Čvn 15

Major Bitcoin Exchanges Crippled by DDOS Attacks Amid Record Price Rally

· June 15, 2017 · 12:45 pm

Denial-of-service attacks brought several major Bitcoin exchanges to their knees this week, leaving traders locked out of the system, as hackers reap the market rewards.


Ongoing Cyber Attacks

DDoS attack

The DDoS attacks, timed to occur during intense periods of trading, gain the hackers a market advantage during price swings. Allowing them to game the price difference on compromised exchanges. Users are left locked out of the system during what could be crucial time periods of market activity.

Bitfinex, the largest U.S dollar-based bitcoin exchange has admitted that their platform was under DDoS attack. However, despite what they refer to as ongoing attacks, they do say that “Most users will be able to use the platform normally.” and released the following tweet;

BTC-e is also believed to have been affected, as their site went down temporarily. They also posted a tweet acknowledging the issue though it has since been deleted.

Market Fears and Due Caution

While no coins were directly stolen from users during the attacks, the ensuing instability caused significant chaos nonetheless. Those who remember, or were victims of, the disappearance of the Mt.Gox and Cryptsy exchanges, know that Bitcoins should not be left on these platforms in case of more catastrophic attacks.

Users engaged in Margin trading on these sites are particularly at risk as they are unable to close their positions and stand to lose a lot of money if no stop-loss measure has been put in place.

In an interview with CNBC, Benjamin Roberts, co-founder and CEO of digital currency trading start-up Citizen Hex offered this warning to cryptocurrency investors:

Investors with assets on centralized cryptocurrency exchanges should be careful. The track records of these organizations are not good, and as the assets on the exchanges grow, so does the bounty for attacking or hacking them.

Unprecedented New Interest In Bitcoin

Bitcoin exchanges are also under the pressure of a surge of new users who are noticing Bitcoins price gains.  The price of Bitcoin climbed to $3000 this week before plunging down to $2400, a move which does nothing to allay fears about the famously volatile coin.

Bitcoin exchange Coinbase has struggled to keep up with the massive influx of new customer registrations. CEO Brian Armstrong recently tweeted:

The CoinBase site has been down this week too, something they put down to the high traffic they were experiencing.

Should the exchanges be doing more to protect their users? Are they improving? Have you had an experience with the exchanges you’d you like to let Bitcoinist know about? Let us know in the comments below.


Images courtesy of Twitter, Shutterstock

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Kvě 29

China’s Biggest Exchanges to Add Ethereum, Other Altcoins as Demand Surges

· May 29, 2017 · 7:00 am

As altcoins continue to gain popularity throughout the world, Bitcoin exchanges in China are also getting in on the action and listing alternative cryptocurrencies.


Huobi to Support Altcoins

As the moratorium on cryptocurrency withdrawals is expected to soon end in China, exchanges in the country seem to be turning their attention to alternative cryptocurrencies. Two days ago, one of the big three exchanges in China, Huobi, announced it will launch Ethereum trading on May 31.

The announcement reads:

We are excited to announce the CNY/ETH will be listed on our exchanges. Trading will start at 12:00 May 31st (GMT +8). ETH deposit and withdrawal is available from now on.

Today, Huobi released a list of altcoins that are to be added in the future according to the rank of the coin in said list. According to Huboi’s underlying model, Ethereum, Litecoin and Ripple are the highest ranking coins following Bitcoin, followed by Dash, Zcash and Dogecoin.

Online news service cnLedger tweeted:

The list was ranked using a model created by Huobi which factors in the coin’s strategy, marketing, activity, risk and technology to calculate the relevance of the coin.

The list and underlying model can be seen in Huobi’s official announcement.

BTCC to Get In On the Action as Well

Huobi isn’t the only Bitcoin exchange in China that is to list alternative cryptocurrencies.

After a two-week poll, in which over 190k votes by the cryptocurrency community were counted, Ethereum Classic will be listed in the BTCC exchange. Bobby Lee, CEO of BTCC tweeted:

Although the exchanges employed a completely different method in which Huobi used a model to rank cryptocurrencies and BTCC used a community poll, both exchanges are interested in opening the doors for the Chinese community to invest in  alternative cryptocurrencies.

Huobi and BTCC, however, are not the first exchanges in the country to list alternative cryptocurrencies. The China-based Yunbi exchange allows users to buy and sell cryptocurrencies like Etherem, Ethereum Classic, Zcash, QTUM, Bitshares, and others. BTC38 also offers a multitude of cryptocurrencies to be bought and sold for CNY. Lastly, CHBTC also lists Ethereum, Ethereum Classic, and Litecoin.

Crypto in Asia

Although less-known exchanges in the country offer altcoin trading, most Chinese users are only familiar with Bitcoin and Litecoin, given that most cryptocurrency investors use one of the big three exchanges in the country, BTCC, OKCoin and Huobi.

China plays a big part in the Bitcoin world, ranking in the top 3 countries by daily trading volume but other countries in the continent are becoming increasingly interested in cryptocurrencies and it’s not just Bitcoin and Litecoin.

Take Japan, for example, where the recent Bitcoin law has created an accentuated demand for cryptocurrencies, making the JPY the biggest Bitcoin pair in the world by trading volume and that’s not all. Other cryptocurrencies are also gaining traction in the country.

Co-Founder of IndieSquare and Community Director at the Counterparty Foundation, stated in a recent blog post:

First, one of the unique characteristics of the Japanese crypto space is that altcoins are very popular as a means of investment and some of them have very strong and dedicated communities; some even more active than the Bitcoin community itself in a way. Among them, two of the most popular altcoins in Japan are XRP(Ripple) and XEM(NEM).

In South Korea, Ethereum and Ethereum Classic are also extremely popular, even more so than Bitcoin whose daily trading volume is smaller than that of ETH or ETC.

With China adhering to the altcoin craze, could Asia become the capital for alternative cryptocurrencies?


Images courtesy of Shutterstock.com, Twitter 

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Kvě 21

Japan Bitcoin Prices Hit 300,000 Yen, Trade Volume Doubles

· May 21, 2017 · 11:58 am

Bitcoin spot rates on Japanese exchanges hit 300,000 yen ($2690) Saturday as the largest trading market continues to buoy prices.


Japan Exchange Frenzy: Coincheck Sees 97% Increase

As Bitcoin breached the $2000 barrier worldwide Friday, Japan’s exchange spreads had begun widening, with asking prices exceeding $500 above the average amount quoted on resources such as Coinmarketcap.com.

Compared to an average press time rate of $2080, major exchange Coincheck currently quotes a spot rate of 260823 yen ($2344).

Japan Bitcoin Prices Hit 300,000 Yen

Fellow exchange BitFlyer registered a 97% increase in trade volumes in the 24 hours to press time Sunday. By contrast, Kraken saw USD/BTC up 21%, Bitfinex 51% and GDAX 45%.

Dotcom, Saxobank: ‘I Told You So’

Momentum in Japan has steadily increased as Bitcoin gains more of a public profile in business and media circles. Most recently, a drive focussed on mainstream availability – and hence adoption – of Bitcoin payments will see hundreds of thousands more outlets able to accept the virtual currency.

These outlets include those of major payment apps and by extension Alipay.

The Japanese exchange climate is also of interest to traders abroad as prices accelerate and opportunities for profit-taking via arbitrage become an increasingly hot topic of conversation on social media.

Taking kudos already meanwhile are those who predicted current prices when Bitcoin was worth much less.

Among those were Saxobank and Kim Dotcom, both of whom forecast a $2000 Bitcoin in 2017.

The banking world has also seemingly reacted to the new personality of Bitcoin, with Norwegian Skandiabanken offering cryptocurrency-denominated accounts.

Mempool Woes Continue To Haunt Users

At the same time, however, all is not well. On a technical usability level, the Bitcoin network’s backlog of unprocessed transactions means that many investors are unable to benefit from arbitrage or other trading-based options afforded by the diverse exchange market.

The mempool is hovering around all-time high levels, vastly inflated compared to even two months ago, with even significant fee rises unable to impact on waiting times.

Having briefly dropped Friday, queues are now lengthening once more, with tools such as transaction accelerators either maxed out or charging comparatively high fees to increase the probability of a speedy confirmation.

A test transaction from Bitcoinist with a fee of 120 satoshi per byte, unconfirmed for 24 hours, would currently cost $4.66 to accelerate with BTC.com.

What do you think about the differences in exchange prices for Bitcoin? Let us know in the comments below!


Images courtesy of CoinCheck, BTC.com, AdobeStock

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Bře 23

The China Syndrome: Are California’s Bitcoin Exchanges Doomed?

· March 23, 2017 · 4:30 am

Increasing regulatory pressures have eviscerated trading volumes across Bitcoin exchanges in China. Bitcoin’s shifting volumes and price are signaling that further disintermediation is inevitable, which could also spell trouble for Western exchanges like Coinbase and Kraken.


China Regulates Bitcoin Exchanges

Increasing regulation of the Bitcoin market in China by the People’s Bank (PBoC) has characterized the first Quarter of 2017.

First they banned margin-trading. Then they halted withdrawals of Bitcoin from Chinese exchanges in February. The latest news is that withdrawals are expected to resume soon provided a strict set of KYC/AML conditions are met.

The nature of the ban on withdrawals has been widely misunderstood.

Note that bitcoins were not trapped. Trading continued the whole time on Chinese exchanges – purchases and sales were allowed. The PBoC never disallowed the withdrawal of cash from Chinese exchanges. So Chinese who wanted to exit could simply sell their Bitcoins and withdraw their renminbi.

The China Syndrome

That said, there were several consequences of the Chinese regulation in the global Bitcoin market. I call this set of results or symptoms that occur in tandem ‘the China Syndrome’.

China Bitcoin Core attack

We can expect more and more financial regulators to intervene ever more intrusively into Bitcoin markets globally, and we can expect to see a similar syndrome of effects every time.

So, as the IRS demands that Coinbase reveal all its customer records, we can expect the same China Syndrome set of consequences.

What were the results of increased regulation of exchanges in China?

  1. The share of global trading volumes of Chinese exchanges collapsed.
  2. There was terrific disintermediation. Over The Counter (OTC) trading volumes in China exploded. This is trading that is done P2P, off-exchange. The two most popular OTC platforms in China are LocalBitcoins and Bitkan.
  3. Bitcoins started to trade on Chinese exchanges at a significant discount to global prices. Previously Bitcoin had nearly always traded at a small premium on China exchanges to the global price. (Zerohedge claimed ad nauseam this was evidence of demand for Bitcoin as a vehicle for capital flight, though that’s refuted by BTCC CEO Bobby Lee.)
  4. Bitcoin traded OTC in China has achieved a premium over both the price on Chinese exchanges and indeed over global prices. It is the most expensive Bitcoin in the world!
  5. Bitcoin has recently started to trade on LocalBitcoins at a premium to exchanges worldwide where previously there was a discount.
  6. The logical endgame of disintermediation is a black market. For example, what naturally happens in an economy such as Venezuela or Nigeria where banks (the middleman) fail to provide the market-clearing price for dollars as a result of capital controls? People will disintermediate their asses and sell on the black market of course!

[Data verifying these statements about prices is at my website, Blocklink.info. Select the ‘Black Market FX’ tab.]

Disintermediation is Inevitable

Definition from Investopedia:

Disintermediation, in finance, is the withdrawal of funds from intermediary financial institutions, such as banks and savings and loan associations, to invest them directly. Generally, disintermediation is the process of removing the middleman or intermediary from future transactions.

There remains a powerful need among Chinese to trade Bitcoin that the PBoC cannot stifle. PBoC tries to block one avenue and wily Chinese users disintermediate their way through. It is like the funfair game of whack-a-mole.

As the middleman  – the Chinese exchanges – was failing to meet the need to freely trade Bitcoin, Chinese users cut out the middleman. Here are two charts to illustrate the extent of the disintermediation. Chinese exchanges have become the sick men of global exchanges, and LocalBitcoins China is experiencing explosive growth..

12

coin-dance-localbitcoins-cny-volume

Note that this second chart greatly understates OTC trading in China for several reasons.

One, it’s possible that the Bitkan platform is even more popular than LocalBitcoins in China. Bitkan reported a twelvefold increase in trading volumes in Q1 2017 in this interview with Bitcoinist.

Two, once buyer and and seller establish a relationship through LocalBitcoins or Bitkan, those two parties might choose to transact thereafter privately, without using the platform, so saving on escrow and platform fees.

Three, you also tend to get P2P Bitcoin deals being negotiated on popular financial and exchange forums, like the Chinese equivalents of Craigslist.

Effects of Disintermediation on Prices

This effect has received less attention than the effect on volumes. In Q1 2017 Bitcoins have traded on Chinese exchanges at a significant discount to global prices. Previously Chinese Bitcoin had always traded at a small premium to the global price.

Premium before Q1 201713

Discount after the actions of the PBOC:

My research shows that a) Bitcoin traded OTC in China has achieved a premium over both the price on Chinese exchanges and over global prices and b) Bitcoin has started to trade on LocalBitcoins as a premium to exchange prices worldwide where previously there had been a discount.

china2

There is not the space here to go into the details, which can be viewed at my site Blocklink.info. In summary, at a snapshot on March 22, 2017 07:00 GMT, these prices prevailed when the Global Bitcoin price was $1,064 USD:

China

  • Chinese exchanges: $1,038 (discount to Global price)
  • Chinese LocalBitcoins: $1,114 ($76 premium to CN Exchanges’ price, or 7.3%)

America

  • US Exchanges: $1,064 (same as Global price)
  • US Local Bitcoins: $1103 ($38 premium to global price, or 3.6%)

Previously analysts argued that there was naturally a discount on OTC markets as a result of the greater convenience that the exchanges offered their clients, and of the greater counterparty risk intrinsic in an OTC trade. But it now seems to be the case that the force is with OTC trading, and that users are prepared to pay a premium OTC to achieve greater privacy and control over their Bitcoins.

Decentralized Exchange is the Future

Exchanges in the San Francisco, Japan and Europe have been doing terrific business in 2017 and the money is rolling into their coffers in the form of trading fees and the income they derive from their Bid-Offer spread.

Oh, they are living the life of Riley in San Francisco’s Financial District! Knocking back the $20 libations at Rickhouse Bar on Kearny Street and at Comstock Saloon. They think nothing of buying $75 steaks. The toilets are dusty with cocaine powder. But threats similar to those that have hit the solvency of OKCoin, BTCC etc. await Coinbase, Kraken, Bitfinex and the other big hitters. There will be blood.

coin-dance-bitsquare-all-volume

The future looks rosier for the more decentralized avenues like Bitsquare, whose global volumes have been rising steadily, and for wallets with greater privacy like Samourai.

Further disintermediation in Bitcoin trading is inevitable. That is what the shifting volumes and the price mechanism in the Bitcoin market are signaling.

And note this: the ultimate disintermediation is black market/criminal activity. For example, drug users disintermediate the failure of pharmacies to provide Grade A meth and crack by buying from the street corner or on Dark Markets. That is where we might buy our Bitcoin 3-5 years from now, possibly from wild-eyed, shaggy-haired ex-employees of Kraken.

Do you agree that centralized exchanges will become obsolete and unable to compete with decentralized avenues? Share your thoughts below!


Images courtesy Coin.dance, Twitter, Shutterstock, Blocklink.info

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Bře 18

Could This Be The End For Bitcoin Unlimited?

· March 17, 2017 · 11:30 pm

1,550 views

20 Bitcoin Exchanges have agreed to list Bitcoin Unlimited (BTU/XBU) as an altcoin, if a hard fork should occur.


BTC & BTU

In the midst of a heated discussion on the scalability and future of Bitcoin, a group of 20 Bitcoin exchanges, including major eastern and western ones, have announced that should a hard fork occur, they will list BTC (Bitcoin Core) and BTU (Bitcoin Unlimited) as two separate currencies.

This decision, backed by BitFinex, BitStamp, Kraken, BTCC, BTCChina, ShapeShift, BitSquare, QuadrigaCX, and other exchanges, was announced in a joint statement.

This announcement reads:

Since it appears likely we may see a hardfork initiated by the Bitcoin Unlimited project, we have decided to designate the Bitcoin Unlimited fork as BTU (or XBU). The Bitcoin Core implementation will continue to trade as BTC (or XBT) and all exchanges will process deposits and withdrawals in BTC even if the BTU chain has more hashing power.

These exchanges have pledged to only add Bitcoin Unlimited (BTU) as an altcoin only if both chains can be run without any conflicts, something that currently is a concern due to the risk of transaction replays.

bitcoin-unlimited

A few hours after this announcement, Poloniex and BitMEX joined in as well, both supporting the plan released by the other exchanges. BitMEX in particular stated:

BU will not be listed or used as a deposit/withdrawal currency until replay protection is implemented and BU is not at risk of a blockchain reorganization if the Core chain becomes longer.

Transaction Replays & Hard Forks

This isn’t the first time a major cryptocurrency has come under danger of hard forking; in fact, Ethereum experienced a similar situation last year. However, this wasn’t without mishaps; Ethereum experienced a number of replay attacks after the fork.

A replay attack is where a transaction carried out on one chain is broadcasted on the other chain. For example, Bob may want to send BTU to Alice. However, this transaction could be rebroadcast on the BTC chain, meaning that Bob would lose both his BTU and BTC.

The announcement states that the exchanges will only list Bitcoin Unlimited if the replay attack vector is eliminated, such as by changing address formats or moving coins to new addresses.

“[N]one of the undersigned can list BTU unless we can run both [blockchains] independently without incident. Consequently, we insist that the Bitcoin Unlimited community (or any other consensus breaking implementation) build in strong two-way replay protection,” the group said. “Failure to do so will impede our ability to preserve BTU for customers and will either delay or outright preclude the listing of BTU.”

The End of the Road for Bitcoin Unlimited?

This new decision could be a devastating blow to Bitcoin Unlimited’s (BU) approach in what has been a tough week for BU. Earlier this week, a critical bug was discovered and later patched, but not before taking half the network’s nodes offline and leading many in the community, including Andreas Antonopoulos, to question BU’s code QA (quality assurance) process.

Additionally, according to coin.dance, a large majority of the companies and services in the Bitcoin Space prefer SegWit over Bitcoin Unlimited by a wide margin.

SegWit Bitcoin Unlimited Support

Furthermore, a majority of miners also support Bitcoin Core. However, if Bitcoin were to fork off into Bitcoin and Bitcoin Unlimited, the loss of a large amount of hashpower could still be detrimental to Bitcoin.

Bitcoin Core Bitcoin Unlimited Pie Chart

Many users and prominent community members have also voiced out against Bitcoin Unlimited, believing that it is a rash and unprofessional attempt to scale bitcoin or even an “attempted robbery.” Some have even gone as far as to suggest a User Activated Soft Fork (UASF), a type of fork where nodes actively reject blocks that don’t signal for SegWit activation.

However, this might not even be necessary, seeing that many exchanges will now only see Bitcoin Unlimited’s approach as an attempt to create an altcoin.

Do you think that Bitcoin Unlimited will try to hard fork the network? If so, do you think that their chain will survive? Let us know your thoughts in the comments below!


Images courtesy of Coin Dance, AdobeStock, Shutterstock

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Bře 07

BitKan: Our Volume Grew ‘Twelve Times’ Since PBoC Halted Withdrawals

· March 7, 2017 · 12:00 pm

2,631 views

Bitcoinist spoke with Leon Liu, the CEO of BitKan, a Chinese P2P Bitcoin trading service, to get a better idea on the current situation following the recent regulatory clampdown on Bitcoin exchange withdrawals in the country.


Bitcoinist: What kind of trading services does BitKan provide?

Leon Liu (LL): BitKan provides P2P bitcoin trading services with broker match-making to save time for our users. During a trade, BitKan acts as an escrow service, guaranteeing funds delivery for both sides. Users can also trade small amounts in five minutes.

Bitcoinist: How has the recent restrictions imposed by the People’s Bank of China (PBoC) on crypto-exchanges impacted your operations?

LL: The PBoC focused on the three biggest exchanges. PBoC actions did not have any impact on us because it focuses on money laundering, currency outflows and pyramid schemes. We do not provide such services to our customers. That’s why we weren’t impacted. Right now, customers can use our platform to withdraw Bitcoin after 3 days.

Bitcoinist_PBOC

Bitcoinist: China’s overall Bitcoin trading volume has seen a significant drop due to these PBoC inspections. Have traders gone abroad or have they simply moved off-exchange and into P2P and OTC markets? Have you seen an uptick in P2P, OTC trading as a result?

LL: There are two kinds of customers: the first kind buys bitcoin and uses it. So, they need to withdraw bitcoin. Yes, some of these people went to other small markets, where withdrawals weren’t suspended.

Some went to the OTC market. It is difficult for Chinese people to access foreign markets. Therefore, these customers cannot buy Bitcoin abroad using CNY. Also it is difficult to exchange CNY to USD in China.

Our volume grew by twelve times [since withdrawals were suspended].

The second kind of customer trades bitcoin, buying and selling it to earn a profit. In fact, most people speculate with the price this way, and then they withdraw CNY. And yes, our volume grew by twelve times.

Bitcoinist: Who is your typical customer?

LL: We have two kinds of customers. Those new to bitcoin and who buy their first bitcoin on our platform; and then there are users who already have basic knowledge about bitcoin and who do not want to trade on exchanges.

coin-dance-localbitcoins-cny-volume

Bitcoinist: How does your P2P trading service compare to the increasingly popular LocalBitcoins, for example, which has seen exponential growth in China following the suspension of withdrawals?

LL: The first step for our customers is registration via email. If they want to trade on our platform they need enter their cellphone number. If users want to trade more that 5 BTC a day – they need to comply with KYC and AML guidelines.

The difference with LocalBitcoins is that BitKan offers a mobile phone app that is easy to use. Second, all traders must go through the KYC process, to ensure safe trading.

BitKan is better localized for the Chinese market compared to LocalBitcoins

Third, trading is faster than on LocalBitcoins and a trade can go through within a minute. Fourth, BitKan is better localized for the Chinese market compared to LocalBitcoins.

Bitcoinist: So customers can buy up to 5 BTC with just their email address?

LL: Yes, the maximum is 5 BTC without having to submit any personal information.

Bitcoinist: Do you agree with BTCC CEO Bobby Lee that Bitcoin is not being used to bypass Chinese capital controls – that it’s mostly hype created by the media? 

LL: We agree with Bobby Lee. This goes back to 2013 when the government said that Bitcoin is a commodity. It can not be used by companies for payment. Now, Bitcoin is used mainly for two things in China – mining and trading (speculation).

bitkan-co-founders-original

Bitcoinist: Bitcoin mining giant BitMain invested $1.6 million into your platform last year. What have you done with these funds so far and what are your future plans?

LL: We spent the investment on global promotion and development. In the future, we are going to roll out our OTC business globally.

Segwit will not be the best solution for Bitcoin scaling, it will make the Bitcoin network more complicated.

Bitcoinist: Bitmain is a supporter of the Bitcoin Unlimited scaling proposal. Where do you stand on this issue in the scaling debate?

LL: We support Bitcoin scaling first and foremost, but we do not support a fork. We hope that the parties can reach some agreement. My personal opinion is that SegWit [Segregated Witness] will not be the best solution for Bitcoin scaling, it will make the Bitcoin network more complicated.

Bitcoinist: Finally, how is your planned expansion into the US market coming along?

LL: This is still in the early stages, but we are making some progress. The USD market is now the second biggest for BitKan. The US has different regulatory policies across different states, and BitKan will comply with these laws accordingly.

[Full disclosure: Bitcoinist is not owned by and is not associated with BitKan.]

Will the Bitcoin OTC and P2P trading continue to grow in China? Let us know below! 


Images courtesy of Shutterstock, BitKan, BItcoin Magazine, Coin.dance

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Úno 20

LocalBitcoins Trading Up 1,200% in China Since PBoC Clampdown

· February 20, 2017 · 7:30 am

LocalBitcoins has recorded an exponential 1,200% surge in China trading since the country’s exchanges started reacting to pressure from the People’s Bank of China (PBoC).


36 Million Yuan Per Week and Counting

The week ending February 18th was the best on record for the peer-to-peer marketplace, which registered a global high of over $24 million USD in transactions.

The Chinese market, until just a few weeks ago practically dormant, saw a giant 36 million yuan in transactions compared with the previous week’s 6.6 million, which itself was a previous high.

coin-dance-localbitcoins-all-volume-1

LocalBitcoins has seen a rapid increase in usage for the past few months from countries around the world. Venezuela, Canada, Turkey, and New Zealand have all recently peaked on the platform, due variously to financial clampdowns or – in New Zealand’s case – the closure of one of its longest-running exchanges due to “banking hostility.”

Spreads in highly active markets are unsurprisingly wide, with Chinese users especially paying a premium for convenient fast access to fiat or cryptocurrency.

Lee: PBoC ‘Taking Scrutiny More Seriously Than 2013-14’

February 18th also saw Bobby Lee, CEO of major Chinese exchange BTCC, take to Reddit for an AMA session with the community.

bobby_lee_bitcoinist

While much of the discussion focussed on issues related to Chinese miners’ support of scaling solutions for the Bitcoin network, Lee was predictably coy on matters involving regulators.

“I think that compared with 2013/2014, this time, the PBoC is spending more effort on this and taking it more seriously,” he wrote, adding:

The PBOC will have a strong say in how the bitcoin exchange industry evolves in coming years.

He added he could not comment on topics discussed behind closed doors “beyond what was already announced publicly.”

Over-The-Counter Real King of CNY/BTC?

But despite the LocalBitcoins figures being impressive, their overall effect could be little more than a drop in the ocean. A recent report by WSJ China on Bitcoin’s entry and exit from China highlights three main ways investors are using the currency – and LocalBitcoins is not one of them.

“There are several options: premium-taker, foreign futures exchange and OTC (over-the-counter),” a translation of the original article from news resource 8btc reads.

Bitcoinist_NodeCounter Variety

Given the extremely tight margins involved, even for high-frequency traders, it is likely that the last of these methods is seeing the most action.

“OTC traders are looking for each other through mobile apps, social media tools, forum, website or offline meetups,” 8btc reports.

Some major OTC dealers are hiring people to spam online. Wechat chatbot are being developed for OTC purpose. With the absence of exchange-like monitoring, OTC trading will be even harder to track.

Where do you think is the bulk of Chinese Bitcoin trading happening currently? Let us know in the comments below!


Images courtesy of Shutterstock, Twitter, Coin.dance

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Úno 03

BTCC CEO: Chinese Bitcoin Capital Flight ‘Simply Not The Case’

· February 3, 2017 · 8:30 am

BTCC exchange CEO Bobby Lee has become the latest Bitcoin figure to refute claims the cryptocurrency is being used for Chinese capital flight.


Lee: Bitcoin Capital Flight ‘Simply Not The Case’

In a post published Wednesday, Lee said that “from everything I’ve seen on the ground here, running one of the largest Bitcoin exchanges in China, this is simply not the case.”

His comments follow those made late last year by Bitquoints CEO Joseph Wang, who described Bitcoin as “useless” for moving money out of China.

bobby_lee_bitcoinist

“The talking point is that many Chinese people are now using Bitcoin as a means to transfer large amounts of their RMB abroad, into other foreign currencies,” Lee wrote.

Yes, many people have been talking about this idea, to use Bitcoin to circumvent China’s capital controls on the RMB. But that’s just media stories feeding the frenzy!

Raft Of Hurdles Face Would-Be BTC Exports

Lee was likely referring to stories such as that which appeared in Singapore publication Straits Times, which interviewed a Chinese businessman allegedly using Bitcoin for the purposes of circumventing capital controls and the declining yuan.

yuan

He continued that the hurdles facing those who wish to use Bitcoin for such purposes require certain skills. In addition, while Bitcoin’s price has broadly steadied as investors shake off worries about a restrictive move by the People’s Bank of China, exchange rate remains a major sticking point for potential Bitcoin-based RMB transfers.

“The biggest problem today with using Bitcoin to evade Chinese capital controls is that there’s just no good guarantee on the eventual effective exchange rate,” Lee said.

For those who have a lot of RMB to move offshore, advanced guarantee of the exchange rate is very important to them. Otherwise, they will prefer another channel, even if the guaranteed rate of exchange is worse than the official rate.

Bitcoin To Mature With Yuan Internationalization

Speculating about the future status quo, Lee considered that reduced controls on the RMB will coincide with Bitcoin being “mature enough” to handle large-volume transfers without the aforementioned risks.

Until then, the arena of transferring Bitcoins around the world remains an area for the professionals, the players who arbitrage prices between Bitcoin exchanges worldwide,” he concluded.

2017

Bitcoin today meanwhile continues to hover around the $1,000 barrier, with mixed opinions as to whether it will stay there. Analysts variously report shifts in either direction being likely, with the corresponding 7,000 RMB mark in China being equally important psychologically. Chinese trading volumes declined sharply by as much as 92% in January after exchanges imposed trading fees to curb volatility.

Do you agree with Lee that Bitcoin in not a major capital flight tool? Let us know in the comments below!


Images courtesy of Shutterstock, Twitter

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Led 31

Bitcurex: Owner ‘Disappears’ After Failing to Return 2,300 BTC

· January 31, 2017 · 8:00 am

Poland’s oldest exchange Bitcurex has mysteriously “disappeared” with users losing access to capital and locking 2,300 bitcoins out of users’ hands.


2,300 BTC Gone Forever

Local news sources report that following problems reaching back to October, the platform has now ceased operation altogether, with staff failing to release clear information.

Only social media pages survive, while it appears that a Polish public prosecutor investigation instigated by the exchange is no nearer returning lost funds.

qykxy1smxvmp7dgy97t5

Bitcurex’s problems began when an attack caused accounts to become unusable for customers. It subsequently transpired that “external interference in automated data collection and processing of information” meant all bitcoins on the platform had gone, Gazeta.pl reports, adding:

One thing is for certain: all the bitcoins in the Bitcurex portfolio have disappeared.

Owners’ Houdini Impression Continues

The exchange’s owners have meanwhile been making a name for themselves for the wrong reasons. Following the initial issues, hardly any official information has surfaced, while users are appealing to each other for leads regarding their identity.

“Anyone got any leads on an owner bitcurex or his next of kin?” one post on Bitcurex’s still live Facebook page read Monday.

Lawyers are also getting involved on the page, offering advice for those affected by the loss of funds.

Similarly, Gazeta postulates that this month’s final disappearance had deliberately fraudulent motives, coming as it did prior to a major uptick in Bitcoin’s price. Evidence for this theory is lacking, however.

Vanbex

The loss of funds marks the final fallout from another of 2016’s exchange casualties. Overall, at least eleven major hacks were recorded last year, underlining the continuing security issues faced by exchanges, as well as trust issues faced by the community, which have been touched on by commentators such as Andreas Antonopoulos.

Bitcoinist reiterates to readers never to leave bitcoins on platforms operated by third-parties, such as exchanges of any sort, which they do not control themselves.

“Not your private keys, not your bitcoin,” should be the mantra of every Bitcoin user. 

It is interesting to note that Bitcurex’s fall from grace was precipitous. Just in July, the company added what it described as a “certified compliance department” to its outfit, ostensibly to ensure stable operations in line with relevant governmental legislation such as AML and KYC requirements.

Launched in 2012 in the Polish city of Lodz, the exchange processed over $50 million worth of BTC transactions in its final six months.

What do you think about the loss of Bitcurex? Let us know in the comments below!


Images courtesy of Shutterstock, Crunchbase

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Led 25

PBOC to ‘Continue Focus’ on Exchanges as Volumes Plummet

· January 25, 2017 · 7:00 am

Bitcoin’s price dropped slightly after the People’s Bank of China (PBOC) published a summary of its findings after inspecting major Chinese exchanges.


PBoC: ‘Continued Focus’ on Exchange Activities

“According to the initial inspection and the problems found, the inspection group decided to continue to focus on payment and settlement, anti-money laundering, foreign exchange management, information and financial security and other aspects of further inspection,” the translated statement reads.

Investigators suggested that investors should pay attention to Bitcoin platform transactions, such as legal compliance, market volatility, financial security and other risks, careful participation in Bitcoin investment activities.

The Bitcoin price had remained largely unfazed as new Chinese exchange fees caused trading volumes to crash by over 90% in 24 hours.

Following reported criticism by a regulatory inspectorate last week, major Chinese exchanges BTCC, Okcoin and Huobi all implemented a 0.2% trading fee Monday to “curb manipulation and extreme volatility,” as BTCC described it.

The move hit China’s giant automated trading market, which had previously enjoyed zero-fee transactions.

Figures now show that for all three exchanges, trading has decreased in volume by roughly 90%.

Far from causing panic, many are suggesting the move will remove volatility from Bitcoin’s price for good, given that China’s toll-free environment had previously comprised up to 98% of trading.

While mainstream media attempted to spread its oft-quoted doom and gloom, BTCC COO Samson Mow said the publicity was simply “good for Bitcoin.”

Former Bitcoin Foundation Director Jon Matonis added that Chinese exchanges had effectively “taken one for the team,” however, echoing comments by a local Bitcoin hedge fund owner that they were “cutting off their aim to stay alive.”

Japan Overtakes China

Commentators on social media continued the positive speculation, citing “organic growth” and less manipulation making Bitcoin more appealing for wary investors in the long term.

These could potentially include instruments such as Bitcoin ETFs, the first of which has spent three years awaiting US regulatory approval and is still considered by analysts to have slim chances of slipping through the net.

Meanwhile, statistics are providing interesting reading in terms of how the Bitcoin trading landscape could look in the future. As Bitcoinist reported previously, Japan’s exchange scene had reached the number two spot prior to the Chinese drop, and volumes in the country are now topping global charts, beating even the US.

What do you think about the People’s Bank of China’s latest announcement and the impact of lower Chinese trading volumes? Let us know in the comments below!


Images courtesy of Shutterstock, Twitter

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