Venezuelan government cashing in on Bitcoin mining through extortion & police raids

Here’s an interview with an anonymous Bitcoin miner in Venezuela, where the government is taking some extreme, and apparently unlawful, measures to cash in on Bitcoin mining.

I recently published, “Ground Zero In the Venezuelan Bitcoin Scene” and randomly received a message from an anonymous Twitter account complimenting the article. They also told me that I missed the real story. Of course I asked, “What was that?” They responded alluding to the Venezuelan Government’s involvement in Bitcoin mining. I thought to myself, now there is a story.

There have been other claims of issues in Venezuela, and there’s certainly an air of desperation that makes it seem possible, though there obviously remains a question of veracity in regards to the answers given here. Here’s an excerpt of some of the questions and answers:

There are stories of the government confiscating computers and mining equipment from people. Tell us about this.
Yes, sometimes the police squad that visits your place decides to seize your mining equipment, and there is absolutely nothing you can do about it.

What do they do with the equipment?
Rumor has it they install them on government facilities.

It is not a secret the Venezuelan government is rumored to be using the confiscated mining equipment to run their own farms and making the people who they took it from to set it up. Tell us about these secret operations?
This is the worst case scenario, but I’ve heard multiple stories like this. If for some reason they don’t like you at all during the raid, they would confiscate your equipment and have you install it for them. They even “hire” you as an infiltrator and they make you rat out other miners.

How does the government and police find miners?
There is an intelligence police division exclusively for mining hunting. They accomplish so by monitoring electric power consumption looking for irregular situations.

Read the whole interview at Extortion, Police Raids and Secrecy: Inside The Venezuelan Bitcoin Mining World at Hacker Noon

Looking beyond Bitcoin riches

From the New York Times recent article on looking beyond Bitcoin (and the crypto mania), which has seen too much of a focus on money. There are true technology changes and there will be some big winners. Well worth a read. Here’s a few more excerpts:

The true believers behind blockchain platforms like Ethereum argue that a network of distributed trust is one of those advances in software architecture that will prove, in the long run, to have historic significance. That promise has helped fuel the huge jump in cryptocurrency valuations. But in a way, the Bitcoin bubble may ultimately turn out to be a distraction from the true significance of the blockchain. The real promise of these new technologies, many of their evangelists believe, lies not in displacing our currencies but in replacing much of what we now think of as the internet, while at the same time returning the online world to a more decentralized and egalitarian system. If you believe the evangelists, the blockchain is the future. But it is also a way of getting back to the internet’s roots

The article cites the move from open protocols to the current state of internet we have now.

For all their brilliance, the inventors of the open protocols that shaped the internet failed to include some key elements that would later prove critical to the future of online culture. Perhaps most important, they did not create a secure open standard that established human identity on the network. Units of information could be defined — pages, links, messages — but people did not have their own protocol: no way to define and share your real name, your location, your interests or (perhaps most crucial) your relationships to other people online.

Facebook is the ultimate embodiment of the chasm that divides InternetOne and InternetTwo economies. No private company owned the protocols that defined email or GPS or the open web. But one single corporation owns the data that define social identity for two billion people today — and one single person, Mark Zuckerberg, holds the majority of the voting power in that corporation.

And there’s a good summation of the ultimate potential of blockchain to fix some of the problems that have arisen.

The blockchain evangelists think this entire approach is backward. You should own your digital identity — which could include everything from your date of birth to your friend networks to your purchasing history — and you should be free to lend parts of that identity out to services as you see fit. Given that identity was not baked into the original internet protocols, and given the difficulty of managing a distributed database in the days before Bitcoin, this form of “self-sovereign” identity — as the parlance has it — was a practical impossibility. Now it is an attainable goal. A number of blockchain-based services are trying to tackle this problem, including a new identity system called uPort that has been spun out of ConsenSys and another one called Blockstack that is currently based on the Bitcoin platform. (Tim Berners-Lee is leading the development of a comparable system, called Solid, that would also give users control over their own data.) These rival protocols all have slightly different frameworks, but they all share a general vision of how identity should work on a truly decentralized internet.

 

Full article at Beyond the Bitcoin Bubble at The New York Times

Crypto & Taxes, in the NYTimes

“Every time you transfer a cryptocurrency, you might trigger a gain and pay a tax,” said Selva Ozelli, a tax lawyer and accountant who has recently written about the tax implications of virtual currencies.In late 2016, the I.R.S. made it clear that it was searching for cryptocurrency tax evaders: The agency sent a broad request to Coinbase, the largest Bitcoin exchange in the United States, requesting records for all customers who bought digital currency from the company from 2013 to 2015.Coinbase balked, but a court ruled that it must provide the records of roughly 14,000 customers, fewer than 1 percent of its patrons, who made transactions involving more than $20,000 of virtual currencies.

via When Trading in Bitcoin, Keep the Tax Man in Mind at www.nytimes.com

There’s reason for banks to worry about bitcoin

And here’s a good reason for banks to be wary of Bitcoin:UBS Group AG Chairman Axel Weber said the Swiss bank won’t trade Bitcoin or offer it to retail clients as increased regulation could lead to a “massive” drop in value.

“This is something where the price is really unclear,” Weber said in an interview Wednesday with Bloomberg TV at the World Economic Forum in Davos, Switzerland. “We fear that in the future if these investments implode and the market corrects, then investors will be looking at ‘who sold us this?’”

If some dude on the internet sells you a hugely volatile asset with no intrinsic value and it immediately loses 50 percent of its value, you’re like “well played, dude on the internet.” If a bank does it, though, you sue.

from Matt Levine in Crypto Finance Meets Regular Finance at Bloomberg.com

Highlights from ~95 theses on crypto

95 Theses for 2018On Crypto Prices and “Investing”

1) 2017–2019 will be THE big crypto bubble. Things could get nuttier from here…far nuttier than in the dotcom era. The retail investor base is 10x larger, with 24/7 access to the FOMO and get rich quickism. And we’ve got CNBC to help with the pump!1a) Unbelievably, the institutions will be the last money in this time, with the futures market and custody solutions just coming online, and the mythical ETFs perhaps not too far behind. This has been properly hyped, I think. I could see a Q1-Q2 stampede.

Lots of great ideas in this post from TwoBitIdiot on Medium. Here’s a few more:

3) BTC, ETH, ZEC, and XMR are the main cryptocurrencies. These could still have a LOT of room to run. Money is a reflexive asset where the more people buy it and use it and believe in it, the more valuable it gets. Cryptocurrencies are the ultimate momentum play.

5) Most utility tokens, then, will go to zero, regardless of team quality and execution. You simply don’t need to hold them but for momentum & greater fool investing. When the market lacks “higher order” investors for speculators to flip to, assets will unwind. Viciously.

17) Forks with airdrops will become the preferred alternative to ICOs. You give away free money in order to get people excited about the new and improved project. The only thing they pay is attention. The people who truly buy in become your collaborators

54) Sooner rather than later, the institutions will wise up to the reality that they shouldn’t be paying carry on funds mostly denominated in BTC and ETH. When that happens, you’ll see a massive influx of capital to passive index funds like Bitwise’s HOLD 10.

via 95 Crypto Theses for 2018 – TBI’s Weekly Bits – Medium at Medium

Another bearish outlookon non-major cryptocurrencies

aside from BTC and ETH, all of the other TOP 10 coins will disappear into oblivion.

as always, lots of links to excellent pieces throughout their weekly post

via Token Economy #30: Gazing into the crypstal ball at Token Economy – Medium

Decentralized crypto exchanges are the only way forward

Centralized and custodial exchanges are the exact antithesis of why Bitcoin was born and why (we like to think) people spend their time in the crypto world.We are building trustless technology to remove middlemen, monopolies and risk

via ☠ Token Economy #31: Kraken & the death of centralized exchanges at Token Economy – Medium

Bullish on bitcoin

I think that this market is headed well above 20000$ in the upcoming weeks/months, for completeness a possible bearish scenario would imply first a drop down to 7500$

I think that this market is headed well above 20000$ in the upcoming weeks/months, for completeness a possible bearish scenario would imply first a drop down to 7500$

From last week, a bullish longterm view of bitcoin from one long-term trader’s perspective

via Long Term Update: Bottom Done. at Bitcoin Trading Ideas, Analysis

Bitcoin as compared to beanie babies & gambling

Why am I spilling digital ink on Bitcoin and other coins? I know how this movie will end, and this knowledge brings a weight of responsibility. People will be hurt by this mania, and many of them will not be able to afford their losses.

Why am I spilling digital ink on Bitcoin and other coins? I know how this movie will end, and this knowledge brings a weight of responsibility. People will be hurt by this mania, and many of them will not be able to afford their losses.

One value investor’s take on cryptocurrency. After this analogy, he goes on to liken it to gambling. More true for bitcoin than utility tokens and coins from quality projects.

via Bitcoin and cryptocurrencies are just the Beanie Babies of the moment at Vitaliy Katsenelson Contrarian Edge

Ray Dillinger on the Sad State of Blockchain

From Ray Dillinger, who reviewed the blockchain code for the orginal bitcoin source code and began experimenting with virtual currency back in 1995, comes a regretfully toned message on the current state of affairs:

Sadly, many of the people who launched these alternates don’t know what they’re doing. Even more sadly, most of them do know what they’re doing, and at least three quarters know that what they’re doing is ripping people off. They strive to do it as well as they possibly can, usually by means that I can’t really distinguish from blatant stock price manipulation and insider trading.

His lament comes after praise of bitcoin and Satoshi:

Every Trusted role is, by definition, a weakness in security. You can see why security professionals are aghast when people talk about “Trusted Computing Modules” becoming a standard part of computers.

Satoshi had developed, as far as I’m aware, the first digital cash system with no Trusted role at all and thus, no way to abuse a Trusted position.

You know the old saw about being able to get a lot done if you don’t care who gets the credit? Satoshi doesn’t want the credit. Two years later he walked away and left the pseudonym behind. And hard as this may be to believe, it looks like he doesn’t even want to be paid for it. As far as we can tell he mined approximately a million Bitcoins and has never sold a single one of them.

The original selflessness of bitcoin feels a long way from the ICO-craze.

I hate to even imagine how many billions of dollars of scams and failures and thefts have been perpetrated by abusing people’s faith in and enthusiasm for that technology by now. And I have no idea how we could possibly have prevented it.