Weekly news 31/2019: Bitcoin bypasses sanctions and censorship

August, the month named after the first Roman emperor, has begun strong for the sovereign king of cryptocurrencies. After a heavy correction in July, Bitcoin seems rested and ready to continue its conquest toward world dominion much like the Roman Empire 2000 years ago. While Emperor Augustus may have his face minted in ancient coins, Bitcoin has the potential to become the face of modern money on a grander scale. Bitcoin has shown its strength as an uncensorable money numerous times. The decentralised blockchain ensures that the system cannot be censored or manipulated, and every attempt so far has failed. It is therefore no wonder that Bitcoin has gained increasing popularity in an era where states, companies and other parties are trying to violate our personal information and restrict our freedom. Aside from private citizens, Bitcoin's uncensorable nature also provides a shield for larger parties. States such as Iran and Venezuela have shown an interest in using cryptocurrencies to bypass sanctions - and it seems to be working. This week we will take a closer look at some of these cases. In other news we have increasing investor interest, threatening letters from the American tax authorities and DARPA's blockchain projects aiming for an unbreakable code. Additionally, an update from Facebook confessing their cryptocurrency Libra may be published later than expected - or not at all. Bitcoin may shape the future of money more than ancient Roman emperors. (PICTURE: Pinterest) Investors increasingly interested in Bitcoin According to a recent research by digital asset management fund Grayscale Investments, over 83% of Americans consider investing in bitcoin. 79% in turn reported that they believe bitcoin will continue to grow in the future. However, investors seem to be rather cautious. Only 36% of investors told that they would be ready to make significant investments right from the beginning. The research also studied why some investors are unwilling to invest in bitcoin. 75% of all investors and 68% of those interested in Bitcoin reported that the main reason is cyber criminality. 65% of all investors and 53% of those interested in Bitcoin in turn stated a lack of regulation as a discouraging factor. 89% of all answerers told that if they had better ways to gain reliable information on cryptocurrencies, they would be more likely to invest in bitcoin. Even though investors know more about Bitcoin than before, it's still a mystery for the majority. (pic. Denarium) American IRS hunts crypto taxes The Internal Revenue Service, responsible for taxation the United States, has sentwarning letters to bitcoin users suspected to have violated federal tax laws. According to the IRS letters have been sent to roughly 10 000 bitcoin users. The IRS gained the user information from American bitcoin and cryptocurrency exchanges and sellers. At least Coinbase gave the IRS information from users having sold, bought or sent over $20 000 dollars worth of cryptocurrencies. It seems the receivers of the letters are not facing any legal proceedings, but are instead sent a demand to correct their tax filings and declare cryptocurrency-related profits. According to international media estimates, there have been apparent lacks at least in declaring profits. "Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,"the IRS states in its announcement. IRS wants to tax bitcoin users and be taken seriously. Iran officially accepts Bitcoin mining Cryptocurrency mining has receivedan official blessing from the Iranian government. Last week Iran's ministers together with president Hassan Rouhani decided to officially declare cryptocurrency mining legal activity in Iran. According to the government Iran itself takes no responsibility for miner activity and miners themselves must accept all cryptocurrency-related financial and technological risks. Iran is most likely aiming to use cryptocurrencies to bypass economic sanctions, since exchanging cryptocurrencies is still illegal within the country. Cryptocurrency miners must also pay taxes if they are sold abroad and profits are not returned to Iran. The government of Iran also announced they will make a later decision regarding Iran's energy policy affecting crypto mining. Iran's cheap energy can potentially give the Iranian mining industry a boost due to the government's announcement. Iranian president Hassan Rouhani accepts crypto mining - especially if it benefits the country. Venezuela uses Bitcoin to bypass U.S. sanctions The harsh economic situation in Venezula has been widely reported in Bitcoin news, and so has the use of bitcoin among citizens as a protection from hyperinflation and sanctions against the country. Now the government of Venezuela has decidedto try the same trick, reports ABC International. According to the media, Venezuela intends to try two new projects, in which they exchange a part of tax revenue for bitcoins in order to later exchange them back to fiat currencies via exchanges. According to ABC International the project is tested for the first time at the Maiquetia International airport. All international flights are expected to pay a certain tax sum to the government. The Venezuelan government uses automatic systems exchanging paid taxes directly to bitcoins. Thereafter they use different exchanges located for instance in Russia and China to exchange bitcoins to U.S. dollars and ensure a continuous dollar flow. If Venezuela's scheme succeeds, it has the potential to access stable dollar income regardless of sanctions set by the U.S. Venezuela may succeed in bypassing U.S. sanctions much like private citizens. DARPA develops new blockchain technologies The United States Department of Defense has begundeveloping new blockchain applications. The applications are a part of the department’s modernizing efforts in digital security. According to an announcement by the DoD, their research branch DARPA (Defense Advanced Research Projects Agency) is developing at least two blockchain projects. The first blockchain is meant to be used to create a new type of platform for communication and transaction. The blockchain would ensure that the information is verified and cannot be falsified. According to the DoD, the blockchain could be used at least in communications between intelligence officers and the Pentagon. DARPA is also developing something they call an "unhackable code". DARPA intends to use the blockchain's qualities and ability to collect data to verify the intentions of different actors and thus prevent hackers from manipulating codes. Blockchain technology has the potential to provide DARPA an unbreakable flow of information. Facebook's Libra may never come In a recent quarterly report Facebook has admittedits Libra cryptocurrency may never see the light of day. The report states that even though Facebook expects to launch the currency by 2020, many different factors may delay or stop this from happening. In the risk subsection of the quarterly report Facebook admits that Libra has made many politicians, governments and legislators concerned. The company also believes this sceptical concern will continue in the future. "In addition, market acceptance of such currency is subject to significant uncertainty. As such, there can be no assurance that Libra or our associated products and services will be made available in a timely manner, or at all. We do not have significant prior experience with digital currency or blockchain technology, which may adversely affect our ability to successfully develop and market these products and services," Facebook states. Facebook has strong faith in Libra, but even its publication is uncertain.

Weekly news 31/2019: Bitcoin bypasses sanctions and censorship

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Weekly news 31/2019: Bitcoin bypasses sanctions and censorship

Table of Contents

Pessi Peura

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Compliance

Coinmotion Oy

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