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How Encryption Will Survive the Crypto-Apocalypse

How Encryption Will Survive the Crypto-Apocalypse

Most people don’t realize it, but the world runs on cryptography. The art and science of secure communication is integral to everything from instant messaging apps to online banking and modern warfare. Today, cryptography relies on a handful of algorithms so secure that the heat death of the universe would occur before anyone would be able to break them, even if they had access to all the computing power on Earth.

The problem is that the nature of computing is rapidly changing. The digital computers of today will eventually give way to new, more advanced computers of tomorrow. So-called quantum computers will be far more powerful than the fastest supercomputers in existence today. While they hold the potential to facilitate unprecedented scientific advances, they also threaten to render today’s strongest encryption standards obsolete.

The threat of a crypto-apocalypse, where everyone’s private information becomes insecure due to the arrival of large-scale quantum computers, is no longer a question of ‘if,’ but a question of ‘when.’ The perceived inevitability has security researchers locked in a high-stakes race to develop quantum-resistant cryptography before the dawn of the first large-scale quantum computer arrives on the scene.

“Quantum computers decimate (versus just weaken) currently deployed public-key cryptography,” Michele Mosca, the founder of the University of Waterloo’s Institute for Quantum Computing, told me via email. “Just increasing key sizes with our current systems isn’t a solution. We need fundamentally new public key systems, and this can take well over a decade to do properly.”

Unlike normal computers, which process information using binary bits (that is, either a 1 or a 0), quantum computers traffic in qubits, which allows them to code information as either a 1, 0 or both at the same time. This gives them a massive leg up when it comes to solving the complex math problems (usually factoring primes for astronomically large numbers) that are the reason RSA, or public-key cryptography, is so secure. This type of crypto allows people to post a public key to encrypt a message sent to them, which they can then decrypt using a privately held key that is paired with that public key.

To address this looming security issue, quantum information researchers like MIT’s Seth Loyd are exploring alternative methods of encryption that will be resilient to the brute force attacks capable by quantum computers. Last year, Loyd and his colleagues created the first prototype of a “quantum enigma machine,” a previously hypothetical device capable of encrypting information in a way protected from quantum attacks. This device encodes messages by altering the properties of a photon wave, such as its amplitude or wavelength.

By encoding information in a quantum channel itself, Loyd and his colleagues are virtually guaranteeing it will be impossible to crack. Any interference in the channel that is conveying the information–such as an optical fiber—will cause the photon wave to degrade and the message to be destroyed. In other words, encoding information in a photon wave makes it impossible to eavesdrop on a conversation. A ne’er-do-well with a quantum computer only has one shot at decoding the message successfully before it degrades beyond recovery. This is different from traditional encryption, where an attacker could intercept an encrypted message, store it, and use a quantum computer to decipher the code.

For now, the device developed by Loyd and his colleagues remains highly experimental, but it’s also the best bet we have to defend information from quantum attacks in the future. Other methods, such as quantum key distribution, are also promising, but still less secure than the enigma machine. Quantum key distribution essentially scrambles a message using the quantum properties of a photon (such as its spin state) as a key, and the message is then sent over a traditional, non-quantum channel.

It’s uncertain when we can expect to see a functional, large-scale quantum computer. When I spoke to Mosca in 2015, he estimated that there was a 1 in 7 chance that we’ll see a large-scale quantum computer by 2024. But when I spoke to him in September of this year, he said it’s become even more likely.

“There has been much positive progress both in reducing the physical resources needed to break [encryption standard] RSA2048, and in developing physical systems designed to be fault-tolerant and scalable,” Mosca told me. “So my 10-year estimate has nudged up to 1 in 6.”

Considering that the blueprints for a large-scale quantum computer were only rigorously outlined last year, Mosca’s prediction seems pretty optimistic, but he says it’s based on tracking the development of quantum computers over two decades. In any case, the only way to make sure we don’t get pwned by the future crypto-apocalypse is to address the problem now before it’s too late.

Dear Future is a partnership with CNET that will explore the people, companies, and communities that are ushering in the future we were all promised. Follow along here.

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Is The Pirate Bay’s In-Browser Cryptocurrency Mining Better Than Its Crappy Ads?

Is The Pirate Bay’s In-Browser Cryptocurrency Mining Better Than Its Crappy Ads?

The modern internet runs on advertisements. Arguably the two most powerful companies in Silicon Valley—Facebook and Google—make billions of dollars in revenue each year almost exclusively by selling customer data to advertising firms. Although these products are nominally free, their users are actually paying in lost privacy.

Over the weekend, the torrent site Pirate Bay conducted an experiment to see if it could replace the advertisements that keep the site afloat with a new monetization scheme: Using visitors’ browsers to mine cryptocurrency.

Although the Pirate Bay is perhaps the freest of free services on the internet, it has operating costs like any other website. Historically, these costs have been supported through ad revenue and donations, but as the Pirate Bay admins detailed in a blog post, “we really want to get rid of all the ads.”

It makes sense. The Pirate Bay isn’t exactly known for its tasteful and legitimate advertisements, which are often laced with malware. In fact, it was the Pirate Bay’s terrible advertisements that prompted its co-founder Peter Sunde to argue that the site should be left to die after it was taken offline following a raid of its servers.

“I’ve not been a fan of what TPB has become,” Sunde wrote in a 2014 blog post. “The site was ugly, full of bugs, old code and old design. It never changed for one thing—the ads. More and more ads [were] filling the site, and somehow when it felt unimaginable to make these ads more distasteful they ended up even worse.

Read More: At Least 1.65 Million Computers are Mining Cryptocurrency for Hackers

Three years later, the Pirate Bay’s solution was to embed the code for a cryptocurrency miner called Coin Hive in the footer of the site. The code used a portion of the visitor’s CPU power to mine the privacy-oriented cryptocurrency Monero while the user was on the website.

The miner could be blocked using a regular ad blocker or by disabling JavaScript, but at the time of this writing, the miner was no longer operating. According to TorrentFreak, a source from the Pirate Bay said the miner was only being tested for a few days as a possible replacement for ad revenue. The source did not clarify whether the miner will be used again in the future.

Nevertheless, the Pirate Bay mining experiment raises an interesting question: Should cryptocurrency mining replace advertisements as a way to cover a website’s operating costs?

The idea of using the distributed computing power of an internet service’s users to mine cryptocurrency is by no means new. Botnets have been used to hijack Internet of Things devices to use their processing power to mine Bitcoin several times in the past, and BitTorrent infamously used its app to mine for Litecoin on users’ computers without really informing users it was doing so.

In 2013, a group of MIT students created a code called TidBit that would allow websites to generate revenue by using visitor’s processing power to mine for Bitcoin, a project that was shut down by court order. According to the ruling, using a person’s CPU power to mine cryptocurrencies without consent is considered gaining access to that person’s computer.

More recently, security researchers have been reporting an uptick in malicious advertisements that are used to mine cryptocurrencies within a web browser. Since advertisements that use a person’s processing power without their consent are banned from legitimate ad distribution networks, these ‘malvertisements’ are distributed by buying user traffic and directing it to a website that hosts the advertisement with the malicious mining script.

In all of these cases, the primary issue is consent from the user. Obviously, hijacking IoT devices for a botnet usually isn’t done with permission and neither is injecting malware into a device. But to download and run BitTorrent, users had to agree to a terms of service. A clause in this terms of service said that the software can make use of a computer’s unused processing power and users would have to opt out of installing the mining software, but these details were buried in the terms of service that few users ever take the time to read.

In this respect, the Pirate Bay’s scheme was relatively more transparent. Rather than trying to bury its cryptomining plans in a wordy terms of service agreement, the code for the miner was clearly visible at the bottom of the site. The code was still pretty easy to miss, but the uptick in a visitor’s CPU usage wasn’t.

Read More: µTorrent’s Shady Bitcoin-Mining Program Could Blow Up Your Computer

The Pirate Bay blog post on its decision to implement a miner claims “a small typo” in the miner’s code initially made it so that the miner would use all of a visitor’s unclaimed processing power. This was soon fixed so that the miner would only use 20 to 30 percent of a visitor’s CPU power and run only in the tabs in which the Pirate Bay website was open. Still, a 20-30 percent increase in CPU usage could cause a user’s computer to slow to a crawl or crash.

In short, if distributed mining schemes aren’t properly implemented by allowing users to opt in and informing them just how much processing power will be used, it could have serious negative effects for a site’s visitors.

What is uncertain is whether the cryptomining scheme would have been enough to cover the website’s costs or replace revenue from advertising. A 2014 report from McAfee, for instance, found that it was nearly impossible to turn a profit using botnets to mine for Bitcoin. That same year, the consumer advocacy group Digital Citizens Alliance published a report that claimed that leading torrent sites like Pirate Bay generate upwards of $4 million per year from advertising revenue.

As seen in the Pirate Bay subreddit and official forum, not all users were happy about the new scheme, but many saw it as an improvement over advertisements. The one complaint uniting users, however, was that the Pirate Bay admins could have been more forthcoming about the miner.

Although the Pirate Bay’s mining scheme did come off a little shady, even ‘legitimate’ advertising schemes can run afoul of users. In 2015, for instance, it was revealed that Facebook used a long-lasting cookie to track web browsing habits that could then be sold to advertisers—even if you weren’t a registered user on Facebook. Moreover, advertisements can give a platform to unsavory organizations, as the recent Facebook debacle over selling ads to Russian interests during the 2016 elections goes to show.

Assuming that user consent is obtained, the issue ultimately boils down to whether internet users would prefer to pay for free web services with their privacy, or a few more cycles on their CPU. But no matter what, there’s no such thing as a free lunch on the internet.

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Three of China’s Biggest Bitcoin Exchanges Are Shutting Down

Three of China’s Biggest Bitcoin Exchanges Are Shutting Down

Two of China’s largest exchanges for buying and selling Bitcoin, OKCoin and Huobi, announced on Friday that they will stop trading Bitcoin for Chinese yuan effective immediately. The reason, the exchanges stated, is to comply with Chinese government directives issued on Thursday.

While the suddenness of the Bitcoin trading ban was surprising, it reflects a larger trend in China toward regulating crypto markets. Earlier this month, China’s central bank outlawed Initial Coin Offerings—a method of raising capital for blockchain-based companies—in a telltale sign that the country was moving to tighten regulations on cryptocurrencies. China is a major hub for Bitcoin mining, a resource-intensive process that confirms transactions and updates Bitcoin’s public ledger, the blockchain.

Fears that this would lead to an outright ban on trading cryptocurrencies in China were confirmed Thursday when the Chinese news outlet Yicai reported that “the order has come from above” to shutter all Chinese Bitcoin exchanges by the end of September.

The cessation of yuan-to-Bitcoin trading means that Chinese citizens will no longer be allowed to buy Bitcoin using their national currency. However, Huobi and OKCoin will continue to allow trading from one cryptocurrency to another.

“OKCoin is doing its best to respond positively to the national regulation and to propose and explore regulatory recommendations and programs aimed at protecting the interests of its users,” OKCoin said in a statement. “The decision is not the end, but a new start.”

Motherboard reached out to OKCoin and Huobi for comment, and we will update this post if we hear back.

The announcement OKCoin was followed by a document leaked on the Chinese social media site Weibo that purports to show the contents of a verbal directive issued to Chinese Bitcoin exchanges from government officials. Motherboard was not able to independently verify this document’s authenticity.

Image: Weibo

According to a translation provided by Bitcoin trade blog Coindesk, the unverified document lists six steps that the exchanges must take during closure. These steps included announcing that the exchanges will halt yuan trading by midnight on Friday, and sending all user trading and holding data to the government on DVDs. Motherboard has reached out to Huobi and OKCoin about the nature of this data, but has not received a reply at the time of writing.

Read More: China is on Track to Fully Phase Out Cash

At the time of writing, most major Chinese Bitcoin exchanges had complied with the government’s directive. In addition to Huobi and OKCoin, BTC China and ViaBTC also announced that they would be halting trading in yuan.

The reasoning behind China’s sudden crackdown on cryptocurrency trading is not entirely clear. In February, government officials reportedly met with Bitcoin exchange leaders, ostensibly to discuss how to limit the use of these services for money laundering. These meetings were followed by a three-month ban on cashing out Bitcoin from exchanges, which was lifted in June.

Optimists in the Bitcoin community are hoping that the Chinese ban on Bitcoin trading will be similarly temporary, but for now, it looks like Chinese citizens will be unable to get in on the Bitcoin speculation bonanza.



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New Bitcoin Scam Targets Hurricane Irma Anxiety

New Bitcoin Scam Targets Hurricane Irma Anxiety

Scams that convince people to give away their bitcoins by entering information into a legitimate-seeming (but fake) website are on the rise. But a new phishing campaign that targets people worried about the aftermath of Hurricane Irma, which tore across parts of Caribbean and Florida this week, might just be a new low.

The scam, which appears to be an evolution of an existing phishing campaign, was publicized in a Reddit post on Tuesday by Chicago-based Bitcoin ATM company Athena Bitcoin. According to the company, it received a phishing email purporting to be from Blockchain, a popular blockchain explorer and digital wallet service, warning them that Hurricane Irma had damaged the company’s servers in Florida and that their bitcoins may be at risk of becoming irretrievable. As a result, the scam email instructs, the victim must transfer their bitcoins to a new address and server located in Ontario, Canada.

The address in the email is presumably controlled by the scammers, although it isn’t clear who they are, and sending bitcoins to it would result in the permanent loss of funds.

The scam address currently contains no funds, meaning that nobody took the bait. But it’s possible or even likely, given the personalized nature of the scam, that the address is single-use and intended for the email recipient only. According to Athena Bitcoin spokesperson Patrick Patton, who contacted me via email, the company believes it is just one of many organizations and individuals targeted by the scam.

“We understand that digital currency has a significant learning curve and losses to scams can be significant,” Patton wrote me in an email. “Unfortunately, major disasters often coincide with reprehensible attempts to defraud victims using any and all payment methods.”

This isn’t the first time that scammers have tried to turn Blockchain’s clout into a weapon in order to fleece unsuspecting victims. Last year, a similar phishing scam made the rounds, and there are stories of losing funds to such schemes going back three years on Reddit.

“We ask that users bookmark our link [www.blockchain.info/wallet/#/login] and alert us to any phishing emails or spam they receive,” a Blockchain spokesperson wrote me in an email. “We have a team that is extremely diligent, but it’s always helpful when the community gives us a heads up.”

If you’re out there on the wild web holding bitcoins, keep your head on a swivel.

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At Least 1.65 Million Computers Are Mining Cryptocurrency for Hackers So Far This Year

At Least 1.65 Million Computers Are Mining Cryptocurrency for Hackers So Far This Year

Cryptocurrencies are a boon to all sorts of criminals, from online drug dealers to ransomware hackers, due to their semi-anonymous nature. But another set of scammers takes a different approach: loading up victims’ computers with software that “mines” currencies to generate a profit, without the owner’s knowledge.

Cryptocurrency mining can be lucrative. By setting up a computer or group of machines to work around the clock, miners solve math problems required by a given cryptocurrency (Bitcoin, Ethereum, Monero, etc.) to create new funds. The newly generated funds are returned to miners as a reward because mining is resource-intensive and can rack up electricity costs. Mining cryptocurrency is legal, but criminals can get other people’s computers to put in the work while they reap the rewards by surreptitiously installing mining software on their computers with malware.

According to new statistics released on Tuesday by Kaspersky Lab, a prominent Russian information security firm, 2017 is on track to beat 2016—and every year since 2011—in terms of the sheer number of computers infected with malware that installs mining software. So far in 2017, the company says it has detected 1.65 million infected machines. The total amount of infected computers for all of the previous year was roughly 1.8 million. The infected machines are not just home computers, the firm stated in a blog post, but company servers as well.

Read More: You Could Be Mining This Cryptocurrency Without Knowing It

“The main effect for a home computer or organization infrastructure is reduced system performance,” Anton Ivanov, a security researcher for Kaspersky, wrote me in an email. “Also some miners could download modules from a threat actor’s infrastructure, and these modules could contain other malware such as Trojans [malware that disguises itself as legitimate software].”

Ivanov said that the firm doesn’t know how much money has been made overall with this scheme, but a digital wallet for one mining botnet that the company identified currently contains over $200,000 USD.

Image: Kaspersky Labs

The most popular cryptocurrencies mined by malware were Zcash and Monero, according to Kaspersky. This is noteworthy, because it reinforces the notion that mining Bitcoin, the most popular and valuable cryptocurrency, is just too difficult for normal people to engage in (or for hackers controlling other people’s computers). The Bitcoin mining space is dominated by gigantic firms that run server farms, largely in China. Smaller or newer currencies like Zcash and Monero are thus more likely to pay off. In addition, Ivanov noted, Zcash and Monero promise more privacy for users and, as it happens, criminals, than Bitcoin and Ethereum.

The increased rate of mining with malware is likely due to the massive bull-run that cryptocurrency markets across the board have enjoyed this year, buoyed in part by rampant speculation on the future value of digital assets. “In our opinion, it is happening because top cryptocurrencies have rapidly increased within the year,” Ivanov wrote me.

If you’ve noticed a suspicious slow-down on your computer recently, or your electricity bill is inexplicably growing, you might just be mining digital coins for someone else.

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People are Losing Bitcoin Cash By Accidentally Sending It to Bitcoin Addresses

People are Losing Bitcoin Cash By Accidentally Sending It to Bitcoin Addresses

On August 1, a renegade group of cryptocurrency enthusiasts decided to split off from Bitcoin and create a near-identical clone called Bitcoin Cash. The two digital currencies are similar—Bitcoin Cash addresses even look like Bitcoin addresses—but are incompatible.

Now, some users are reporting that they’ve accidentally sent Bitcoin Cash funds to Bitcoin addresses, and they’re likely lost for good. Damn.

On Sunday, a Reddit user called “btctroubadour” raised the alarm on the trend in a post that listed a handful of instances where people had complained on Reddit that they’d screwed up and sent Bitcoin Cash funds to a Bitcoin address, and desperately asked how to get it back. Most of the posts are from people claiming to have sent their funds to a Trezor wallet. Trezor is a popular manufacturer of hardware Bitcoin wallets, and very clearly warns users several times on its site not to send Bitcoin Cash funds to a Bitcoin address.

“Yep, I have done the thing it says not to do in the documentation,” Reddit user “styz0r” wrote in the Trezor subreddit a week ago. “I have sent my bitcoin cash from my coinspot exchange to my hardware bitcoin wallet address. Is their [sic] a way to recover it?”

Read More: Scammers Are Targeting Naive Bitcoin Owners With Terribly Simple Trick

Why is this happening? Bitcoin proper supports a recent code change called Segregated Witness, but Bitcoin Cash does not. This difference makes them incompatible. However, Bitcoin Cash addresses follow the same format as Bitcoin addresses and look alike. This coincidence means that if Bitcoin Cash users aren’t careful, they can send their money to a Segregated Witness-supporting Bitcoin address.

“People WILL make mistakes,” Pavol Rusnák, Chief Technology officer of SatoshiLabs, the company behind Trezor wallets, wrote on Reddit. “Too bad, this could have been easily prevented.” Indeed, Rusnák raised this concern with Bitcoin Cash developers on GitHub in July.

“This affects all Bitcoin Cash users, not only Trezor users,” Rusnák wrote me in an email. “[The] decision not to change the address format is quite irresponsible from Bitcoin Cash developers, because a lot of people have big problems distinguishing these two projects, [and] moreso their addresses.”

According to Rusnák, the only way for people to get their Bitcoin Cash funds back is to somehow find a miner who would be willing to go through the trouble of processing these non-standard transactions.

When Rusnák raised his concerns in July, Bitcoin Cash developer Amaury Séchet responded, “I have a plan to change the address format.” If the recent spate of unfortunate screw-ups is any indication, this change can’t come soon enough.

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The Bitcoin Is Dead, Long Live Bitcoin

The Bitcoin Is Dead, Long Live Bitcoin

It’s time to stop talking about Bitcoin as if “one bitcoin” is a normal thing that anyone uses or even owns. It’s bullshit.

One bitcoin, indicated as “1.0” in the system, is worth more than $4,000 USD right now. What you may not know, though, is that “one bitcoin” can actually be divided into one million bits and sent one bit at a time, if you want. In fact, “one bitcoin” doesn’t really exist. What does exist are granular entries on a digital ledger that can be bundled together until they add up to whatever amount of bits that you want to send—usually something like .0035, which is equal to $15 USD.

Think of it this way. If Bitcoin were ever used as a normal currency (and this is seeming more and more like a long shot), you’d go to your coffee shop and say, “One coffee, please,” and the barista would say, “That’ll be .00057.” If you buy a domain name using Bitcoin today, the service will ask you to pay .00274, give or take a decimal place. A pair of Yeezys costs .0568 BTC. Even if you paid your rent in Bitcoin, which is most people’s largest lump sum expense in a month, it would still be just .3 bitcoin. If you really want to pay a whole bitcoin for something, you’d have to buy a used car. Practically speaking, with Bitcoin’s present value it just doesn’t make sense to treat a whole coin as the basic denomination and break it down from there.

Read More: The Motherboard Bitcoin and Ethereum Primer

There was a time when you could talk about whole coins as something people own and use. Specifically, around 2012 when one bitcoin was worth between $1 and $5 USD. That was a base denomination that made sense. But now, that same denomination—”one bitcoin”—is equivalent to more money than many of us see in a month. Estimates for how many Bitcoin addresses actually hold a whole coin illustrate what this means in practice: around 95 percent of all Bitcoin addresses contain less than one bitcoin. Some people may have more than one Bitcoin address, or even several, but the existence of a “Bitcoin one percent” has been a specter in the community for years. If a person of average means decides to pony up and invest $1,000 of their hard-earned dollars in Bitcoin, they’d still have just .23 of a coin.

Image: Reddit

Bitcoin’s present value makes “one bitcoin” useless as a base denomination, but over the years there’ve been several proposals for other denominations as Bitcoin’s value rose and transactions became more fractional. Some units, like the satoshi, have made their way into semi-common parlance. One satoshi is worth .00000001 BTC, or a fraction of a cent at current prices. There’s also the milli-bitcoin (.001), the micro-bitcoin (.000001), and more. Some have even proposed simply going by bits, making one bitcoin a denomination of one million bits being sent through the Bitcoin network. Which to choose?

Bitcoin’s volatility makes this choice extremely difficult. A denomination of bits that are equal to $1 USD today could be worth $10 tomorrow, or much less. Regardless, the current situation is clear: whole bitcoins aren’t for normal people, and so if Bitcoin is ever going to be a mass payment system, we should be talking about something more realistic.

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Lawmakers Introduce Bill that Will Let You Buy Coffee With Bitcoin Without Paying Capital Gains Taxes

Lawmakers Introduce Bill that Will Let You Buy Coffee With Bitcoin Without Paying Capital Gains Taxes

Despite its sky-high value, there are many barriers to using Bitcoin for normal things like buying a coffee or groceries. Some of these obstacles are technical, and some social, but a big one has always been the question of taxes.

Right now, every single Bitcoin transaction in the US, no matter how small, must be recorded and later reported to the government in order to pay a capital gains tax. This tax is normally incurred when selling property, stocks, or precious metals—not domestic currency.

The Cryptocurrency Tax Fairness Act of 2017, introduced Thursday by Democratic Rep. Jared Polis and Republican Rep. David Schweikert, would remove this requirement for any Bitcoin transaction under $600 USD. If passed, this law would mean that average folks can use Bitcoin to pay for most things without keeping track of every single purchase and later having to pay capital gains tax on their cryptocurrency.

Read More: IRS Demands Identities of All US Coinbase Traders Over Three Year Period

“Right now, under the law, you have to keep track of every transaction, whether it’s for a coffee here or an MP3 player there,” Jerry Brito, executive director of Coin Center, which consulted on the bill, told me over the phone. “Because the IRS treats Bitcoin as property for tax purposes, you owe capital gains tax whenever you dispose of Bitcoin, whether that’s selling 10,000 bitcoins or buying a coffee.”

The issue of Bitcoin and taxes has been a thorny one to date. It’s currently unclear, first of all, how many people are actually following the existing rules. Secondly, the government has arguably taken a rather heavy-handed approach enforcing them. In November of last year, the IRS ordered popular Bitcoin exchange Coinbase to reveal the identities of all of its customers over a three-year period—potentially millions of people—to see if they’ve been paying their taxes. According to Brito, the Cryptocurrency Tax Fairness Act would have made such a broad order unnecessary.

“Individuals all over the world are starting to use cryptocurrencies for small every day transactions, yet here in the States we have fallen behind and make cryptocurrency use more of a challenge than it needs to be,” said Congressman Schweikert in a statement. “With this simple legislative change, anyone can make digital payments to buy a newspaper or a bike without worrying about tax code challenges.”

If the Act is passed, it would remove a big barrier to using Bitcoin in the real world. However, Brito said, it’s not the only thing that needs to change before the cryptocurrency can be more than a speculative asset or financial tool.

“There are a lot of hurdles before we see widespread use of Bitcoin,” he said. “Some of them have to do with the technology advancing so it can handle more transactions, and some of them have to do with usability. But one of those has been the issue of tax—Bitcoin is the one payment system where I have to keep track of capital gains on every transaction. That creates friction, and this law would remove that friction.”

Of course, there’s a long way to go yet before the Cryptocurrency Tax Fairness Act can become law. And as with any law, it stands a better chance if the community gets together to put pressure on their representatives. According to Brito, support is what’s needed now.

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A Bitcoin Investment Fund Was Just Approved In Canada

A Bitcoin Investment Fund Was Just Approved In Canada

A cryptocurrency investment fund that allows people to make profits from Bitcoin’s rising value without having to actually buy bitcoin has been approved by regulators in Canada, after a similar fund in the US tried and failed to gain approval from the federal securities regulator in March of this year.

The fund, called the Canadian Bitcoin Trust, was launched in July by Vancouver-based company First Block Capital. On Wednesday, the British Columbia Securities Commission granted First Block Capital registration as a fund manager in the provinces of BC and Ontario, with BCSC as its principal regulator. (Securities law is handled at the provincial level in Canada.) According to a BCSC press release, regulators have imposed registration conditions on First Block Capital that allow it to operate in the current regulatory environment, although the statement does not expand on what those conditions are.

What does this mean? For finance-types in Canada, it means that you can buy a stake in a pool of bitcoin managed by First Block Capital. As the bitcoin appreciates in value, the value of your stake will go up in turn. The target audience for this scheme is people who want to invest in Bitcoin like a commodity—say, steel or oil—and sit back while it (ideally) becomes more valuable. That way, they don’t have to worry about the nitty gritty, including private keys and exchanges, or even how Bitcoin works, frankly. The point is the profit.

Read More: Bitcoin Is for the People, Not Wall Street

The BCSC said that it is open to helping more cryptocurrency investment funds meet regulatory compliance standards.

“We strongly encourage other companies in British Columbia, whether they are potential new registrants or existing investment fund managers, to contact the BCSC’s Tech Team if they are considering pursuing cryptocurrency investments in their funds,” said Zach Masum, head of the BC regulator’s technology team, in a statement. “The Tech Team can help ensure compliance with securities regulation, which can help save time and potential costs later on.”

Regulatory approval for the fund arguably puts Canada ahead of the US when it comes to investing in Bitcoin. The US Securities and Exchange Commission (SEC), the federal regulator, has not yet approved any similar funds. One such fund, proposed by the Winklevoss brothers, looked like it had a shot and the Bitcoin community rallied around it, only to have their hopes dashed when the SEC denied its application in March. Since then, the SEC has re-opened its ruling in that case but hasn’t made a final decision.

There are other investment funds in the US that offer exposure to cryptocurrencies, but not many specialize. One that does, called Grayscale, trades as “pink sheet” stock in the US, and the value of its shares is separate from the value of the bitcoin it holds. Thus, even though the value of the bitcoin they hold means that shares should sell for $250, in June shares were going for over $500 due to hyped-up demand. It’s risky.

Bitcoin investment funds that allow people to buy a stake in a pool of bitcoin that appreciates in value if the currency’s value increases—basically, holding bitcoin without having to actually own bitcoin—represent different things, depending on your perspective. On one hand, special attention and approval from the government is great press. Ideally, that would encourage more people to buy bitcoin and use it. On the other hand, more people blindly investing in Bitcoin as its price continues to skyrocket without any major real-world uses for the currency is exactly what Bitcoin doesn’t need right now.

Either way, for hosers, there’s a new way to buy bitcoin—without actually buying bitcoin.

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Scammers Are Targeting Naive Bitcoin Owners With Terribly Simple Trick

Scammers Are Targeting Naive Bitcoin Owners With Terribly Simple Trick

With Bitcoin nearing a valuation of $4,500 scammers are trying all kinds of tricks to steal people’s valuable cryptocurrencies, including just asking people to give them away.

The cybersecurity research group MalwareHunterTeam spotted a new simple scam: an app that promises naive Bitcoin-owners to double their cryptocurrency balance if they provide their Bitcoin wallet’s private key. Of course, the private key is all one needs to take control of that wallet and steal the bitcoins.

Read more: How to Build an Ethereum Mining Rig

Despite the rudimentary, almost offensive nature of this scam, “no doubt, some people will still far for it,” the researcher behind MalwareHunterTeam’s Twitter account told Motherboard in a direct message.

It’s impossible to know how many people—if any—have fallen for this, but given how popular Bitcoin has become and how tempting this might sound for people hoping to make a quick cryptobuck, we can’t rule out that no one will fall for it. For now, most antivirus programs don’t seem to detect this app as malicious, according to Virus Total, an online malware repository that tests malicious files with several antivirus engines. In any case, according to MalwareHunterTeam, the app actually doesn’t do anything other than ask for the keys. It doesn’t infect the target with a virus nor attempts any other malicious attack.

If you come across this malware scam, do not give up your private key. There’s a reason it’s called private.

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Posted by Bitcoinist in News