ICOs Are Coming To The Bitcoin Network With Sidechain Technology

Over the past two years, RSK has been working on its Turing-complete smart contract sidechain for Bitcoin. The sidechain would make it possible to …

RSK is working on creating a sidechain by the end of the year that would make it possible for ICOs to be launched using Bitcoin.

RSK working on bringing back ICOs to Bitcoin

Since 2013, developers have been working on the concept of fundraising on the Bitcoin network. J.R. Willett, who claims to have come up with the idea, was able to launch an ICO for the Mastercoin project on the Bitcoin network and raised $500,000 in the process.

Over the past two years, RSK has been working on its Turing-complete smart contract sidechain for Bitcoin. The sidechain would make it possible to launch ICOs on the Bitcoin network, and meaningfully improve crowdfunding.

Temco, a South Korea-based blockchain startup will be the first ICO to launch on the smart contract sidechain.

The company, which is looking to enter the supply chain management sector, will leverage RSK’s technology to launch an ICO which the company hopes will raise $19 million.

Just like Ethereum, RSK is writing their smart contracts using the Solidity language. The network would work using a bitcoin-pegged cryptocurrency dubbed called Smart Bitcoin or SBTC.

The RSK sidechain is still in its beta version, with only a few projects deploying their smart contracts on the network.

Temco CEO Scott Yoon and head of business development Joey Cho believe that given time, the Bitcoin network would be able to bring in more projects and even compete with industry leader Ethereum for ICO launches.

Yoon believes that Bitcoin has what it takes to become a cryptocurrency that is only used as a means of payment.

Temco token to be used for various purposes

Temco will issue tokens that will primarily be used to enable small and medium-sized businesses to track their products via its supply chain.

The token would be used by both the vendors and the consumers and can be used to pay for products, data storage, and subscribing to business intelligence tools.

Using the tokens as rewards, users of the platform are able to “review” their purchases, and incentivize high-quality products.

The public sale of the token is planned to commence in November and the organizers said they will accept both Bitcoin and Ether as a means of payment. The token sale would be available for users all over the globe with the exception of China and the US.

ICOs on the Bitcoin network could lead to mass adoption

Even though Bitcoin ICOs would be similar to those launched on Ethereum, several notable differences are intended to improve on Ethereum’s implementation and support of the projects.

Unlike Ethereum, launching ICOs on the Bitcoin network could sustain the creation of real products thus leading to mass adoption, claim Yoon and Cho.

“We believe RSK is one of the best blockchain technology because … if we create our supply chain on top of let’s say ethereum … number one the gas fee is amazingly expensive…which is not ideal for the Temco supply chain since we use lots of smart contract transactions.”

Cho further added that RSK would have transaction speeds to match that of online giant payment platform, PayPal.

RSK technology still in development

Despite the hype and expectations, the RSK sidechain is still being developed. The beta version of the platform was launched at the start of the year and is only available to a few select developers, business partners, and Bitcoin miners.

The project has been progressing smoothly, having received the approval of 80 percent of Bitcoin miners. They are set to implement some important upgrades that would help the Bitcoin network overcome its scalability issues.

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ICO Regulations Guide: World’s Initial Coin Offering Country By Country

Virtual currencies is that used by internet users via the web. It is characterized by the absence of physical support such as coins, notes payments by …
ICO Regulations Guide: World's Initial Coin Offering Country By Country

An Overview of ICO Regulations by Country

The regulatory environment for ICOs is not uniform from country to country. Understanding ICO regulation on a global level can help investors in their decision-making process. Here is what ICO regulation looks like:

Country Name Status Other Information
Algeria Not permitted Banned use of virtual currencies in 2017 – “The purchase, sale, use, and holding of so-called virtual currency is prohibited. Virtual currencies is that used by internet users via the web. It is characterized by the absence of physical support such as coins, notes payments by cheque or credit card. Any breach of this provision is punishable in accordance with the laws and regulations in force.”
Argentina Permitted Altcoins recognized as money but not legal tender
Australia Permitted
Bangladesh Not Permitted
Belarus Permitted
Belgium Permitted
Bolivia Not permitted
Bosnia and Herzegovina Permitted
Brazil Permitted
Bulgaria Permitted
Cambodia Permitted Discourages use of altcoins
Canada Permitted ICOs are managed by the Canadian Securities Administrators, which has determined that ICOs and altcoins are securities and subject to regulation on a case-by-case basis. There is a “regulatory sandbox” in place to regulate fintech projects that are outside of the normal regulatory scheme.

As for altcoins, they are recognized as intangible assets. Commercial altcoin dealers must be registered and treated as a money service business in the future. Canada’s largest banks are temporarily banning purchase of altcoins.

Chile Permitted
China Banned People’s Bank of China has banned ICOs for all businesses and individuals. ICOs in the country that have completed their funding cycle must refund altcoins raised. The Bank will investigate entities found to violate the ruling. Altcoin trading is also banned, but individuals can hold the altcoins.
Colombia Permitted
Croatia Permitted
Cyprus Permitted
Czech Republic Permitted
Denmark Permitted
Ecuador Not permitted Ecuador developing its own national altcoin
Estonia Permitted The country is considering to start its own ICO for fundraising, but there is a split opinion on how the Eurozone rule on nation states affects the ICO fundraising campaign.
European Union ICOs permitted but subject to future regulations The EU permits ICOs, so long as they comply with Anti-Money Laundering/Know Your Customer policies. In November 2017, the European Securities and Markets Authority adopted a strict position on ICOs, determining that they are a high risk to investors – as a result, firms must adhere to the regulatory requirements.
Finland Permitted
France Permitted but regulated
Germany Permitted Though permitted, the Federal Financial Supervisory Authority issued a warning on the risks of ICO investments, which states, “Due to the lack of legal requirements and transparency rules, the consumer is left on their own when it comes to verifying the identity, reputability and credit standing of the token provider and understanding and assessing the investment offer. It can also not be guaranteed that personal data will be protected in accordance with German standards.”
Gibraltar Permitted but subject to regulation Regulators planning on offering regulations for ICOs by January 2018 to permanently codify legal protections for altcoins
Greece Permitted
Hong Kong Permitted but subject to regulation Certain altcoins should be treated as securities
Hungary Permitted
Iceland
India Permitted but very regulated Use of altcoins is discouraged. Reserve Bank of India banned altcoin use in banking system
Indonesia Permitted Permitted as commodity – but not as money
Iran Permitted but subject to future regulation
Ireland Permitted
Isle of Man Permitted by subject to regulations Seeking to forge regulations in the future to establish and protect ICOs legal status
Israel Permitted Altcoins subject to a 25 percent capital gain tax. Miners and traders must pay corporate income tax and a 17 percent value-added tax (VAT).
Italy Permitted
Jamaica Permitted Publicly announced support of altcoins as growth opportunity
Jordan Permitted but very regulated Banks and financial institutions are not permitted to use altcoins
Kyrgyzstan Permitted Prohibits use of altcoins as currency
Lebanon Permitted
Lithuania
Luxembourg Permitted but regulated Supports Bit License for altcoin business
Malaysia Permitted but subject to regulation Country was scheduled to ban altcoins
Malta Permitted
Mexico Permitted but regulated Nation’s FinTech law recognizes altcoins as virtual assets
Morocco Not permitted Bitcoin introduced as payment conduit. In 2017, the government warned that the use of altcoins violates exchange rules for the Office des Changes and the use of such devices could be used for illicit purposes.
Namibia Permitted Altcoin exchanges are forbidden and altcoins cannot be used as payment – but these stances do not have the force of law
Nepal Not Permitted
Netherlands
Nicaragua Permitted No official position on altcoins
Nigeria Permitted Use of virtual currency banned. Central Bank released a statement to correct perception that it banned altcoins – bank takes the position that it cannot regulate the internet, and therefore it cannot regulate altcoin use.
Norway Permitted
Pakistan Not permitted State Bank of Pakistan banned altcoins to all organizations and institutions – ban not enforced judicially.
Philippines Permitted but subject to regulation Regulators recognize bitcoin as a form of remittance payment – but country also feels that regulations addressing AML/KYC protections may be needed. Companies offering exchange services must register.
Poland Permitted
Portugal
Romania Permitted
Russia Permitted but very regulated Five orders have been issued by the Kremlin requiring altcoin miner registration and taxation, application of securities laws to ICOs, and use of altcoins to create a “single payment space” in Eurasian Economic Union to oppose Eurozone. Position is shifting to altcoins being “probably illegal” but no official policy et.
Saudi Arabia Permitted
Singapore Permitted but very regulated Monetary Authority of Singapore provided a guide on Digital Token Offerings, indicating how altcoins should be treated under current securities laws. The guidance states that any ICOs or altcoins that are “capital market products” under the Securities an Futures Act can be regulated under MAS. The regulation includes altcoins that either infer ownership of a corporation or product, debt, or a share in an investment scheme.
Slovakia Permitted
Slovenia Permitted
South Africa Permitted Altcoin are intangible assets
South Korea Permitted No explicit ban of altcoins, though the government has embraced a “zero-tolerance” attitude for malicious ICOs. Altcoin futures and derivatives trading is banned
Spain
Sweden Permitted No VAT for altcoins, but subject to the Swedish Financial Supervisory Authority – currently under appeal.
Switzerland Permitted but subject to future regulations Attempts to regulate ICOs have failed, but may occur in the future. Swiss Financial Market Supervisory Authority examines ICOs for possible breaches of securities law, which could be the first signs of a new wave of campaigning for regulatory oversight. Regulations may not be able to halt the current momentum to incorporate ICOs into Swiss culture.
Taiwan Permitted Taiwan’s Central Bank warned banks against altcoin use and altcoin ATMS are not permitted. Altcoin purchases permitted by three of the country’s four major convenience stores
Thailand Permitted but very regulated Financial institutions prohibited from investing or trading in altcoins, exchanging coins for fiat currency or other altcoins or commodities, from creating a platform for altcoin trading, from allowing altcoin purchasing via issued credit cards, and from advising about altcoin investing or trading. Government has not banned trading.
Trinidad Permitted
Turkey Permitted
Ukraine Permitted
United Arab Emirates Permitted but subject to future regulations
United Kingdom Permitted but subject to regulations Issued investor warning on unregulated nature of ICOs – even if the ICO acts in good faith, investors can lose their investment. According to the Financial Conduct Authority, “Typically ICO projects are in a very early stage of development and their business models are experimental.”
United States Permitted but heavily regulated States have their own ICO rules, which vary. There is no uniform regulation, but some states require deposits in equal to or in excess of all local transactions. Others require a license for businesses to engage in altcoin activities. On the federal level, ICOs are not banned, but are expected to be registered and licensed with the SEC if the ICO trades or sells securities. Further, SEC determined that some ICOs are securities and subject to its rulings. ICOs must also adhere to AML/KYC practices and failure to do so can lead to legal action.

United States recognized celebrity endorsement of ICOs to be illegal, unless compensation involved id disclosed.

Purchase of altcoins is not permitted by several credit card processors and banks.
Vietnam Permitted Altcoins cannot be used as currency, but no laws prohibiting trading
Zimbabwe Permitted No official position on altcoin, but the government is skeptic. Altcoins currently traded in the country.

The chart above shows that there is no uniform attitude toward ICOs. Further, it indicates that there are international concerns about malicious or fraudulent ICOs, a nationalistic cornering of the altcoin market, and the risks involved in the ICO space. Many nations and financial institutions have released their stance on ICOs and altcoins, which either recognize or don’t recognize the digital currency. On the other hand, there seems to be a positive reception of distributed ledger technology. Which is the technology behind altcoins,

Moreover, many countries’ issues with ICOs is that they work around establish regulatory schemes. Rather than initiating an initial public offering, businesses can preform seed funding, without proper due diligence, regulatory requirements time, or fiduciary permissions a traditional IPO requires. Further, small business often deal with untested or unknown technologies, a peer-based alternative may provide funding opportunities for businesses that cannot conduct a traditional funding scheme.

The trouble is, the above approach can include fraudulent practices. China is not a proponent, and it worries that scammers can use ICOs to defraud investors. As a result, it has banned the creation or sale of them. As for the SEC, it issued an alert indicating that public companies engaging in “pump-and-dump” practices tend to manipulate market prices.

As for countries that have a “zero-tolerance” position concerning fraudulent or malicious ICOs, have some mechanisms in place that show support for altcoins. For instance, Australia introduced regulations allowing the questioning and prosecution of malicious ICO operators. South Korea relaxed its bank on ICOs and is committed to punishing bad actors in the ICO sphere.

Countries are pursuing changes to regulatory policies to reflect an anti-money laundering/know your customer practices. ICOs may also require additional oversight, such as registration and disclosures.

As for investors interested in getting into the space, it is best to understand the changing nature of regulation. This will ultimately protect investors from running afoul of the regulations and it also reduces the risk associated with investments. Ultimately, the best practices for investors include research, preparation, and understanding the regulatory marketplace.

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Bitcoin Cash (BCH) Wormhole vs Ethereum (ETH) ERC20 Token Protocol

Corbin Fraser, one of the lead developers for Bitcoin.com, said, “For better or worse, ICOs and CryptoKitties are probably coming to Bitcoin Cash in the …
Bitcoin Cash

New Token From Bitcoin Cash Brings Forth the Wormhole Protocol, Which is Potential Threat to ERC-20

On August 11th, Roger Ver, the CEO of Bitcoin.com, announced that the company would be unleashing a new tool on Bitcoin Cash. This new tool gives developers the option of issuing tokens, involving a process called the Wormhole Protocol. With these new possibilities, the door is wide open for chain in the blockchain industry. Corbin Fraser, one of the lead developers for Bitcoin.com, said, “For better or worse, ICOs and CryptoKitties are probably coming to Bitcoin Cash in the near future.” However, one of the big suggestions is that this new option has the potential to eliminate the need for ERC-20.

Understanding Tokens and Coins

The two assets dividing the cryptocurrency market are coins and tokens. Though some experts use the phrases interchangeably, they actually are not the same at all. Coins are used as ways to pay and have the support of original blockchains. Tokens, on the other hand, are part of Initial Coin Offerings (ICOs), which are when a company holds a sale before their platform is active. Tokens are also based on an existing blockchain, rather than an original. A good example of that is in the way that 82.86% of tokens are built on the Ethereum blockchain, using technology that is already in place, rather than establishing their own system.

What Makes ERC-20 the Chosen Blockchain?

With such a high number of ICOs developing their platforms on top of Ethereum blockchain, it may be smart to wonder why. After all, it is referred to as “the king of DApps” as a result of the popularity. “ERC” stands for “Ethereum Request Comments,” and it was originally published by Fabian Vogelstellar on GitHub in 2015. The information outlines the way that these tokens are required to work on the ecosystem, even down to how many tokens can be issued.

Through its short lifetime, users have enjoyed how simple and straightforward the ERC-20 principles are, especially considering that it does not take an engineering degree to work with it. Mainly, developers only have to copy the coding from GitHub, decide how many tokens they want to have, establish a name and a symbol. Then, after putting some ETH into the blockchain, the token is ready.

Based on the most recent numbers, it seems that there are over 110,000 tokens under this protocol, with some of the most popular ones being EOS and TRON, which are in the top 12 for market cap. There is a surprising number of those tokens that are not actually directly used, because of the need to adhere to the regulatory measures in the industry still. Though it took a while, Ethereum is “not a security,” according to the SEC, but that does not trickle down to the tokens on the ERC-20 blockchain. The deciding factor is how they are marketed, and most of them are just a representation of shares.

Problems With ERC-20

Since ERC-20 was the first version of Ethereum-based protocol issued in the industry, there are still many problems that come with its use, most of which have revealed themselves over time. One issue that made headlines is the batchOverflow bug. With this flaw, if users send ERC-20 tokens, rather than ETH, the funds get stuck inside the receiving smart contract. Basically, users cannot use tokens from ICOs, and this has accounted for $3 million in losses, and the developers still only are willing to call this a “user error,” rather than assuming the blame of a bug in their system.

After the bug, there were multiple exchanges in April this year that stopped deposits and withdrawals that involved ERC-20 tokens, based on the glitch. As a result, it seems that developers of ERC protocols are trying to eliminate the ERC-20, bringing in options that will either hide the problems or bring in new features. Presently, there is:

  • ERC-223, which corrects the problems in ERC-20
  • ERC-721, which brings in collectible tokens, like CryptoKittens
  • ERC-948, providing an opportunity in a subscription

There are still others in the works, but Wormhole has the potential to truly compete against ERC-20, with no ties to their blockchain.

Bitcoin Cash’s Wormhole

Wormhole is not a bug or a glitch, and it certainly does not hold the same risks at ERC-20. Specifically, this protocol is more of an upgrade or an update that works on the Bitcoin Cash blockchain. It was created and introduced by a team of developers under Jiazhi Jiang, who presented the whitepaper in July. Basically, integration of Wormhole means that users can apply a smart contract feature, but without any of the rules it runs by on Bitcoin Cash’s blockchain. There is an opcode, OP_RETURN, used on the platform to make this possible.

The new protocol also makes it possible to support native tokens, which are involved in smart contracts on the BCH blockchain to develop ICOs, and the tokens are referred to as Wormhole Cash (WCH).

A Challenge to ERC-20

With these changes, and without the issues that ERC-20 platforms deal with daily, it is clear that there is now a strong rival for the top spot in the industry. ERC-20 is heavily tied in with almost any ICO though, so it is uncertain if they will have the chance to outperform, despite their benefits. They are still new, so the industry will probably be taking a close look to see how potential bugs impact Wormhole.

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UK Regulator Warns Investors of Rising Cryptocurrency Scams

The Financial Conduct Authority, UK’s financial watchdog, is reminding consumers that cryptocurrency scams are rising in the country. Residents in …

The Financial Conduct Authority, UK’s financial watchdog, is reminding consumers that cryptocurrency scams are rising in the country. Residents in the United Kingdom who decide to invest in Bitcoin or any other virtual currency are not protected by the regulatory framework given that cryptocurrencies are not regulated by the FCA.

£2 Million Lost In Cryptocurrency Scams In June And July Alone

A warning of cryptocurrency scams first made in June has been re-posted by the UK regulator to let consumers know that fraudulent schemes are on the rise.

“UK consumers are being increasingly targeted by cryptocurrency-related investment scams […] Cryptocurrency fraudsters tend to advertise on social media, often using the images of celebrities or well-known individuals to promote cryptocurrency investments. […] The firms operating the scams are usually based outside of the UK but will claim to have a UK presence, often a prestigious City of London address.”

Cryptocurrency swindles include posting images of celebrities supposedly endorsing said coins or tokens, according to the statement. The regulator has observed a rising number of reports about virtual currency scams, but its regulatory framework does not protect UK residents that choose to trade their fiat currency for any digital coin or token.

Britain’s financial watchdog has recently warned about two scams that involve companies impersonating respectable UK traders. Good Crypto and Fair Oaks Crypto have quoted the two legitimate firm’s addresses and Firm Reference Numbers as part of the swindle, the FCA said.

A report by the National Fraud and Cybercrime Reporting Centre said that approximately £2 million has been lost in cryptocurrency scams in June and July alone this year, an average of £10,095.59 per person. The statement noted that the most prevalent methods used by scammers are cold calls and social media-based campaigns.

Fraudsters are able to convince victims to sign up to their websites and provide sensitive information such as credit card details and driving licenses to open a trading account. Victims are then persuaded to make sizable first deposits before realizing it is a fraud, said Director of Action Fraud Pauline Smith.

“It’s vital for anyone who invests or is thinking of investing in cryptocurrencies to thoroughly research the company they are choosing to invest with. The statistics show that opportunistic fraudsters are taking advantage of this market, offering investments in cryptocurrencies and using every trick in the book to defraud unsuspecting victims.”

As the FCA handles a rising number of virtual currency scam cases, the regulator announced it has launched investigations into 24 different cryptocurrency companies. In March 2018, a task force was also established with the Bank of England and the Treasury to develop UK’s policy thinking on crypto assets.

Image from Shutterstock

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BitMEX CEO Calls Ethereum a Shitcoin, Says Ether (ETH) Price Under $100

The second-largest cryptocurrency, Ethereum, was traded as low as $249 on Monday 13 August 2018 and is still down 22 percent over the past seven …
BitMEX CEO Calls Ethereum a Shitcoin, Says Ether (ETH) Price Under $100

THE FORTHCOMING DOWNFALL OF ETHEREUM?

The second-largest cryptocurrency, Ethereum, was traded as low as $249 on Monday 13 August 2018 and is still down 22 percent over the past seven days. It is speculated to plunge to double-digit price levels. Although Ethereum has not suffered from much of a loss compared to the bitcoin value itself, bitcoin is certainly dragging all alt-coins with it at this rate. with the ETH/BTC ratio declining, there is no Ethereum price improvement in sight as of right now. In March, the US Securities and Exchange Commission (SEC) said crypto trading exchanges need to register with the federal agency. This was one of the reasons for the market’s bearish performance.

BitMEX CEO Arthur Hayes argued that Ethereum is a “shitcoin” whose price has been reinforced by initial coin offerings (ICOs) since at least early 2017. Most investments have come from Venture Capital firms (VCs), who he says will eventually succumb to the bear market and dump their ether and ERC-20 tokens at whatever price they can get.

He wrote:

“The VC investor who has never suffered the vagaries of the market is as green as the noob who thinks he or she can go from 1 to 100 Bitcoin in a few trading days. They don’t have the mental strength to cut positions to limit further losses, or backup the truck and buy opportune dips even though they are down. More importantly, LPs can now see an objective last price for a particular token, and can’t be hoodwinked. They will attempt to be a Monday morning quarterback, and that only adds to the VC investors’ anxiety. At a certain point, they go ‘fuck it’, and dump everything they can.”

The sell-off is surmised by some analysts to be the result of ICO-funded startups cashing out their ether, due to the fear of the bear market extending further than many people had initially expected. Hayes argues that it will be VCs who deal the real death-blow since fund managers tend to operate according to a herd mentality.

There are those who believe that a sustainable token economy can exist but no one will be buying at these levels. Will the prices ever go up or will the bloodbath continue, making investors wary?

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