From Beijing to Zimbabwe – the Blockchain of Corruption

The apparent military coup in Zimbabwe has been greeted with far more excitement outside the country, than by people on the inside. Political observers were excited by the possibility that the despotic regime that has been bleeding the country dry for almost forty years would be possibly replaced by something more palatable. Blockchain technology enthusiasts were equally excited by the news, although for different reasons.

Due to a confluence of political and economic circumstances, Zimbabwe has been one of the foremost proving grounds for blockchain based cryptocurrency such as Bitcoin. Due to a severe cash shortage, the demand for cryptocurrency has been so strong, that as a result of this excessive demand, Bitcoin now trades at nearly double the price in Zimbabwe as it does on other major global exchanges. As of Thursday afternoon, Bitcoin was reported to have made a slight correction from the previous high of $14,500 to be trading at about $12,500.

The extremely volatile nature of blockchain-based cryptocurrencies, seemingly makes Bitcoin a strange candidate for a safe haven asset. But if you happen to live in a currency-starved country that is also in the midst of a coup and that has ATM withdrawals limited to $20 a day, digital currency all of a sudden seems to provide the only viable alternative. As the week progressed and evidence that a coup had indeed occurred became more omnipresent, blockchain enthusiasts began to speculate whether Bitcoin would reach a new price record – propelled forward by the volatile political situation.

The excitement exhibited by outside observers was however not matched by those inside the country – most of whom greeted the news with general caution and skepticism. Their reaction is somewhat understandable as over the past 37 years, Zimbabwe’s political elite has made its life’s mission to obliterate any semblance of democratic and civic institutions in the country. One of the central people in the decades-long assault on civil society has been the very man now appears slated to replace Robert Mugabe – his much feared security chief and top enforcer – Emmerson Mnangagwa. Far from being the face of democratic opposition, Mr. Mnangagwa has for decades been in charge of the machine of political repression that has kept Zimbabwe functioning as a stone-age dictatorship. Nearly every accusation of corruption and human rights violations that can be levelled against the erstwhile president Mugabe, could just as easily be extended to the man that until the recent conflict, had been his close ally and personal enforcer. That is why most people inside Zimbabwe are viewing this as palace coup, a squabbling for power amongst the ruling elite, rather than a genuine democratic revolution.

While the immediate cause of the coup seems to be Mr. Mugabe’s attempt to install his own wife as vice president at the expense of other, more senior members of the ruling elite, more informed spectators have made comments that China – the African continent’s veritable paymaster – has been anything but a passive observer in the unfolding events. Over the past decade and half, China’s investment into the African continent has eclipsed that of any other countries combined. So powerful has become China’s economic clout on the continent that African countries such as Zimbabwe now find themselves completely subservient to China’s economic and political machinations. China is also Zimbabwe’s biggest source of foreign currency and top trading partner, having invested in more than 128 projects in the African country between 2000 and 2012. Clearly no investor can be happy about the prospect of their investment not being able to pay off. It is no secret that Mugabe’s economic mismanagement was pushing Zimbabwe exactly down that path of economic insolvency – exasperating the Chinese investors.

It is also no secret in Zimbabwe’s that Mr. Mnangangwa enjoys close and long-standing ties with China. Mnangagwa, who first began to cultivate those ties in the 1960s, when he visited the country for training as a guerrilla fighter, has been open about his admiration for China’s government. Over the years, he maintained strong personal and diplomatic links with the PRC, even sending one of his children to receive education at a Chinese university and learn Mandarin.

Days before the political turmoil materialized in Harare, Zimbabwean army chief Constantino Chiwenga visited Beijing for a meeting with Chinese officials. China’s Foreign Ministry has stated the Nov. 5 meeting was a “normal military exchange as agreed by the two countries,” but there is speculation that Chiwenga, now a leading figure in the undeclared coup, was seeking to secure China’s support for a move against Mugabe.

There is perhaps a degree of irony in the fact that China, the country that (despite recent restrictions) is still one of the world’s leaders in cryptocurrency mining is now trying to throw its influence in Zimbabwe – a country where cryptocurrency usage is one of the world’s highest. While not at an official level, the Chinese Yuan has frequently been used by Zimbabweans to settle transactions – due to a scarcity of US dollars. While there have been speculations about various governments possibly adopting blockcahin-based cryptocurrencies, China has not yet been one of them. If however, the Chinese government was to consider digitizing the Yuan, then obviously its circulation would not be only limited to mainland China. As a country already heavily relying on the Yuan, Zimbabwe might find itself adopting the (as of yet theoretical) digital Yuan by default. If this were to come true, then Zimbabwe would find itself in a unique position of adopting a blockchain based digital currency that is both not decentralized like Bitcoin (as it would be controlled by the People’s Bank of China) and at the same time not issued by its own government.

 

Stiglitz Against Bitcoin – on the Wrong Side of History Again

The demand to make Bitcoin illegal, initially sounded impressive. As impressive perhaps as the credentials of Joseph Stiglitz seem to be at first glance: distinguished professor of economics at Columbia University, former Chief Economist of the World Bank, Chairman of the Council of Economic Advisers to the President of the USA, during the Clinton administration and recipient of the Nobel Memorial Prize in Economics are just some of the many honors and prestigious positions that decorate his resume. Other feathers in his cap include time as an economic adviser at the UN and being named by Time magazine as one of the 100 most influential people in the world.

But upon closer inspection it becomes apparent that all these feathers and embellishment merely prove a maxim once enunciated by Mark Twain: give a man a reputation as an early riser and he can sleep till noon. In other words Twain was expressing the idea that people tend to judge a man by his reputation rather than by the things he does and says. In the particular case of Joseph Stiglitz, this maxim can be rephrased to: make a name for yourself as an intellectual and people won’t ever dare to question the self-contradictory nonsense that issues from your mouth.

Indeed it is a veritable mystery, how for so long this man was able to duplicitously peddle re-hashed Marxist tripe to the public, while lining his pockets with the proceeds of the very system he attacks, without anyone calling him out on it. The very fact that Stiglitz keeps on trying to promote politico-economic ideals that have been repeatedly and manifestly discredited by history, demonstrates a complete lack of historical perspective and education. This alone should be enough to suggest that this man is nothing more than a disingenuous, bloated bureaucrat posing as an intellectual.

Despite taking every opportunity to tout his “credentials”, upon closer examination they appear to be nothing but Potyomkin village, as virtually all of the positions Steiglitz held in his life were that of a professional pencil-pusher. The man has zero experience in the real world, having spent all his life in the cushy, well-fed world of the global bureaucracy.

One of his favorite hobby-horses to ride is his two-and-a-half year stint at the World Bank, which apparently somehow qualifies him to spew empty, outdated socialist vitriol at the system that makes him prosper. He even managed to produce a book about the experience – conceitedly and childishly titled; ‘The Rebel Within.’ An ironic title perhaps, considering that Stiglitz was pushed out from his position at the World Bank for doing nothing but leveling criticism at the institution’s conduct while at the same time being absolutely unwilling or incapable of contributing any constructive advice.

While there is no doubt that the conduct of any large bureaucratic institution like the World Bank may at times be problematic and warrant criticism, it does also hold true that as Chief Economist it would seem to precisely be your job to find solutions to such problems, instead of spending all your time badmouthing your colleagues. An article on the subject of Stiglitz’s resignation, printed in the Economist in December of 1999 encapsulated how his colleagues felt about working with him; “[We] often longed to hear less from Mr. Stiglitz about what he would not do and more about what he would.” The article goes on to describe how Stiglitz’s former colleagues, including his boss – the James Wolfensohn – were initially all ears when it came to cooperating with Stiglitz on potential proposals to bring positive change to the institution. However it soon became abundantly clear to them that Stiglitz’s main objective was to “embarrass you deliberately and repeatedly” and therefore the basis for such cooperation was absent.

Even Stiglitz’s claim of being a Nobel laureate is misleading. Indeed he was awarded something called the Nobel Memorial Prize in Economic Sciences in 2001. Despite the impressive sounding name however it is not one of the Nobel Prizes that Alfred Nobel established in his will in 1895, to be awarded by the Nobel Foundation. This prize was established in 1968 by a donation from the Swedish National Bank, on the bank’s 300th anniversary. The prestige of the Prize in Economics derives solely from its ostensible association with the Nobel name. Many – including Alfred Nobel’s relatives – criticize the misuse of their family’s name.

The Swedish human rights lawyer Peter Nobel, himself a great-grandson of Nobel’s brother Ludvig states that no Nobel himself never had the intention of establishing a prize in economics.

“Nobel despised people who cared more about profits than society’s well-being,” said Peter, adding: “There is nothing to indicate that he would have wanted such a prize. The association of this prize with the real Nobel prizes is simply a PR ploy.”

Considering all this, it is perhaps wise to take Stiglitz’s recent ramblings against Bitcoin with a grain of salt. Last week the corpulent desk-jockey went into a mouth-foaming tirade against the popular digital currency and demanded that this revolutionary technology be made illegal, because “it does not posses any socially useful function”. Perhaps it would be better left to society to decide what it finds useful and not, in which case it might be the likes of Joseph Stiglitz and not Bitcoin that might find themselves in the rubbish bin of history.

Separatism and the Blockchain

As the drama over the DDoS attack on Bitcoin Gold continues to unfold, a completely different drama is unfolding in the heart of the European Union. Its member – Spain – is facing the most severe constitutional crisis since the end of the Franco era. The main issue at hand, is the potential push for independence by one its “historical regions” – Catalonia. Interestingly enough, if the Catalans do manage to break away from Spain blockchain based crypto currency might play a key part.

While the origins of this dispute lie buried beneath hundreds of years of complicated European history, the speed with which the dispute has spiraled out of control has alarmed not just the citizens of Spain but indeed all members of the European Union. The dispute has once again raised the specter of separatism – a sore spot not just for European governments, but many national governments world-wide. But apart from its geopolitical implications, it is the velocity with which developments occurred, that continues to stun observers.

Only about a month ago, the Catalan regional government announced that it will be holding a referendum vote on independence, on October 1st. The announcement was met with stern disapproval from Madrid which declared, that not only would such a referendum be considered unconstitutional and therefore illegal, but that the Spanish national government would do everything in its power to prevent such a vote and any subsequent attempts at secession –  by physical force if necessary.

What followed on October 1st, was a fiasco. Spanish national police was ordered to disrupt the theoretically illegal voting process. Catalonia – being an autonomous region of Spain – maintains its own police service. In a dramatic show of discord, Catalan police (which normally is supposed to work hand-in-hand with the Spanish national police) refused to follow orders from Madrid and instead pledged loyalty to the separatist-minded Catalan regional government – headed by Carles Puigdemont. Supporters of independence filled the streets and scuffles broke out, as the Spanish police attempted to seize ballot boxes and disrupt polling stations.

The central government ended up seizing 10m ballot papers; arrested key officials; dismantled the technology to connect voting stations, tally votes and vote online; blocked and removed voters from polling stations; and blocked Catalan government websites that provided information about the vote. The national police even jostled with Catalan police and firefighters as the chaos unfolded. The immediate result of the violence was hundreds of casualties and at least 11 wounded officers. According to the Catalan government, about 2.3 million out of Catalonia’s 5.3 million registered voters – or 43% – cast their ballot (about 770,000 votes were lost after Spanish police confiscated ballots.)

While Madrid was hoping to enforce the unity of the Spanish realm, the events of October 1st might have had the opposite effect. Until that point, a significant number of Catalans were indifferent or opposed to secession. But the perceived, heavy-handed crackdown by Spanish authorities seems to have pushed politically moderate Catalans into the arms of the secessionists. “Who wants to be ruled by a state like this?!” was a phrase heard over and over again on the streets of Barcelona in the aftermath.

Although Mr. Puigdemont signed a declaration of independence within the weeks following the referendum, he has subsequently proposed that its effects be suspended for two months to allow for talks. This too came to an impasse as Spain’s Prime Minister – Mariano Rajoy – refused to hold any talks with Mr. Puigdemont, until the latter drops his insistence on independence.

The Catalan parliament, which is dominated by pro-separatist parties, will meet in Barcelona on Friday, where it will consider a declaration of independence. It’s previous session on Thursday yielded no resolution despite intense speculation that an attempt to to defuse the situation by announcing fresh, regional elections in return for a similar shows of good faith from Madrid. Instead Mr. Puigdemont enunciated that the position of the Catalan government is that no elections can be held until Madrid suspends its threats of imposing direct rule.

In a situation more and more resembling a showdown, the Spanish national parliament is also supposed to convene this Friday to cast a formal vote about the the revocation of Catalan autonomy. Madrid – viewing the behavior of Catalan politicians as nothing short of sedition – announced that it will be invoking article 155 of the Spanish constitution – suspension of regional autonomy. The measure, which is expected to be approved by the Spanish parliament, would see Carles Puigdemont’s government stripped of its powers and its functions assumed by the relevant ministries in Madrid.

But the coup-de-grace would not just be the formal suspension of Catalonia’s autonomous status, it would also imply a loss of control over its finances. The Spanish government has threatened to take direct control of Catalan government bank accounts all financial transactions in the region. Cristóbal Montoro, Spain’s finance minister, confirmed that a mechanism had been approved for the state to take control of Catalonia’s finances including money intended for public services and salaries, to prevent any of it from being spent on the secession.

That’s where it gets difficult for the would-be rebels. Politics are politics, but you can’t very well have a breakaway republic without having control over its finances. This is where blockchain based digital currency might enter the picture. In fact, Catalonia‘s current dilemma could make for a very interesting case study for how (would-be) sovereign states could adopt decentralized cryptocurrencies on a large scale. Countries like Venezuela have proven, albeit on a smaller scale, that Bitcoin and other cryptocurrencies can be a viable solution for politically unstable regions. China, despite its recent restrictions on ICO’s, is still another example of country with a thriving cryptocurrency market. Given that the case of Catalonia is different in many ways than the former, some similarities can be observed.

Besides an array of left wing and anti-establishment parties, Wikileaks and its colourful founder Julian Assange, have pledged their support to the cause of Catalan independence. Even before the referendum, back in September Mr. Assange tweeted his support for Catalan independence, as well as a comment on the importance of cryptocurrency in this situation.

@JulianAssange 7:40 PM – Sep 15, 2017”

Why all freedom loving people and states need Bitcoin part 29192: https://twitter.com/wikileaks/status/908731595938570240 …

As Bitcoin or any of its fellow cryptocurrencies it is not controlled by either Madrid  or for that matter any other government, its use could be one way in which Barcelona could wrest control of its finances from Madrid. If the vote to block Catalonia’s finances passes in the Spanish parliament – it would implement this weekend. If the Catalan government would theoretically convert its funds into cryptocurrency beforehand – it would at that point be out of Madrid’s grasp. Catalonia currently has around 7.5 mln inhabitants. In the as of yet unlikely event that Bitcoin or another cryptocurrency would be implemented as an immediate method of payment, the Bitcoin Blockchain would see a significant surge in demand and therefore undergo another price explosion. Indeed some have even suggested that the Catalan government holds its own initial coin offering. Various governments print and sell bonds to raise capital, especially in times of crisis. Digital tokens could potentially be considered as a new sort of electronic bond. If this does occur, then the case of Catalonia would not only be unprecedented in modern European history but also in the history of finance.

Why Anarchy Doesn’t Work: The Increasing Centralization of Bitcoin Mining

The reason why anarchy can not work in practice is because a power vacuum is just that – a vacuum. By definition, a vacuum pulls whatever is closest to it, into itself and therefore can only stay vacant temporarily. Likewise, history shows that a place of political power never remains vacant for long which is why anarchy can only be a temporary (and often unhappy) interlude. Membe

rs of the Bitcoin community are currently in the process of learning this lesson as one of their core principles – decentralization – is being negated by increasing centralization of Bitcoin mining in the hands of wealthy corporations.

While Bitcoin hit a record high of $6000 over the weekend, a quiet drama was unfolding behind the screens of the global bitcoin community. Some members of the community have been complaining over the last months that their digital revolution was being stolen from them right in front of their eyes.  What they are referring to is that over the last few months more and more users have noted the presence of mining monopolies in the Bitcoin network. The financial system which prided itself on being decentralized is now quickly becoming centralized in hands of a few companies. While not a particularly high number in terms of global finance, six thousand dollars is still far from being a ‘proletarian’ sum of money. Until recently that meant that big companies that can afford to either buy large amounts of bitcoin or have the capital to purchase the expensive hardware needed to mine bitcoins, have an unfair advantage of the individual.

However the digital revolutionaries are fighting back with the new Bitcoin Gold hard fork. The hard fork of bitcoin’s blockchain will create an offshoot cryptocurrency called bitcoin gold, which would be freely distributed to current holders of bitcoin. Proponents of Bitcoin Gold claim that this cryptocurrency’s resistance to use of application-specific integrated circuits (ASIC) will decentralize the Bitcoin network, lowering the possibility of mining monopolies.

The man credited with leading the development of Bitcoin Gold is Jack Liao,CEO of Hong Kong mining firm LightningASIC. Mr. Liao commented that “…the idea of Bitcoin gold is to give mining back to the users who can start using CPUs and GPUs to mine.”

While it remains to be seen if Bitcoin’s latest fork will be able to loosen the grip of monopolies on the crypto market, two of the largest cryptocurrency exchanges have already announced that they will be accepting Bitcoin Gold as of early November.

I’m Dreaming of a White Knuckle, Cryptocurrency Christmas

The end of the year, usually associated by a very large segment of the world’s population with the winter holiday season – a time of peace and love on Earth. For cryptocurrency enthusiasts however, this holiday season brought anything but piece of mind, as excitement over the monster rally that saw Bitcoin scrape the $20,000 mark, gave way to consternation as the above-mentioned rally began to run out of momentum and eventually saw Bitcoin’s price plummet all the way back roughly the $13,000 level.

While far from being the catastrophic crash or bubble pop that the augury of cryptocurrency naysayers envisioned, the recent decline of not just Bitcoin but all major digital currencies, has badly rankled investor confidence and unleashed a wave of speculation as to what might be the main cause (or causes) behind the recent abasement.

Ironically, the star of the initial rally and later the focus of investor anxiety, has not been the golden child of the cryptocurrency world – Bitcoin – but rather its slightly less glamorous and famous cousin – Ripple.

Over the weeks leading up to the New Year, Ripple Ripple’s market capitalization shot up from $40 billion to $88 billion. In the days immediately after the New Year, Ripple overtook Ethereum to become the second largest cryptocurrency in the global market, becoming the first “altcoin” to reach a $100 billion market valuation.

The addition of the Ripple to Bloomberg’s price terminal in mid-December, was arguably one of the major factors that started the substantial rally.

Another important factor was the announcement of a formation of a strategic partnership between Ripple and several large Asian financial institutions, including the Thai banking giant – Siam Commercial Bank (SCB) – as well as Japan’s SBI Remit.

While it is true that to date, no major banks are utilizing the Ripple’s blockchain network on a daily basis to process transactions, the network already saw some use by several large banking institutions. Banks in Thailand and Japan for example, have already been processing near-instantaneous transactions for many months using Ripple. Earlier this year, major Swedish bank SEB settled $180 million on the Ripple blockchain network by sending cross-border payments on behalf of high profile clients.

The fact that Ripple did manage to catch the eye of major financial organizations is perhaps logical, considering that the technology behind Ripple was very intentionally aimed at large institutions. Other cryptocurrencies also felt the boost, especially in combination with the news that the Chicago Mercantile Exchange (CME) as well as the The Chicago Board Options Exchange (CBOE), would start operating Bitcoin futures in December.

The above-mentioned developments have lended an air of legitimacy to both Ripple and Bitcoin which in turn generated tremendous investor hype and spurred the price upwards.

However, some members of the cryptocurrency community voiced skepticism in regard to these developments, declaring that centralization is the absolute antithesis of what digital currencies should be about.

This skepticism grew louder and louder, as the cryptocurrency rally completely unraveled in the past few days and investor excitement turned into white-knuckle anxiety. Their pain became even more pronounced, as some early champions and adopters of Bitcoin seemed to be making a complete about-face.

In a severe blow for Bitcoin supporters, Microsoft Corporation has this week removed the ‘Bitcoin’ payment option from its list of payment instruments. The move was especially hurtful for some crypto-enthusiasts as the company was an early adopter, and former CEO Bill Gates had expressed his support for the cryptocurrency.

In order to not misrepresent things, it is very important to note that while Microsoft has been an early supporter of Bitcoin, the company always did so in very limited fashion. More specifically, it only offered select digital products in exchange for Bitcoin, and mainly to US customers only. Microsoft still accepts Bitcoin, but users now can only use it to pre-fund their account balances, where it would be instantaneously converted into US dollars. Clients may no longer use Bitcoin directly to purchase any products.

Evidently Microsoft’s temporary attempt to accept Bitcoin as a method of payment was just a trial to see how things would turn out. But now it seems things turned out significantly less rosy than initially anticipated.

The confirmation of this came from a recent chat between reporters and Microsoft support staff, during which the staff admitted that the Bitcoin payment option has been revamped. Moreover, they went on to claim that this has been planned for some time now, as a response to the ongoing network issues plaguing Bitcoin, including high fees and transaction delays. Microsoft has been monitoring these issues for quite some time now, but instead of getting better, they have persisted and not improved. In fact, the situation is growing worse every month, the staff went on to comment.

While more emotional investors have decried recent developments, cooler heads have suggested that perhaps investors may simply be cashing out a little, after seeing gains of over $5,000 per coin.

It seems that Bitcoin and its digital cousins are at yet another crossroads, with the boisterous rancor about its future, between its supporters and detractors, once again rising to a fever pitch. The stage is therefore set for 2018 to be the year of intense debate and unexpected developments for the global crypto-community.

 

A Luta Continua!

The morning after the Bitcoin Gold fiasco, Bitcoin’s development team still has no idea as to precisely who was behind last morning’s “denial of service” (DDoS) attack on Bitcoin Gold’s website, while members of the crypto-community continue to grapple with practical and ideological differences over mining.

With cryptocurrency being such a contentious topic – this episode is likely to spur more heated debate about the future and implications of blockchain technology. Crypto-skeptics will likely point the affair as proof of the new technology’s inherent instability, and its status as a historical bubble. Crypto-enthusiasts on the other hand are likely to see the same events as the emergence of a new financial technology, that is in the process of slowly perfecting itself.

What both sides of the debate however can not deny, is the perhaps ironic point that the reality of human nature has for the time being, trounced  the lofty pipe-dreams of egalitarianism. As more people realized the profit making potential of cryptocurrency, the process originally premised on the notion of decentralization – became increasingly concentrated in the hands of organizations whose size and wealth make them the only players able to compete.

At one time, cryptocurrency mining was possible to perform on a slightly above-average home computer equipped with a graphics card. But as mining became increasingly more difficult, (a design feature originally built into the system to maintain the deflationary nature of Bitcoin) miners had to pool together resources, sharing the workload and the electric bill. Eventually, this mutated into a parody of itself, to the point that mining operations now look more like factories, with thousands of CPUs occupying racks and shelves of warehouses full of specialist equipment.

This is the interesting thing about this third and latest Bitcoin fork, is that the impetus for its development seems to essentially be an ideological one. For those wishing to maintain ideological purity, this fork is supposed democratize and re-decentralize mining and pry the profitable activity from the grip of a relatively small group of wealthy players. The forked Bitcoin Gold system will use a different “proof-of-work” block-verification algorithm that’s friendlier to the kinds of graphics processing units (GPUs) that regular people can buy.

While it has not been yet established from whence yesterday’s DDoS originated, it does seem that its perpetrators had a vested interest in blocking Bitcoin Gold’s attempt at “democratization.” The main driving force behind the development of Bitcoin Gold is a Hong Kong based company LightningASIC whose outspoken CEO – Mr. Jack Liao – has been an unequivocal critic of mining in its current form, and the companies that profit from it. Members of the cryptocurrency community have already begun to speculate that the nature of the attack has at least partially something to do with the Mr. Liao’s unreticent opinions. It remains to be seen who will have the upper hand in this unfolding power struggle – the idealistic crypto revolutionaries or human nature.

Blockchain Technology Overtakes Visa, with Red Belly

Blockchain proponents have long been claiming that digital currency has the potential to eclipse traditional finance methods and Thursday morning, it looked like their vision was one step closer to becoming reality.

Latest reports about blockchain research carried out at University of Sydney, show the technology’s performance improves as it progresses. New data from the University of Sydney’s Red Belly Blockchain research project have found that it can process financial transactions 50 times faster than originally thought, making it more rapid than Visa for worldwide payments!

Dr. Vincent Gramoli, head of the Concurrent Systems Research Group developing the blockchain, said: “Our latest tests showed the Red Belly Blockchain can process more than 660,000 transactions per second on 300 machines in a single data centre. This is a notable improvement from our tests earlier in the year, which showed our blockchain achieved a performance of more than 440,000 transactions per second on 100 machines.”

This is compared to Visa’s network, which can process 56,000 transactions per second. Bitcoin is limited to about seven per second whereas the ethereum blockchain can process twenty.

The latest news seem to be supporting the view held by cryptocurrency enthusiasts – that as blockchain technology is slowly perfected over time, it will become more safe and reliable and eventually overtake the role of traditional financial instruments.

The Red Belly Blockchain research project was conceived to find a solution to problems currently facing digital currencies such as double spending. It is different from proof-of-work (PoW) blockchains in that it offers a performance that scales without consuming much electricity. This in itself is an interesting development as lately the cryptocurrency community has been embroiled in a bitter civil war regarding the issue of mining of new cryptocurrency.

Initially envisioned as a completely decentralized and democratic process, mining was accessible to anyone with a slightly above-average home computer and a graphics card. As the blockchains expanded, the computational power required for further mining increased. This had the effect of slowly tipping the balance in favor of organizations that have whose size and capital allow them to invest into specialized mining equipment and can afford to feed this equipment with an unlimited supply of electricity.

Bitcoin Gold – the third and the latest fork of the original Bitcoin was intended to remedy this problem, by introducing improvements to the blockchain that would once again make it easier to mine cryptocurrency with a regular GPU. However no sooner than the morning of Bitcoin Gold’s scheduled release – their website came under a concerted denial-of-service (DDoS) attack.

While Bitcoin Gold’s development team still has not figured out precisely the identity of the attackers, it has been established by now that the attack originated from hijacked computers with IP’s originating in mainland China. This is perhaps not a coincidence as China houses the majority (more than two thirds) of all the global mining operations. It is then perhaps logical that some of those operations did not look too kindly at Bitcoin Gold’s attempt to siphon at least some of the profitable activity away from their hands. The development of Red Belly potentially shifts the balance in favor of mining “democrats” by lowering the infrastructural requirements for mining.

Zimbabwe Takes the Lead in Cryptocurrency Use

While Zimbabwe is generally known to informed individuals, as a country with a less-than-stellar economy, it is currently taking the lead as the world’s top adopter of cryptocurrency. Due to a confluence of economic and political factors, the demand for digital currency in Zimbabwe is so great, that some electronic tokens – such as Bitcoin – have been reported to sell for more than double their current price on cryptocurrency exchanges elsewhere in the world.

Indeed the economic problems and the rapid proliferation of digital currency use in this central African nation, are very much linked phenomenon. The steady worsening of the economy has led to hyperinflation and a dramatic de-evaluation of the local currency – the Zimbabwean dollar. With the economy hitting rock bottom in the early 2000’s, the purchasing power of  the “Zimdollar” as it was known – reached practically zero.

Initially the government of Zimbabwe’s immutable president – Robert Mugabe –  decided to remedy the crisis by ditching the local currency in favor of the US dollar. This plan soon ran into trouble, as Mr. Mugabe’s government’s record on human rights was even more dismal than their mismanagement of the Zimbabwean economy and the regime was slapped with economic sanction by an exasperated international community. This physically cut off the flow of US currency into Zimbabwe and created a veritable lack of bills for day-to-day transactions.

In an attempt to somehow halt the leakage of any remaining dollars outside the country, the government imposed draconian capital controls, even taking the dramatic step of banning fruit imports. This put the citizens in a bind, as foreign suppliers refused to accept anything printed by the Zimbabwean government. Faced with an acute shortage of foreign currency reserves and a worthless national currency, Zimbabweans have increasingly come to view Bitcoin as safe-haven asset and to rely on cryptocurrency as the only viable way to navigate in a dysfunctional economy.

The above-mentioned factors have lead to a tremendous increase in demand for digital currency in Zimbabwe, to the point where CNN has reported on the 31st of October that the price of the bitcoin has soared beyond $10,000 over the past week, inside the country. CNN was referencing a Harare-based trading platform – Golix.

The case of Zimbabwe parallels in some ways that of Venezuela – another country where hyperinflation and a broken economy have made digital currencies an attractive option. While the government of Venezuela has continued to stubbornly hold onto their worthless Bolívar, the government of Zimbabwe has recently behaved in a more pragmatic manner by permitting its citizens to officially use any foreign currencies that they can get their hands on, to conduct transactions.

It remains to be seen what Mr. Mugabe’s government will think of these developments, with some speculating that in its obstinate intent to maintain capital controls, the authoritarian regime might ban cryptocurrency exchanges. Although its ability to enforce such a ban remains doubtful.  Other have pointed out that introducing bitcoin into a country that already utilizes a multi-currency basket, would not be so absurd. Proponents of such an option have even suggested adopting Bitcoin as Zimbabwe’s official currency. If the government of Zimbabwe would consider embracing cryptocurrency then it could potentially position itself to take advantage of what appears to be a thriving market.

 

As Bitcoin Surpasses the $10,000 Mark, Dash is Setting Records of Its Own

As of late, most of the media hype surrounding cryptocurrency has been focused on Bitcoin, which recently smashed through the the $10,000 barrier and has already touched the $10,800-$10,900 zone as of Wednesday morning. Dash – the digital currency that until recently tended to escape the notice of many investors – has been setting some rather impressive records of its own.

The news of Bitcoin surpassing the ten thousand mark did not come as a total surprise to many crypto-observers as the price of the popular digital token already surpassed those heights in certain regions of the world, where demand for cryptocurrency is especially high. Notable examples of countries where the “ten thousand record” has been reached, before it has in most other parts of the world include locales as diverse as Zimbabwe and Korea.

Demand for Bitcoin and other digital currency in both countries has been surging, although for reasons that tend to stem from different causes. In Zimbabwe, a severe politico-economic crisis has created an enormous cash shortage – leaving cryptocurrency as the the only viable alternative. South Korea on the other hand has a prosperous economy and as democratic nation, enjoys socio-political stability, despite the obvious perils of its geographic location. Most of the demand in Korea has been generated by a massive investor rush, which to an extent has been egged on by an intense media hype.

Bitcoin – still considered to be the world’s most popular digital currency – has been in high demand in both Africa and Asia but more recently, Dash has been capturing the attention of a number of investors as the privacy-focused cryptocurrency surged past the $600 mark last week. This rise has been at least partly attributed to an increase in demand for Dash, in the above-mentioned regions of Africa and Asia.

With seemingly impeccable timing, Dash announced the commencement of a project to bring more blockchain technology advancements to Zimbabwe, in the immediate aftermath of a military coup, which removed the geriatric dictatorship of Robert Mugabe from power. The ruined economy of this African country had already been desperately looking for solutions such as cryptocurrency, before the coup took place. The fact that it did take place, highlighted in even more uncertain terms the need to resuscitate the economy and Dash plans to help, by increasing Zimbabwe’s access to blockchain technology. This project will be initially injected with a starting capital of roughly $550,000 which will come directly from Dash’s treasury. Dash explains that the main aim of this initiative is to provide Zimbabwe with its first-ever localized, peer-to-peer cryptocurrency payment service. It is hoped that the implementation of such a system will help Zimbabwe to stabilize its economy by stymieing hyperinflation and providing a functional medium of exchange.

In Korea, the rise in demand for Dash coins has less to do with third world concerns but rather with Dash’s growing profile. The announcement of Dash’s Zimbabwe initiative has increased the brand’s media exposure and consequently caused a number of South Korean investors to flock to it. The increase in Korean demand has also been noted as a key factor in Dash’s recent price spike.

Investors are now wondering whether Dash will continue to garner more media attention, as a further rise in its value seems to be a function of the former.

Dollar Weakness Also a Factor in Bitcoin Advance

One of the most important factor in the recent, meteoric rise of Bitcoin prices, has been an enormous upsurge of interest in cryptocurrency within the general public, itself in turn driven by an increasing media hype. However another factor has been quietly helping Bitcoin’s advance within recent days and weeks – US dollar weakness.

The fiat currency that is most frequently used as benchmark, against which the value of Bitcoin is measured, is the same currency which is used as the benchmark measurement for oil and other commodities – the US dollar. That is off-course why the most common forex twinning of Bitcoin, is with the US dollar – BTC/USD. It is therefore logical that the value of Bitcoin in terms of US dollars, would go up if there is a fundamental increase in Bitcoin’s value – created by a sharp increase in demand for example.

But it is just as logical to conclude, that if nothing happens to fundamentally increase the value of Bitcoin and at the same time – the value of the US dollar would fundamentally decrease – then the value of the Bitcoin would still appear to increase in relation to the greenback, creating a sort of ‘phantom rally.’

It is precisely this phenomenon that Bitcoin enthusiasts and potential traders would be wise to keep in mind. The dollar has in fact been weakened lately by a number of factors and its recovery would act as damping factor on Bitcoin’s advance. On the other hand, a lack of a recovery would act as a boosting factor for Bitcoin. And there are some factors that have the potential to turn into an impediment for the greenback.

The current US administration has failed to produce any substantial legislative accomplishments within eleven months of being in power. The markets have so far been frustrated by this inaction. Any further potential delay on the part of the US Congress in the implementation of tax reform, or the possibility of said reforms being watered down, would tend to work against U.S. currency.

“I think potential dollar weakness is connected with uncertainty surrounding the path towards tax reform,” said Vassili Serebriakov, currency markets strategist at Credit Agricole’s New York branch. “The (likely) December interest rate hike is already fully priced in, so it’s unlikely to give any further boost to the dollar. There is a lot of uncertainty about next year, especially regarding the composition of the FOMC,” added Mr. Serebriakov, referring to the Fed’s policy-making body — the Federal Open Market Committee. Any further dollar weakness would only serve to give Bitcoin a further boost.