Bitcoin Experiences Volatile Start to the Year, Struggles to Maintain $4,000 Mark: BTCManager’s Week in Review

The price of bitcoin jumped to surpass the $4,000 mark to kickstart the week early on Monday morning but dropped back down again to close the week five percent lower at around $3,650.

Investors rejoiced to see bitcoin jump back above the important $4,000 mark but were quickly disappointed again when bitcoin dropped from this year’s high of $4,102 down to the $3,600 to $3,700 range ahead of the weekend.

The price drop occurred after China announced new regulations to de-anonymize blockchain users in the People’s Republic and to allow the state to censor content on blockchain networks. Despite China no longer being the central trading hub for the pioneer cryptocurrency, this news was the likely culprit that caused traders to sell bitcoin en masse.

Conversely, there have also been positive developments for bitcoin this week. BitRefill announced its Thor Lightning Network Channel for fast Bitcoin transaction for its services and the French will soon be able to purchase bitcoin at local tobacco shops thanks to the fintech startup Keplerk.

The altcoin market followed bitcoin into the red this week. The only outperformer was TRON, which saw a price rally after it announced that filesharing giant BitTorrent, which was acquired by Tron last year, would be launching a token sale on the platform. Tron closed the week five percent in the green while the remainder of the top 20 altcoins were down five to 20 percent.

This week’s contribution have been provided by Aisshwarya Tiwari, Ogwu Osaemezu Emmanuel, and Tokoni Uti.

Bitrefill, a California-based that facilitates crypto payments, has launched its Thor Lightning Channel, a service that allows people to transfer bitcoin quickly and receive superfast payments via Bitrefill’s node on the Lightning Network, according to the firm on January 9, 2019.

Bitrefill has launched Thor, a service the firm says makes it possible for anyone to get a vacant Lightning channel opened to them from its node on the Lightning network. Bitrefill says its Lightning node is well-connected and has custom capacities between 300,000 to 16,000,000 sats.

For the uninitiated, the Lightning network is a layer two payment protocol that enables faster transactions at super low rates. Lightning has been touted as the technology capable of fixing the scalability challenges of the Bitcoin network.

With the successful launch of Thor, Bitrefill says anyone can use it to receive the world’s flagship crypto as tips or other payments in a quick and easy way. All that is required is the  Bitcoin Lightning application and a special link which the sender will use to open the channel

On January 8,  2019, the first six tobacco stores in France began selling bitcoin as a result of a deal inked with Keplerk, a French fintech company that intends to expand the sale of bitcoin to 6,500 more stores by February.

In November 2018, it was announced that Keplerk would be partnering with tobacco shops in France to make bitcoin as easily purchasable as cigarettes.

Now, the first six tobacco shops in France have begun selling bitcoin alongside their products and according to the management of Keplerk, there are plans to bring aboard as much as 6,500 more shops by February.

It might seem, on paper, like an odd idea to partner with tobacco shops of all places to sell bitcoin when they are so readily purchasable on websites and on apps. But according to Adil Zakhar, one of the co-founders of Keplerk, there is a reason for this.

Cryptocurrencies, in general, are still a novel idea to many people and the thought of buying some strange internet currency is a tough call for most.

However, by selling them through a physical store, there is a sense of “realness” to bitcoin that encourages people to buy. Also, most people who patronize tobacco shops have some friendly relationship with the store owners and thus, will trust them more than a website.

“They trust their local tobacco shop owner more than they would trust some remote anonymous website,” says Zakhar.

A recent survey by the Bank for International Settlements (BIS) found the majority of the world’s central banks are not too keen on issuing digital currencies at least for the next three years but 70 percent of them accepted that they are exploring the idea of central bank-backed digital currencies (CBDCs) in some capacity, reports SCMP, on January 8, 2019.

The survey conducted by BIS took place towards the end of 2018 and included central banks that cover approximately 80 percent of the world’s population.

A total of 63 central banks were surveyed, among which the majority of the institutions stated that cryptocurrencies only accounted for “trivial” usage for domestic payments. Moreover, 28 percent of the surveyed bank opined that digital currencies were only used by niche groups domestically.

The survey also found that central banks the world over see interbank payments as the most viable and extensive use for digital currencies.

The report co-authored by Christian Barontini and Henry Holden reads in part:

“No central banks reported any significant or wider public use of cryptocurrencies for either domestic or cross-border payments in their jurisdictions.”

Notably, the report also mentioned that two central banks from “emerging market economies” were contemplating issuing CBDCs for the general public. However, it did not identify these central banks.

Per the report, most central banks blamed factors such as lack of acceptance, complex compliance issues, unawareness among the general public, and the illegal status of cryptocurrencies in some countries for their stifled growth in the finance industry.

The European Banking Authority (EBA)  has published the report of its assessment concerning the suitability and applicability of existing financial laws to cryptoassets. The body has made it clear that the European Union Commission needs to study the blockchain space extensively to enable it to formulate robust laws capable of governing the entire continent, according to a press release on January 9, 2019.

In its report, the EBA noted that financial transactions involving bitcoin and other cryptoassets do not constitute regulated services within the jurisdiction of EU banking, payments, and electronic money law. As such, there are no significant consumer protection mechanisms in place.

The agency also stated that the lack of an EU level regulation for cryptoassets also makes it easy for bad actors to use them in aiding their unlawful practices, including money laundering.

Specifically, the agency said that that the existing laws governing cryptocurrency exchange platforms as well as wallet providers are not robust enough. Moreover, different member states of the European Union have taken it upon themselves to draft specific guidelines for cryptoassets, making it almost impossible to have a level playing field.

For instance, nations such as Gibraltar and Malta are fast becoming a hotbed for blockchain-based businesses due to their liberal stance and amenable rules for cryptoassets. The EBA noted:

“In some EU member nations, legislative measures have been promulgated or are being considered to create new classes of activity involving cryptoassets trading platforms or wallet provision for which some sort of custom regulation or registration is required, driven primarily by concerns about consumer protection.”

On January 7, 2019, the government of Venezuela published a decree detailing the process of taxation payment with regards to cryptocurrencies and foreign fiat currency.

As cryptocurrency becomes more widely used, the subject of its taxation inevitably comes up. In places like the United States, the Internal Revenue Service has been criticized for failing to provide concrete and clear guidelines for the payment of taxes relating to cryptocurrency.

This, however, is not the case in Venezuela as the government has just published an official decree detailing the protocol for the payment of taxation related to cryptocurrency as well as foreign fiat currency.

The decree in question is number No. 3719 and was published in the Gaceta Oficial edition No. 6,420. The decree is also accompanied by an explanation of the framework as well as the reasons for the new law which is described as an economic emergency.

As revealed last year, Venezuela is in a state of an economic downturn and has issued the Petro, a national cryptocurrency that the government hopes will turn the nation’s fortunes around.