The proportion of illegal Bitcoin transactions are declining. View in browser

“I see Bitcoin as ultimately becoming reserve currency for banks, playing much the same role as gold did in the early days of banking.” ~  Hal Finney

Market State

Last week the price of Bitcoin dropped to $9735 and stabilized around $11500. Since then Bitcoin reached $12560 within 20 hours. In Zimbabwe Bitcoin was trading at $76000 on LocalBitcoins with 600% premium compared to international prices. (The reason behind it was the country’s government has decided to stop transactions in the US dollar and reintroduced the Zimbabwean dollar, which had disappeared in 2008 due to unbelievable hyperinflation. However people find it hard to trust those papers have value. In 2017, Zimbabwe officially banned cryptocurrency exchanges but peer-to-peer exchanges, such as the well-known LocalBitcoins platform still flourish.) 

Ether was trading sideways with a weekly low of $272 and high of $310. At the moment the second largest cryptocurrency is sitting around $305. A new study from Binance Research shows that Bitcoin has become less correlated with other cryptos in Q2 2019. The study found out that while the overall market capitalisation rose by 139%, altcoin aggregated market capitalisation increased by 71% over the same period.  

A former hedge fund manager Raoul Pal, started a discussion on Twitter about the economic situation in Europe. He claims that European economy is in a mild recession and pointed out with examples that many bank stocks are going down. In the end he even recommended investing in Bitcoin. Andreas M. Antonopoulos, Bitcoin and Blockchain expert gave a talk on Facebook’s digital currency project Libra. According to Andreas there will be three types of money, money of people which is Bitcoin, money of corporations such as Libra from Facebook and lastly money of governments which are fiat currencies such as euro, dollar, forint etc. He believes that neither of these currencies will disappear but they will coexist. 

Check the latest Bitcoin Price
Quiz of the week

What incentivizes the miners to give correct validation of transactions?

  1. More storage
  2. A block reward
  3. Support from the community

Scroll down to see the answer at the end of the newsletter.

Top stories of the week
Further News From Facebook's Crypto Project

Last month Facebook announced a new digital currency wallet called Calibra which is designed to enable people to access and participate in the Libra network. Calibra wallet will be available to billions of people around the world. The wallet isn’t just for the Libra currency. An anonymous source claimed that Calibra will support Bitcoin and other cryptocurrencies. So far the Calibra began the process to obtain a BitLicense from New York’s Department of Financial Services (DFS). BitLicensce is a business license of virtual currency activities, issued by the DFS. Meanwhile members of the United States House of Representatives Committee on Financial Services formally asked Facebook to halt development of Libra as ”it raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook's over 2 billion users, but also for investors, consumers, and the broader global economy.” During the this moratorium, the representatives “intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions” because as their letter states: “failure to cease implementation before we can do so, risks a new Swiss-based financial system” that is “intended to rival U.S. monetary policy and the dollar” and is “too big to fail.”

Less Than 1% Of Bitcoin Transactions Are Involved In Illicit Activity

A new study by Chainanalysis suggests that just 1% of Bitcoin transactions are involved in illicit activity. Chainalysis observed that Bitcoin spent on illegal marketplaces peaked in 2017 with a total of $872 million worth of Bitcoin spent on various illegal products. In the first half of 2019 about $515 million of Bitcoin has already been spent on the dark web. Chainanalysis revealed that the proportion of illegal Bitcoin transactions are declining. In 2012 when Silk Road was still fully operational, criminal deals made up 7% of Bitcoin transactions. (Silk Road was an online black market for selling and buying illegal drugs which was launched in February 2011 and was shut down by the US government in October 2013). Since then the price of Bitcoin has grown so dramatically that a tiny fraction of total transactions easily surpasses the dollar amount from the same time period in previous years. This shows that utility of Bitcoin has grown well beyond its use on dark markets. Another reason for this dynamic is related to the tightening of control over the digital money market and the strong volatility of the asset. According to Chainalysis CEO Hannah Curtis, criminals have become more active in using Fiat to hide their actions.

Bitcoin Uses As Much Energy As Switzerland

According to an online tool launched by the Cambridge Centre for Alternative Finance (CCAF) Bitcoin consumes as much energy as the entire Switzerland. The online tool is called the Cambridge Bitcoin Electricity Consumption Index (CBECI) which is a live model that tracks the estimated annual electricity usage of the Bitcoin network in real time. The CBECI says the Bitcoin network is consuming more than 8.25 gigawatts of electricity which accounts for roughly 0.25% of the world’s entire electricity consumption. However the index doesn’t take into account where the electricity is coming from. A recent study showed that over 74% of Bitcoin mining is powered by renewable energy.

A Physical Bitcoin Is Selling On eBay For $99,000

Last week a physical Bitcoin containing 1 BTC has been offered for a whopping $99000 on eBay, even though Bitcoin is trading at around $11,600 at that time. The seller claimed that the coin is a collector’s must have and is a Casascius Bitcoin that was created in 2011. Casascius Bitcoins are physical Bitcoins that have a private key embedded in the coin and covered by a hologram. The hologram leaves behind a honeycomb pattern if it is peeled. The coins come in different sizes, values and materials. The full list of Casascius coins in circulation can be tracked on this website. In 2013 Casascius was shut down by the US government.

Trezor hardware wallets have unfixable vulnerability

Ledger Donjon, a security research team at Ledger hardware wallet has revealed that Trezor hardware wallets are vulnerable to hardware attacks. This attack only works if a hacker gains physical access to your device. The vulnerability allows a hacker with a stolen device to get the master seed if no strong passphrase is set. The vulnerability cannot be patched with firmware update without redesign of the hardware wallet. Trezor said that the attack was too specialized and hard to reproduce. The Ledger research team designed an inexpensive tool that worth around $100 to extract the master seed from the wallet within 5 minutes. Experts suggest users to set a strong passphrase and ensure no one gets hold of your device. 

Brave now supports tipping on Reddit and Vimeo

Users of the Brave browser will soon be able to leave Basic Attention Token tips on Reddit. The features are currently available in Brave browser’s developer preview on desktop, they will soon roll out for the public version of Brave. Although the features won’t roll out for at least another few weeks, users can already begin verifying their Reddit and Vimeo accounts to begin receiving tips in beta version. Brave developers are also working on to integrate Ethereum wallet. A Reddit user shared several screenshots of Brave’s GitHub repository where the images revealed that developers are also working on to add support for Ledger and Trezor hardware wallets. This would allow users to earn and store funds directly into a self custody wallet.

Tweet of the week
Meme of the week
Crypto word of the week

A mnemonic seed is a 12-24 word phrase which is used to backup and restore a cryptocurrency wallet. They are easier to memorize instead of long alphanumeric private keys.Whoever has your mnemonic seed has control over your holdings.

Quiz answer

What incentivizes the miners to give correct validation of transactions?

The correct answer is “B”.

Thank you for reading :) 

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