expect to see more value gains over time,” she said. “To us it’s very important to use bitcoins and show the importance and benefits of the technology. From a non-profit and donation perspective, it’s such a relevant use case to a mainstream audience: people can relate to charity, get excited about it.”

She also pointed out the inefficiencies of the fiat charity system and implied that Bitcoin fixes many of these issues. 

“Many of the bitcoin donors understand the challenges of the current mainstream philanthropic system, so to me it’s a wonderful opportunity to reach a mainstream audience and prove the usefulness of the technology,” Gallippi added. “In the process of doing that, people have a real-time social impact.”

And if these arguments are not enough to convince American bitcoiners that they should contribute some of their funds as donations to charitable causes, there is also a tax exemption argument. 

“Instead of giving to the government for taxes, you can give to charity — and since you’re doing it in bitcoins, you can choose a charity like BitGive which holds bitcoins and continues to grow from there,” she said.

From BitGive to GiveTrack

If you check the website of the BitGive Foundation, you’re going to discover that only the partnerships formed between 2013 and 2016 are presented. This isn’t because the charity ceased its operations after that period, but because it has grown along with Bitcoin. Just as Satoshi’s invention has acquired a second layer and a federated sidechain, BitGive has scaled to handle more operations and support even more humanitarian causes.

That has meant the formation of GiveTrack, roughly a dozen curated causes to which benevolent bitcoiners can donate. 

“If you go to GiveTrack.org, you will find many more projects which we supported,” Gallippi explained. “We have been able to scale and do more than in the first few years: now we have between 10 and 12 projects listed, in collaboration with many humanitarian organizations around the world.”

Gallippi noted that GiveTrack has a strict vetting process which only considers reputable NGOs. 

“The GiveTrack platform is open to new charitable causes, but we do have a vetting process,” she said. “We work with registered and compliant NGOs (so individuals can’t submit their own proposal without a proper affiliation). We must meet some standards and requirements — but once they are met, we start strategizing.”

Benefitting From Bitcoin

BitGive approaches its investments with some core Bitcoin philosophy. Gallippi said that the funds donated are not immediately converted into U.S. dollars — there is an ongoing and conservative HODLing process which seeks to maximize the efficiency of the humanitarian campaigns. This is also part of the secret to its longevity, as the organization has never run out of money, even during market capitulation phases.

“The benefit of holding in bitcoin has been very noticeable, and the fact that we don’t cash out as soon as we receive donations has really helped,” concluded Gallippi.

The post Video: Connie Gallippi on BitGive and Bitcoin Charity appeared first on Bitcoin Magazine.

On Lightning, Messaging Apps Emerge as Growing Use Case

by

“Does instant messaging over Lightning have killer application potential?”

Lightning Labs developer Joost Jager asked his Twitter followers this rhetorical when he debuted a demo for his Lightning Network messaging application, Whatsat.

Your average Bitcoiner probably wouldn’t think of messaging as one of Lightning’s killer use cases, at least not before micropayments, streaming payments and the like. For encrypted messaging, they’d likely default to options like Signal, Keybase or Wire. 

These are certainly better than mainstream messaging apps, like Facebook’s Messenger and WhatsApp, whose encrypted options are thinly veiled save-faces that don’t offer much material confidentiality. But encrypted messaging needs to go further than privacy, Jager believes; they need censorship resistance too, and this is where Lightning-powered messaging comes in.

“The encryption part is similar, in both systems the message content is private,” Jager told Bitcoin Magazine. “The difference is that there is no central server involved. No single kill switch that could be used to shut down all communications. Or that is used more selectively to deny certain users to communicate.”

Whatsat: A New Approach to an Old Feature 

The Lightning Network has supported messages from day one, same with Bitcoin’s base layer. The Blockstream Satellite has been used in experiments around Lightning-driven messages and private text message services have leveraged Lightning payments. But recent tweeks to the protocol now make it easier to attach additional data to a payment and pass it on to other applications using type-length-value (TLV) payloads. 

TLV payloads allow people using communication protocols to attach additional, extraneous information onto a data packet. For Whatsat, this extraneous data would be the message that is bolted onto a Lightning transaction. 

The update that enabled TLV payloads paved the way for a concept like Whatsat which, alongside censorship resistance, could also make communications more private for end users, depending on how messages are sent or routed, Jager said.

“Chatting over Lightning also makes it much harder to find out who is communicating with whom. It is not required to have a direct (observable) TCP/IP connection between users and there is no central server either that could reconstruct the communication pathways,” he told us.

Lightning-powered messages (or transactions, for that matter) are onion routed, just like information passing through the Tor network. The messages are shunted from node to node, and each node can only identify the node that sent it the information or the node next in queue to receive it. 

Now, if one entity runs the majority of the nodes in a pathway then they may be able to unmask the sender and receiver, Jager admitted. 

“Privacy and security are relative concepts,” he continued.

In some cases, then, it might be better for users to set up direct payment channels with each other. For example, if a “spy” or “attacker” wanted to deanonymize a user via node surveillance, then onion routing the payment may offer significantly less privacy depending on the route, as described above. In this case, a direct payment channel would be more private. But if the surveilling party were an Internet Service Provider (ISP) and tracking TCP/IP addresses, then onion routing would be more private.

Direct channels could provide absolutely free messaging, however — something that some users might find a negligible benefit compared to potential privacy trade-offs. For instance, Lightning messaging is already a free-to-use service; when one user sends another user a message, they have to attach it to a payment, but the recipient can reject this payment after opening the message (for Whatsat, a return-to-sender message saying that the payment has been rejected serves as confirmation of the original message). 

As with Lightning payments writ large, a fee market is likely to develop for this service to route messages when a direct channel is not open. This could be seen as one of the cons, Jager said, but it’s also a trade-off some might be willing to accept for censorship-resistant, confidential communication. 

“There is the cost side, but also the benefit side,” Jager explained. “The weight of that is dependent on the awareness of users of the downsides of existing messaging systems. For most people, an imaginary world in which some authority can block two people from talking to each other in real life sounds like scary sci-fi. But it is where the vast majority of the users are at with the current state of messaging in the digital domain.”

Whatsat is currently in testnet, and its source code is on GitHub. But don’t expect a beta from Jager anytime soon. In our conversation, he mentioned that Whatsat is “only a proof of concept,” a side project of his that isn’t associated with Lightning Labs, his employer. It’s his hope that the hobby project will “inspire other people … to start developing” it further.

Sphinx Chat, a Different Approach to the Same Effect

Some developers have begun toying further with Lightning messaging, though not from Jager’s source code, and they’re close to launching a private beta.

Sphinx Chat, for instance, has been in motion for about a year. Project lead Paul Itoi told Bitcoin Magazine that its team cobbled together a prototype for a Lightning hackathon in New York in 2018. At this year’s Lightning Conference in Berlin, it released “a very hacky version to a handful of users on TestFlight,” Itoi told us, but they plan to drop a new beta version in the near future (you can register for the private beta on its website). 

The application takes its name from the Sphinx protocol, an upgrade that onion routes Lightning transactions over a Tor-esque network. Whatsat leverages the same protocol to achieve a certain degree of privacy, though it differs from Sphinx Chat in that it will offer free messaging within direct channels in addition to TLV payload messaging. Sphinx Chat is focusing solely on the latter. 

“Both are similar,” Itoi told us. “But [Jager’s] is designed to avoid fees since it uses a failed payment to deliver the message. This is currently free on LN. Sphinx inserts the message in the [TLV] and uses keysend to deliver and standard fees will apply.”

TLV still has an extra step to go before it’s production ready for mass messaging, however. For LND, the Lightning instance that Sphinx Chat runs, the team still needs to enable TLV messaging from the receiver’s end; it can receive the data, but it has no way of processing it. 

Lightning Labs is tracking and working on the issue on GitHub, but until it is sorted out, Sphinx Chat will rely on specific nodes hosted by Nodl to relay messages (which have been customized to fully support TLV payloads).

“We’ll stay in beta on nodes we’re hosting until those features are officially supported,” Itoi told us.

Once out of beta, though, Sphinx Chat will be totally open-source, he continued. At this point, node operators can establish fee markets for relaying messages, same as with Whatsat. He also sees it as a complementary application to StakWork, a chore app that allows people to complete tasks for sats. For example, workers can be notified and paid through Sphinx Chat

The Future of Encrypted Messaging?

Perhaps the first question that comes to mind with Lightning Network messaging: Why use any of these developments when we already have reliable, encrypted messaging apps?

Jager admitted that this is a definite “con,” since “Lightning is complicated compared to a centralized service.” Additionally, with a decentralized system like Lightning, “it can be difficult to deliver the same user experience that people are used to. An example of this — which is just as valid for payments — is how to deliver a message to a user that is offline.”

Still, there are reasons why someone may prefer Lightning-based messaging options to more centralized alternatives. Because the Lightning Network is decentralized, these options will be more censorship resistant and resistant to service outages that result from single points of failure. Itoi also views this development as indispensable for how it couples payments and communication as a single, permissionless entity. 

“The key benefit is integrating the ability to pay and communicate under one identity,” he said. “Our core belief: the privacy and censorship resistance that Lightning provides for payments should apply equally to speech. Using Lightning for chat will accelerate the adoption of bitcoin as a medium of exchange.”

This also opens up avenues for Lightning-powered forums, which would theoretically reduce spam given that, in Sphinx Chat’s case, each message costs something. Chatting also need not be limited to humans, Itoi believes. In the future, he envisions APIs and Internet-of-Things devices sending messages and payments to each other via Lightning (sorry, IOTA).

Like many other burgeoning applications and features being built on Bitcoin, Lightning messaging still has a ways to go. Another question to consider, besides usability, is whether users will be willing to pay to chat. This model is reminiscent of the old days of pay-per-message SMS, though it will certainly be much cheaper. Lightning messaging, depending on how hard it is to route messages, could cost as little as a sat or less. 

Still, with the promise of cheap, confidential and censorship-resistant messaging on the horizon (far off as it may be), Jager is optimistic in the future of this incipient use case.

“It isn’t said that a Lightning-based messenger can’t eventually match the ease of use of existing services,” Jager explained. “There surely is a ton of work to do, but I wouldn’t say it is impossible. At the moment, people generally have no problem with existing messaging services … but that is today. The future may be different. Perhaps the existing messaging services change their business model, perhaps some scandal happens in which huge amounts of metadata are leaked … I can’t say how this all will develop, but I think it is good to explore alternatives.”

The post On Lightning, Messaging Apps Emerge as Growing Use Case appeared first on Bitcoin Magazine.

Cashaa Announces U.S. Dollar Bank Accounts for Cryptocurrency Firms

by

Bitcoin banking platform Cashaa will soon offer U.S. dollar bank accounts for cryptocurrency-focused businesses, except those operating in sanctioned countries. 

Cashaa offers banking services like International Bank Account Number (IBAN) accounts, international SWIFT transfers for fiat and credit card processing for cryptocurrency-based businesses, which often struggle to receive these services from traditional banks. It also enables businesses to accept cryptocurrencies and withdraw funds in fiat, including British pounds, euros and Indian rupees. Beginning November 25, 2019, clients based in the U.S. will be able to apply for USD accounts.

These accounts will include automated clearing house and SWIFT access without limits and incur a one-time setup fee of 250,000 CAS, Cashaa’s native token (about $1,500 at press time).

Cashaa has integrated with New York-based Metropolitan Commercial Bank for provision of this service. As with Cashaa’s U.K. accounts, U.S. dollar account holders will have access to multisig wallet and exchange functionality for bitcoin purchases.  

Banking the Unbanked 

Cashaa’s new service is targeted at cryptocurrency businesses who encounter difficulty opening a corporate account in the U.S. As noted above, traditional banks have often shied away from the industry for reasons that range from regulatory uncertainty to the volatile nature of crypto assets. 

In some cases, cryptocurrency-based businesses have had their accounts closed. In a press release on the service, Cashaa noted that it formed a “pre-compliance team” in September 2019 following Barclays decision to stop serving Coinbase.

Speaking on their rationale, Janina Lowisz, the co-founder and vice president of marketing, believes her company could help serve the “underserved businesses building new technologies.”

“Our goal is to create a hassle-free experience for all businesses who are building new technologies and business models,” Lowisz said in the release. “The addition of U.S. Dollar accounts is an important milestone for the crypto community and us. We want to thank our community and all businesses so far who have trusted Cashaa to solve their banking problems.”

In April 2019, Cashaa began supporting cryptocurrency purchases with major debit and credit cards. In October 2019, the company enabled bitcoin purchasing options for customers in India using fiat currency.

The post Cashaa Announces U.S. Dollar Bank Accounts for Cryptocurrency Firms appeared first on Bitcoin Magazine.