The U.S. Commodity Futures Trading Commission (CFTC) proposed regulations that will curb unlicensed bitcoin futures trading within the country.

The proposed regulations, announced by the CFTC on Friday, explicitly place bitcoin and other cryptocurrencies under the framework for “actual delivery” that currently governs the purchase of physical commodities such as gold and oil.

Under this framework, exchanges and traders must demonstrate an ability to physically deliver the commodities to their owners within 28 days of purchase. Otherwise, the purchase constitutes a futures contract and is subject to a litany of other regulations governing futures trading.

The full text of the proposed regulatory language has been reproduced below

(1) a customer having the ability to: (i) take possession and control of the entire quantity of the commodity, whether it was purchased on margin, or using leverage, or any other financing arrangement, and (ii) use it freely in commerce (both within and away from any particular platform) no later than 28 days from the date of the transaction; and

(2) the offeror and counterparty seller (including any of their respective affiliates or other persons acting in concert with the offeror or counterparty seller on a similar basis) not retaining any interest in or control over any of the commodity purchased on margin, leverage, or other financing arrangement at the expiration of 28 days from the date of the transaction.

The key point in the proposed language is that the seller may not retain “any interest in or control over any of the commodity” for more than 28 days following the date of the transactions. According to a 23-page document (PDF) accompanying the proposed regulations, this includes exchange-controlled deposit wallets where the trading platform operators — not the traders — retain control of the private keys.

Although the CFTC has long classified bitcoin as a commodity, the physical delivery provision was a thorny issue for cryptocurrency market participants because bitcoin does not exist as a physical entity.

Last year, the CFTC reached a $75,000 settlement with overseas exchange Bitfinex after the commission found that the exchange continued to hold the purchased bitcoins in exchange-controlled wallets after the actual delivery exception expiration date.

The Bitfinex case highlights an important point regarding the extent of the commission’s jurisdiction. The regulations would not just apply to U.S.-based exchanges, but also foreign trading platforms that provide services to Americans. Consequently, this regulatory guidance could lead overseas exchanges that offer margin trading to further restrict access to U.S. residents.

The CFTC will accept public comments on the proposed bitcoin regulations for 90 days, a period that will commence following their publication in the Federal Register.

Signal creator Moxie Marlinspike has announced MobileCoin, an ambitious project that purports to overcome the limitations that prevent bitcoin from serving as a viable medium for small-value payments.

It’s no secret that the user experience has largely taken a backseat to innovation in cryptocurrency development. While this was understandable during the technology’s early days, cryptocurrency’s rapid journey into the mainstream has necessitated the creation of a more accessible user experience so that, according to the common parlance, even your grandma can use it.

Unfortunately, improved accessibility has come primarily at the application level through third-party services that require users to sacrifice — to varying degrees — privacy, and security, and even control over their private keys.

MobileCoin revealed by Moxie Marlinspike

Released this week, the MobileCoin whitepaper (PDF) reveals a roadmap — still in its early stages — to make cryptocurrency usable for everyday transactions without sacrificing security and decentralization.

“I think usability is the biggest challenge with cryptocurrency today,” Marlinspike told Wired. “The innovations I want to see are ones that make cryptocurrency deployable in normal environments, without sacrificing the properties that distinguish cryptocurrency from existing payment mechanisms.”

Drawing on his experience developing end-to-end encrypted messaging systems at Open Whisper Systems, Marlinspike envisions a mobile-focused cryptocurrency protocol that will integrate seamlessly with secure messaging apps such as Signal and WhatsApp. Significantly, users will be able to recover their funds using a simple four-digit PIN code, eliminating the complexity of private key management.

MobileCoin will be based on the federated Stellar Consensus Protocol (SCP), enabling transactions to process in less than a second. While nodes will do the “heavy lifting” for the network by handling transaction processing, the whitepaper claims that they will not be able to “learn anything about their users’ balances or transaction history.”

This will be accomplished through a layered approach that isolates nodes in SGX secure enclaves and also employs CryptoNote — the same basic protocol on which privacy-centric Monero is based — to provide users with one-time addresses that cannot be linked together if node operators successfully compromise SGX.

At four pages, the MobileCoin whitepaper is incredibly brief, and security researchers have stated that many questions remain about the use of federated protocols and SGX enclaves — questions that the developers will hopefully answer in the coming months.

Nevertheless, given Marlinspike’s development chops, MobileCoin is a project worth keeping an eye on.

pineapple fund

An early bitcoin investor has established an $86 million philanthropy project — dubbed the Pineapple Fund — that will donate bitcoins to charities and causes across the globe.

Announced on Wednesday, the Pineapple Fund has committed to donating 5,057 BTC, worth approximately $86 million at the time the fund was established, to worthy non-profit organizations, including some suggested by the Bitcoin community on Reddit.

Pineapple Fund
Source: Pineapple Fund

The fund’s anonymous creator stated that he or she acquired a large number of bitcoins when the cryptocurrency was still in its infancy, and that wealth has risen so large that he or she could never hope to spend it all. Rather than HODL to the grave, he or she committed to using this newfound wealth to make a difference.

“Sometime around the early days of bitcoin, I saw the promise of decentralized money and decided to mine/buy/trade some magical internet tokens. The expectation shattering returns of bitcoin over many years has lead to an amount far more than I can spend,” the fund organizer said. “What do you do when you have more money than you can ever possibly spend? Donating most of it to charity is what I’m doing.”

As of the time of writing, the Pineapple Fund had made four donations, totaling $3.5 million. The Water Project, Watsi, and the Electronic Frontier Foundation had each received $1 million, while BitGive had received $500,000 — which appears to be the largest donation this organization has ever received.

Cryptocurrency investors are often depicted as selfish, greed-driven individuals. However, this is not the first time that the Bitcoin community — whether as a group or as represented by an individual — has rallied to support worthy charities and causes.

Sean’s Outpost, a non-profit organization in Florida funded by bitcoin donations, has served more than 167,000 meals to homeless members of the local community. Just this month, the community donated almost $2 million to bitcoin evangelist Andreas Antonopoulos after learning that he had been forced to sell his bitcoin holdings to pay his rent and continue working in the cryptocurrency space full-time during bitcoin’s “lean years.”

As with any group, cryptocurrency has its share of rapacious characters, but the stereotype that bitcoin holders are driven solely by greed is based far more on a two-dimensional caricature used to justify opposition to this nascent asset class than actual reality.

The truth is that the majority of cryptocurrency investors are honest, hardworking individuals who believe bitcoin will make the world a better place — and, when applicable, are willing to use their newfound wealth to help make that a reality.

Featured Image from Pexels

A new bitcoin fork called UnitedBitcoin appears to have the backing of one of the earliest Bitcoin developers.

The success of bitcoin cash, and, to a lesser extent, bitcoin gold, has incentivized developers to attempt to turn a profit by hard forking the main Bitcoin blockchain to create new altcoins. At least seven forks will take place during the month of December, and more will likely follow, at least until “fork fatigue” sets in and the scheme is no longer profitable.

Like most of these forks, it is difficult to identify the purpose of UnitedBitcoin (UBTC), but, oddly enough, this project appears to have backing from one of the biggest names in the cryptocurrency space: Jeff Garzik.

When UnitedBitcoin first claimed to have support from Garzik, many people believed it was a hoax. However, Garzik confirmed the news in an interview with Bloomberg, and he apparently promoted UnitedBitcoin at a tech event this week.

united bitcoin fork
Source: UnitedBitcoin/Twitter

One of the earliest Bitcoin developers, Garzik also served as lead developer for SegWit2x, a contentious Bitcoin protocol upgrade that was ultimately called off just days before it was set to activate. Garzik is also currently working on Metronome, a cross-blockchain cryptocurrency that will be distributed through an ICO-style auction.

Purportedly, UnitedBitcoin will introduce a number of new technologies into the codebase, including native support for smart contracts and a lightning network. Like Bitcoin Cash, the new blockchain will also feature 8MB blocks, demonstrating a commitment to on-chain scaling.

“UB is not looking to replace Bitcoin, but rather is looking to support the progression of the ecosystem by introducing new technologies faster,” said Garzik in a press release. “We look forward to this exciting next phase in Bitcoin’s evolution.”

Matthew Roszak, who — along with Garzik — co-founded blockchain firm Bloq, concurred, lauding UnitedBitcoin for its support for innovative features.

“This ecosystem is a movie, not a static picture – the pace of innovations being developed in this industry is incredible. UB has created a platform and philosophy of adopting new features and functions for a broad community of market participants,” said Roszak in the announcement.

But while the project may have nominal backing from Garzik and Bloq, it is not clear to what extent the firm is involved in the project or whether Garzik has even reviewed the code. A cursory glance at the UnitedBitcoin GitHub repository reveals that Garzik has not made any commits to the project — a very different scenario from SegWit2x.

This is troubling, especially considering that UnitedBitcoin’s marketing materials heavily emphasize his role in the project but say little about the rest of the team. It is also disconcerting that the UnitedBitcoin codebase includes a function called “godMode” that, apparently, gives the developers the ability to seize coins at the time of the fork and grant them to the UnitedBitcoin foundation.

unitedbitcoin fork
Source: GitHub

The developers state that they will only take “inactive coins,” but — given that most bitcoin holders treat their coins as a store of value — it is likely that the vast majority of coins will be deemed inactive.

There is still much to be learned about UnitedBitcoin, as well as Garzik’s actual involvement with the project, so bitcoin holders should probably proceed with extreme caution if they intend to interact with the fork and claim their UBTC.

Featured Image from Pexels

starbucks mining monero

A Starbucks in Buenos Aires, Argentina was mining Monero (XMR) on customer’s devices without their permission. Twitter user Noah Dinkin noticed that a Starbucks location in Buenos Aires was utilizing their WiFi captive sign-in portal to force a 10-second delay when users first connected to the wifi in order to mine Monero. The user originally assumed that the Starbucks WiFi was attempting to mine Bitcoin, but it was in fact mining Monero. XMR is currently trading at $286.27 according to the Block Explorer Monero Price Index

Starbucks has not responded to the outcry on social media about their use of Coinhive

Coinhive is in-browser software that allows users to mine Monero in-browser with JavaScript using their ‘extra’ CPU power. Coinhive usage has been increasing and expected to increase both legitimately and illegitimately.

The Palo Alto Networks Research Center has stated that they have seen 36,842 instances of Coinhive being implemented. Out of these 36,842 instances, they claim that a large quantity of these fall into the category of ‘compromised’, likely being the result of malicious script injection into vulnerable servers. In some cases, multiple copies have been injected and use up 100% of the user’s available resources. One specific payee identity alone is tied to over 35,000 of these instances.


Edit: Since the time of writing, Starbucks issued the following statement:

As soon as we were alerted of the situation in this specific store last week, we took swift action to ensure our third-party support provider resolved the issue and made the changes needed in order to ensure our customers could use Wi-Fi in our store safely.