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New Crypto Tax Rules issued by the IRS

The Internal Revenue Service (IRS) recently released instructions for computing taxes involving crypto assets. The digital market has been waiting for this report since May 2019 after the Revenue’s chief Chuck Rettig hinted at an update to the existing regulations. In April 2019, some members of Congress wrote to Rettig seeking clarification regarding crypto reporting requirements and related tax consequences.

The guidance consists of a revenue ruling section and FAQs. According to Rettig, the IRS is dedicated to increasing citizens’ understanding of their tax requirements in this developing sector. The new directive, he added, would enable taxpayers and industry professionals to understand how prevailing tax principles fit into the ever-changing scene.

What’s more, the authority would shed some light on the relevant reporting requirements and ensure fair implementation of tax regulations. Although the guidance addresses Federal income taxes, states might soon observe these rules. Some of the highlighted issues include tax liabilities from crypto forks, computing taxable gains during cryptocurrency sales and how to estimate cryptocurrency earnings.

Forks

The document states that new digital currencies developed from a current Blockchain fork should be considered as normal income equivalent to the new coin’s market price when received. This is only possible if you are in control of the coins. While a hard fork arises when coins in a shared ledger shift, a soft fork is from a protocol switch that does not divert the ledger, hence, does not create another cryptocurrency.

As such, holding digital coins before hard forks or immediately after is free of tax penalties. However, a new cryptocurrency’s airdrop after a hard fork incurs tax on the airdrop’s value. An airdrop spreads crypto units to multiple users’ ledger addresses.

Determining Cost Basis

It also explains how to find the market price of currencies earned from mining and selling goods and services. When it comes to the cost basis, add the cash spent on buying the coins to the other acquisition costs in U.S. dollars. In addition, the document explains how to work out the cost basis for every crypto unit disposed of through a taxable deal.

Take the example of an investor who has bought bitcoins through different transactions over the years. During the sale, it will be unclear which buying price to use when computing taxable gains. A coin’s price determines its value when bought at an exchange. Income basis, therefore, comprises of fees and similar purchase costs.

When buying the cryptocurrency at a peer to peer (P2P) exchange, you can establish its market value using a price index. According to the IRS, this could be an explorer that checks global crypto indices and computes coin values at a particular date and time. Users distinguish the coins they are selling by recording distinct labels such as addresses or private and public keys. Alternatively, they can use the transaction registers of all units.

Past Guidance

This report borrows from a similar IRS directive in 2014. Dubbed Notice 2014-21, the document contains 16 FAQs explaining the relevance of general tax concepts in crypto transactions. It describes a crypto coin as a digital symbol of value functioning as an accounting unit, mode of exchange and store of value.

Although digital coins act as real currency in certain environments, they lack legal tender status. Virtual currency is considered a capital asset only if it is convertible to cash. For example, users can buy bitcoins or convert them into currencies like the Euro and the U.S. dollar. Needless to say, capital gains principles cover both profits and losses.

Gifts and Contributions

Suppose virtual currency is exchanged as a gift. The giver does not incur taxes. The gifted individual, on the other hand, will not earn from it unless they sell or exchange it. It is prudent to note that business gifts do not apply. When it comes to donations, the charges are equivalent to the currency’s value if the period you held it exceeded one year.

Defaulters

The IRS notes that some users have not reported their earnings nor paid the resulting taxes. Similarly, others have given incorrect information about their transactions. Therefore, the commission is using methods such as audits, tax literacy and criminal investigations to tackle non-compliance.

In July 209, for example, the authority declared that it had sent letters to over 10,000 citizens who submitted false crypto transactions or failed to report their activities altogether. Such offenses could attract penalties, interests and even criminal prosecution. Investors should, therefore, document transactions such as sales, receipts, and exchanges to determine their tax returns.

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Source: Crypto News

India Announces Preparation of All-Inclusive Blockchain Strategy

Over the last couple of years, the popularity of blockchain technology has increased considerably, thanks to its numerous advantages over traditional systems. For a while, governments, private companies, digital currency projects, financial institutions and numerous other entities have actively researched the opportunities associated with blockchain. At this point in time, the technology is ready for usage, and we are already seeing implementations, both from private and public entities.

With this in mind, recent reports indicate that India is now working on developing an all-inclusive blockchain strategy, meant to ensure that the country is ready for the future’s blockchain-based technological infrastructure. In a recent Q&A, the Indian Minister for Electronics and IT, Sanjay Dhotre stated: “Considering the potential of Blockchain Technology and the need for shared infrastructure for different use cases, an approach paper on National Level Blockchain Framework is being prepared.” Currently, it seems that the technology will be used at a national level for a series of niches, including cybersecurity, public administration, banking, education and governance.

According to the minister, the Indian Ministry for Electronics and IT will soon begin working with the Indian Institute for Research & Development in Banking Technology, alongside several other departments and organizations, in order to facilitate the development of the blockchain strategy, and its implementation later down the road.

For instance, the blockchain strategy will facilitate the development of Proof-of-Existence blockchain technology, which will be used at a state-wide level to help authenticate and verify numerous types of documents, such as academic certificates, property documents and more. This development will help reduce forgeries and fraud, while also making it easier for Indian employers and other authorities to verify the authenticity of the documents that they are presented with. The ministry representative offered several other examples of potential blockchain implementations, including initiatives concerning finance trading or cloud security.

So far, it is believed that India’s upcoming blockchain strategy will feature several guidelines that blockchain-based companies must follow for the sake of ensuring consumer security and protection against fraudulent practices. Additionally, the strategy will also feature in-depth policies explaining how government-backed blockchain projects will replace existing governance, financial and administrative systems, thus offering users a cheaper, faster and more intuitive experience.

At this point in time, several other countries are investing in the research and development of blockchain technology. For instance, China has also launched its blockchain strategy. It features several guidelines that must be respected by blockchain-related entities, while also showcasing China’s plans to implement such systems at a nation-wide level, in order to improve digitalization, while also disrupting existing industries and improving their overall performance.

Despite everything that has been outlined so far, India has been fairly critical of cryptocurrencies. Thus, we can observe a trend in several countries (including China and India), where blockchain technology is promoted and incentivised, whereas the development and use of standalone decentralized digital currencies are discouraged.

 

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Source: Crypto News

European Central Bank Considers the Development of a CBDC

Over the last couple of years, governments and central banks throughout the world have been actively researching the opportunities and potential drawbacks of releasing central bank-based digital currencies. So far, China, Uruguay and Sweden are getting close to the official release of their CBDCs. Recent developments in the global payments market have encouraged other central banks to carry out their due diligence and research the market as well. Based on this, reports now indicate that the European Central Bank is also considering releasing its very own CBDC that will be usable throughout the European Union.

As part of a recent press statement, Benoît Cœuré, a member of the bank’s executive board and the head of digital currency research has mentioned that:  “A central bank digital currency could ensure that citizens remain able to use central bank money even if cash is eventually no longer used (…) A digital currency of this sort could take a variety of forms, the benefits and costs of which the ECB and other central banks are currently investigating, being mindful of their broader consequences on financial intermediation.”

Based on this, the European Central Bank has not yet decided whether the CBDC will be blockchain-based, and which use cases it will eventually serve in the long-run. These decisions will likely be taken once the research effort is finalized, and once the market has further matured. On the other hand, there are reports stating that the European Central Bank will first develop a centralized digital currency that can be used for inter-bank transfers and settlements, as a wholesale coin. Such experiments are already underway in several other countries, and they are bound to show whether digital currencies like this can be integrated within the available systems.

At this point in time, several financial experts, such as Mark Carney, the governor of England’s central bank has stated that a network-based central bank-backed digital currency developed as part of an inter-bank joint effort could potentially reduce the influence of the US dollar in numerous types of international transactions. Because of this, we can conclude that the discussion is mostly centred on inter-bank coins that would facilitate large-scale monetary settlements. Thus, while research is surely being carried out, it seems that a digital euro for population usage is not a priority at this point in time.

Luckily, decentralized digital currencies are here to stay, given the growing maturity of the market and the increased adoption rates throughout the world. After all, while CBDCs can work in theory, they offer little to no benefit when compared to traditional digital currencies that are decentralized, semi-anonymous, transparent and immutable. The main difference is the fact that CBDCs remain in control of coin minters (central banks, governments and other financial institutions), whereas cryptocurrencies are controlled by the people and unwritten financial laws.

 

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Source: Crypto News

Nano May Emerge as Bitcoin’s Strongest Rival, yet Platform Remains Vulnerable

There is no shortage of cryptocurrencies challenging Bitcoin’s hegemony, yet Nano stands out among them due to its unique architecture and function. Although it is far from the most valuable of Bitcoin’s rivals, there is no doubt that it has the potential to become a dominant player in the crypto space. As altcoins continue to recover, Nano supporters are clearly expecting the platform to take a bold leap forward.

Bitcoin and Nano both have singular functions in that they serve to store and transfer value. They are not designed for more advanced operations such as smart contracts or Internet-of-Things. Others in this sector include Dash, Zcash, Monero, and Litecoin. 

The Nano team has, by any measure, designed a platform that is remarkably well suited for this purpose. Instead of a blockchain, Nano uses a direct acyclic graph (DAG) that creates a single chain between each sender and receiver. This unique design enables extremely high performance. Most transactions are fully confirmed in well under one second with tremendous capability for scaling. The ledger is also incredibly lightweight, requiring much less storage than competing blockchain platforms. Most notable is the fact that transactions are feeless, making Nano perfect for microtransactions or small purchases. 

Nano recently made headlines when U.K.-based Kappture, a producer of point-of-sale hardware and software, adopted it for integration into their equipment. The company has released several videos demonstrating the technology in action, and has stated that Nano is the only cryptocurrency that meets its standards for security, speed, and reliability. Should this partnership succeed it is easy to see similar players following suit. A developer has also just released a Nano plugin for Unreal Engine, which will enable game developers to integrate Nano micropayments into gaming platforms. 

It is worth noting that Nano has one significant weakness. The lack of fees makes it possible for a malicious actor to overload the network with large numbers of transactions. Such a spam attack would bloat the ledger and grind legitimate transactions to a halt. The Nano team is well aware of this issue and is working on a solution, yet until it is deployed the vulnerability is very real. 

There is no question that Nano is a potential game-changer in the crypto space. In fact, Nano supporters routinely accuse Bitcoin advocates of undermining the platform on social media. The extent to which such activity is taking place is certainly debatable, but Nano’s performance is clearly enough to make Bitcoin investors nervous. Should the solution to the spam attack issue prove effective, Nano will be in a position to render all but the most advanced blockchain platforms obsolete. 

With a market cap of just over USD $100 million, Nano is still far less valuable than Bitcoin or many other platforms designed for direct payments. Nevertheless, the crypto revolution remains in its infancy, and many platforms are certain to rise and fall before a clear picture emerges of which will be mass adopted.

Disclaimer: Crypto-News is not associated with the Nano team in any capacity and this article should not be taken as financial advice.

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Source: Crypto News

Upbit the Latest Exchange to be Hacked as $50 Million Worth of ETH are Stolen

South Korean-based Upbit has become the latest major exchange to be hacked. A thief has stolen 342,000 Ether worth USD $50 million. The exchange has stated that the stolen cryptocurrency did not come from user funds, and that all deposits and withdrawals will be suspended for at least two weeks. As this attack is far from the first to happen to a popular exchange, patterns are now emerging that may provide greater insight into why they remain common.

One fact emerging from the constant series of thefts is that exchanges have yet to develop secure protocols for handling the vast quantities of cryptocurrencies that are held in their wallets. Although all claim to keep the majority of their funds in cold storage, doing business requires many large-scale transfers every day. This activity is inevitably going to open the door to vulnerabilities as passwords and private keys must be regularly accessed. Additionally, the demand by users for ever faster deposits and withdrawals may hinder reasonable security and review processes when using exchange wallets. 

Also, unlike the legacy banking industry, standard protocols do not exist for the handling of exchange funds, and most exchanges do not undergo independent security auditing. In fact, as crypto remains largely unregulated, there are few organizations qualified to even conduct such reviews. Thus, users have no clear method for determining if exchanges are managed by competent personnel, or if their funds are properly managed. 

Contrary to popular myths, most major exchange thefts are not the result of crooked operators. In other words, they are generally not exit scams. Rather, the exchanges are seeking to conduct honest business, and the hacks are due to improper security protocols. The recent attacks on Binance, Bithumb, and Cryptopia are all examples of this fact. It is worth noting, however, that many exchange hacks appear to have been inside jobs by lower level employees, raising questions about the ability of these organizations to properly vet and monitor their workers.

A key takeaway from the Upbit hack is that users should never use exchanges for long-term cryptocurrency storage. Exchanges are not wallets, and should not be used as such. The common, time-honored phrase “not your keys, not your crypto” remains as valid today as it did when Bitcoin was first released. 

Although they have not been able to stem the rate of major thefts, exchanges have become far more adept at tracking and seizing stolen crypto funds. Thieves almost always seek to launder stolen cryptocurrencies through other exchanges, and a substantial amount of stolen crypto has been recovered via mutual cooperation during this process. For example, earlier this year Bitrue was able to freeze over USD $4 million in stolen Cardano and Ripple after attempts to launder it were discovered.

Exchanges are also less likely to shut down after major security breaches. Six multi-million dollar thefts have occurred in 2019, yet none have resulted in permanent closure of the affected exchange, although Cryptopia closed in January due to a theft that took place last year. The ability to survive major attacks is no doubt due to the fact that exchanges are now establishing emergency funds that can be tapped into when these events occur. 

As the crypto space matures, it is likely that many of the shortcomings that are leading to these high-value thefts will be corrected. Doing so will, of course, require greater cooperation from many agencies, including governments and law enforcement. Fortunately, Upbit appears to be able to remain open after this attack, yet users should still exercise caution and restraint with all exchange activity.

 

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Source: Crypto News

Altcoin Recovery is Leaving Bitcoin at a Crossroads

Throughout its ten year history, Bitcoin has experienced the greatest level of volatility of any asset ever created. It has endured significant challenges and setbacks, yet remarkably has remained by far the most valuable and significant cryptocurrency. As the general crypto market recovers, Bitcoin now finds itself in a strange position. Across the globe, there is tremendous enthusiasm and support for its future, yet there is an equally strong desire to undermine it. The flagship cryptocurrency is thus now at a point where soon it will become either a mainstream platform for use in the new global economy, or it will cease to be relevant.

By any traditional measure, this has been a good year for Bitcoin investors. The cryptocurrency has more than doubled in value since early January, and more people than ever either own it, or plan too. Of particular note is its extremely high popularity among those under age thirty. 

A closer examination, however, reveals serious concerns. One of which is the stagnation of the Lightning Network (LN), which is Bitcoin’s scaling solution and crucial for its long-term success. After initial growth earlier this year, LN adoption has clearly stalled. Node and channel growth, as well as overall capacity, have not increased since June. Interest in using it is anemic, and even its staunchest supporters acknowledge that it is complex and far from user friendly.

An equally serious problem is Bitcoin’s slipping market share. It reached its yearly peak of seventy percent in mid-September, and has since slowly declined. Market share now sits four points lower, which coincides with an overall drop in value to USD $7,600. Although this number still represents a commanding lead over all other cryptocurrencies, its decline reflects the fact that altcoins are gaining strength. Should Bitcoin ever lose its status as the most valuable crypto platform its relevance in the space would surely collapse. 

In terms of altcoin competition, the stakes are clearly getting larger. A number of platforms are on track for deployment in sectors ranging from logistics to finance. Until now Bitcoin has benefited from the fact that its key rivals are still under development, and have yet to prove themselves in the real world. This scenario is changing. Already some platforms such as Ripple, BAT, and VeChain are experiencing institutional and personal use. By this time next year, the floodgates are likely to have opened for these and many others, which will be a tremendous challenge to Bitcoin’s hegemony. 

To a certain extent, predicting Bitcoin’s future is an exercise in psychology, not technology. All cryptocurrencies will require mass use to succeed. On the one hand, Bitcoin is by far the most recognized blockchain platform, and perhaps the only one known to most of the public. It has an overwhelming first-mover advantage on a global scale. On the other hand, there is no shortage of more user friendly and technically advanced altcoins, albeit lesser known. Thus, understanding whether or not Bitcoin will remain on top involves getting into the heads of the general public, and predicting their choice on this matter. 

Regardless of where one stands on Bitcoin’s future, the crypto space is rapidly evolving, and the picture is all but certain to become more clear in the coming months. Altcoins are recovering, and more than ever blockchain technology is emerging as a revolutionary force. Bitcoin is, without a doubt, at a point where soon it will either live up to its potential as a global currency or yield its hegemony to other platforms. 

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Source: Crypto News

Middle Eastern Banking Crises Are Highlighting The Case For Cryptocurrency

Cryptocurrency is once again becoming a popular topic in the Middle East as two countries are experiencing economic turmoil related to their banking systems. Lebanon is in the midst of a full-blown banking crisis that has now led to a collapse of the ruling government. Meanwhile, Iranian protests have led to the burning of a central bank branch and an attempt by the government to shut down the Internet. In both cases blockchain assets are functioning as tools for the protestors, yet not without challenges of their own.

The situation is Lebanon is becoming worse by the day, as street demonstrations escalate and the government appears incapable of leading the nation toward a peaceful resolution. The protests began in October after reports emerged of impending tax hikes on many items including food, gasoline, and Internet use. At the root of the problem is the central bank’s shortage of U.S. Dollars, against which the Lebanese Pound has been pegged since 1997. This shortage has been exacerbated by the country’s large budget deficit and deteriorating economy.

Facing a dollar crunch, banks across Lebanon have suspended or restricted withdrawals, which has, not surprisingly, caused stress and anger among the public. Many Lebanese are now turning to cryptocurrencies, notably Bitcoin, to protect their assets. This trend is especially common among expats, who are deeply concerned about sending remissions home via the traditional financial channels.

Events in Iran are equally unsettling, as demonstrations are erupting across the country, and are growing more violent by the day. This latest round of unrest began after the government announced a fifty percent hike in the price of gasoline, along with monthly rationing. The larger issue, however, is the rapidly deteriorating condition of the Iranian economy, which has suffered under crippling sanctions imposed by the United States and Europe. As in Lebanon, interest in crypto has surged, with many Iranians seeking to move their wealth away from the Rial, which has seen its value collapse in recent months.

In a move that is being downplayed by the official state news agencies, a group of angry Iranians have just burned the central bank building in Behbahan. Many more images and videos of burned buildings and vehicles are emerging.

The events underway in these two countries underscore the advantages blockchain assets have over state-based fiat, yet clear limitations of the technology are also evident. Lack of reliable Internet access is severely limiting citizens’ access to their crypto funds. In fact, the Iranian government has reportedly shut down the Internet in much of the country as a result of the protests. Also, purchasing cryptocurrency requires fiat, which is in short supply. In fact, as is the case in many economically stressed countries, cryptocurrency in Lebanon and Iran currently sells for a much higher price than the global average.

Perhaps the largest problem is the fact that the blockchain economy in these nations remains very small, as few businesses accept cryptocurrencies, and only a small percentage of the population possesses the skills needed to acquire and use them. This fact is certain to change moving forward, but for now it is a serious problem. Likewise, as blockchain assets begin to disrupt traditional economic systems, states are likely to crack down on them, most notably those with the most unstable, and least trusted central bank currencies.

Given the scale of the unrest in Lebanon and Iran, it is unlikely that their respective governments are much concerned about the embrace of cryptocurrencies by their citizens at this time. Despite their utility, blockchain assets remain a relatively fringe component of their overall economies. Nevertheless, their use by many of the people caught in this turmoil is a clear indication that crypto will play a much larger role moving forward during times of economic stress. Thus, leaders around the world would be wise to pay attention to their adoption.

 

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Source: Crypto News

ChainLink’s Popularity Is Surging, Represents Mainstream Blockchain Interest

Although there is no shortage of enthusiasm for many emerging cryptocurrencies, ChainLink is becoming a clear standout. The blockchain platform has emerged from relative obscurity to become a top performer in both crypto markets and in interest from major institutions. ChainLink’s ascension is a clear example of the dynamic nature of the blockchain space, and as the technology moves mainstream it is positioned to grow even further.

ChainLink has been created to fill a unique need within the blockchain space. It seeks to bridge the gap between smart contracts and real-world data. Data providers, known as “oracles” are well-known to be a crucial component of any advanced distributed ledger system. ChainLink is specifically designed to enable information from oracles to be reliably inputted.

Although there are competing platforms, ChainLink is the clear leader in this specific niche, and its popularity is growing. The team has forged dozens of partnerships with notable institutions such as Binance, Google, and (coincidentally) Oracle Corp. As more mainstream businesses seek to enter the blockchain space, there is little doubt that more will seek to incorporate ChainLink’s network.

In terms of market value, ChainLink has easily outperformed every other significant platform over the past year. It is currently up over four hundred percent from this time last year, and a staggering eighteen hundred percent since late 2017. This growth is remarkable given the steep declines most other platforms have experienced as of late.

It is worth noting that ChainLink is an Ethereum token, and its network operates within the Ethereum ecosystem. Although there are designs in place to enable it to work across many different blockchain platforms, for now this restriction could hinder growth. Ethereum must also successfully implement its scaling solution, and remain a top platform for ChainLink to achieve its potential, which although expected, is far from guaranteed.

ChainLink’s present success is representative of a larger trend in the blockchain space that is seeing platforms advance based on specific use cases and adoption by trusted legacy institutions. In other words, investors are becoming choosy, and are presently more interested in newer, more advanced coins. Cryptocurrencies that serve merely to transfer value, such as Bitcoin, Dash, and Litecoin, are struggling to maintain market share against these competitors that offer more utility.

There is, of course, no guarantee that ChainLink will succeed long-term. Despite the impressive potential, the system that it has created to ensure the accuracy of oracle data has yet to be proven at scale. Within the same context, other solutions are also under development, such as one from Iota that is integrated into is Qubic project.

For now, the mood among ChainLink supporters could not be higher. The platform’s progress is showing no signs of slowing, and it is all but guaranteed to play a key role in blockchain mass adoption. As with all blockchain assets, ChainLink remains highly speculative, yet increasingly investors see it as a risk worth taking.

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Source: Crypto News

Litecoin is Facing increasing Challenges, Yet Value Continues To Rise

Like most altcoins, Litecoin is experiencing a revival in market cap, and interest in the platform is growing among investors. Litecoin has moved up twenty percent since late last month, and remains one of the best known cryptocurrencies. Nevertheless, challenges facing the platform are growing, as competition is increasing and the investing public is becoming more discerning in which blockchain assets it chooses to support.

Litecoin is one of the oldest and most established platforms in the crypto space. Launched in 2011, it was the first altcoin, and is technically almost identical to Bitcoin. The only notable differences are that it uses a different consensus algorithm, and has a faster block time as well as a larger maximum supply. 

Litecoin has always had its share of critics, yet has remained a top platform with a strong community and development team. Whereas this fact is unlikely to change soon, it is apparent that Litecoin is no longer as well regarded among casual crypto advocates as it once was. For example, despite it being the sixth most valuable blockchain asset, it only occupies 1.6 percent of the total cryptocurrency market cap. Blocks are routinely completed partially filled, and merchant adoption is anemic. 

A serious concern is its hashrate, which has been in decline since August after the block reward halved. Miners now only received 12.5 LTC for block completion, as opposed to the previous 25. It is thus not surprising that mining interest would decline, and will only increase if Litecoin’s value moves ups considerably more, which is far from guaranteed to happen. 

Perhaps Litecoin’s most significant challenge is its lack of unique qualities that distinguish it from Bitcoin or other first generation cryptocurrencies. The platforms that have seen the most significant gains over the course of the past few weeks have been newer, with design purposes that go much farther than mere exchange of value. These include Chainlink, Cosmos, and VeChain. Finding a place among these competitors may prove quite difficult moving forward. Adding to this issue is the fact that the Litecoin Foundation, which is largely responsible for marketing, is low on funds.

It is worth noting that Litecoin also has a number of very powerful advantages. For example, transaction fees are extremely low, and it is available on virtually every legitimate exchange. Also, like Bitcoin, Litecoin enjoys significant early mover advantage, as it is nearly universally known, and trusted, by long-term crypto advocates. A Litecoin conference held in Las Vegas last month was quite well attended, and featured a keynote address by former U.S. Senator Ron Paul. 

There is also very little discord among Litecoin developers. For example, Litecoin adopted Segregated Witness and the Lightning Network without issue. Also, Litecoin founder Charlie Lee, despite having sold all of his holdings in the platform, remains active in the project and is one of the best known players in the blockchain space. There is little doubt that, moving forward, the community will make whatever adjustments are needed for the cryptocurrency to remain relevant.

Litecoin’s remarkable ability to remain a top altcoin has baffled many crypto analysts, yet there is little doubt that now the platform is at a crossroads. The market recovery that is clearly underway is all but certain to test it like never before. However, Litecoin’s greatest feature appears to be its resilience, and time and again it has proven wrong those that have chosen to bet against it.

 

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Source: Crypto News

Stellar’s Team Taking Bold Steps to Secure Platform & Push Mass Adoption

Stellar Lumens (XLM) has experienced a series of highs and lows since its founding in 2014, but the development team has kept a steady eye on long-term development and use. Now, as blockchain technology begins to emerge from the frustrating crypto winter, the platform appears positioned to make great strides into the mainstream. In preparation, the team has made a series of bold moves designed to strengthen Stellar’s ability to compete with other cryptocurrencies.

There has never been any doubt that Stellar has tremendous potential. Its principle founder, Jed McCaleb, co-founded Mt. Gox and Ripple, and is widely regarded as one of the most talented minds of the blockchain space. McCaleb and the Stellar team intend for their platform compete with Ripple, focusing on cross border fiat transfers and other financial activities. To that end they have been very effective at making partnerships, notably with IBM as the core protocol for Big Blue’s Blockchain World Wire service. 

Stellar is also able to run smart contracts. A growing list of decentralized applications have been written for it, and it promises to be as scalable as competing platforms. 

Recently, the Stellar team disabled a built-in inflationary mechanism that added one percent of the circulating Lumens tokens per year to the platform. Lumens holders could vote on the recipients of the tokens, which the team intended to be projects building on the platform. After much discussion among the Stellar community, the inflation was disabled because it had become clear that the process was not achieving this goal.

Also, the Stellar development team has just burned fifty billion Lumens, which represents more than fifty percent of the entire token supply. This move came as a surprise, and immediately caused the price of the coin to spike twenty percent. The team asserted that burning such a large number of Lumens, which had a value of USD $4.7 Billion, was a good faith effort to demonstrate its commitment to the platform. It still has thirty billion under its control, which it claims is more than adequate to achieve its goals. 

On November 5th, Weiss Crypto Ratings claimed that Stellar remains under valued, and praised recent protocol upgrades. Notably, the financial analysis firm stated that many Ripple users would be well-served if they switched to Stellar. This statement has drawn the ire of the Ripple community, but nevertheless underscores the fierce competition that is heating up between the two platforms.

In the midst of what is impressive progress for Stellar, a number of challenges remain. One of the most notable is the fact that its consensus mechanism, known as Stellar Consensus Protocol (SCP) has been accused of being centralized. SCP has a unique architecture that enables transactions to be confirmed by only a handful of nodes. Also, many nodes are controlled by the development team. Earlier this year the Stellar network went offline for one hour after several nodes failed to work properly. The team, of course, refutes the claim of centralization, but has acknowledged that more work is needed to make SCP fully operational.

Stellar is also seeking to establish itself in what is becoming an increasingly crowded field of players. Several platforms of various designs now seek to become the go-to system for moving money around the world. For Stellar to succeed in this task will need to be more than merely technically superior, it will need to win over key figures in the political, business, and financial sectors. This task will not be easy. 

The altcoin recovery that is underway has certainly been good for Stellar, and its supporters are no-doubt happy with recent events. Nevertheless, much work remains if the platform is to prove itself as a mainstream blockchain network. Its team has now proven that it has the drive to achieve success. Thus, the next phase of its development will need to focus on real-world adoption and use.

 

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Source: Crypto News