by Ruby Henley
This is an interesting and popular currency concept, and it is taking the world by storm. However, are there any dangers ahead for bitcoin users? How do banks feel about bitcoin? For that matter, how does the government feel about bitcoin?
In the first week of July, Jay Shore got bad news. U.S. Bank and Chase informed him they were closing the accounts for his company, Coinabul, a San Diego-based precious metals buyer that sells silver and gold for Bitcoin. They didn’t want to house his half-million dollars. Chase was mum on the reason but Shore says a U.S. Bank compliance officer told him it was shutting down all small Bitcoin clients.
“They tried to force me to take a cashier’s check but I refused,” said Shore who worried he wouldn’t be able to deposit it elsewhere. He made a dozen trips to U.S. Bank because they wouldn’t give him more than $30,000 at a time. “The money is now sitting in our corporate vaults along with our metals.”
The bitcoin trend may be more risky than expected. Are banks going to going to rebel against it? What does the bitcoin user do if his or her bank account is closed due to use of bitcoin?
First lets look at the history of bitcoin? How did the concept of bitcoin begin?
Bitcoin was invented in 2009 by a mysterious programmer as a replacement for state-backed currency, “mined” from the Internet via complex computing. It has limited real world uses now but offers, as investor Peter Thiel says the “world-changing” promise of online transactions without fees, third parties or identity; it’s the online equivalent of paying someone in cash, and it works universally.
Many Bitcoin start-ups have a big problem: they can’t get bank accounts.
“I’ve been kicked out of every major bank in New York,” says Charlie Shrem, the CEO of Bitinstant. “Chase, Wells Fargo, Citibank, U.S. Bank. And once they shut down your business account, they ban your social security number too meaning you can’t keep a personal account.”
So there is a huge problem developing for the users of Bitcoin, and if one cannot get a bank account, what can one do? Is bitcoin really worth it? If bitcoin is so extraordinary, does this mean the government will surely find a way to cash in, too? What will banks do to cope with bitcoin in the future?
Currently, major banks including Santander Bank are focusing on the development of their own digital currencies and unique financial infrastructure, utilizing Bitcoin’s fundamental blockchain technology. It could be perceived, therefore, that Santander Bank is demonstrating a hostile behavior toward bitcoin users to protect their own interest in blockchain technology.
In fact, Santander Bank recently left the R3 consortium to focus on blockchain technology development after the consortium clarified that they will not need blockchain technology in order to provide essential infrastructure to the global financial industry. Santander is also extremely optimistic toward the future of blockchain technology, and according to the bank, the technology will cut operating costs of banks by up to $20 billion by 2022.
This article came out today: themerkle.com/top-5-banks-closing-bitcoin-users-accounts/
Government agencies are looking further into adopting blockchain technology and bitcoin. They hope to commandeer these protocols in order to protect the military from mass-hacking campaigns, counterintelligence, and otherwise hostile attacks on their systems. The Pentagon has especially shown recent interest in using cryptographically-guarded blockchains to aid their operations.
The Pentagon and U.S. NATO allies have been moving discreetly but aggressively in recent months to develop military-related apps exploiting the capabilities of blockchain. NATO is considering the technology to improve efficiencies across such traditional processes as logistics, procurement and finance.
The Defense Advanced Research Projects Agency (DARPA) also appears to have taken an interest in blockchain technology. They have currently been interested in developing a blockchain-based messaging application. The goal of this project is for them to have a secure platform to send encoded messages to operatives in combat situations. Furthermore, according to various sources, DARPA has interest in creating “unhackable” code for use with blockchain. This would allegedly help expose hackers who attack them.
A Foundation for Defense of Democracies memo expanded on DARPA’s goals, citing different attack vectors. It discusses a variety of ways that malicious actors could attack the United States. The memo also explored what would happen if the United States failed to act against these threats.
With these threats on the radar, government believes their greatest ally might be blockchain technology. They think they can prevent their supply chains from being interrupted by placing their sensitive documentation on the blockchain. However, it is presently unclear how exactly various agencies will implement blockchain and bitcoin to further their agenda.
So since the government is moving in on blockchain and bitcoin technology, we know it is a very successful and innovative technology, but will the government step on citizen bitcoin usage?
This article came out today, and I would say, YIKES! Here we go! news.bitcoin.com/fbi-requests-new-funding-to-investigate-use-of-virtual-currencies/
On June 21 the acting director of the FBI, Andrew McCabe, gave a speech to U.S. bureaucrats requesting a new budget for the fiscal year of 2018. The request proposal totals of $8.77 billion, and some of that funding will be appropriated towards investigating the use of virtual currencies by criminals who “obscure their transactions.”
We knew this was bound to happen. Here, we have good ‘ole Andrew McCabe stepping in to produce problems for the average bitcoin user. I think at this point, it should be a warning, as there is nothing that the average man can benefit from that will not be exploited by our government.
This is an interesting development: www.coindesk.com/us-government-lockheed-martin-bitcoin-analysis-tool/
A federally funded research lab run by Lockheed Martin is developing a bitcoin analytics tool for the US Department of Homeland Security (DHS).
The project, first detailed in a 19th August newsletter published by Sandia National Laboratories, marks a continuation of previously detailed efforts at the DHS. The project is being funded by the DHS Science and Technology Directorate, which late last year issued a call for blockchain research.
Thus far, the bitcoin project appears to be in the early stages – Sandia has reportedly created a set of “requirements” for an analysis tool and is moving to develop a user interface to enable additional tests.
Andrew Cox, an R&D analyst for Sandia, said during an interview published in the newsletter that the tool would be best utilized as part of a broader investigatory effort involving multiple angles.
“To be successful, the reality is it’s going to take different types of algorithms and additional types of investigative techniques including good old-fashioned police work. They’re all going to have to be combined.”
Here is a research update on bitcoin: www.jdsupra.com/legalnews/bitcoin-and-blockchain-technology-95521/
Bitcoin and Blockchain Technology Update: Research Paper – Dated February 2017
Locke Lord London Global Head of Cards & Payments Robert Courtneidge and Associate Charlie Clarence-Smith wrote a research paper on bitcoin and blockchain technology. Over the past few years, digital currencies have been gaining significant importance throughout the world, particularly Bitcoin and its underlying technology, blockchain (based on distributed ledger technology), which are changing the way we transfer value domestically and internationally. This research paper provides an overview of the current status of Bitcoin regulation and blockchain developments across the world covering over 50 countries where digital currency legislation has either already been implemented or is being considered, and as for the majority, countries which are undecided, impose taxes but have stopped short of regulating or have banned Bitcoin all together such as Bangladesh, Bolivia and Iceland. The authors also provide updates on the latest Bitcoin/blockchain funding rounds and details of recent significant initial coin offerings.
Here is your download link: archive.is/EdKls
I archived this page for you, because it is absolutely what a bitcoin user needs at his or her fingertips.
I downloaded the pdf, and if you are interested in bitcoin, you need to download this.
The following is just a few of the facts in this report:
- Most common warnings about Bitcoin and digital currencies : Because of its design and because of the large volatility, Bitcoin is highly speculative. The anonymous nature of digital currency transactions leave the user vulnerable to risks. Bitcoin does not offer consumer protections.
- GUIDANCE FOR A RISK-BASED APPROACH
- BTC/BLOCKCHAINFUNDING ROUNDSUPDATES
In closing, I would advise you to download this complete report. Good luck with your bitcoin.