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Russian Government Buying Bitcoin? Largest Bitcoin Price Catalyst.

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According to Vladislav Ginko, the new rounds of US sanctions will indeed push Russia to invest in Bitcoin and it is indeed inevitable.

According to Vladislav Ginko, a lecturer at Mosco’s Russian Presidential Academy of National Economy and Public Administration, the new rounds of US sanctions will indeed push Russia to invest in Bitcoin. He said that he is appearing recently on Russian state TV and radio providing economic commentary and saying that much of his recent work has been in persuading Russian officials that bitcoin is the best way to mitigate the impact of new sanctions on Russia. If this is the case, it could be huge.

The idea of a state level actor getting into cryptocurrencies in indeed inevitable and when it does happen, it is going to push the bull market to new extremes.

 

Russia adopting bitcoin:

If a country is going to start adopting bitcoin as a percentage of their strategic foreign reserves then Russia may just be a prime candidate for that to happen. Recently Russia has been drastically increasing the number of gold reserves. Now gold currently at around $41.2 million a ton, in the last months of 2018 Russia bought around 92 tons or $3.8 billion worth of gold bringing the total gold stockpile in Russia to 2066 tons or approximately $85 billion worth of gold.

Russia has been progressively moving away from the dollar and the dollar is moving away from Russia as well. The United States has been very antagonistic towards Russia so it’s no surprise that they wouldn’t want to be using the currency of a country which is continually hostile towards them. Russia’s US treasury holdings have dropped from $96.1 billion back in March 2018 to $14.4 billion in September 2018. We don’t have a current number on that but it is continuing to fall until they completely relieve themselves of US foreign currency holdings. The Kremlin, of course, fears that US sanctions may end up freezing a significant portion of country’s international reserves and that would be a terrible situation for Russia and as we see sanctions continued to be pulled against Russia they have rightly paranoid and its probably not a bad idea to be exploring alternative options.

 

How would it affect the bitcoin markets:

Currently, the Russian Central Bank has around $460 billion worth of gold and foreign currency assets. So to see them diversifying into bitcoin could be very interesting. Although if it does happen, Russia is going to buy that on the OTC market if we imagine that Russia is going to take just 1% of the assets which would be $4.6 billion invested in bitcoin, that’s a massive amount of money.

So the OTC statement actually kind of ignores the reality of the markets because that $4.6 billion would equal more than 1.2 million bitcoins at the current price. Nevertheless, the OTC markets would have a tough time filling those orders in a quick fashion. So the OTC desks are going to have to go to regular exchanges and buy more bitcoin and that would surely have an effect on the market. Let’s just assume that if Russia is able to fulfill all of its orders via some magical OTC desks which have enough bitcoin to meet that demand, that’s probably going to be most of the available OTC bitcoin on the markets. So then the OTC desks are again going to have to go to regular exchanges and buy more bitcoin to put their stockpiles together.

 

The Sad Truth of the Current State of World Affairs:

The sad truth is that the system that the financial system which has been primarily US-led has been used as a financial weapon against other countries. Finance and money have been weaponized and that’s exactly what’s happening. Predatory loans against poor countries, for example, sanction regimes etc. It’s all one-sided and its all hypocritical but bitcoin doesn’t care.

Currently we see a situation where the United States is forcing Europe to do things that Europe doesn’t necessarily want to be doing and so in response to France, Germany, and others not wanting to always have to be the dog following America’s lead, they are proposing some of their own solutions to free themselves from a one country dominated financial system. So France and Germany have announced that they are looking at a new international trading system beyond US control. Germany would likely include Russia in this because they are such major partners that haven’t been officially the part of the announcement and just speculation.

French finance minister Bruno Le Maire or Mr. Bitcoin as they call him in France has agreed to the overall idea with Germany. He said that we are determined to work on an independent European or Franco-German finance tool which would allow us to avoid being the collateral victims of US extraterritorial sanctions. These countries which are the closest allies of the US are looking for alternatives.

It’s interesting that they don’t need a new SWIFT network, they could just use bitcoin. That would be totally next level if some of the world’s biggest economies all started using bitcoin to interact with one another in terms of international transactions. Now the reality of Russia investing or not investing in bitcoin, we can definitely see the use case.

If you want to talk about fear of missing out, just wait for Russia to announce that it’s going to buy 1.2 million bitcoin. You think Japan is going to sit back watch Russia gobble up all the bitcoin, You think China will sit back? This kind of country-level FOMO could be unimaginable big when it comes down to it. We could see countries literally adding hundreds and thousands of bitcoin to their strategic reserves and for these countries, it’s not a huge amount of money.

 

What do you fell about the same? Tell us in the comments section below.

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Bitcoin and Dark web: Transactions increasing, Values decreasing

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The bitcoin transactions on the dark web, underground illegal marketplace have doubled in the last year (2018) in comparison to 2017.

The bitcoin transactions on the dark web, underground illegal marketplace have doubled in the last year (2018) in comparison to 2017 while the value of the transactions has decreased from around $700 million in 2017 to $600 million in 2018 as revealed by Chainalysis’s report.

 

Dark web not affected by the bear market:

It seems that the dark web is not affected by the bear market trend which led to the price of bitcoin to fall from over $19000 to around $3200 last year. Even during the bear market, the transactions on the dark web have been rising.

According to the report by Chainalysis, a blockchain analysis company, the value of the total transactions on the dark web was around $700 million in 2018 while the value of bitcoin transactions in 2018 was around $600. This was probably due to the shut down of dark web markets such as AlphaBay and Hansa in 2017.

The dark web websites have been experiencing massive growth in terms of the number of cryptocurrency transactions even though the prices of these cryptocurrencies have seen a tremendous decline over the past year. According to Kim Grauer, the senior economist at Chainalysis, the buyers and sellers on these dark web marketplaces really do not care about the price of bitcoin or other cryptocurrencies while transacting. She also believes the in the coming time, the value of these transactions may further decrease as the governments are taking strict measures in order to shut down these markets.

 

Binance using Chainalysis:

Binance, which is one of the largest cryptocurrency exchanges revealed last year that it was using Chainalysis’s KYC and anti-money laundering software to prevent any illicit transactions on the exchange. The software by Chainalysis is used by companies to perform investigations in terms of financial transactions. The same software is also being used by many institutional clients of security firms for compliance.

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Trump Government Shutdown: Impact on Bitcoin ETF, Bakkt and Cryptos.

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The ongoing government shutdown is devastating for the crypto industry. Major functions of the government are simply not working right now.

The ongoing government shutdown is devastating for the crypto industry. Major functions of the government are simply not working right now. The SEC announced that it will be limiting its operations reducing its staff during the shutdown and restricting the functions to those that meet critical needs and unfortunately the Bitcoin ETF may not be a critical need to the SEC.

The US CFTC is also doing limited staffing during the federal government shutdown. There is no time limit as to how long the government shutdown is going to go on but the longer it goes on, the longer will be the delays for these key items that the people have been waiting for. So the possibility of an extended government shutdown could definitely impact the cryptocurrency industry in the United States.

 

Will the government shutdown impact BAKKT?

Obviously, it impacts the launch of BAKKT, particularly their futures because the CFTC does not have the staff sitting around to regulate. In fact, BAKKT has announced that basically there is an indefinite delay at this point on the launch of their futures contract which is unfortunate but considering the dysfunction or the government shut down in America, it’s not really surprising.

But in the background of all this, it’s not as though that the Intercontinental Exchange has just gone to sleep and forgotten about all of the things that they want to do. They have recently acquired an established futures broker hoping to strengthen their bitcoin offering.

 

Impact on Bitcoin ETF

This government shutdown could lead to one of the SEC’s longest shutdown in recent years. So maybe the Bitcoin ETF is going to remain at the table for a long time from now because we have to realize that when these organizations come back to work there is going to be a massive backlog which will depend upon how long the government shutdown goes on. The SEC and the CFTC both have issued orders freezing all pending administrative proceedings until further notice and this will not be changed until we see the federal government gets back to work.

The fascinating thing here is that technically if the SEC fails to approve or disapprove the Bitcoin ETF by the deadline the ETF, in theory, shall be automatically approved but the reality is that probably won’t happen. The SEC will probably just put out a one page denial or a one page request for withdrawal or a one page delay notice or something like that so even though they are running with a low staff, they are probably just going to keep kicking the can down the road on all these things instead of just letting it happen but there is still a technical possibility of the Bitcoin ETF getting directly approved.

 

Reg A+

Obviously, the Bitcoin ETF and the Bitcoin futures contracts by BAKKT gets a lot of attention but that’s not all that’s going on. There are about sixty different countries which have applied for Reg A+. Reg A+ is basically a mini IPO. SO this permits the eligible issues to offer securities to the general public and not just to accredited investors and some of these will definitely be cryptocurrency projects. But like everyone else, even these companies need to wait until the government shutdown is over.

 

Is Bitcoin influenced by the government shutdown?

Looking at Bitcoin, we can see that it is not super influenced by events like these. Although the Bitcoin ETF, Bitcoin Futures, BAKKT and all of these things get a lot of people excited but of course remember that we don’t need Wall Street. The SEC and CFTC are regulating for projects, especially for Wall Street.

The IRS has had to send home 56% of its staff. This is an agency which is already dramatically underfunded and then to send home even more of their staff during tax season means that not a lot of audits are going to be happening and they are already struggling to adapt the new tax policies which were put in place recently.

 

The State Level Innovation:

While the Federal Government cannot regulate during the government shutdown, the State Governments are pushing ahead with very innovative legislation and playing with this technology and trying new things. For example, Vermont is putting insurance on the blockchain, Nevada has issued 1000 marriage certificates on the Ethereum blockchain, Wyoming is bringing land records to the blockchain, Bitpay is helping Ohio accept bitcoin for taxes, two Colorado senators have filled a bill to introduce a digital token act which would allow cryptocurrencies to bypass securities laws which if passed could turn Colorado to a leading legislation within the United States in terms of cryptocurrency regulations and lastly, New York has become the first state to create a cryptocurrency task force which will be studying the regulation use and definition of digital currency.

 

Even though the Federal Government is having a dysfunction due to the government shutdown, there is still innovation happening. What are your thoughts on the government shutdown? Tell us in the comments section below.

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Bitcoin Lightning Network Updates 2019: Advancements and Forecast

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The popularity and commercial use of Bitcoin Lightning Network has increased at a very accelerated pace during the last few months. The reason is the improvement of the network day by day and increasing convenient and secure way of the transaction between consumers through this network. Being a peer-to-peer connection, this network gives features that even if two consumers are not directly connected to each other through a channel, any consumer on the network can do the transaction with another consumer on the network.

 

Let us have a glance on 15 new additions in Bitcoin Lightning Network in the last few months and also what could be the new features to come:

 

1. Fast payment:

Now, the payment done on the lightning network is so paced and frequent. You can compare this speed of payments with the speed at which data is transferred on the internet between connections. This has reduced the scalability problem of bitcoin for surety. No. of payments per second in the network has been increased considerably.

 

2. No restriction in the duration of the open network:

There is no any type of timeout kind of thing between the lightning network. That means that if both consumers wishes, the channel between them would be open for an indefinite time. Their channel will not be closed after a time and hence cost and time required to closing and restarting the channel has been minimized.

 

3. The enforcement of third-party for security:

Earlier, if in a channel, one consumer who wanted to steal money, closes channel; the second consumer has to report within a given time period to prevent the theft. The network is now planning to enforce third-part which wouldn’t be given any control over transactions but only performing the above function.

 

4. More secure routing in the network:

Unlike normal routing, in this network, a peer has only information of the previous peer and the next peer. A peer doesn’t have the knowledge of the originating and destination peer of the network in  Bitcoin Lightning Network. Thus, making it a more secure mode of payments and fund transfers.

 

5. Support more kind of payments:

Bitcoin Lightning Network now supports more kind of frequent payments, thus, there are only a few loads on Blockchain payment channel. Now, blockchain payment has only to take care of payments like closing and opening of channels of payments. Thus reducing extra overheads from the blockchain channel.

 

6. Functionality to close channel whenever desired:

Unlike regular connection, where there is a fixed timeout to close the channel, in this network, now two parties if agreed to each other can cancel the channel whenever they want. So, they don’t have to wait for unwanted time to close the channel even if the fund transfer is completed, they can close it immediately after mutual agreement.

 

7. Payment without invoice:

With this new feature, payment can be funded from one consumer to other without creating the invoice for the payment first. This new feature creates a fast streaming payment of funds. Now, the need of creating an invoice ahead of the transfer of fund which makes the fund transfer slower is non-relevant.

 

8. The functionality of single-funded channel:

Suppose a consumer wants to pay second consumer and the payment is uni-directional, then there is no need of another consumer to add fund in the channel and just a single-funded channel can be created with only first consumer participating and adding fund in the channel.

 

9. Payments across different blockchains:

Now, the lightning network allows payments across various different routes of blockchain provided they have same hash locking. Hence, the payment can be done from one channel of blockchain to channels of another blockchain only if they have the same hash code and locking.

 

10. No trust with third-party institutions:

The channel is completely shared between two consumers and no other third party has any access over the funds during the process of the transaction. This gives more security and safety to the fund transfer process done in bitcoin lightning network channel.

 

11. Provision of conditional payment:

Depending upon the result of some payment, now a probabilistic model of payment can be performed. This feature is known as sub-satoshi kind of payment. For example, A created a 1-satoshi kind of payment and pay B 0.3 satoshi with an odd of 10-to-3. This means that 70% of the time, A pays him 0 satoshis whereas 30% of the time, A pays 0.3 satoshis.

 

12. Less transaction fee:

Bitcoin is aiming to capitalize on small stores also. Hence, this network would cost a very little transaction fee, perhaps the least for any kind of transaction of funds. Hence, it could be used for daily purposed also like paying for restaurants, stores etc.

 

13. More Anonymity:

It will be impossible to track the payments completed through lightning channel network as a major part of these transactions take place completely isolated of the main channel of the blockchain.

 

14. Bi-directional fund channel:

For the very first time after the evolution of bitcoin, the funding has now become of two-sides. The lightning channel of bitcoin supports bi-directional fund channel.

 

15. Decentralized network:

Early testing of the bitcoin lightning network depicts that it is possible to have a decentralized network above the layer of blockchain transaction resulting to transfer funds from one peer to another peer even in multiple hops.

 

However, there are various still shortcomings. Bitcoin is aiming for various changes and upgrade in its technology to provide a more convenient and secure channel above the layer of the payment channel of the blockchain, thus increasing the scalability of the bitcoin payment. Let us also a brief glance at some upcoming features that the lightning network aims at:

 

1. Evolution of hubs like nodes:

A node similar to a hub in a network which would finally collect more than one payments of one or more peers would make a strong centralized network.

 

2. Reduce the complexity of the channel:

In the present time, the channel is very complexed. Several attempts are made by the bitcoin to make it a little bit simpler.

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