Translated by
2019/08/13 14:12:36

Bitcoin Cryptocurrency

The peer-to-peer payment system using the unit of account of the same name. Creation of a system of completely irreversible transactions when electronic payment between two parties occurs without the third party guarantor and any of the parties, including any external administrator (bank, tax, judicial and other state bodies) was the purpose of developers, could not cancel, block, dispute or compulsorily make transaction.

Content

Blockchain

Main article: Blockchain

The systems of digital currencies are constructed on a basis a blockchain.

From where there are bitcoins

The total amount of issue of bitcoins is limited and will not exceed 21 million. To the middle of 2016 more than a half of cryptocurrency is already generated.

Bitcoins can be purchased at the exchange or "to get" (to mine), carrying out calculations. In the second case the computer of the owner who decided to be engaged in bitcoins solves difficult mathematical tasks, receiving virtual money as an award. Bitcoins function on the basis of a blockchain system — it has no uniform center also has distribution that is at the same time ensured by reliability and safety.

All taking place transactions pass through miners: their computers should check accuracy of translation using secret key and information on all new transactions. If confirmation of transaction happened, the miner received an award in 25 bitcoins for formation of the block earlier. Each four years a system reduces amount of remuneration, and in 2017 it was less exactly twice.

Creation sources for miners had enough normal home computer, then — game video cards, but with increase in capacities capable to generate cryptocurrency were only owners of the special equipment[1].

Number of owners of bitcoins

Estimate the number of owners of bitcoins not simply difficult, and it is impossible in principle. It proceeds from base characteristics of cryptocurrency as such – decentralization, not accountability to the state regulators and that is important in our case, anonymity. The anonymity does not allow to obtain correct statistical data. The number of the registered bitcoin wallets also will help nothing as one person can have an unlimited number of bitcoin wallets. The only assessment which can be given, is as follows: if today to separate all bitcoins equally, to each inhabitant of Earth will get approximately on 0.002 bitkoinabitkoin [2]

But we can outline an approximate portrait of the investor ready to invest in cryptocurrency. With high probability it will be people with the higher education and capability to thinking creative (in the broadest sense) and non-standard approach to the solution of assigned tasks. They should separate confidence that the future – behind the economy constructed on accumulation of knowledge. Thus, the number of potential interested parties to a certain degree matches those whom it is accepted to call by a creative class.

How to use bitcoins

Where to buy and sell bitcoins

  • bestchange.ru (for small volumes)
  • exmo.me (for large volumes)
  • cex.io (for large volumes)

Investments into bitcoins

Investments into bitcoins are how risky?

Potential investors should understand: bitcoins are not simply risky, but high risk asset. On the one hand, the bitcoin can be considered as currency and at the same time as new technology of payments which appeared during globalization of economy as the response to evolution in the field of modern technologies. However still there is no understanding by what criteria the bitcoin should be estimated and how many it should cost. According to the analysis for spring of 2017 its price grows because of the high demand maintained by a boom of high technologies. But the fact that the bitcoin and cryptocurrencies in general are not attached to any specific tangible asset, does not allow to build forecasts as growth will be long and when there comes the return slope. Opinions of analysts in this respect polar – from impetuous optimism before predictions of the next very big bubble in the field of high technologies.

With what minimum amount it is worth investing in bitcoins?

One bitcoin can be separated into 100 million parts. As the result, is not present the minimum threshold amount to start purchase and sale of bitcoins. Generally speaking, it can become advantage: at first on the small amount to fulfill the strategy of biddings at the exchange of bitcoins, and after to decide what amount and for what term you are ready to invest.

As well as in a case with any investment asset, we advise to be guided by the known rule - "Not Put All Eggs in One Basket". As in this case it is about "especially fragile eggs", hardly it makes sense to invest more than 10 percent of free money in bitcoins. However, each investor has ideas of limits of admissible risk …

Tool 1 is purchase of cryptocurrency

Many won on decline of ruble in due time, having invested in dollars or euro as stronger currency. Investors began to invest also in bitcoin which showed rapid growth from year to year, and many could earn from it the whole statuses.

Problem

Since the beginning till summer of 2017 the cost of bitcoin grew from $1 thousand to $5 thousand. Analysts with might and main predicted falling currency which cannot infinitely grow at such rates. Actually, we saw its instability quite recently. Whether it makes sense to invest in bitcoin today – a big question.

The second moment – emergence of a set of other digital currencies, their quantity is already calculated by hundreds. About 70% of capitalization of digital money fall to the share of bitcoin, but further it will fall, and its place will be taken by other digital currencies, the team of researchers-mathematicians from Europe considers. Thus, the investor had an alternative in the form of new digital currencies, and now he still should understand what of them the most perspective at present.

Solution

One of alternatives – stock market game which allows to make good money not only on growth, but also on decline of this or that currency. However, the nonprofessional investor hardly will manage to do at once without consultant. And such in this market already is. The second option – to invest in new currencies at the time of their release when they cost little as much as possible then it is profitable to resell them. However, this tool conceals in itself certain difficulties too.

Tool 2 – ICO

The stock trading analog on the IPO in the cryptocurrency market opened a new opportunity to increase greatly invested funds in hundreds and even thousands of times for investors. At the same time at the initial stage digital coins manage extremely cheap.

Problem

The startups aiming to earn from ICO became much too. By Blackmoon estimates, until the end of 2017 in the world there will pass about one thousand ICO. At the same time nobody gives guarantees – the industry meanwhile is not regulated at the state level. As a result among projects there are swindlers who are taking away money of investors and just disappearing. And also there are nonprofessional commands, perhaps, with good intentions, but not having relevant experience successfully to implement the project. Market of ICO very risky: on it it is possible how to make good money, and to lose everything.

Solution

First, here consultants who will help to select the correct project for investments already work. Secondly, it is possible to make it and independently, having analyzed this or that project on his viability. It is important to estimate a stage of its development at the time of ICO. If it is only raw idea, then risks are high. If already existing or successfully tested project – chances to earn becomes much more. The second is a idea: as far as it is relevant and viable as far as the project in real life will be demanded. Existence of the thought-over business plan is also important: why to the project this money as it will spend them and how many will earn from it. Also the professional command which will be able to realize this business plan is important. It should be specialists not only in the world of IT and the startup, but also in questions of business, economy and finance.

Tool 3 is mining

Process of generation of digital coins allowed to earn to the investors who were in time to catch this subject at the right time. It is possible to make it, having the powerful computer at home.

Problem

The competition among miners is high. Having purchased the normal powerful computer, you will not earn much any more. The miners beginning with normal computers managed to extend significantly in respect of technology base. New investors build the whole computer farms that earnings became essential. Moreover, not only private investors, but also large corporations invest here. Therefore this tool in the original form does not suit nonprofessional players with the small capital any more.

Solution

Businessmen found the solution of this problem. There are companies which build farms for mining on money of investors, and profit is divided into all. A peculiar collective investment turns out. For example, BitClub Network is engaged in it.

ICO — Initial Coin Offering

Main article: ICO (Initial Coin Offering)

Initial Coin Offering is the mechanism of attraction of financing for projects or the companies for the purpose of development and product output (service) on the market. The investment attraction happens in cryptocurrency (bitcoins, air, litecoins, etc.). Unlike the IPO (public placement of actions) process of placement of tokens is not regulated: its carrying out almost does not require the financial investments, there are no minimum requirements to the issuer, audit and the other accompanying IPO procedures.

Cryptocurrency mining

About problems of cryptography and security in Bitcoin

Bitcoin digital currency which provides to users unique opportunities. The Bitcoin payment system uses the cryptographic and decentralized register. As soon as it appeared, many considered that behind it — the future of the world of finance, but at the same time, Bitcoin opened gate for underworld. On the one hand, the governments aim to prohibit end-to-end enciphering worldwide, on the other hand there is an anonymity of Bitcoin. The technology of end-to-end enciphering is widely used in the consumer software, from iMessage Apple to WhatsApp.

The government wants to get access according to the court order to personal data successfully to counteract terrorism. In this case in the victim confidentiality and data security of law-abiding citizens are brought. It threatens anonymity — distinctive feature of Bitcoin network — and pulls down hopes of cryptoanarchists that the Bitcoin protocol will continue to develop with respect for the principles of true anonymity. If de-anonymization increases in mass scale, Bitcoin will lose capability to bypass requirements of the governments and will not be able to provide "the safe harbor" to those who do not wish that Google, Facebook or Amazon collected personal data.

"True anonymity in Bitcoin is a myth — Vijay Michalik, the analyst, Frost & Sullivan notes. — All transactions can be browsed. Though they are connected only with an alias, but not a real name or the address, each transaction can be browsed using special browsers of a block chain".

The analysis of a block chain as rather new sector of the Bitcoin market shows shortcomings of use of aliases. The block chain is data source for other financial services which need to observe regulatory requirements. They collect metadata, the minor information relating to transactions and the IP addresses connected with nodes and use these data for identification of criminals and their entering in the black list.

Therefore financial confidentiality in the true sense of the word in a block chain of Bitcoin does not exist. If not to make change, it can become a reason for concern. And the speech goes not only about criminals and cryptoanarchists here. Methods of the analysis of a block chain can be improved. It is considered that huge volumes of the addresses can be deanonimizirovana eventually. And when separate parts will be at disposal of malefactors, they without effort will be able to put them in the broad picture. As a result, all history of your financial transactions forever will become public.

"Any person, whether it be the friend or the colleague, the business partner, the authority or the malefactor will be able to browse data of most of users on income and expenses — Vijay Michalik adds. — The enterprises using the Bitcoin system will also face problems: all information on their cash flows and purchase orders and also other important data will become available to competitors. In this aspect Bitcoin looks is unprofitable against the background of traditional financial channels".

Despite technical shortcomings, Bitcoin is the powerful tool for payments, money transfer, microfinance or a bypass of government requirements for disclosure of personal data. The Bitcoin network protected by P2P provides new opportunities for financial technologies and allows consumers to save money. The complex efforts on de-anonymization made by the governments, obviously will minimize potential benefits from use of the Bitcoin system.

Anonymity — distinctive feature of Bitcoin. It can become a basis for conversions in business and the financial industry. However strict regulatory requirements or de-anonymization will give up as a bad job perspectives of such conversions.

The damage from target attacks to the cryptoexchanges almost for 2 years reached $882 million

On October 17, 2018 it became known that the company Group-IB assessed damages from target attacks on cryptoexchanges in 2017 and the first 9 months 2018 at $882 million according to experts of Group-IB, for this period, at least, 14 cryptoexchanges were cracked and 5 of them — are attacked the North Korean hacker by the Lazarus group, including, the Japanese the exchange Coincheck which lost $534 million. In more detail here.

As a result of cracking of a cryptopurse on the Bancor platform 13.5 million dollars are stolen

The decentralized Bancor platform was cracked on July 9, 2018 and right after it developers switched off the platform to avoid big losses. Bancor stated in the twitter a profile that "purses were not compromised", and shutdown was a forced step.

According to the representative of the platform though the command managed to block transfer about 2.5 million tokens of BNT - for the amount of 10 million more dollars, the company could not make it earlier, and as a result of 25,000 ETH (about 12.5 million US dollars) and also nearly 230 million tokens of NPXS (about 1 million US dollars) were stolen, Altcoin reports[3].

Thus, the company lost about 13.5 million US dollars as a result of cracking. The project cooperates in about tens of the cryptocurrency exchanges for tracking of the stolen means and preventing to their sale by malefactors.

FBI learned to recognize owners of bitcoins

The 36-year-old Frenchman Gal Valerius (Gal Vallerius) arrested by FBI in 2017 admitted guilt that he sold drugs in the Darknet. FBI could identify it on bitcoin transactions[4].

Valerius, using OxyMonster nickname, was an active participant and the moderator of Dream Market - the narcomarket in the Darknet.

It created in the community peculiar to "bank for a tip" through which users could thank him for services in addition. In it there is nothing unique, many participants of Dream Market arrive also. But usually "tip" passes through the internal system of transactions of this market supplied with the anonymizer. A tip of OxyMonster, in turn, directly went on specific bitcoin account.

According to documents of court, FBI agents carried out a certain analysis of outgoing transactions, and found out that 15 of 17 went the numerous cryptopurses registered for Gal Valerius on the Localbitcoins.com resource.

In what way it was set, remains a riddle: there are no details in this respect in the indictment.

Stole cryptocurrency from the Japanese exchange for $500 million

At the end of January, 2018 there was a theft of cryptocurrencies largest in the history. It happened at the Japanese cryptocurrency exchange Coincheck from which stole more than $500 million. 260 thousand users suffered from theft. Coincheck expressed the intentions to return about 90% of means from equity. Read more here.

As it is safe to keep bitcoins

The total damage from target hacker attacks on the cryptoindustry exceeded $168 million

According to the results of the annual report of Hi-Tech Crime Trends 2017 published by Group-IB on October 10, 2017 the total damage from target hacker attacks on the cryptoindustry exceeded $168 million, and income from the attacks to the cryptoexchanges varies from $1.5 (Bitcurex) to $72 million (Bitfinex) while as a result of a successful attack to bank criminals on average earn only $1.5 million. In addition to higher yield, hackers are attracted by anonymity which is one of the basic principles of the cryptocurrency industry.

According to forecasts of experts, banks, power plants, the cryptoexchanges are the most probable purposes of hackers in 2018. According to representatives of Group-IB, cryptocurrency and the related services — the dynamic and highly profitable market. At such speed of development and inflow of money security issues often become minor for a blockchain startups, than and hackers use. At the same time malefactors use broad set already known the technician — from a banal phishing and interception of control over domains to vulnerabilities in source codes and the purposeful attacks for the purpose of gaining access to a local network of the company.

Cracking of the cryptocurrency exchanges is carried out according to the same scheme, as purposeful attacks to banks. For example, malefactors receive SIM cards according to forgery documents for recovery of passwords and receiving control over the account in cryptocurrency services.

According to Group-IB, hackers managed to automate a phishing under banks and payment systems, the phishing occurs without direct participation of the cybercriminal in each theft now. Daily more than 900 clients of banks become the victims of a financial phishing in Russia. On average 10-15% of visitors of phishing sites come across a trick of criminals and enter the data.

Example of the phishing page using which malefactors collect secret keys and get access to e-wallets of users
Example of the phishing page using which malefactors collect secret keys and get access to e-wallets of users


According to a research, from 22 new malware for plunder of money 20 (91%) are created and are controlled the people speaking Russian. The damage from trojans under Android in Russia grew by 136% and blocked damage from trojans to personal computers for 30%.

According to Dmitry Volkov, the head of department of investigations and service of cyberinvestigation Threat Intelligence, the co-founder of Group-IB, the number of threats for cryptocurrency and a blockchain projects, fixed by the Threat Intelligence system, flew up together with a rate of bitcoin. Vulnerabilities in the source code of smart contracts are successfully used. Accesses to confidential purses of the cryptoexchanges are got. There were leaks of databases of users, stealings of domain names. Owners a bot networks trace appeals of the infected devices to web and mobile applications of purses, the exchanges, funds. Creation and promotion of the phishing websites clones for interception of accesses to client accounts is already put on a flow.

According to Chainalysis, hackers managed to steal 10% of all means in 2017 invested in ICO projects in Ethereum. The general damage in a dollar equivalent was $225 million, 30 thousand investors lost on average in $7500.

«
We observed similar scope at the beginning of online banking development — hackers always follow money — Volkov added. — The fact that malefactors "recustomize" popular bank trojans, such as TrickBot, Vawtrak, Qadars, Tinba, Marcher for collecting of logins and passwords of users of cryptocurrencies, says that they found for themselves a new niche, and in the nearest future it is possible to expect decrease in their activity in traditional banking sector.
»

Growth of number of the attacks and the amounts of plunders is the bright indicator of financial activity of cybercriminals, changes of their tactics and the purposes.
Growth of number of the attacks and the amounts of plunders is the bright indicator of financial activity of cybercriminals, changes of their tactics and the purposes.


According to Dmitry Volkov, the keen interest in the cryptocurrency industry will lead to the fact that more and more attacks will be made not only financially motivated hackers, but also the groupings sponsored by the states which will try to use this financial instrument both for receiving an additional income, and for the general monitoring of a situation in the cryptocurrency market.

According to experts, not theft of money, but destruction of their IT infrastructure as a final stage of the purposeful hacker attack will become the main danger to banks. If earlier only cybercriminals attempted upon banks, now all this is more often the pro-state hackers. Destroying IT infrastructure, cybercriminals try to cover up tracks, and state hackers — to maximize damage of bank and to stop banking activities. In both cases the damage to bank can be even more, than from plunder of money.

One of possible scenarios of diversion, experts believe, there can be biddings at the exchanges from a bank name for the purpose of influence on currency rates. It can lead to start of the avalanche transactions made by trade robots after acute fluctuations of currency rates.

Bitcoin wallets can be cracked through vulnerabilities of cellular networks

Experts of Positive Technologies in September, 2017 showed the scenario of gaining access to someone else's bitcoin wallets using architectural shortcomings of signal networks SS7 (OKS-7). The experiment was made on the example of a test purse of Coinbase — one of the largest bitcoin exchanges in the world, the managing director of means more than 9 million clients on which accounts there are about $20 billion in different digital currencies.

According to experts of Positive Technologies, cryptocurrency offer the high speed of transactions and safety of transfers, however security of e-wallets in which this money is stored, is a weak point.

During the experiment on cracking of a test purse in Coinbase to researchers was the minimum data on the victim (a name, a surname and the phone number) enough to receive the password from the account and freely to withdraw virtual money. Operating vulnerabilities of SS7 for interception of Sms with one-time passwords, experts could learn the e-mail address, tied to a purse, take over it control and get access to a purse.

According to Positive Technologies, the attacks using these vulnerabilities can be executed of any place in the world, and therefore are of great interest to malefactors. In the spring of 2017 in Germany the first cases of the attacks through SS7 networks for theft of funds from bank accounts were recorded. Cybercriminals intercepted Sms with codes of confirmations of banking activities of clients of Telefonica Germany mobile operator (O2) and performed unauthorized transactions.

«
Operation of features of signal networks SS7 is only one of several methods of interception of Sms. But failure from the SMS for transfer of one-time passwords is still impossible - it is the most universal and available technology of two-factor authentication. Therefore each telecom operator needs to analyze vulnerabilities and to systematically increase the level of security of subscribers — Sergey Puzankov, the head of group of consulting of Positive Technologies emphasized.
»

The websites accepting bitcoins nullify anonymity of users

Bitcoin-transactions can be anonymous, but the Internet users performing them cannot. Scientists of Princeton University on the basis of the conducted[5] came to such conclusion in the summer of 2017[6]. Find compliances between cookie-files of the user and his cryptocurrency transactions so simply that there is a question why the similar research is published just now.

According to scientists, the binding of Alice to its Bitcoin-transactions requires very few data. Quite really to identify the personality even of users of CoinJoin – the protocol intended for privacy protection of Bitcoin-transactions. In principle, CoinJoin makes impossible determination of compliances between the input and output data.

According to the research, 53 of 130 the accepting bitcoins of online stores transfer payment information to 40 foreign companies for advertizing, analytics, etc. That it is even worse, many marketplaces transfer to tens of third-party trackers data on transactions in a blockchain.

In total the analysis of 130 online stores accepting bitcoins showed the following:

  • 107 websites transfer to the third parties this or that information on transactions;
  • 31 websites permit third-party scripts to get access to the user Bitcoin-addresses.
  • 104 websites transfer data on the transferred amounts (not in bitcoins);
  • 30 transfer data on the transferred amounts in bitcoins.

At users of services like CoinJoin the situation is not better – the websites analyzed by scientists transfer also their information. In total personally identified information of users is transferred by 49 websites, and 38 of them transfer data even those who use means for protection of anonymity[7].

The method is found to destroy anonymity of bitcoin

Staff of Bitfury Group company developed new approach to the analysis bitcoin transactions, having suggested to integrate the addresses of the cryptocurrency wallets related to one user, in clusters. As it is specified in the publication of the company, the new solution "will help to reveal relationship between the addresses of bitcoin wallets that will allow to minimize errors in data and to provide enhanced accuracy in determination of accessory of such addresses at criminal investigations". "Besides, this solution will prompt to end users methods to protect the privacy" — developers specify[8].

Bitfury follows from the text of the press release that their tool allows to deanonimizirovat actually users of Bitcoin, or, at least, it is reliable to proassotsiirovat among themselves all purses of the same user.

The Klastering of the addresses of purses of Bitcoin is a process which allows to deanonimizirovat users of cryptocurrency, defining all their addresses through data analysis of both the blockchain, and information out of it (first of all, the open data placed out of Network). The new Bitfury method, allegedly, combines data so that to minimize quantity of errors, especially, in comparison with the former methods using data only from a blockchain.

Emergence of harmful cryptocurrency applications

In Apple App Store, Google Play and others online stores can be met easily harmful cryptocurrency applications using which hackers abduct money and personal data of people. The data of cybersecurity company RiskIQ published on January 24, 2018 demonstrate to it.

Experts analyzed more than 18 thousand applications to find among them potentially dangerous and entered by cybersecurity specialists in "black list". Based on a research on pages 20 of online stores, including such popular as App Store and Google Play, 661 cryptocurrency applications posing a threat were revealed. Most of all — 272 — met in Google Play. 54 more were available to downloading on the platform ApkFiles, and 52 — in app store 9Apps.

Distribution of cryptocurrency (BTC) in the world

China:

  • mainly – operations on the stock exchange;
  • the popularity of cryptocurrencies is connected with share crisis of 2015-2016;
  • depreciation of yuan;
  • an opportunity to display means because of excessive state control of movement of the capital.

USA:

  • investments;
  • purchases in shops (offline and online), web services;
  • gamblings.

Germany:

  • generally investments and savings;
  • payment of goods in cryptocurrency.

Canada:

  • thousands of merchants accepting payments in cryptocurrencies;
  • users receive bonuses at payment of goods and services in bitcoins;
  • 5 of 6 people prefer to be calculated contactless payment methods when it is possible (the growing trend).

Philippines:

  • one of the best platforms in Asia (coins.ph);
  • money transfers, payment of goods \accounts and t \@.

Regulation of cryptocurrency in the different countries

In the world for 2017 the bitcoin and other cryptocurrencies are completely prohibited in three countries: Iceland, Ecuador and Bolivia. Reason: problem of capital preservation and control of its movement. [9]

The most advanced countries in regulation of cryptocurrency in the world:

1. USA.

In the USA the cryptocurrency can be treated as goods, but the lack of the VAT does not assume big problems for miners and those who use cryptocurrency.

In 2016 one of courts of the USA decided to recognize cryptocurrency means of payment when which using for the purpose of legalization of criminal income there come the corresponding legal consequences. In the State of New York entered the special license regulating separate types of activity (mining and exchange) – New York Bitlicense.

In the State of Vermont draft the bill at which smarts contracts will receive legal force.

2. European Union.

The EU regards cryptocurrency first of all as means of payment that does not allow to tax it that the startup companies, in particular is welcomed by the mining companies.

In the approach the authorities of the EU adhere to the following principles:

  • to objectively consider all possibilities of cryptocurrency;
  • estimate the business models working with cryptocurrency;
  • monitoring and market research.

These criteria are used for further determination of whom and how to regulate, reduction of risk of illegal use of cryptocurrency.

2.1. Germany.

The cryptocurrency received the status of "private money", i.e. rules of fiat currencies are applied to it, but at the interstate level there is no regulation.

2.2. Spain.

The main determination of cryptocurrency – means of payment, in compliance with a will of the EU. However the authorities of Spain obliged to the mining companies and persons, zanimayushchimya mining, to be registered as SP and also to pay a tax for profit earning from production (mining) of cryptocurrency.

3. China.

  • all transactions with cryptocurrency are completely resolved individuals;
  • to legal entities, first of all – to banks, transactions with cryptocurrency are prohibited completely.

4. Canada.

The authorities of Canada set a number of criteria to which the cryptocurrency should correspond as means of payment, among which:

  • should be used as means of payment;
  • should be subject to exchange;
  • should be a store of value and t \item.

5. Australia, Israel, Scandinavian countries. The cryptocurrency received the status of a commodity tangible asset capable to be assessed with a tax.

6. Russia.

In Russia regulation of cryptocurrency has character fragmentary and not systematic:

  • in 2014 the Central Bank of the Russian Federation published the information letter prohibiting to banks to have any relations about bitcoin business. Arguments are given as the basis: Bitcoin – a monetary substitute (the Russian Federation is prohibited) and also a statement that the cryptocurrency can be used in money laundering, received in the criminal way.
  • Rosfinmonitoring confirmed outputs of the Central Bank of the Russian Federation.
  • bills of the Ministry of Finance with administrative and criminal liability for actions with cryptocurrency.
  • the deputy bills assuming administrative punishment for any actions with cryptocurrency.
  • 2016 (October) – the letter of FTS (which can be considered as an official position of the state): transactions with cryptocurrency are not prohibited; transactions with cryptocurrency are similar to currency transactions therefore they will be considered by FTS as currency. Conclusion: FTS looks at cryptocurrency as on an object with which it is possible to make transactions; but without a statement that the cryptocurrency can be used as means of payment.

Scenarios of development of regulation of cryptocurrency

  • Pessimistic: the legislator will prohibit use of cryptocurrency and will impose liability. Business, as well as after the letter of the Central Bank of the Russian Federation, will try to display the assets out of borders of the country.
  • Probable option: there will be no accurate position of the state on the matter, consideration of a question will be postponed. Waiting attitude.
  • Optimistic scenario: the cryptocurrency will be recognized a legal tender currency. The state will consider all points of view, will hear business, will take world practice into account, will analyze them.

Turnover of the cryptocurrency exchanges (24 hours)

Top-10 the cryptocurrency exchanges on the amount of transactions per day (data on 1/30/2017)

1. Poloniex - $14,731,826; converting of altkoin in Bitcoin and back
2. Kraken - $6,750,684; mainly, converting of Bitcoins in fiat currencies:

  • 64% are EUR
  • USD – 13.26%

3. OKCoin.cn - $5,413,820; converting of altkoin in CNY, the Chinese yuan
4. Huobi - $5,256,440; converting of altkoin in CNY, the Chinese yuan
5. Bitfinex - $4,278,149; advantage, converting of cryptocurrency in USD – 90.36%
6. CoinsBank - $4,083,979; converting of cryptocurrencies (BTC and LTC) in fiat currencies:

  • USD – 42.24%
  • EUR – 35.09%
  • GBP – 15.32%

7. GDAX - $3,904,107

  • USD – 87%
  • GBP – 9.76%

8. HitBTC - $3,198,455; converting of altkoin in Bitcoin
9. BTCC - $2,935,952; converting of BTC and LTC in CNY
10. BTC-E - $2,916,705; converting of altkoin in fiat currencies

  • USD – 75.64%
  • including in RUR (Russian ruble) – 5.92%.

At the same time, the trading volume in Russian rubles – $172.755. However, the cost of BTC in convertings of BTC\RUR is $1.90 higher in relation to BTC\USD convertings.

Since January 24, 2017 the largest Chinese cryptocurrency exchanges BTCC, Huobi and OKCoin entered the commission on transaction with Bitcoin (FX: BITCOIN) and Litecoin in the amount of 0.2% of each transaction that "bridle speculation" and "prevent volatility" in the arising market of digital currencies.

Up to this point the Chinese platforms were only who did not charge the fee: they earned from the margin trading. To the end of 2016 to China by different calculations it was come from 90% up to 98% of world trade volume by Bitcoins.

Bitcoins in Russia

Main article: [[Bitcoin in Russia]]

In the world

2019

permitted to pay the Companies in New Zealand salaries in cryptocurrency

In August, 2019 New Zealand became the first country which officially permitted the companies to pay salary in cryptocurrency. The innovation will become effective on September 1, however some organizations already began to use it.

The New Zealand Internal revenue service legalized digital money and submitted the detailed guide to regulation of this sphere. In order that the cryptocurrency was applied to compensation, it should be tied at least to one fiat currency, have an opportunity to be converted freely into a standard payment method, and payments should be made in the form of regular fixed amounts, transfers the Financial Times edition.

In New Zealand workers will be able to get paid in bitcoins and other cryptocurrencies
In New Zealand workers will be able to get paid in bitcoins and other cryptocurrencies
«
Now cryptocurrencies directly are not accepted for payment of goods or services. Therefore the cryptoassets unavailable to direct converting in Fiat at the exchange, cannot be considered as the salary as they have no sufficient monetary signs  — reported in Internal revenue service in August, 2019.
»

Salaries in bitcoins and other cryptocurrency will be able to receive only salaried employees of the companies. This innovation will not extend to self-employed. Besides it will not lead to increase in tax burden of business, declared the authorities of New Zealand.

In the resolution the example of calculation of taxes for the workers who are getting paid in bitcoin is also given. If the salary of the worker is 10,000 New Zealand dollars, then a half of the amount will be credited to him to the bank account, and a half – to the cryptocurrency wallet. The tax will be calculated from 10,000 New Zealand dollars.

In the resolution the example of calculation of taxes for the workers who are getting paid in bitcoin is also given. If the salary of the worker is 10,000 New Zealand dollars, then a half of the amount will be credited to him to the bank account, and the rest — to the cryptocurrency wallet.

In spite of the fact that salary in digital currency will correspond to a fixed amount, it will not secure the worker against fluctuations of cryptoassets in the price. Experts advise to cash such payments right after receiving.

In 2017 the Financial Services Authority of New Zealand equated cryptocurrencies to securities.[10]

The fifth part of bitcoins is without the movement of 5 years

At the end of July, 2019 the analytical Coin Metrics portal published data according to which the fifth part of bitcoins is without the movement within five years. The share of similar coins from total number makes 21.6%, i.e. 3.8 million BTC. It is a new record, and it is still unknown whether the popularity of bitcoin will fall and further.

The share of not used coins began to grow steadily from the middle of 2015: the share of bitcoins which lie on purses without the movement already more than half a year reached 12.5 million BTC, and those that more than one year - 10 million BTC are not used. The quantity of coins, transactions with which were not made about two years, is 6 million.

Coin Metrics: the number of not used BTC reached record levels
Coin Metrics: the number of not used BTC reached record levels

Data retrieveds demonstrate that the bitcoin steadily becomes rather means of accumulation of cost, than means of payment. The partner of Adaptive Fund and cryptanalyst Willy Woo expresses concern that the lack of the address of bitcoins can lead to decrease in volatility because of what rate fluctuations of cryptocurrencies will become comparable with behavior of assets in the traditional market, for example, of gold.

Willie Wu is also afraid that concentration of a large number of bitcoins in hands of few group of people will make them "new bankers". Considering that the quantity of bitcoins is limited, and large institutional investors since 2018 regularly redeem cryptocurrency, his concerns can be not unreasonable.

However, some analysts, it seems Tura Tuur Demeester, consider that the situation is not so deplorable as it can seem at first sight. He notes that as the bitcoin price grows, also the quantity of inactive coins will grow, and confusion at the legislative level motivates investors to transfer the funds to bitcoin as the most stable currency.[11]

As Venezuela uses bitcoin for a bypass of sanctions of the USA

At the end of July, 2019 the Spanish edition ABC found out that the president of Venezuela Nicolás Maduro and his administration use cryptocurrency for a bypass of economic sanctions of the USA. At the same time the government uses bitcoin, but not own national digital currency of El Petro. Read more here.

The U.S. presidential candidate accepts donations in bitcoins

At the end of July, 2019 the candidate for  a prezidentyssh  of Democratic party Andrew Young within the election campaign began to accept donations in bitcoins. Read more here.

On production of bitcoin energy which will be enough for all Switzerland leaves

At the beginning of July, 2019 the Cambridge university published data on energy consumption in the field of production of cryptocurrencies. According to the experts, mining of bitcoin on a global scale requires about 58.93 terawatt-hour of electricity. It is more, than for all Switzerland (58.46 TVT·w) or to Kuwait (57.78 Tvt·ch). For comparison, total energy costs in a year are measured in the USA and China by 3902 and 5564 TVT · h respectively. Read more here.

Investors of Bitfury fund will be able to put in objects for production of cryptocurrencies

On April 24, 2019 Bitfury Group announced creation of a controlled fund of mining thanks to which investors will be able to make investments in objects for production of cryptocurrencies. A blockchain company started this project jointly with the Swiss investment firm Final Frontier. Read more here.

The founder of SoftBank lost $130 million on investments into bitcoin

On April 23, 2019 it became known of severe losses of Masayesi Son — $130 million — from investment into bitcoin. Read more here.

2018

It became unprofitable to get bitcoin. Its price below cost mining

In December, 2018 it became known of unprofitable production of bitcoin. Its price became below cost mining,  Financial Times (FT) with reference to the mining companies reports and private miners. Read more here.

In the USA it is possible to pay with bitcoins taxes

On November 25, 2018 an opportunity to pay taxes by means of cryptocurrency knew of emergence in the USA. The first the new technology was implemented by the State of Ohio. Read more here.

The protocol for exchange of bitcoin for "air" and back is created

On October 24, 2018 the blockchain system using the new Open Federated Gateway Protocol (OFGP) protocol open source which is intended for transactions between networks bitcoins and Ethereum when using a special token was started the first. Read more here.

The American police officers sell by an auction the confiscated bitcoins for $4.3 million

In October, 2018 the Federal Penitentiary Service and court ushers of the USA (United States Marshals Service) announced an auction by which about 660 bitcoins will be sold (there correspond about $4.29 million at the rate of at the time of the publication of the message department), which were confiscated within federal criminal, civil and administrative cases.

The auction which will take place on November 5, 2018 will be divided into two rounds. In the first six portions will be sold at 100 bitcoins, and in the second — the remained 60 coins. For participation in biddings it is necessary to be registered till October 31 and to enter a deposit in the amount of $200 thousand. Participants of an auction will not be able to browse others rates and to change offers after they are made. 

The American police officers will sell 660 confiscated bitcoins at an auction
The American police officers will sell 660 confiscated bitcoins at an auction

In the Federal Penitentiary Service and court ushers of the USA reported that a part of the assets offered for an auction includes the bitcoins withdrawn during investigations of affairs of traders Theresa Tetley and Thomas Mario Costanzo.

Theresa Tetli in July, 2018  was sentenced  to a year of prison on a charge of trade in cryptocurrency without necessary license and money muling, received from drug trafficking. At persons involved in this case 120 bitcoins — 40 were withdrawn from Tetli and 80 from Costanzo.

The American service of police officers not for the first time sells the confiscated cryptocurrency by an auction. So, in January and March, 2018 3600 and 2100 bitcoins respectively were put up for sale. According to the results of those transactions about $50 million went to the budget of the USA.

In July, 2018 it became known that the U.S. Government confiscated more than 500 bitcoins belonging to Iranians, and their number continues to grow.  It was noted that confiscation happened without explanation.[12]

Removal of prohibition on advertizing of cryptocurrencies

In September, 2018 it became known of removal of Google of prohibition on advertizing of cryptocurrencies after Facebook. On these news the rate increased more than by 10%. Read more here.

In what cities most of all outlets accepting bitcoin

According to Coinmap, for September 16, 2018 around the world there are about 13,150 platforms, shops and ATMs accepting bitcoin, and their number steadily grows since the end of 2013. Now practically everywhere it is possible to reserve run or hotel, having paid a trip or stay bitcoin – and still in some cities of such outlets more, than in other.

Most of all platforms accepting bitcoin is in Prague – the homeland of SatoshiLabs, producer of a hardware purse Trezor. Here the bitcoin can be used in 152 organizations for lease of apartments, payment of food and drinks in different bars and restaurants or even for visit of crypto-friendly movie theater. However by the end of 2017 the Ministry of Finance entered the law on anti-money laundering which is partially limiting bitcoin. Local cryptoexchange points are obliged to identify the identity of clients that they could not "hide under counterfeit names or nicknames any more".

The map of the cities leading by the number of the outlets and ATMs accepting cryptocurrency
The map of the cities leading by the number of the outlets and ATMs accepting cryptocurrency

In San Francisco there are about 120 places accepting cryptocurrency. Exactly there is well-known "cryptolock", Crypto Castle – Mecca for the people dreaming to join the ranks of cryptomillionaires. Actually San Francisco is so developed in terms of cryptoinfrastructure that even the local federal court permits release under the pledge paid in bitcoins.

Buenos Aires was unofficial called the capital of bitcoin in Latin America. The number of the platforms accepting bitcoin reaches 140, according to Coinmap here, and Buenos Aires is included into top three together with San Francisco and Prague. According to a local source, in Buenos Aires there are a publishing house and taxi service on a basis bitcoin, not to mention a great number of specialists who take bitcoin for the services – photographers, designers, psychologists and IT specialists.

Also the set of the outlets accepting bitcoin are in Tokyo, Berlin and Malta.[13]

The cryptocurrency investor lost $24 million via the smartphone and accused of it AT&T

On August 15, 2018 the cryptocurrency investor from California submitted a claim against AT&T in the amount of $224 million, having accused the telecom operator of negligence because of which he allegedly lost about $24 million Read more here.

Vitalik Buterin predicts breakage of a cryptobubble

On July 31, 2018 the creator Ethereumvitalik blockchain ecosystem Buterin expressed the opinion on a current status of the cryptocurrency market on Twitter, having answered a tweet which indicates falling of web traffic of the Coinbase exchange, occurring since the beginning of 2018. Read more here.

The collapse of bitcoin destroyed 800 cryptocurrencies

At the beginning of July, 2018 it became known that cost more than 800 cryptocurrencies reduced almost to zero partly because of falling of a rate of the most popular cryptocurrency — bitcoin.

According to CNBC with reference to experts, occurs optimization of the market of cryptocurrencies. The collapse of such quantity of cryptocurrencies is for a short time caused by the fact that some of unfortunate projects were fraudulent, others had fair intentions, but they did not achieve the goals and did not keep the promises made to investors. Besides, the competition from new projects of primary placement of cryptocoins (ICO) grows. It is obvious that older coins which were inefficient are considered as "dead" or "dying" now and now trade below 1 cent, notes TV channel.

Cost more than 800 cryptocurrencies reduced almost to zero partly because of falling of a rate of the most popular cryptocurrency — bitcoin.
Cost more than 800 cryptocurrencies reduced almost to zero partly because of falling of a rate of the most popular cryptocurrency — bitcoin.

At the end of 2017 the cost of bitcoin flew up to $20 thousand to the great delight of owners of cryptocurrency. Industry experts predicted the further growth of cryptocurrency to $50 thousand by the end of 2018. However since the beginning of year the rate decreased by 70% in comparison with the record price.

According to the website Cryptodisrupt at the beginning of July of the 2018th, for the previous 1.5 years a huge number of new cryptocurrencies and the ICO projects appeared. Experts compare the current situation with a collapse of the market of dotcoms in 2000.

CoinSchedule is the website which monitors a situation in the market and the course of the new ICO projects, - reports that the cost of ICO in 2017 reached $3.8 billion. Though 2018 did not end yet, results already exceeded last year's digits and by the beginning of July $11.9 billion are measured.

Though experts compare sharp falling of Nasdaq at a turn of the millennium to a present situation in the market of cryptocurrencies, the critical mark is not reached yet. The fact that the market of ICO attracted 300% more than means this year in comparison with all 2017 confirms that a situation in the market favorable.

Despite pressure put upon the industry of cryptocurrencies and the market of ICO from regulating authorities, the competitive nature of the market means that the new ICO projects have good chances of implementation and perspectives for investors and the industry in general.[14]

The Europe's first bitcoin ATM is started

In June, 2018 the Europe's first cryptocurrency ATM was started. It was placed at the Skhipkhol airport in Amsterdam, says on the website of the air harbor.

The device is intended for exchange of euro for bitcoins and air. It will be tested within half a year then initiators of the project will make the decision on whether such equipment is necessary for passengers.

The Europe\'s first bitcoin ATM is started at the airport of Amsterdam
The Europe's first bitcoin ATM is started at the airport of Amsterdam
«
Skhipkhol aims to implement constantly innovations and to provide optimal services to passengers. We hope that an opportunity it is easy to exchange "local" euros for "world" cryptocurrencies will be useful to them. It can be profitable, for example, if other currency, than euro works in the country of the passenger — the director of consumer products and services of the airport Tanja Dik said.
»

The administration of the airport assumes that service of exchange of cryptocurrencies will be useful to travelers who cannot spend euro trips which remained later in the country.

The bitcoin ATM is in the second hall of arrival and also in a corridor, conducting in the first and second hall of departures.

At the airport of Amsterdam the ATM for exchange of euro for bitcoins and air works
At the airport of Amsterdam the ATM for exchange of euro for bitcoins and air works

The project of exchange of euro for cryptocurrencies is implemented by the Skhipkhol airport together with the Dutch company ByeleX Data Solutions which helps clients to integrate payments in cryptocurrencies.[15]

In addition to Skhipkhol, bitcoins can be purchased at  the airports of Japan and  Australia. Earlier in 2018 the airport of Brisbane also  announced  plans to create conditions for payment of purchases in cryptocurrency in outlets on all terminal.

By the end of 2017 the quantity bitcoin ATMs in the world exceeded 2 thousand, having doubled in comparison with previous year. The most part of such exchangers is located in the USA. In June, 2018 such ATM started working in Kenya, it issues bitcoins for dollar cash or for national Kenyan currency.

In Scotland the first center for treatment for "cryptocurrency dependence" opened

In May, 2018 opened a course of treatment for "cryptodependent" in hospital of the Scottish district Skottish-Borders. According to[16], similar practice of treatment of dependence on a game at cryptocurrency exchanges it is developed for the first time[17].

The Scottish clinic Castle Craig, one of the lead rehabilitation agencies of Europe specializing in treatment for harmful dependences, such as alcoholism, drug addiction and game addiction announced the beginning of acceptance of the patients suffering from addiction to online trade in cryptocurrencies.

Clinics began to treat dependence on cryptocurrency
Clinics began to treat dependence on cryptocurrency

As explained in clinic, the addiction to trade in bitcoins and other cryptocurrencies belongs to behavioural dependences, the same as game addiction and insuperable inclination to online trading in the stock market.

«
According to TV channel, for treatment the same methods which are applied to disposal of game dependence are used. In Qasl hospital Craig programs for rehabilitation alko-and drug addicts are also implemented. According to the experts, "cryptodependence" has similar symptoms with attachment to gamblings. "High risk, acute fluctuations of a rate of cryptocurrencies - all this is similar to what is tested by players in casino", - the attending physician of hospital Chris Burn said, having cited as an example the known cryptocurrency bitcoin whose rate endured several considerable take-off and falling for the last year.
»

According to him, using a game at the cryptoexchange "people try to run away from reality".

«
At the first stage of treatment patients go to group therapy where share with each other stories from the life. It helps them to understand that their problem is not unique, and they are not lonely, - Burn told.
»

One of psychologists of clinic is Tony Martini who won against the dependences on cocaine and gamblings the past itself.

«
I passed through all this and my experience gives me understanding as it is better to help those who have similar problems", - he told, having noted that key aspect of treatment - to show all variety and versatility of the real world, to show that there are much more pleasant and useful methods of self-realization and carrying out leisure.
»

For treatment of a problem in Castle Craig the known psychological programs and techniques, including "12 steps", cognitive behavioural therapy, a travmaterapiya, hippotherapy (rehabilitation by means of medical riding on horses) and others are offered.[18]

The addiction to trade in cryptocurrencies forms because of constant fluctuation of the prices in the market. The profitable transaction on purchase or sale of virtual money causes high spirits in the trader. It excites blood, but at the same time results in dependence, same as arises at fans of gamblings. Also, as well as the game addiction, similar addiction can have catastrophic financial effects, specialists warn.

«
We consider it a kind of a game addiction, but the addiction from trade in cryptocurrency is even stronger because of high excitation which arises at players. Spending day and night behind observation of jumps of a rate of cryptocurrencies, the conceived a liking people run away from reality and aim to continue study as long as possible. At the same time they like not feeling of a victory at the profitable transaction, and process. People are ready to repeat transactions again and again. It tickles them nerves. There are those who "sit down" on trade in normal currencies, such as dollar or pound, but in this case dependence not such strong, as with cryptocurrency because there are no such sharp jumps of rates, - Chris Burn said.[19]
»

In Israel will become effective the law on counteraction to money muling using cryptocurrencies

Since June 1 in Israel will become effective the first law regulating activity of financial services providers and defining measures of counteraction to money muling using cryptocurrencies.

From the moment of the introduction of the law in force brokers, banks, the cryptocurrency exchanges and all operators who provide access to digital assets will be obliged to respect the rules of AML/KYC and to announce suspicious cryptocurrency transactions of the clients, including using monero and zcash, ForkLog[20] reports[21].

In the project it is also specified that service providers are obliged to store not less than five years documentation which includes the addresses of digital purses, the IP addresses and quantity of each specific cryptocurrency.

Earlier many Israeli banks refused to accept the money received from transactions with cryptocurrency, reasoning it with lack of the relevant legislation.

Bill Gates called bitcoin of one of the most speculative things

The founder of Microsoftbill Gates openly criticized bitcoin, having said on May 7, 2018 in an interview to CNBC TV channel that the first cryptocurrency and ICO represent "some of the craziest and speculative things". Read more here.

The Central Bank of Iran prohibited banks to use cryptocurrency

The Central Bank of Iran prohibited credit institutions to use bitcoin and other digital currencies. "Use of bitcoin and other digital currency in all monetary centers and financial institutions of the country is forbidden", – Vedomosti to the press service of the Iranian regulator quotes.

The decision on prohibition of cryptocurrencies was made at the end of 2017, however the order is published just now, said in the press release. Set in motion it was undertaken in connection with that,  the chtokriptovalyut it can be used for "money muling and financial provision of terrorism".

The G20 refuses regulation of cryptocurrencies

The Ministers of Finance of the countries of the G20 who gathered on a meeting in Argentina refused appeals to regulation of global market of cryptocurrencies. Instead they intend to watch closely development of this sector[22].

The inability to reach agreement reflects a difference of opinion of members of the Group of Twenty in a question of introduction of drastic measures on what should be the correct policy on the matter. While Germany and France required introduction of severe measures for protection of the population and crackdown concerning crime, other countries, for example Brazil, let know that they will not follow recommendations G20.

Having agreed with remoteness of perspective of emergence of risks for financial stability, members of the G20 in the final protocol only called for development of international standards for the purpose of creation of bodies which task will consist in "continuation of monitoring crypto - assets and the related risks …. and estimates of multilateral response measures at emergence of such need".

Having noted that with crypto - assets connect emergence of problems of concealment of taxes, money muling and financings of terrorism, members of the G20 undertook to implement future standards in cooperation with Group on counteraction of money laundering and to financing of terrorism.

Besides, data collection based on which future policy will be developed continues. Discussion of results is planned for July, 2018.

Opinion of the head of Twitter on bitcoin

On March 21, 2018 the cofounder and the head of Twitterdzhek Dorsey said that in ten years, and, perhaps, and earlier, in the world there will be one cryptocurrency, and the bitcoin will be it. Read more here.

European Commission about danger of loss of means at investments into cryptocurrencies

Digital currencies cannot be recognized official currencies, their value has no serious security and the high speculative activity can be connected with them. The European Commission (key supranational authority of the EU) according to the results of the special round table devoted to cryptocurrencies came to such conclusion reports in February, 2018 TASS[23].

European Commissioners recognized that ICO allow the new hi-tech companies to raise funds for development, however this process bears big risks for investors. The main problem is that it is difficult correct to estimate the company which is releasing new cryptocurrency. In it is the essential difference of ICO from the IPO (primary securities placement in the market) at which very serious requirements in respect of transparency of business are imposed to the issuer.

Thailand prohibited transactions with cryptocurrencies

The government of Thailand prohibited local financial companies to perform operations with digital currencies, the Rosbalt[24] reports in February, 2018[25].

Now banks of the country have no right to trade in such assets and even to issue to clients loans if their purpose – acquisition of cryptocurrency. The authorities of the country, it is equal as their colleagues from other countries, refer to the fact that digital money bears big risks, in particular in the field of financing of terrorism and washing of the means received in the criminal way.

The first rating of cryptocurrency rich men

In February, 2018 the magazine Forbes published the first rating of cryptocurrency rich men. In the list there was a 24-year-old inventor cryptocurrencies Ethereum Vitalik Buterin.

The first place among the businessmen who earned a status thanks to cryptocurrencies, observers gave to the founder of the cryptocurrency Ripple platform Chris Larsen whose fortune was estimated in $7.5-8 billion. The businessman possesses about 5.2 billion  emitted Ripple of tokens of XRP, the market value of each of which is about $0.7 (for February 7).

Vitaly Buterin
Vitaly Buterin

On the second position Joseph Lubin, one of founders of Ethereum, with the capital from 1 to 5 billion dollars was located. The third place was taken by the founder of the cryptocurrency exchange Binance Changpeng Zhao (Changpeng Zhao; $1.1-2 billion).

Authors of rating explain the indication of approximate range of statuses of the listed millionaires with the fact that the market of cryptocurrencies is opaque and differs in high volatility.

«
Our calculations are based on inventory data of cryptocurrencies, a post-tax profit at trade in cryptoassets and on their shares in the companies which are connected with cryptocurrencies … We are almost sure that missed some people and some of our estimates are approximate — notes the edition.
»

The list of cryptocurrency billionaires from Forbes
The list of cryptocurrency billionaires from Forbes

On the 17th line of rating the native of Russia Vitalik Buterin who grew up in Canada got. According to Forbes, its fortune is estimated in $400-500 million. The co-founder of BitFury company which makes the equipment for mining the native of the USSR Valery Vavilov took the 13th position ($500-700 million). Earlier Buterin was included into the list of the most successful entrepreneurs more young than 30 years according to Forbes.

Brothers Tyler and  Cameron Uinklvossy (Cameron & Tyler Winklevoss) which adjuded in  2008 $65 million for  the idea of Facebook  Mark Zuckerberg umarka hold the fourth place with  $0.9-1.1 billion. Earlier British edition Telegraph called brothers the first-ever bitcoin billionaires.[26]

Blocking of purchase of cryptocurrency credit cards

At the beginning of February, 2018 large American banks prohibited purchase of cryptocurrencies by means of credit cards, being afraid that clients will not be able to return money in case of a collapse of a rate of bitcoin and similar currencies.

According to the Bloomberg news agency, JP Morgan Chase & Co., Bank of America and Citigroup  do not allow credit card holders any more (both personal, and corporate) to buy on borrowed money of cryptocurrency. Bank of America noted that prohibition does not concern debit cards.

The bitcoin was prohibited to be bought up using credit cards
The bitcoin was prohibited to be bought up using credit cards

Earlier some banks already began to refuse to clients purchase of bitcoins by means of credit cards. So, the Discover Financial Services company imposed a ban in 2015, and Capital One Financial  — in January of the 2018th. The head of Discover Financial Services David Nelms assumes that the bank can review the policy for cryptocurrencies depending on consumer demand.

Banks consider that purchase of cryptocurrencies using credit cards can increase risk for the creditor if the buyer is not able to pay off because of sharp change of course. The bitcoin lost more than a half of the cost since December 18, 2017, having fallen lower than $8 thousand at the beginning of February of the 2018th.

One more reason because of which JP Morgan Chase & Co., Bank of America and Citigroup could prohibit to buy up cryptocurrency by means of credit cards experts consider complexity to monitor cash flow after  normal money is converted into  cryptocurrency.  At the same time  it is offered to banks to monitor cash flow on  accounts to reveal doubtful transactions.

According to MasterCard, the number of the international payments used often for purchase of cryptocurrencies on foreign online platforms in 2017 increased by 22%. At the same time dynamics began to fall significantly after falling of the cost of cryptocurrencies, speak in the company.[27]

Deutsche Bank does not advise to make investments in cryptocurrency

Does not advise analytics of Deutsche Bank to invest means in cryptocurrency. Markus Mueller, the head of investment division of German bank told about it in an interview to the Bloomberg agency at the end of January, 2018.

According to him, problems consist in high instability of a rate, potential manipulation with the cost of cryptocurrencies and also in a possibility of loss or theft of data. Read more here.

Tax on exchange of cryptocurrencies in South Korea

In January, 2018 in South Korea imposed a tax on exchange of cryptocurrencies, having continued to toughen measures for regulation of the fast-growing, but unstable market. The tax rate exceeds 24%.

According to the news agency Yonhap, the South Korean government of South Korea approved 22 percent corporate tax and  2.2%  as local income tax from  transactions of exchange of cryptocurrencies. The innovation concerns the exchanges with annual profit more than 20 billion wons ($18.8 million).

Seoul decided to impose taxes on the cryptocurrency exchanges which worked in fact out of the legal framework earlier
Seoul decided to impose taxes on the cryptocurrency exchanges which worked in fact out of the legal framework earlier

By estimates of analysts of Yujin Investment & Securities, in 2017 revenues of the cryptocurrency exchange Bithumb, largest in the country, reached 317.6 billion wons so she taking into account tax innovations should pay about 60 billion wons ($56 million).

Introduction of a tax on cryptocurrency exchange became known after completion of unprecedented investigation on   anti-money laundering in  six large South Korean banks which showed 36-fold increase in the commission virtual accounts linked with  cryptotransactions — with  61 million wons ($57   to one thousand) in  2016 to  2.2 billion ($2 million) in  the 2017th.

Yonhap with reference to the unnamed official writes that the government intends to oblige the cryptoexchanges to tell data on  transactions to banks that will allow to increase taxation still.  

In the Commission on financial services of South Korea (  Financial Services Commission, FSC — the finance regulator) said that the possibility of blocking of all operations on exchange of cryptocurrencies or at least those transactions which break the law is still considered.

Despite a number of restrictive measures which were entered by South Korea (enters into the three of the world's largest markets according to transactions with cryptocurrencies) in 2018, the rate of bitcoin at the beginning to the second half of January ceased to fluctuate strongly, having stopped at the level of $ 11,500.[28]

South Korea prohibited anonymous transactions of cryptocurrencies

On January 23, 2018 South Korea announced prohibition of anonymous transactions of cryptocurrencies to reduce the number of financial crimes.

The legislative innovation which will become effective on January 30, 2018, assumes that all owners of anonymous virtual wallets will have to tie them to the bank accounts.

South Korea prohibits to use anonymous accounts for purchase of cryptocurrencies
South Korea prohibits to use anonymous accounts for purchase of cryptocurrencies

It is not allowed to do deposits in the purses by cryptocurrencies if the name of the bank account holder does not match an account name in exchange of cryptocurrencies, the vice-chairman of the Commission on financial services of South Korea (  Financial Services Commission, FSC) said to Kim Yong-beom at a press conference in Seoul.

«
Nobody, including the government, guarantees the value of cryptocurrencies. Considering high volatility, characteristic of cryptocurrencies, please, be careful when you make decisions on investments in them — he reported.
»

Experts call South Korea the third largest market in the world according to transactions with bitcoin and other cryptocurrencies. This status means that the decision on prohibition of anonymous trade in cryptocurrency made by Seoul can be led to acute fluctuations of its cost in the market.

It is noted that this decision is made in connection with desire of the country leaders to stop use of virtual currencies for illegal activity, first of all for money muling. Six South Korean banks will be connected to a recording system of an original name.

Besides, the authorities of South Korea prohibited to open virtual wallets for minors and foreigners.

At the beginning of  January, 2018 it became known that the authorities of South Korea began to draft the bill prohibiting trade in cryptocurrencies at the special exchanges. Before, in September of last year, the Commission on financial services of South Korea prohibited all primary placements in tokens (ICO) in the country.[29]

Growth of a rate by 7 times thanks to frauds

In January, 2018 the Journal of Monetary Economics edition published article about artificial manipulations at the exchange as a result of which in 2013 the rate of cryptocurrency bitcoin grew seven times in two months.

Researchers Neil Gandal, J.T. JT Hamrick, Tyler Moore and Hoists Oberman (Tali Oberman) analyzed influence of suspicious activity at the cryptocurrency exchange Mt. Got which in 2014 declared the bankruptcy. According to them, transactions on this platform led to sharp increase in a rate of cryptocurrency.

«
In article influence of a suspicious trading activity at the Mt exchange is analyzed. Got during which about 600,000 bitcoins (BTC) worth $188 million were purchased — researchers write. — During the specified period during suspicious trade activity USD-BTC rate rose on average by 4% a day, and in the period of calm slightly decreased. On the basis of the careful analysis we came to a conclusion that the suspicious trading activity probably caused unprecedented splash in an exchange rate of bitcoin at the end of 2013 when the rate jumped up from 150 dollars to more than 1000 dollars in two months. 
»

Frauds became the reason of 7-fold rise of bitcoin
Frauds became the reason of 7-fold rise of bitcoin

Generally transactions were performed using two bots of Markus and Willy which created visibility of real transactions in the market. However, according to researchers, bots had no bitcoins in which they traded. During a hacker attack on Mt. Gox these bots carried out false transactions worth millions bitcoins, manipulating the price of BTC. At the same time in a research it is said that Willy bot could be also used for masking of earlier hacker attack on Mt. Gox. It agrees one of versions, in 2011 hackers stole from Mt. Gox about 650 thousand bitcoins.

The high activity of swindlers at the exchange stimulated users to trade in bitcoins therefore the average volume of transactions at all exchanges trading in bitcoins was much higher in days of activity of bots. The Mt Gox cryptoexchange did not show concern because of suspicious transactions as got from them profit thanks to commission charges for transactions.

It is noted that malefactors managed to influence a rate because of low demand and a small number of participants in the market. Mt. Gox was one of the largest trade platforms: through the exchange there passed about 70% of all transactions with bitcoin. At the beginning of 2014 Mt. Gox went bankrupt and stopped work. General losses of investors of Mt. Gox are estimated at 850 thousand bitcoins.

The essence of a research is simple: if the bitcoin wants that it was perceived seriously, it needs to finish frauds at the exchange. Certainly, large players could affect significantly limited market of bitcoin in 2013. Moreover, large players can influence it also now as researchers consider. But as the market grows, with it also the number of investors grows. Decentralization of the industry, in turn, should regulate the market independently.

As many invest means in cryptocurrency assets, and some countries take steps for legalization of bitcoin as payment system (as it was made by Japan in April, 2017), manipulation with the cryptocurrency markets becomes a serious problem, researchers note.

In January, 2018 the market of cryptocurrency endures recession. So, on January 17 the cost of bitcoin fell more than twice in comparison with records of monthly prescription. In December the rate of bitcoin reached 20 thousand dollars, and  total capitalization of this cryptocurrency exceeded 330 billion dollars. [30]

Brazil prohibited to invest in cryptocurrency

The financial authorities of Brazil notified investment funds of the country on prohibition of investment of funds in cryptocurrencies, Bits.media reports[31].

Prohibition will work at least until as the local regulator – Securities and Exchange Commission of Brazil (CVM) – will develop an order of regulation of digital currencies.

"Cryptocurrencies cannot be considered as financial assets which are controlled by the finance regulator of CVM therefore the direct investment in such assets as bitcoin, is forbidden for investment funds", said in the circular of the Commission.

About it the set of public listenings was already carried out, however officials did not come to a consensus and could not approve a part finally.

KFC accepts bitcoins

In January, 2018 KFC began to accept bitcoins for payment of orders. By the time of start of a pilot project it is possible to pay with cryptocurrency only one dish. Read more here.

2017

The USA taxed cryptocurrencies

Transactions on exchange of cryptocurrencies in the USA will be assessed with a tax now, reports[32] The relevant law was signed by the president of the country Donald Trump.

U.S. authorities in 2014 defined the status of digital currencies, having written them as "property", but not "currencies". Therefore earlier American Tax Code allowed to exchange one cryptocurrency for another without payment of taxes – according to Article 1031 of the Tax Code of the USA it was considered as exchange of "similar assets" and suited traders of bitcoin and other digital currencies. Besides, dealers in the real estate and objects of art used it – it was possible to pay expensive pictures or houses with cryptocurrency and to leave from taxes.

Now the given hole is eliminated, it is necessary to pay a tax for such transactions – Article 1031 of the mentioned code of laws will concern only real estate transactions, and determination "property" will be treated as "a corporeal property" (or existing in reality), completely excepting digital currencies.

Belarus legalized cryptocurrency and ICO

The president of Belarus Alexander Lukashenko signed in December, 2017 the decree "About development of digital economy" which legalizes ICO, cryptocurrencies and smart contracts[33].

According to A. Lukashenko,  a main goal of the document — to create such conditions that the world IT companies came to Belarus, opened the representations, development centers and created the product demanded in the world.

Besides, as writes BelTA, the decree till 2023 exempts individuals from a tax on mining and purchase of tokens. Also this activity  is not subject to declaring as is not entrepreneurial.

"The second purpose of the decree — investment into the future. It is the IT personnel and education. The third — implementation of the latest financial instruments and technologies. The leading economies of the world just look narrowly at this new phenomenon. Belarus becomes actually first-ever state which opens ample opportunities for use of blockchain technology. We have every chance to become regional competence center in this area" — Alexander Lukashenko said.

The head of state emphasized that he supported all proposals of entrepreneurs, upon whatever difficult subjects they touched. "We have advanced people who already thought how to be engaged in it. I thought so: we do not have it today if something is good — in plus if is in minus — I know from whom to ask" — he told.

Moreover, the President noticed, with adoption of the decree in Belarus not only conditions for IT sphere development will be created, but also unique competitive advantages for attraction of technologies, the capitals and, the main thing, clever and talented people from around the world are purchased.

Titov: Mine bitcoins in Belarus it is expensive, and it is dangerous to create "bitcoin offshore"

December 22 The Comissioner for the President of the Russian Federation on protection of the rights of entrepreneurs Boris Titov commented to journalists on news about legalization in Belarus of mining and transactions with cryptocurrencies.

"Development of technologies – it is good, but in Belarus very expensive electric power therefore mining will not develop there, - Titov considers. - They legalized bitcoin turnover, it is a little bit another story. Could in the principle appear such "offshore zone" for bitcoin, but Belarus is not the most reliable territory for offshore zones. From there left much the IT companies because they felt pressure from the authorities upon their property. It is necessary to look how everything will develop".

Boris Titov reminded that the Growth strategy program developed by Stolypinsky Club contains offers on legislative registration of cryptocurrencies in Russia. As envisioned, the Central Bank of Russian Federation should create a so-called "regulatory sandbox" (regulative sandbox) in which the quality and reality of projects will be confirmed by consolidation of players of the market. Thus, risks of investors considerably will decrease.

Capitalization of cryptocurrencies exceeded the cost of the company of Buffett

On December 13, 2017 total market capitalization of all world cryptocurrencies for the first time in the history exceeded one half-trillion dollars USA.

On December 12, 2017 stock exchange rates of cryptocurrencies air and litecoin (Ethereum and Litecoin) updated records, and next day, on December 13, approximately at 3:40 p.m. Moscow time the market value of all digital currencies reached $506 billion, CNBC with reference to data of the Coinmarketcap.com portal reports.

Cryptocurrencies were more expensive than Buffett\'s company
Cryptocurrencies were more expensive than Buffett's company

The result was received by multiplication of the price of cryptocurrencies by the total amount of the digital tokens which are in circulation explained in the agency.

Investors show unprecedented interest in cryptocurrencies, and as of December 13 of the 2017th all digital money outstripped Warren Buffett investment company Berkshire Hathaway which market capitalization is estimated at $491 billion at cost.

Besides, all cryptocurrency is more expensive now, than the American banks Citigroup and Wells Fargo combined (the cost of everyone was on 12/13/2017 $201 billion and $297 billion).

Charles Hayter, the chief executive and the founder of the Crypto Compare service providing analytical data on cryptocurrencies by e-mail expressed concern about a situation in the comment of CNBC:

«
We come to not studied territory, with huge risks, both in terms of normative regulation, and in the technology roadmap. Explicit analogy to an Internet bubble is traced. Our servers hardly cope with loading which is daily generated by over 1 million users. The market of cryptocurrencies the fear and greed in many respects govern, but if to abstract from it, then in the virtual world there is a revaluation of a concept of cost now and new mechanisms of determination of an exchange rate are entered.[34]
»

The first biddings by futures for bitcoin

On December 11, 2017 the biddings first in the history began futures for bitcoin. The debut was marked by the impressive growth of quotations.

Biddings with futures for bitcoin there began the Chicago    exchange Cboe Global Markets. In six minutes the cost of the future (one bitcoin is equivalent to one future) counting upon January, 2018 rose by 11% to $16 thousand. In four hours there was a growth by 20%, and half an hour more later the future reached a maximum in $18.9 thousand.

On December 11, 2017 the biddings first in the history began futures for bitcoin
On December 11, 2017 the biddings first in the history began futures for bitcoin

By the time of material writing (on December 13 9 a.m. Moscow time) bitcoin cost at the Chicago exchange was $17,382.

Futures are the derivative securities allowing to purchase or sell an asset in the future at the price determined at the time of the conclusion of the transaction. With their help traders can be protected from rate fluctuations of bitcoin and stake on growth or decrease in its cost. So to trade in it as gold, oil or other raw materials.

The website of the exchange did not cope with huge influx of users: because of too large volume of traffic interruptions in its work were observed. In 2.5 hours after the beginning of biddings they had to be stopped at all — for several minutes. The second already five-minute stop occurred in 1.5 hours.

Experts consider important risk factor for a rate of bitcoin the high level of its concentration in the few hands: by December, 2017 40% of bitcoins are almost concentrated on $120 billion at only 1000 investors (so-called whales). If they decide to approve the actions, then for normal investors you should not wait for anything good. 

On December 18, 2017 CME Group will also begin biddings with futures for bitcoin. Stock exchanges expect that the futures trading for bitcoin will allow to attract on the regulated market of traders and investors that in the future will allow to make still high-risk cryptocurrency the full-fledged investment tool.[35]

The first bitcoin billionaires

At the beginning of December, 2017 it became known of the first billionaires who came into the fortune thanks to investments into bitcoin. Brothers Tyler and Cameron Winklevoss (Tyler and Cameron Winklevoss) were them. Read more here.

The rate of bitcoin for the first time in the history exceeded $10 thousand.

On November 27, 2017 the rate of bitcoin on many exchange platforms of South Korea for the first time in the history exceeded $10 thousand. So, at the Coinone and Korbit exchanges the cryptocurrency costs about $10,108 and $10,047, respectively. On Bithumb — the first in trading volume South Korean exchange — the bitcoin reached a point in $10,052.

The bitcoin struck through the level in $10 thousand.
The bitcoin struck through the level in $10 thousand.

According to data of CoinMarketCap.com, by November 27, 2017 the majority world bitcoin exchanges estimate cryptocurrency cost in the range of $ $9,500 and 9,700. CoinDesk's Bitcoin Price Index (BPI) announces mean value in $9,624.90 that it corresponds to rise in price almost for $300 in a day.

Daily turnover of the Bithumb exchange grew more than twice after the Service of financial supervision of South Korea (FSS) announced that department is not going to regulate trade in cryptocurrencies and also activity of the cryptoexchanges in the territory of the country, considering cryptocurrencies as speculative assets.

The bitcoin promoted rapid growth of a rate also the fact that the second largest commercial South Korean bank Shinhan announced the beginning of testing of the bitcoin wallet and the related services.

The bitcoin strongly influenced growth of cost great demand at the cryptoexchanges of Asia. Sales of the Japanese yen in bitcoin make about 62% of total amount of the stock exchange transactions, according to data of CryptoCompare. Growth rates of the prices for cryptocurrency steadily increased as the bitcoin gained the increasing popularity in Japan where in the spring of 2017 the bitcoin was legalized, and acceptance of deposits in cryptocurrency began and also practice of use of cryptocurrency as means of payment in shops is widely adopted more and more.

Such jump of cost of bitcoin, as well as other cryptocurrencies, led to the fact that in November, 2017 total market capitalization of the market of cryptocurrencies for the first time exceeded a mark of $300 billion at the end of November, 2017.[36]

New Zealand equated cryptocurrency to securities

The relevant decision is made in October, 2017 by the Financial Services Authority (FMA) of the country[37].

Department noted that all operations performed using cryptocoins and tokens get under regulation of this legislation. It means that all enterprises, the companies or the individuals offering services in exchange of cryptocurrencies, creation and service of cryptocurrency wallets and providing broker services get under the securities act. Therefore all participants of this market should be registered by the unified register of financial services providers of New Zealand and also by National service on permission of financial disputes (FDRS).

Did not decide on regulation of the ICO procedure of the authority of the country yet. At the same time management recommends to the projects planning release of tokens to address the regulator. The regulator intends to carry out the individual analysis of each address and on the basis of risks assessment to issue permission to the procedure or to veto to secure investors.

Vietnam prohibited cryptocurrency

The Socialist Republic of Vietnam does not recognize cryptocurrency. Since January 1, 2018 circulation of cryptocurrency as means of payment in the country will be forbidden[38]. The relevant amendments were made to the document by the Central Bank of Vietnam and supported by the government[39].

Since 2018 citizens and financial institutions of the republic will not be able to use digital currency as means of payments and transfers. And transactions will be equated to fraudulent activity and money muling. For non-compliance with the law penalties in the amount of $9000 will be applied to violators.

As legal payment systems and transfers in the country bank cards, checks, collection and payment orders and others are still recognized. And here transactions with mining so far under prohibition in the country did not get.

South Korea prohibited ICO after China

The commission on financial services of South Korea announced prohibition of all forms of placement of tokens (ICO — initial coin offering),[40] reported on September 29]. According to the South Korean regulator, attraction of financial resources through ICO increases risk of financial frauds with respect thereto all types of placement of tokens will be prohibited. Also the regulator announced that penalties will be applied to all financial institutions and persons participating in release of new cryptocurrencies, and emphasized that control over trade in cryptocurrencies should be strengthened[41].


The decision of the South Korean commission followed less than in a month after introduction of similar measures by the People's Bank of China. And as well as at the beginning of September, the cryptocurrency market reacted with temporary falling of quotations and fast recovery to almost same values. And, this time depreciation of bitcoin was not so considerable. According to us this results from the fact that the volume of the South Korean market of cryptocurrencies is significantly less than Chinese. It can also demonstrate that the market of cryptocurrencies becomes steadier and ceases to react to statements and actions of the regulating [42] sharply.

It is also important to note that statements of finance regulators of China and South Korea matched nearly to the last comma. Meanwhile financial markets of these countries very strongly differ from each other. In relation to the Chinese market experts periodically use determination "authoritative", meaning the excessive number of the restrictions set by the state whereas the market of South Korea is recognized as one of the most liberal in the world.

The contradiction this seeming as in these statements is traced by a background one more subject especially important for the Chinese authorities. We speak about control over financial flows. For Beijing the main priority of the pursued economic policy is financial security. Therefore the purposeful policy on restriction of the shadow banking sector, illegal mechanisms of crediting, legalization of criminal acquired income and cash outflow from the country leads to the fact that the Chinese government introduces restrictions for all financial mechanisms which can promote an output of cash flows from under control of the state. Today such mechanism represents cryptocurrencies.

At the same time you should not consider the restrictive measures entered in China and South Korea as the final decision. These actions are intended to give time to regulators to develop the rules of the game arranging everything the parties. Liquidation of gray zones in the legislation will allow to give to cryptocurrencies accurately designated legal status, will introduce them into economically circulation and will protect the interests of potential investors in disputable cases – for example, at emergence of problems with project implementation for which funds were raised using ICO. For this purpose the Commission on supervision of the financial sector of South Korea is going to get rid of anonymity at performing transactions with cryptocurrencies. As one of options the possibility of introduction of an authentication system is considered. Also development of mechanisms on tracking of suspicious transactions is planned.

Until new rules of the game are published, Asian investors will look for marketplaces in the countries with more friendly legal climate in relation to cryptocurrencies. Today Japan which recognized cryptocurrencies as means of payment in April, 2017 can become such smooth water.

On the same day, when in South Korea it was announced restrictions, the State Agency of financial services of Japan approved 11 companies as operators of the exchanges on exchange of cryptocurrencies. In addition to obligatory registration in the government, such companies are obliged to create a powerful computer system for ensuring stable work of the exchange, to provide identification of the identity of clients and also to respect the rules on anti-money laundering and some other requirements. At the same time the Japanese authorities are not going to prohibit attraction of financial resources using ICO. In the long term it can lead to the fact that more than 60% of transactions with cryptocurrencies will consist on the Japanese marketplaces.

China prohibits trade in bitcoins

The Chinese authorities intend to close all exchanges where it is possible to exchange bitcoin in the country. The central bank of China already made the draft instruction which prohibits local platforms to have services of trade in cryptocurrency, Wall Street Journal with reference to anonymous sources reports in September, 2017 [43].

Regulatory bodies of China since the beginning of year investigate the cryptocurrency market in the country, reports the edition, and already some time of the power reflect over introduction of the rules directed to money muling suppression. As notes a source of Wall Street Journal, the decision to close the exchanges was made because of "too big disorder" in this sphere.

"Big disorder"

The situation with cryptocurrencies in China seriously became complicated when the bitcoin sharply rose in price as it increased risk of speculation from the Chinese investors. According to analysts and investors, one of the reasons of growth of bitcoin last year consisted that Chinese began to use coins as the method to rely on decline of yuan.

Will lock ICO

On September 4 the People's Bank of China announced on the website completion of investigation concerning primary placement of tokens of cryptocurrencies (Initial coin offering, ICO). According to the regulator, more than 90% of ICO are potential violators of laws on illegal financing and counteraction to fraud in the financial sphere. The share of the projects raising funds for investments does not exceed 1%, representatives of the Central Bank of China reported.

According to an official position of the Central Bank, all ICO in the country from this day began to be considered as illegal. The regulator intends to punish strictly for similar violations in the future. At the same time it threatened with legal consequences for already complete ICO. Despite tough prohibition of ICO, the existing cryptocurrencies, such as air (Ethereum) or bitcoin were not mentioned in the corresponding statement of the Central Bank of China.

The market of cryptocurrencies met news about prohibition of ICO in China extremely negatively. The bitcoin, according to Coindesk, dropped at biddings by 5%, and air lost 15% of the price.

The Australian police officers accused bitcoin of growth of financial crime

Development of online banking and emergence of cryptocurrencies are basic reasons of mass growth of organized crime in the financial sector of Australia, specialists of police investigation of the country consider.

In the report published this week by the Australian commission on criminal investigations (ACIC) it is said that money muling and other financial crimes committed by large criminal groupings annually cost the country in the amount exceeding 28.43 billion dollars SSHAPO [44].

The Australian authorities are especially concerned by the fact that the enterprises of e-commerce and the exchange of bitcoins facilitate life of organized crime thanks to lack of transparency of transactions and use of enciphering that as a result opens opportunities for criminal activity and tax avoidance.

"The bitcoin in which it is possible to trade anonymously and which is not worse than cash addresses at the most known international exchanges now" — the Minister of Justice Michael Keena notes.

The report was published after introduction at the beginning of this month of the new law adopted for the purpose of distribution on the cryptocurrency exchanges of the mode of disclosure of information set for banks and the traditional exchanges.

The publication was also preceded by raising of allegations against the Australian bank of the Commonwealth in connection with mass violations of rules of anti-money laundering by it and financing of terrorism.

In the report growth of volumes of money muling via the websites of online rates is also emphasized, many of which belong to the international criminal syndicates. This year the authorities already fined the bookmaker company Tabcorp Holdings, largest in the country, 5 million US dollars for abuse of regulations of counteraction to money muling.

And though the main source of income for criminal community of the country are still drugs, in the report the amounts in which cost the country fraud with credit cards (411 million US dollars) and plunder of personal data (1.74 billion US dollars) are also called.

Estonia starts the first-ever national cryptocurrency — estkoin

The authorities of Estonia start the first-ever  national cryptocurrency — estkoin. Thus they expect to attract directly in national economy of investors from around the world.  The national cryptocurrency will be created within the program of digital nationality and are going to start it  through the state ICO,  and to transfer the gained money to public-private partnership which will promote "the digital nation".

Also consider option of creation of venture fund for support of "electronic entrepreneurs".  Foreign investors receive official digital ID which will give the chance to register the company in the EU country in the simplified form. Thanks to it entrepreneurs will be able to open the bank account and to receive the electronic signature. Today in a system 22 thousand entrepreneurs were registered.

Estkoinami can pay the public and private services in Estonia.  The authorities hope that as a result  estkoin will function as the viable currency used around the world.

The bitcoin broke up in two: causes and effects

On August 1 it became known that in community of bitcoin there was a split as a result of which the Bitcoin Cash (BCC) cryptocurrency appeared. In fact, it is practically bitcoin "clone", but the limit is increased by adding of data from 1 MB to 8 MB. Start of this currency was implemented by group of insiders under the leadership of the ex-engineer of Facebook Amory Secheta.[45]

The bitcoin broke up in two. Photo: tvzvezda.ru
The bitcoin broke up in two. Photo: tvzvezda.ru

Bitcoin problem

As you know, initially the size of the block of bitcoin could not exceed 1 MB. Such restriction was implemented for the purpose of protection of a system against DDoS attacks. However with growth of popularity of bitcoin the number of transactions increased, and the speed of their processing, on the contrary, decreased.

For solution in community of bitcoin two methods were discussed: lifting of restriction in 1 MB or storage of a part of information outside a blockchain.

SegWit vs Bitcoin Unlimited

In support elimination of a limit, generally miners which in see in it the method "unload" a system and to lower the transactions commission (volumes of transactions at the same time will increase, and miners all the same will remain in a prize). Such method of solution is called by Bitcoin Unlimited.

Other method is advanced by software developers of cryptocurrency who suggest to transfer a part of information which is stored in a blockchain out of limits of a chain of blocks and to store in separate files. As result, a lot of room will be made, and the speed of transactions will manage to be increased. This method is called Segregated Witness, or in abbreviated form SegWit.

On belief of supporters of SegWit, removal of a limit on the size of the block will lead to the fact that for confirmation of transactions more and more capacities will be required. It, as a result, will force small miners to leave business, and a system will appear under control of the large organizations. Such state of affairs contradicts the idea of bitcoin as the decentralized cryptocurrency, developers complain.

SegWit2x

However compromise was reached — the common decision in the form of the new SegWit2x protocol. In general it was offered to store a part of information outside a blockchain as developers wanted, but along with it to raise a limit on adding of new data to 2 MB, to please to miners.

For transition to the SegWit2x protocol it was necessary to update the software which is applied by miners and owners of bitcoins. Despite support of SegWit2x by most of miners, a part of users nevertheless refused updating.

Split of bitcoin in two

The small development team separated, having created the Bitcoin Cash cryptocurrency. This branch was supported by some miners and also exchangers and developers of purses. Miners transferred a part of the capacities to receiving new Bitcoin Cash blocks, and developers provided an opportunity to normal users to buy, store and pay off with new currency.[46]

As noted, supporters of Bitcoin Cash decided to create the version of cryptocurrency as they do not believe that within SegWit2x the limit will increase by adding of new data.

According to the technical director of the Safello exchange, the board member of Blockchain.Community Alexey of a bragin, Bitcoin Cash will have a few followers as earlier most of representatives of the western business agreed about support of the main branch of bitcoin. Thus, not all will be able to carry out transaction with new cryptocurrency. Also the option of its complete elimination is not excluded from possible calculations. [47]

In the USA transactions with cryptocurrency will equate to transactions with securities

In July Securities and Exchange Commission USA (SEC) announced intention to bring under operation of the American legislation on securities of transaction like the original offer of coins (ICO) and sales of tokens. Business resorts to ICO for the investment attraction by means of cryptocurrencies, and tokens are a virtual analog of actions.[48]

Photo: habrahabr.ru
Photo: habrahabr.ru

According to SEC, the transaction with participation of the "virtual" organizations, security purchases for bitcoins, financing of transactions through a blockchain should be equated to transactions with securities which should be executed legally. The position in the Commission was explained care of safety of players of the market in usage time of the innovation methods of attraction of the capital. According to vision of SEC, both on tokens, and on the exchanges where they bargain, action of federal securities laws should extend.

Precedent

SEC prevented the market about innovations in the report on investigation into the case of the Decentralized autonomous organization (DAO) which published on the website. Investigation showed that DAO sold tokens for the Ether cryptocurrency, without registering at the same time the transaction as transaction with securities. At the same time, the company positioned itself as the crowdfunding project, however in defiance of requirements of the legislation had neither the dealers, nor the portal for attraction of financial resources registered by regulatory bodies.

DAO drew attention of SEC to the activity after in June, 2016 its network was hacked by hackers. By that moment of the company about 7.9 million coins of Ether (more than $132 million) were succeeded to raise from sale of tokens funds for the amount. Having stolen a part of means of DAO, hackers thereby caused Ether collapse.

Statistics of electricity consumption in comparison with the countries

In July, 2017 the DigiConomist portal published the curious statistics showing how a lot of electric power "miners" — the people who are engaged in production of cryptocurrencies or "mining" spend.

All farms of the world involved in production of Etherium and bitcoins consume about 19.23 terawatt-hours of energy in a year that it is more, than Syria, Iceland and Jordan. At the same time only 0.02% of world consumption of electricity are the share of cryptocurrency mining. It would seem, it is small digit, but in scales of the large companies and regions it turns out huge.

Comparison of energy consumption of cryptocurrency mining and countries
Comparison of energy consumption of cryptocurrency mining and countries

According to calculations of DigiConomist, more than 1.25 million houses in the USA can eat from energy which is used in mining of bitcoins. All network of Visa finance corporation consumes 27 times less energy. On production of bitcoin about 14.54 terawatt-hours of energy a year leave, the indicator of Ethereum is 4.69 terawatt-hours.

It is curious that one transaction on generation of bitcoin requires about 163 kilowatt-hours of energy against 49 kilowatt-hours from Ethereum. If to transfer it to energy for households, then it turns out that one transaction in a blockchain system of bitcoins by quantity of the used electricity corresponds to about 5.5 days of a power supply of one house. At Ethereum this indicator is equal to 1.5 days.

Considering that digital currencies have perspectives of further rise in price, also costs for the electric power will grow. Ethereum already works on change of an algorithm of obtaining the proof of performance of work for the purpose of increase in energy efficiency.

In China, the USA and the countries of Europe the huge plants which are engaged in production of bitcoin commercially are created. Millions of their computers, consuming electric power megawatts, every day are occupied by only one — the solution of cryptographic tasks. It can create a heavy load on local power supply systems. The popularity of Ethereum is lower, however and it results in deficit of video cards in the market.[49]

Japan legalized cryptocurrencies

The authorities of Japan in April, 2017 adopted the law on a virtual currency,[50] reports]. Thanks to the new law in the country kriptovalyutybitcoin also Ethereum are legalized now. Thanks to it this virtual money in Japan can be used for settlement. At the same time, despite adoption of law, cryptocurrencies in Japan did not become legal means of payment[51].

In the majority of the countries of the world of cryptocurrency are not recognized as legal means of payment which can be used for purchase of goods and services and settlement and also cannot be a part of a system of a currency exchange. At the same time there is also no legislation which is firmly prohibiting use of cryptocurrencies as means of payment.

Such neodnoznacheny status led to the address of cryptocurrencies to "shadows" — there were semi-legal financial offices providing services of exchange of cryptocurrency for legal currency and carrying out payments with converting upon purchase of goods or services. Some such firms are registered also in Japan.

Thanks to the adopted law, the Japanese firms, whose internal regulations permit to work with cryptocurrency, now can use Bitcoin and Ethtereum for settlement with each other. Besides, the companies and individuals can buy this virtual money as the goods which are not subject to obligatory taxation by an eight-percentage consumer tax.

The consumer tax in Japan is some kind of analog of a value added tax. In Japan the consumer tax is paid upon purchase of the majority of goods and services and is the instrument of balancing of the state budget. For example, for opposition to financial crisis and supports of needy families raised a tax in 2014 from five to eight percent.

Meanwhile, despite adoption of law on virtual currencies, Bitcoin and Ethereum specified in it did not become legal means of payment in the territory of Japan. It means that the companies and individuals cannot use this currency for direct purchase of goods and services. Instead, they are obliged to resort to services of the registered exchange bureaus.

To receive the status of the registered point exchanges of cryptocurrencies the company in Japan, according to the new law, should have the authorized capital not less than ten million yens (88.2 thousand dollars) and the protected computer system for carrying out financial transactions. Besides, such organization is obliged to undergo audit every year.

The bitcoin is recognized official currency in Japan

The government of Japan recognized bitcoin official means of payment. The cabinet of the country announced a number of conditions which should be executed to the companies for use of cryptocurrency in the work[52].

In particular, to use bitcoins, the companies should have financial provision in the amount of 100 thousand dollars or more. The next obligatory step is passing of systematic external audit in tax administration and providing the report on the performed activity.

Besides, the organizations applying for permission to use bitcoins in the activity should make for benefit of the budget of Japan a disposable contribution in the amount of 300 thousand dollars. At the same time it is specified that successful observance of the approved rules does not guarantee obtaining the license at all. The final decision by payments with cryptocurrency will be made by members of the special commission.

As notes the Nikkei edition, circulation of Bitcoin, Ripple, Litecoin and other virtual currency in the country is 185 billion yens ($1.67 billion). Experts of a research institute of Fuji Chimera predict that by 2020 this indicator will grow practically by 10 times. The market of mobile payments in online stores is considered the most perspective for development of technology.

Use of bitcoins will be limited in the Czech Republic

The Czech Republic adopted the law which limits use of bitcoins. Also the European Commission prepared offers on identification of users who trade in digital currencies[53].

Citizens of the Czech Republic who exchange sell or buy bitcoins, should be registered. According to the Ministry of Finance, the anonymity at transactions with cryptocurrency can become a backdoor way for tax avoidance and criminal actions.

In Prague there are 80 places where accept bitcoins for payment. At the same time the number of owners of cryptocurrency in the country already exceeds tens of thousands.

The European Commission also prepared offers on identification of users who trade in digital currencies.

"If to bring digital currencies into a directive framework on anti-money laundering, the cryptoexchanges will have to require documents for check of the identity of the clients, according to policy "Know the client (KYC)"", said in the press release of EC.

2016

Santander: Bitcoin – threat for ekvayer and card issuers

According to experts of Santander bank, gain of positions bitcoin and technology of block chains can have a strong impact on the market of payment cards from which merchant acquirers and issuers will suffer, but provision Visa and Mastercard[54] will significantly improve[55].

In the document devoted to the Brazilian market, researchers of Santander warn that further distribution of bitcoin will have a negative impact on the largest operator of credit and debit cards of the country, Cielo, having threatened a business model of the company as a result of fall of income from trade commission and network of POS terminals.

Decline in income expects from the interbank commission also emitting banks while suppliers of cards and producers of POS terminals can face some difficulties connected with reduction of number of physical maps in the address.

The large companies, such as Visa and Mastercard, on the contrary, can benefit by technology of block chains due to decrease in operating costs and expenses on IT and support of a back office.

Four large banks will create new digital currency

UBS Swiss Bank with assistance of ispansky bank Santander, the German Deutsche Bank, American Bank of New York Mellon Corporation and the British broker ICAP intends to release the new digital currency based on blockchain technology (blockchain) which is used when carrying out payments in bitcoins, Financial Times reports [56].

In 2017 project participants intend to get all necessary permissions from the central banks and other bodies regulating financial markets, and in 2018 to begin commercial use of new digital currency.

"Today calculations between banks and financial institutions are difficult, take a lot of time and cost much, that is why all of us locate large back offices. It is about rationalization and increase in efficiency of process" — explained to Julio Faur's edition, responsible for research and development in Santander.

The court of the State of Florida decided that the Bitcoin cryptocurrency is not money

The American judge decided in the summer of 2016 that Bitcoin is not money, having rejected the charges of the money muling brought against the man, accused of sale of bitcoins Ошибка цитирования Отсутствует закрывающий тег </ref>.

The judge of the district of Miami Teresa Mary Pooler rejected charges concerning Michell Espinoza of which accused that he was engaged in money muling and illegal activity when he agreed to sell bitcoins for the total amount of 1500 dollars at a current rate to the disguised police officers who said to it that the cryptocurrency is necessary to them for purchase of base of the stolen credit card numbers.

On the eighth page of the text of a verdict of court on case the judge decides: "Anything in terms of a coordinate system known to us does not allow us to describe or give authentically definition to what is Bitcoin. "The court is not the expert in economic problems, but nevertheless even to any person having limited knowledge of this area is obvious that Bitcoin is still very far from being an equivalent of money."

The judge concluded that state statutes Florida concerning charge someone in money laundering if the defendant is involved financial transactions which encourage illegal activity, have extremely ambiguous treatment if to attach them on the Bitcoin cryptocurrency.

"The court has no intention to punish the person for sale of the property to other persons in case his act falls under operation of laws which are represented in this case [i.e. concerning sale of cryptocurrency] so indistinct that even professionals of law find it difficult to give to this act uniquely identifying." - the verdict of court said.

2013: The bitcoin has a competitor

In 2013 development of blockchain technologies the programmer of the Russian origin Vitalik Buterin seriously pushed.

He understood that, in addition to monetary transactions, in the code of the program it is possible to write information on any events: from legal documents to personal data.

So there was Ethereuma blockchain platform. Buterin, as well as Nakamoto, entered own currency, of the same name to the name of the platform. At the end of 2015 Ethereum carried out issue * of $18.5 million.

2010: Put bitcoin pizza

In the spring of 2010 the programmer László Hanesh ordered two pizzas for which for fun paid with ten thousand bitcoins — to very few people with the known then cryptocurrency. Hold László this money, today he would be an owner about $60 million.

2008: What everything began with

The bitcoin appeared at the end of 2008 when [57] published on the Internet article with the description of an operation algorithm of "electronic currency".

Incomplete nine years later the total cost of all bitcoins reached nearly $53 billion, and payments with their help make up to 40 million people.

There are also other cryptocurrencies: for their 2017 there are more than 200.

You look also the Blockchain and cryptocurrency



Notes

  1. From where bitcoins undertake
  2. as an investment asset: Excessive optimism restrains reasonable scepticism. The comment of the expert AO IK of TsERIH Capital Management in May, 2017.
  3. Cracked Bancor. 13.5 million dollars in cryptocurrency are stolen
  4. of FBI learned to recognize owners of bitcoins
  5. [https://arxiv.org/abs/1708.04748 research When the cookie meets the blockchain
  6.  : Privacy risks of web payments via cryptocurrencies]
  7. the websites Accepting bitcoins nullify anonymity of users
  8. the method Is found to destroy anonymity of bitcoin
  9. Data "Wirex: the analysis of cryptocurrency and its provision in the world", January, 2017, Digital Finance Agency
  10.    New Zealand legalizes salaries paid in cryptocurrencies
  11. BITCOIN’S ‘UNTOUCHED SUPPLY’ REACHES ALL-TIME HIGH OF of 21.6%
  12. US Marshals To Auction Bitcoins Valued at Around of $4.3 million In November
  13. From Malta to Prague: What Is the Most Crypto-Friendly Travel Destination?
  14. Over 800 cryptocurrencies are now dead as bitcoin is 70 percent off its record high
  15. Exchange leftover euros for Bitcoin or Ethereum at Schiphol
  16. Sky News Sky News TV channel
  17. In Scotland the first center for treatment for "cryptocurrency dependence" opened
  18. Cryptocurrency Addiction Now Treated at Top UK Rehab Clinic
  19. us/article/8xe8jv/cryptocurrency-trading-addiction-gambling-castle-craig We Spoke to a Therapist Who Treats Cryptocurrency Trading Addiction
  20. [https://forklog.com/v-izraile-vstupit-v-silu-zakon-o-protivodejstvii-otmyvaniyu-deneg-s-pomoshhyu-kriptovalyut/ In Israel
  21. will become effective the law on counteraction to money muling using cryptocurrencies]
  22. of the G20 refuses regulation of cryptocurrencies
  23. of the Deputy head of EC warned about danger of total loss of means at investments into cryptocurrencies
  24. [http://www.rosbalt.ru/world/2018/02/13/1681780.html In Thailand
  25. to banks prohibited transactions with cryptocurrencies]
  26. The Richest People In Cryptocurrency
  27. Bitcoin Ban Expands Across Credit Cards as Big U.S. Banks Recoil
  28. Gov't to collect 24.2 pct of taxes on income by virtual currency exchanges
  29. South Korea to ban cryptocurrency traders from using anonymous bank accounts
  30. [Researchers find that one person likely drove Bitcoin from of $150 to of $1.000]
  31. the Finance regulator of Brazil prohibited local funds to invest in cryptocurrencies
  32. the bitcoinist The new U.S edition. tax code amends IRC Section 1031 (a)(1) regarding 'like kind exchanges', excluding all cryptocurrencies from a previous legal loophole and making all cryptocurrency trades a taxable event.
  33. In Belarus legalized cryptocurrency and ICO
  34. Cryptocurrency market now worth of $500 billion, more than Warren Buffett's Berkshire Hathaway
  35. XBT-Cboe Bitcoin Futures
  36. Bitcoin Price Tops of $10.000 on Korean Exchanges
  37. of FMA commentary on ICOs and cryptocurrencies
  38. to Vietnam Prepares to Analyze Legal Framework for Bitcoin
  39. Vietnam prohibited cryptocurrency
  40. [https://www.cnbc.com/2017/09/28/south-korea-bans-all-new-cryptocurrency-sales.html CNBC South Korea bans all new cryptocurrency sales
  41. South Korea ICO after China prohibited
  42. organovkommentariya of experts of AO IK of TsERIH Capital Management
  43. China prohibits trade in bitcoins
  44. to the materials PLUSworld.ru, finextra.com
  45. The bitcoin broke up to two currencies: as it occurred
  46. The bitcoin was separated into two currencies. What is going on?
  47. Bitcoin at the crossroads: what will lead separation of cryptocurrency to
  48. End of bitcoin? The USA undertook regulation of cryptocurrencies
  49. THE WORLD’S CRYPTOCURRENCY MINING USES MORE ELECTRICITY THAN ICELAND
  50. [http://spectrum.ieee.org/tech-talk/computing/it/japan-takes-lead-in-legitimizing-digital-currencies IEEE Spectrum Japan Takes Lead in Legitimizing Digital Currencies
  51. Japan legalized cryptocurrencies
  52. the Bitcoin is recognized official currency in Japan
  53. of Place Zhurnal - Software to materials of Tatar-Inform
  54. [http://www.plusworld.ru/daily/santander-bitkoin-%E2%80%93-ugroza-dlya-ekvayerov-i-emitentov-kart/ Santander
  55.  : Bitcoin – threat for ekvayer and card issuers]
  56. Four large banks will create new digital currency
  57. the Satosi Nakamotoraskryt programmer Nakamoto's identity still did not work well, under this alias even the group of people can disappear.