Cryptocurrency, Scam

How I almost lost ten thousand bucks on a Bittrex phishing site

I have been actively trading crypts for about three months now. I really liked it, at first I started with about 100$ of birthday money, and slowly traded my way up, I made about 5,000$ speculating and watching the market. I was so happy; actually, I was saving up for trips to Iceland and Japan. Well, I got fucked two weeks ago. I used Bittrex for trading.

I was too lazy to enable two factored authentications and I’m guessing that I accidentally entered my log in information on a copy site that ended with .me instead of .com.

This isn’t the first time someone gets duped by a phishing site, make sure you keep your eyes peeled and always remain vigilant. Btw, I lost bout 7,000$, in almost five minutes.

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News

Damn China, Back at it Again with the Ban!

After several weeks of speculation on the Chinese government’s next move on Bitcoin and cryptocurrencies exchanges, the Chinese authorities have now ordered the closure of all the exchanges operating in the country. Previously, it had been reported that according to China’s National Internet Finance Association (NIFA), the exchanges operating in China have no legal authority to operate cryptocurrencies in the country. None of the cryptocurrency exchanges operating in China have the requisite licenses required for order book exchange.

The exchanges have been ordered to voluntarily wind down their operations and were supposed to stop any new user registrations by September 15th 2017. They were to publish the closing notices outlining the schedule of when they will stop trading of all virtual currencies. Additionally, the regulators have instructed the exchanges to develop and publicize plans on how they intend to allow customer withdrawals in a risk-free manner and how they will ensure that the funds are handled in a manner that protects the interest of investors.

All the major exchanges including BTCC, ViaTBC, Huobi, OkCoin, and Yotbc have already complied with the notice and announced their closure plans.  BTCC and ViaTBC will be closing operations on September 30th while Yotbc shall close on September 18th . OkCoin and Huobi will be closing at the end of October.

And the reaction to the news of the closure of the cryptocurrency exchanges was instant and sent shockwaves globally. It saw the Bitcoin struggle around the $3000 region from a high of over $5000 earlier in the month but has since recovered to trade at around $3600 by the time of writing. The Yuan-dominated Bitcoin crashed as much as 35% plummeting from 25,000 Yuan to a low of 16,000 Yuan on September 14th upon confirmation that BTCC was shutting down operations.

The authorities’ latest decision to close down the cryptocurrency exchanges began earlier in the month. They ultimately want to stop all initial coin offerings (ICOs) in a bid to stem fraudulent fundraising, pyramid schemes and speculative investment. Additionally, this closure follows the authorities’ earlier crackdown on the exchanges in February this year which saw them temporarily stop operations as they sought to upgrade their customers’ verification systems to comply with the Anti-money laundering policies of the People’s Bank of China.

But will the latest closure of the cryptocurrency exchanges in China have any long-term implications on the growth and development of this nascent technology? Most analysts believe not. First and foremost, the analysts have observed that the closure is likely to be temporary and all that is needed for exchanges to resume operations is a license. Although no authorities have confirmed or denied this, it is believed that the Chinese regulators are working on a stricter regulatory and licensing regime meant to strengthen the cryptocurrency exchange supervision. These new regulations and licensure requirements are expected to be enforced after the National People’s Congress slated for mid-October. It is during this Congress that the ruling party elects its leaders and, historically, the period leading to the Congress witnesses increased power tripping by the Chinese government.

It is believed that the real reason for the crackdown on the cryptocurrency exchanges is an attempt to put a stop on capitalism. But will these endeavors succeed? With the tightening of regulation in the mainland China, there is a high possibility that the exchange business will shift to Hong Kong. Already, the cryptocurrency and blockchain token exchanges in Hong Kong have reported an increased number of inquiries from the mainland by people who would like to list their tokens in the City’s exchanges. Japan and South Korea are the two neighbors who have the potential to hugely benefit from the crackdown in China since they have more efficient regulations, industry standards and policies.

The increased surge in the number of Chinese clients registering in Hong Kong’s exchanges and the increase in trading volumes in Japanese exchanges is a clear evidence of the historical fact in economics which teaches that capitalists always finds a way. Financial markets exist to channel capital to where it is needed and any regulations which restrict the free flow of capital will eventually die. Additionally, any Chinese citizen traveling outside the country can easily purchase Bitcoin from the thousands of public exchanges operating elsewhere in the globe. No single country can halt the development of the cryptocurrency movement.

Moreover, the closure of the exchanges does not reflect a change in fundamentals of the cryptocurrency technology and applications but rather it is just a market structure drop.  The foundation upon which blockchain technology and the cryptocurrencies are built is as solid as it has always been and therefore there is no tangible proof that the closure of such exchanges will impact on the growth of the industry. The value of the blockchain assets such as Bitcoin is not derived from the exchanges but rather it is intrinsic in the technology and the numerous applications to which it is put into use.

In any case, the closure of the exchanges has not classified Bitcoin and other cryptocurrencies as illegal and so their usage in the purchase of goods and services shall continue. According to Bloomberg, the ban on exchange-based cryptocurrency trades will not apply to over-the-counter (OTC) trades.  Consequently, it is expected that we are going to witness a surge in broker-based OTC and peer-to-peer trading. This means that although the aggregate cryptocurrency business in the country may be curtailed, it is may not be eliminated completely. Moreover, there will be increased trading conducted solely between cryptocurrencies.

Finally, does the closure of the cryptocurrency affect the Bitcoin and other cryptocurrencies mining business? China is famed for the heavy investments in cryptocurrency mining and some reports estimate that the country’s share of total worldwide hashrate is in the range of 70-72%. According to the announcements put out by BTCC and ViaBTC when announcing the impending closure of their exchange operations, both companies have indicated that their mining pools and cloud mining services remain unaffected by the ban. However, without access to domestic cryptocurrency exchanges, if the ban is extended for prolonged periods or becomes permanent, many of the mining operations may close down and relocated to other countries. In the long-term, such a move would erode China’s leadership in the mining industry but would not affect the business of mining globally.

As seen above, the actions by the Chinese regulatory authorities may not have long-term implications in the blockchain technology and cryptocurrencies. There will be short-term price movements but the fundamentals are still strong and the currencies will rebound.

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Cryptocurrency, Horror Story

Cops raided my house while I’m studying abroad

Basically, I was going away for a semester of studies abroad in Madrid, Spain. I had some extra bitcoins that I invested in the year before. I was in desperate need for cash so I decided that I was going to sell them. I went on local bitcoins and found some dude in five minutes who wanted to buy them. I was a little worried that it was a face to face transaction.

Though, I have done face to face transactions a few times in public places so everything was going to be okay. I was pretty sure.

I met with the individual in a spot not too far from where I live, maybe like five miles away. The guy gets out of his car, walks over to mine, goes for his pocket, I get a little worried, but then he pulls out the money, 350$. Then the dude booked it and ran to his car. Whatever, lol. I was driving back home and noticed that I was being followed by a piece of trash Toyota. I decided to drive a little erratically, took detours, drove through a parking lot and eventually lost the Toyota.

Cool, I was packing my bags and really looking forward to my semester abroad in Spain.

I don’t check my physical mailbox often, but when I did a few days after meeting with the individual and being tailed by the Toyota, I noticed a bunch of needle marks and rips on my envelopes, it definitely didn’t look like an accident… Two days went by, and I was really freaked out, but it was Saturday and I was supposed to be leaving for Madrid that day.

When I was in the shower, I heard my house door get smashed in.

I freak out, run downstairs, and see six police officers with canines standing in my living room. I was notified that I sold my bitcoins to an undercover cop and that they had a search warrant. Long story short, they found some weed, but it wasn’t anything serious, I had a medical marijuana registration card. The police just had suspicions that I was selling drugs through local bitcoins or something. They ended up going through my personal laptop and phone. Thank god, I was clean and clear.

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News, FAQs

What is Cryptocurrency Tax Fairness Act? Is it Good? Is it Bad?

Two lawmakers, Jared Polis and David Schweikert, who jointly chair the Congressional Blockchain Caucus, have introduced a new legislation known as Cryptocurrency Tax Fairness Act of 2017. The legislation seeks to create a taxation structure that addresses the burdensome reporting requirements which were introduced by IRS in their March 2014 guidelines.

What are the provisions of the IRS guidelines on cryptocurrencies taxation and what are their implications?

In the March 2014 guidelines, IRS classified cryptocurrencies such as Bitcoin as properties. This had major positive and negative ramifications on the development, application, and usage of the blockchain technology in the payments systems. On one hand, this was a good move since any gains from sale and exchange of cryptocurrencies are taxed as capital gains rather than ordinary income. Capital gains attract lower tax rates than ordinary incomes, resulting in major tax savings for cryptocurrency holders.

On the other hand, the categorization of cyptocurrencies as property introduced two major challenges. One of the problems is the issues of record keeping for tax purposes. In order to report any gains or losses, the cryptocurrency users would have to track price movements between transactions. The guidelines provide that cryptocurrency holders must report the fair market value of their holdings on the date of receiving the currency.

The other problem, and probably the most critical one, is that unlike fiat currencies issued by governments, the de minimis exception is not applicable in properties. The de minimis exception provides tax exception for very small transactions. For example for foreign currency transactions, you do not have to report any gains less than $200 made in a single personal foreign currency transaction.  Without the de minimis exception, any gains, no matter how small, made between the time you acquired the currency and the time you used it, must be tracked and reported to the IRS at the end of the year. This means that using cryptocurrencies to make even the smallest transactions such as an MP3 download is a taxable event and requires meticulous tracking of price fluctuations and reporting to IRS.

In addition to the complexities of tracking and reporting such cryptocurrency transactions, it is generally viewed that by taxing these transactions, the IRS is having a second bite at the cherry. This is because the transactions have already been taxed, and regardless of the currency used to settle the payment, no further taxation should be imposed. For example, a customer paying latte at a café using Bitcoin should not pay any extra taxes as compared to a customer paying in dollars.

The provisions of the IRS guidelines created major reporting responsibilities both for casual users and institutional traders of cryptocurrencies. Cryptocurrencies are extremely volatile and tracking this volatility substantially increases the compliance costs. Additionally, the cryptocurrency economy is in itself a complicated concept for most people and adding an equally complex reporting requirement does not help matters at all. Due to this high compliance costs, and partly due to ignorance, most people are in violation.

Naturally, the IRS guidelines create a lot of friction and discourage the application of cryptocurrency in the payments ecosystem. Moreover, this has stifled the growth of this nascent innovative technology since with this complex reporting requirements comes depressed usage and the ROI for developers and investors in the payments systems is therefore extremely low. For investors to put their money in the development of everyday-use payments solutions, they must be assured of critical masses for widespread application of the technology.

What are the provisions of the Cryptocurrency Tax Fairness Act of 2017 and what is their impact?

The Congressional Blockchain Caucus is a collaboration platform for the government and the industry to study and understand the implications, potential, and development of the blockchain technology. The blockchain is a decentralized distributed public ledger and is the technology behind cryptocurrencies such as Bitcoin.  Its application goes beyond cryptocurrencies and it has been a major source of disruptions in the global economy. Its main advantages are transparency, security, speed, and reduced transaction cost.

The Cryptocurrency Tax Fairness Act aims to create a structure for the taxation of purchases made with cryptocurrency. The bill introduces two major proposals designed to simplify cryptocurrency taxation in the US, and if passed, would be a major step in encouraging the development of this technology and its application in the payment systems. These two proposals are; the creation of a de minimis exemption for transactions executed using cryptocurrency and a development of a clear guideline for informational reporting.

The de minimis exception proposed in the bill is similar to the one enjoyed for foreign currency transactions. Under the bill any cryptocurrency transaction below $600 would be completely tax exempt. This implies that you would not need to keep tracking gains or losses on every small transaction you made. Additionally, even if there was to be any noticeable gain, you would not owe any taxes on such gains.

This would be a major achievement and a significant departure from the current taxation regime where you have to track and report every little purchase you make using cryptocurrency. Through this, the tax compliance costs would be substantially reduced and fewer people would be in violation.

The second proposal of the bill is to provide for the development of guidelines for informational reporting on digital currency for which capital gains is applicable. These would be the transactions above the $600 threshold such as the one for getting in and out of investment position and for which capital tax would be due. Currently, the cryptocurrency holder is responsible for tracking and reporting all the gains and losses from such transactions. This is in contrast to the transaction for stock holding whereby the stock broker is the one who provides you and the IRS with the statement of your gains and losses.

By developing informational reporting guidelines, the bill seeks to further simplify the reporting requirements of the cryptocurrency users by providing a mechanism through which cryptocurrency supplies such as Coinbase would be able to report on these transactions. This would help to avoid court cases similar to the current one between IRS and Coinbase, in which Coinbase is contesting what it has described as a broad and unnecessarily punitive request by IRS to supply all records for all customers for the period between 2013 and 2015.

These twin proposals of the Cryptocurrency Tax Fairness Act are a priceless contribution towards encouraging the use of cryptocurrency in the payment ecosystem. They will encourage investment thus creating the much-needed good jobs in the economy. Additionally, the consumers will benefit from the convenience, cost effectiveness and security of the blockchain technology.

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Cryptocurrency, Horror Story

I lost hundreds of dollars’ worth of bitcoins on eBay

Hey everyone! So, my goal was to sell some bitcoins via eBay, because I figured a lot of people were still confused back in the day as to how to purchase, trade, sell bitcoins and what not. And I figured that I might as well do it on eBay since most people were familiar with how it worked.

Well, everything was going okay, I was doing the trades through PayPal, and had my customers verify themselves by providing me with some of the info in that link.

So, one day I get a message from a client, asking me if I could sell 600$ worth of coins. A few days pass, and I get a notification of a gigantic hold of funds with a message stating that the individual got hacked.

So, an unauthorized payment was submitted by the client, and pretty much I lost a ton of coins with no way of getting them back.

I didn’t know that PayPal has a reversible payment option with a dispute system that doesn’t take bitcoins into account. Guess I got screwed, note to everyone else. Never sell any bitcoins on PayPal or eBay if it’s more than $50 worth.

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Cryptocurrency, Scam

Sent my money to a copy website

I was once trying to buy something from an online auction that a friend of mine recommended. The site looked completely fine and trustworthy. So, I found the merchandise that I needed on the platform, browsed around some more, and was pretty much ready to check out. I noticed a little notification spring up in my message box soon after I registered my account. I didn’t give it any thought really, whatever, just a system message. Well, I ended up transferring my bitcoins and waiting for my wallet on the website to receive the funds.

Two hours went by, three hours, four hours.

I went to bed and woke up the next morning hoping that my cryptocurrencies would have gotten to the wallet already. Which they didn’t. So that’s when I decided to read the message in my inbox on the website. It was a warning from the mods to double check the URL and make sure that it ended in .com, and nothing else…

Whelp, the website to which I transferred my funds, about 400$ ended up ending in .gg, so I pretty much god duped by some guys who made a complete copy of the website, and all of my money went to their personal wallets with absolutely no way of getting any of it back.

Pretty pissed, but pretty sly guys to pull that one off. Now I will always read moderator messages lol. Watch out!

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Cryptocurrency, Horror Story

I got hassled by police in Montenegro

Hello, I’m 25 years old and was, note the word, WAS, really interested in cryptocurrencies and digital asset trading. It’s not so popular here in Montenegro, but I was able to make some easy money speculating anyway. I sold over $400 worth of BTC to someone through localbitcoins, we did all of the trades in increments, and not everything was sent in one day.

About one week after doing the last trade, the police officers knock on my door.

What? They arrest me instantly, take me to the station and start questioning me. I told them everything, that I was just a trader on localbitcoins and wanted to make some money, that everything was legal and okay. They didn’t believe me at first and thought that I was some kind of drug dealer and that we were laundering money back and forth. I was forced to let them go through everything that I had, my phone, my email, my social media.

For some reason, the police want me to send back the money that I received for trading.

Which is kind of ridiculous, and makes me think that they didn’t listen to me at all. If I send the money back to the guy, he will just keep his cash AND my coins.

Good think the Montenegrin police didn’t find out that I was a miner, hehe.

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Cryptocurrency, Horror Story

Thank you silkroad!

I was a freshman in college when this happened to me. I was a regular kid, went to class, partied, smoked some Cannabis. I used to buy everything from my local dealer. However, one of my friend threw me the idea of using silk road, which used to be a really popular dark net platform that could be used to buy almost anything. I was using silk road for quite some time, and to great success at that too.

Not a worry in the world. At one point, I decided that I was going to sell what I was buying and make a good return.

I decided to buy about $1,000 worth of stuff to, ahem, sell, and it was at that very moment that the owner was arrested and the site went down. Too bad for me, I had already sent my thousand dollars’ worth of bitcoins to the trader through silk road. He got my bitcoins to his wallet, but I never got my delivery. That’s pretty much how I lost $1,000 trying to make some! Oh well, I’m well past it now, but as a college freshman, in need of money, I was super pissed. The worst part that I couldn’t do anything about the money that I lost since the website was down and what I was doing was kind of illegal so…

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Cryptocurrency, Scam

Got Screwed in 8 Hours

So, I have been a regular user of the crypto community for a while, I have conducted a few transactions and trades, and have made a good sum of money legitimately. But this bitcoin scam that I got involved with blew my mind. What happened was that some guy contacted me after he saw that I was selling crypto. He offered me to lend out bitcoins, and get them back later with an extra %, and that they would find the borrower. So, I sent the dude $50 worth of coins, and I got everything back +% return percentage. Okay, whatever. I decided to do the lending process again but putting a little bit more money at stake.

Of course, I spoke to these people over the phone, and they sounded really convincing, it was too hard for me to believe that anyone would go through so much time to steal fifty bucks.

Told me all kinds of fancy stories about how he’s been doing this lending stuff for three years now, and how some clients have invested over 5 bitcoins at a time with him. Everything was fluid, I went through the whole process with them about five times in total. For the sixth time, I decided to up the stakes and send them more money. I wasn’t worried, after all I have been doing this lending thing with them for about a week now.

And guess what, everything went cold, it’s been over a day now and I was supposed to get my return already.

No replies, nobody is picking up the phone, the person’s profile is gone from the platform, and I’m out 600$ with no way of getting it back. Never believe in “lending” btc again.

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Theories

How will the North Korea-Trump war affect the Crypto World?

In the second half of calendar year 2017, there are several factors converging that will have significant ripple effects throughout the world in general, but North Korea and the United States in particular. These events will serve as catalysts towards fundamental quality of life changes for everyone as we come to grips with this coming change and the evolving revolution that is cryptocurrency.

trumpThe North Korea situation for President Trump is complicated not only by what outwardly appears to be opposition from both Russia and China, but Trump’s options are limited by an establishment political class coupled with corporate mainstream media opposition at home that seemingly doesn’t respect, nor accept the fact that he was the people’s legitimate choice to be the Commander-in-Chief. Enter Kim Jong-Un, nuclear weapons, and our country’s predisposition to be the world’s policeman.

We are all witnessing a ‘perfect storm’ brewing with the challenges of not only the North Korea nuclear dilemma, there is also the fact that paper and electronic fiat currencies, held in banks, and our debt based systems are in a race to their intrinsic value of zero. There are also the massive national debt, the various public pension crises, derivatives, and bubbles in several sectors of consumer debt to contend with; auto, student loan, credit card, and mortgage. The Federal budget and tax policy issues, along with the severe impact of natural disasters such as the aftermath of Hurricane Harvey and the very real potential for added severe devastation by Hurricane Irma only add to the headache facing President Trump. Those are only some of the factors and variables. Did I say perfect storm?

As a result, Bitcoin, and all of the other myriad blockchain technology based cryptocurrencies, currently stand at a historical point. They’re at the cusp of a massive transfer of wealth and an opportunity to revolutionize how ALL transactions are done, away from governments and the banking system, as the often conjured fiat currencies teeter at the bitter edge of manipulated collapse. A nuclear exchange, in any form, can have significant implications for cryptocurrencies, for the better.

north korea nuclear

Bitcoin, even with its recent pullback from over $5,000 down to $4,300 per unit, commands a market cap greater than a significant portion of companies in the S&P 500. Even with the rocket-like rise, it’s is not in a bubble as many may think. To be in a speculative bubble, the asset must have two characteristics, have a value or price that highly exceeds its intrinsic value, and be widely held. Relatively speaking, it isn’t widely held and opinions vary widely on its intrinsic value. What is of concern though are the implications of present day nuclear brinkmanship by the immature leader of North Korea.

Unlike Gold and Silver which can be physically possessed and have been universally considered as money for over 5 millennia, cryptocurrencies have no substance and reside in the digital ledgers that compose the blockchain system on the internet. An electromagnetic pulse (EMP) can render the technology inert if a regional nuclear exchange, starting with, god forbid, Kim Jong-Un ordering the nuking of Seoul, Tokyo or even Taipei or Hong Kong for instance, creating a domino escalating effect into a wider world war.

I say ‘inert’ purposefully because the beauty of blockchain cryptocurrencies, unlike their fiat/paper counterparts, is that there is no central authority. There’s no controlling central bank or overarching, taxing, regulating government. It’s a decentralized, anonymous global network that manages and records all transactions across the entire network, so if only a few servers and the internet survives (both are necessary), technically the cryptocurrency survives. In such a scenario, value may remain, but as the internet and e-commerce are imbedded indelibly into our society, will there be a practical ability to trade with the world wide web impacted by war induced EMP? Past internet shutdowns have cumulatively cost $billions. Add deliberately targeted EMP to the mix and the impact will be costly to both traditional e-commerce and cryptocurrency transactions. Overall impact? To be determined.

Another concern given the very real North Korean nuclear problem is what happens to the cryptocurrency in the blockchain whose owners are deceased and their anonymous encrypted authentication is lost without clear, legal instructions left behind to pass on digital currency? Are these units out of the loop forever? Can they be recovered? Also, to be determined.

As cryptocurrencies go more and more mainstream, not only will governments and central bankers object, they will become a force to be reckoned right along with Kim Jong-Un’s hydrogen bombs. Bankers know that, for now, cryptocurrencies, in large part, must be redeemed for a fiat currency as the cryptocurrency trading infrastructure is still developing. In wartime, this becomes an even more critical issue as the internet is a critical means of communication, and cutting off communications is a war planner priority. This attacks the very digital core of cryptocurrencies and the practical ability to exchange them for cash or precious metals to acquire basic necessities.

financial crisisThe ongoing currency war against the US dollar hegemony also factors into cryptocurrency’s tactical and strategic value. As countries turn away from the US dollar as the primary medium of international exchange and trade, currency war policies such as economic sanctions are effectively neutered. China has upped the stakes by announcing that by the end of 2017, the Shanghai and Hong Kong exchanges will offer crude oil futures contracts denominated in yuan which will be fully convertible to gold. This will allow oil exporters to bypass the dollar entirely. This is a game changer which bodes well for cryptocurrencies as the fiat currency war continues.

The monetary flow by the smart money is away from zero and negative interest fiat currency-based financial instruments to fast rising cryptocurrencies which early adopters and true believers know to be the future of money. Bitcoin transactions and businesses accepting it as payment are steadily increasing, and while the blockchain is highly resistant to single vector attacks by hackers, the jury is out and the laws of unpredictable, unanticipated, and unintended consequences will preside if Kim Jong-Un and the North Koreans force President Trump’s hand with a nuclear launch.

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