Who Steals Your Bitcoin? | Is Gold Better Than Bitcoin? | Hodler’s Digest

The longest shutdown in history is over. Alas, no big, beautiful wall. But there was a cave outside of the White House. The 2020 election is already heating up. Democrats are entering the race as well as some independents. So while it might not be possible to buy Starbucks with Bitcoin, it might be possible to use Starbucks to buy the presidency. Howard Schultz, former CEO of Starbucks, this week flirted with running for potus, but might reconsider after this exchange.

Help elect Trump, you egotistical billionaire.

Go back to getting ratioed on Twitter. A considerably more popular proposition was BitTorrent this week, which sold out all of their tokens in under 15 minutes, raising over $7 million. Also this week, a $1 billion hack. Chainalysis report. Iran Avoids Sanctions with Crypto. Hamas Accepts Crypto and Gold versus Bitcoin. Ladies and gentlemen, I'm Molly Jane, and this is your weekly Hodler's Digest. Let's take a look at the latest market upd. Two sophisticated criminal organizations are responsible for stealing over $1 billion in cryptocurrency hacks, says a report published by crypto analytics firm Chainalysis. This amount accounts for the majority of funds stolen in such hacks in the last few years. The two groups, dubbed alpha and beta, are still active and appear to have very recognizable patterns of behavior. The report provides a description of the techniques used by the two groups to hide their tracks, which is by transferring stolen funds thousands of times before cashing out from multiple exchanges. A method to stop the hackers, the study says, could be through a tighter collaboration among crypto exchanges. We talked to Philip Gradwell, chief economist at Chainalysis, to give us more details about their report.

So we identified these two organizations by looking at their patterns, by how they cash the money out once they've committed a hack. So, you know, we weren't originally, you know, we didn't know that there would be only two. Instead, we have these investigators who, you know, follow the money from the scene of the crime to the point where the hackers change that for Fiat or for other cryptocurrencies. And what we did is we then took a systematic approach where we were able to analyze those flows of money over time. And when we did that across a number of hacks, we saw that there were two very clear patterns, which suggest to us that there's two groups behind this. And given the scale of the number of hacks that they had done and the complexity by which they moved the money around, it suggests that both of these are large professional organizations. When alpha hacks an exchange, they then move that crypto around thousands and thousands of times in a very short period of time. And they cash out to lots of different places. And that means that they're actually paying quite a lot in fees. They risk kind of losing some of their crypto, perhaps it might cost them more to try and cash out with different areas. So they've kind of got almost higher cost of business through the way that they cash out. So they're not as efficient as Group Beta, which doesn't move its funds around as much and then cashes out all at once, often through a single exchange. It really looks like Group Alpha is trying to create confusion. It looks like on purpose they're making this really complex web that's harder to follow through. The hackers are always trying to cash out at the place where they can swap their crypto for Fiat, that's in other exchanges. So the cooperation really comes from one exchange saying, okay, we've had a hack. Can everyone else be on the lookout for funds that come from us? And if you get those funds deposited at your exchange, can you perhaps freeze them so we can investigate, ask some questions and hopefully get some of those funds returned?

Stepping up the challenge for hackers, New York based crypto exchange Gemini completed an SOC 2 Type 1 examination this week giving proof of its high level security standards. Gemini is reportedly the first crypto exchange to receive such a certification released by audit firm Deloitte and designed to meet the trust services requirements of the American Institute of Certified Public Accountants. Such requirements include security availability, processing integrity, confidentiality and privacy. We talked to Gemini head of risk, Yousef Hussain, and asked him to explain how this represents a significant milestone for the company and for the crypto industry as a whole.

The SOC 2 examination took months of preparation for us to not only say that we're secure, but demonstrate to the independent party to Deloitte that we are indeed secure. I think that's, that's important for the industry to move away from saying that we're secure and then conflicting sort of reports. When customers see that crypto exchanges have been hacked, there's been exit scams. So we as an industry need to move from saying that we are secure to demonstrating that we are secure. And that's exactly what the SoC2 does. So with this SoC2, because it is such a commonplace attestation in the traditional financial industry, the idea here is, look, the industry is trying to mature, the crypto industry is trying to mature itself, trying to show that we can hold ourselves to the same standard as traditional financial industry. We have the same security controls, guarantees that can be provided. So a lot of those folks that are on the fence may consider dipping their toes in crypto.

Major American investment firm Fidelity will launch its own custody service for digital assets in March. As sources close to the matter told Bloomberg this week. The company's new services will be targeted at institutional investors such as hedge funds, family offices and market intermediaries, but for now they will not be available for retail investors. Bitcoin will be the first crypto to be stored by Fidelity, but Ethereum's storage is expected to follow soon, Fidelity reported in a statement. We are currently serving a select set of eligible clients as we continue to build our initial solutions over the next several months, we will thoughtfully engage with and prioritize prospective clients based on needs, jurisdiction and other factors. Fidelity manages trillions of dollars in client assets and it has been in the business for over 70 years. The launch of its crypto custody service responds to an increasing demand for security in the crypto sphere and is likely to attract more and more institutional investors into the space. Iran has lifted the nationwide ban on bitcoin, albeit with some restrictions. Iranians can trade the lead in crypto but are prohibited from having holdings above €10,000, or just over $11,000. In addition, Iranians are not allowed to accept payments in crypto within Iran. Despite the restrictions, the crypto community, which transacts up to $10 million in Bitcoin a day, cautiously welcomed the reversal of the ban. The restrictions are part of draft regulations so could be subject to change. The reversal was announced by the central bank just before the Electronic Banking and Payment Systems Conference earlier this week. The theme of the conference was blockchain revolution, likely the only revolution this country will see for some time to come. Another announcement that was expected at the conference was the launch date of the state backed crypto Real, but so far radio silence from the central bank on that particular topic. All of these crypto related projects, both at the state level and amongst ordinary Iranians, are ostensibly efforts to circumvent crippling sanctions. The US treasury has sought to aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies. However, ordinary Iranians are using crypto to accept foreign payments and conduct business in bitcoin to get around restrictions imposed by US Banks. Of course, not everything is above board. Recently, the U.S. justice Department indicted two Iranian men on charges related to Samsam ransomware, which compromised American heart hospitals and government agencies in Atlanta. On the state level, Iran is reportedly in talks with eight countries, including Switzerland, South Africa, France and the UK to discuss the possibility of conducting financial transactions in crypto. At this point it is still unclear whether the negotiations concern crypto in general or about the crypto real. Iran is not alone in its attempt to circumvent sanctions using a state backed crypto. Russia is currently currently engaged in similar efforts. And yet both countries should perhaps use Maduro's Petro as a cautionary tale or take Max Kezor's advice. Its great states, Iran, Venezuela, China, Russia are trying to stake cryptocurrencies. It's an important step. All theirs will fail and they'll realize only Bitcoin gives them what they escape. From USD we spoke to Gevorg Ovedikyan, an academic scholar of Iranian studies from the Yerevan State University, currently at the European University in St. Petersburg, about how sanctions are affecting Iran.

On February 11th will be exactly 40 years that they have done a revolution. Ever since there have been various kinds of sanctions imposed on Iran. I mean the most, the strongest or the most effective ones that we now know of that are tied to the nuclear policy in Iran have started in mid 2000s. Nevertheless, in November 2018 the sanctions were basically they resumed their action and soon after that Iran's central bank and most of its banks, most of its banking institutions were switched off from the SWIFT network. Which means that Iran was really left with no realistic legal option of international money transactions which meant that they cannot pay for the imports and they cannot also get the money for their exports. Price of rial does not really affect that much the local population, but there's very important things and the first one that comes to my mind is medicine. Iran does have its own industry of pharmaceuticals, etc. But they still depend on many medicaments which is imported to the country and the population at this moment is just unable to pay for it. Last year during the New Year there were large protests all over the country which started from actually a sparkle chicken eggs. The price of eggs had risen for several percent and that was the first sparkle to bring some people into the streets to protest against the growing prices etc.

Hamas is crowdfunding, but due to the fact that amongst others the US and the EU consider them to be a terrorist organization, they likely fall foul of the GoFundMe and Kickstarter terms of service. Thus the de facto ruling party of the Gaza Strip has turned to Bitcoin in order to raise funds. The request for BTC was sent out on Abu Ubaidah's Telegram channel, a spokesman for Hamas. The funds would go to their militant faction which is widely considered a terrorist organization with the exception of exception of Russia, Turkey and China who do not take this position, the telegram message reads. All lovers of the resistance and the supporters of our righteous cause to support the resistance financially using Bitcoin currency. The message goes on to accuse the so called Zionist enemy Israel of trying to cut all means of financial support. The Gaza Strip is currently under a land, air and sea blockade imposed by Egypt and Israel. Furthermore, Benjamin Netanyahu recently froze several million dollars in Qatari aid, 15 million of which was intended to pay the salaries of Hamas civil servants. Spokesman Abu Ubaidah did not detail how exactly supporters could donate bitcoin to the militant wing of Hamas, which is telling because actually receiving funds in bitcoin is most of the battle. Last year the US Congress concluded that cash was still king when it came to terrorist financing and that crypto was a poor form of money in this for regard they reached this conclusion after studying Al Qaeda's efforts to raise illicit funds. In September of Last year, the U.S. house of Representatives passed the Financial Technology Protection act in order to set up a task force to combat terrorism financing. Early in January, Gemini founders Cameron and Tyler Winklevoss confirmed their bullish view on bitcoin, encouraging hopes that the main cryptocurrency will eventually replace gold as the most trusted store of value.

I think investors who have gold in their portfolio and other precious metals are.

Starting to look to bitcoin as a.

As a better store of value. It's got better money characteristics than gold.

Itself, so it's actually better at being gold than gold. Bitcoin is better at being gold than gold itself, said Tyler. It is clear, however, that we are not quite there yet. After briefly turning to bitcoin as their preferred store of value during the 2017 Bull Run, many investors are now returning to gold. At least that's what Jan Van Eck, CEO of investment management firm Van Eck Associates, pointed out in a recent interview. I do think that bitcoin pulled a little bit of demand away from gold last year. In 2017, interestingly, we just pulled 4,000 Bitcoin investors and their number one investment.

For 2019 is actually, actually gold.

So gold lost to bitcoin and now it's going the other way. Fanec's analysis was supported by a recent report by market development organization World Gold Council, which points out that while bitcoin has behaved as a risky asset amidst the stock market crisis of 2018, losing much of its value, gold's price rallied and confirmed itself as the safest store of value in troubled times. According to the same study, Bitcoin's strong correlation to Nasdaq proved its close relation with technology stocks, thus not suitable for replacing gold as a safe haven. However, this doesn't need to be a throw the baby out with the bathwater sort of situation. Several stablecoins backed by the precious metal are already available on the market. For instance, the Digix Gold token, launched in September 2018 is based on the Ethereum blockchain and backed by physical gold. Sean Dehay, CEO of Digix, said the gold Peg token is likely to gain popular in a crypto winter, the end of which is still out of sight. We talked to Sean asking him to comment on the advantages of gold backed cryptocurrency.

Digix is a company that tokenizes physical assets. In essence, we have tokenized physical gold and issued an ERC20 token called DGX which represents 1 gram of gold on the Ethereum blockchain. Gold prices have been increasing over the last couple couple of months. In the background of the whole economic uncertainty around markets with Bitcoin and Ethereum as well trending downwards, we do kind of see a lot of interest in the token. Firstly we purchase physical gold and do note as well like the entire system is always one to one in a sense that we are fully back. So every token that is existing on the Ethereum blockchain right now there is that 1 gram of gold in the vault. We currently do have about 106 kg of gold stored in the vaults here in Singapore as well as in Canada. Bitcoin has always been viewed as the digital gold on the whole cryptocurrency landscape. So what Digix provides essentially is an asset backed token token that actually represents physical gold. Whereas Bitcoin itself appeals to the cryptocurrency community more as a stable store of value at the moment, I do think these two assets would continue to live in paralytically with each other. I don't see a future where both will displace one another. Rather, Bitcoin itself has its own merits and its own value in a sense of being an orderless organization and community.

With Iran circumventing sanctions and Russia de dollarizing, do you think that more countries will and maximize Kayser's words escape the USD or does that have as much chance of happening as a 437 Rams Super bowl victory? Let us know in the comments. And as always remember to like subscribe and hodl Cointelegraph like subscribe and HODL.

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