On Friday the price fell below $7,910 on the Bitstamp exchange, a 12% fall on the day before, but recovered slightly.

But although it is far short of the $19,000 it reached in November 2017, it is still way above the $1,000 level at which it started trading last year.

The fall comes amid a number of recent incidents that appear to have shaken faith in cryptocurrencies.

On Friday, Japan’s financial regulator carried out a surprise check on major Japanese exchange, Coincheck, which last week was subject to a security hack.

The regulator said it had asked the exchange to fix flaws in its computer networks well before last week’s theft by hackers of $530m of digital money.

Also this week, Facebook said it would ban adverts for digital currencies.

Other countries have already expressed concerns about such entities. China and South Korea have banned any new virtual currency launches and have been shutting down exchanges on which they are traded.

The UK’s Financial Conduct Authority warned investors in September they could lose all their money if they buy digital currencies issued by firms, known as “initial coin offerings”.

Bitcoins are created through a complex process known as “mining”, and then monitored by a network of computers across the world.

However, like all currencies its value is determined by how much people are willing to buy and sell it for.

Last year, two of the world’s largest commodity exchanges, the CBOE futures exchange and the Chicago Mercantile Exchange, both allowed trading in Bitcoin futures.

Bitcoin is the most widely traded cryptocurrency, but there are scores of others, the majority of which also fell on Friday, according to the Coinmarketcap.com price tracker.

The second and third largest virtual currencies, Ethereum and Ripple, plunged more than 20%, before a slight pull-back in the price.

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Source: BBC

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The company said it was open to emerging technologies but many companies were not acting in “good faith” when extolling the virtues buying into virtual currencies.

Recently, a wave of new currencies have emerged, seeking to piggyback Bitcoin’s huge increase in value.

Facebook urged users to report any ads the company’s security measures missed.

It admitted it would not always catch every ad for a crypto-currency.

“We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception,” wrote Rob Leathern, product management director for Facebook Business.

“That said, there are many companies who are advertising binary options, ICOs and crypto-currencies that are not currently operating in good faith.”

An ICO – initial coin offering – encourages people to buy into new crypto-currencies before they launch in the hope they are one day worth a lot more money as the coin becomes more popular.

Some companies have used ICOs as a way to raise great sums of money, but without the regulatory burden associated with raising cash though more traditional investment channels.

Because of this, many ICOs have simply disappeared, with little recourse for the “investor” – a loose term, since those who pay into ICOs do not typically get a genuine stake in the new company.

Deception worries

Using Facebook ads to generate “buzz” around a new scheme could be a particularly effective method, especially when paired with celebrity endorsement. Retired boxer Floyd Mayweather was criticised last year for promoting a cryto-currency that later became the target of a lawsuit alleging deception. Mr Mayweather has not been accused personally.

Raising money using an ICO has been banned in South Korea and China, and regulators in other countries are warning against getting involved.

The US Securities and Exchange Commission (SEC) this week said it had seized the assets of a firm that said it had raised $600m in its ICO.

Facebook said its new policy was “intentionally broad” and would evolve over time.

It states: “Ads must not promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, or crypto-currency.”

Under the new policy, advertising using phrases such as “New ICO! Buy tokens at a 15% discount NOW!” or “Use your retirement funds to buy Bitcoin!” would not be permitted, Facebook said.

For Facebook, the move is the latest attempt to protect the integrity of its advertising platform, which over the past 12 months has been under fire for enabling Russian propaganda and other inappropriate content.

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Source: BBC

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Coincheck has promised to use its own funds to reimburse more than 46bn yen ($423m) to customers who lost their NEM cryptocurrency coins on Friday.

The Tokyo-based company suspended trading after detecting “unauthorised access” of its digital exchange.

Some 260,000 customers are said to be affected by the reported theft.

Coincheck said on Sunday that the amount it has promised to return covers nearly 90% of the 58bn yen worth of NEM coins lost in the attack.

After the breach was discovered on Friday, the company froze deposits and withdrawals for all cryptocurrencies except Bitcoin as it assessed its losses in NEM, a lesser-known currency.

The stolen Coincheck assets were said to be kept in a “hot wallet”, which is a part of the exchange connected to the internet, as opposed to a “cold wallet”, where funds are stored securely offline.

The company says it has the digital address of where the assets were sent.

As many as 10,000 businesses in Japan are said to accept cryptocurrencies.

In 2014 MtGox, another Tokyo exchange, collapsed after admitting that $400m had been stolen from its network.

What do we know about the hack?

Hackers broke in at 02:57 on Friday (17:57 GMT Thursday), the company saidin a statement, but the breach was not discovered until 11:25, nearly eight and a half hours later.

Company chief operating officer Yusuke Otsuka said 523m NEMs had been sent from Coincheck’s NEM address during the breach.

“It’s worth 58bn yen based on the calculation at the rate when detected,” he told reporters at the Tokyo Stock Exchange.

Coincheck then looked into how many customers were affected and whether the break-in had been launched from Japan or another country.

“We know where the funds were sent,” Mr Otsuka added. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them.”

Coincheck reported the incident to the police and to Japan’s Financial Services Agency.

How damaging is the loss?

NEM, the 10th-largest crypto-currency by market value, fell 11% over a 24-hour period to 87 cents, Bloomberg news agency reported.

Among the other cryptocurrencies, Bitcoin dropped 3.4% and Ripple retreated 9.9% on Friday, according to prices seen by the agency.

More was lost on Friday than in 2014, when MtGox lost what it thought was 850,000 bitcoins. However, MtGox later found 200,000 bitcoins in an old digital wallet.

After the collapse of MtGox shook the digital currency world, a licensing system was introduced in Japan to increase oversight of local currency exchanges such as Coincheck.

“What’s the lasting impact? It’s hard to tell,” Marc Ostwald, global strategist at ADM Investor Services International in London, told Bloomberg.

“Japan is one of the most pro-crypto trading countries, among the G-20. In Japan they don’t really want a wholesale clampdown. So it will be interesting how Japanese regulators respond to this, if they indeed do.”

What is Coincheck?

Founded in 2012, the company is based in Tokyo, where it employed 71 people as of August last year.

Its headquarters are located in the city’s Shibuya district, an area popular with start-ups that was also home to MtGox, Bloomberg reports.

Last year, Coincheck began running adverts on national television featuring popular local comedian Tetsuro Degawa, the agency adds.

Kunihiko Sato, a 30-year-old customer from Tokyo, told Kyodo he had deposited about 500,000 yen ($4,600), into his account with the exchange.

“I never thought this kind of thing would happen with Japan’s developed legislation,” he said.

How do crypto-currencies work?

Whereas money is printed by governments or traditional banks, digital currencies are generated through a complex process known as “mining”. Transactions are then monitored by a network of computers across the world using a technology called blockchain.

There are thousands of them, largely existing online, unlike the notes or coins in your pocket.

It may be more useful to think of them as assets, rather than digital cash. The vast majority of Bitcoin holders, for instance, appear to be investors. But the anonymity that cryptocurrencies afford has also attracted criminals.

The value of a cryptocurrency is determined by how much people are willing to buy and sell them for.

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Source: BBC

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It said Bitcoin users now saw the virtual currency largely as an “asset” to be traded, rather than something to make payments with.

Fewer online merchants wanted to accept the cryptocurrency, it added.

Rising fees and longer transaction times as a result of price fluctuations also lessened its appeal, Stripe said.

‘Expensive’
Customers of the US-based payments firm pay a fee to Stripe each time it processes a payment. Clients include Lyft, Deliveroo, Grab and Target.

In 2014, it became the first major payments company to support Bitcoin payments.

At the time Stripe said it hoped Bitcoin would become a way for people in places with low credit card penetration or prohibitively high credit card fees to do transactions online.

But the virtual currency was now “better-suited to being an asset than being a means of exchange,” it said.

There has been a huge surge of interest in the digital currency over the past year or so, driven largely by its rapid increase in price.

But that demand has also led to huge swings in price, with Stripe saying the volatility meant the time needed to complete a sale had risen.

“By the time the transaction is confirmed, fluctuations in Bitcoin price mean that it’s for the ‘wrong’ amount,” Stripe’s product manager Tom Karlo said in his blog.

Bitcoin transaction fees had also risen “a great deal” resulting in a decrease in demand from Stripe’s customers to accept Bitcoin payments, he said.

What is Bitcoin?
“For a regular Bitcoin transaction, a fee of tens of US dollars is common, making Bitcoin transactions about as expensive as bank wires,” Mr Karlo wrote.

“Because of this, we’ve seen the desire from our customers to accept Bitcoin decrease. And of the businesses that are accepting Bitcoin on Stripe, we’ve seen their revenues from Bitcoin decline substantially.”

Giving up on cryptocurrencies?
Stripe said it would start winding down its support for Bitcoin immediately and would stop all transactions by 23 April.

But it said its decision to end support for Bitcoin payments did not mean it was giving up on cryptocurrencies all together.

“We’re interested in what’s happening with Lightning and other proposals to enable faster payments,” Mr Karlo said.

“OmiseGO is an ambitious and clever proposal; more broadly, Ethereum continues to spawn many high-potential projects.”

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Source: BBC

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The issue of the adoption of cryptocurrencies in Ghana has been up for some time, with many calling on the state to find a way to get it to be regarded as a legal tender.

[contextly_sidebar id=”lscIp6kRezgyeWru4MG9h84uFcitHFtY”]Speaking at the Ghana Blockchain Conference on behalf of the Minister of Communications, Mr Antwi Boasiako, said, “We have our fears about cryptocurrency but discussions are still going on. Our country is still hesitant to adopt Bitcoin as a legal tender is the fear of the unknown.”

He, however, called on the tech community,  which is already involved in cryptocurrency transaction, clear the mysteries that surround it.

“We are battling fear, the state doesn’t want to move forward because it doesn’t know what’s there. To demystify cryptocurrency, we need a community-driven agenda. We need to strategically demystify the misconceptions around cryptocurrency and get it integrated into the government digitization agenda,” he said

“We need a working group on cryptocurrency that has members from stakeholders like the Bank of Ghana that will set certain targets and study from what is happening in other jurisdictions.”

Cryptocurrency is a digital or virtual currency that uses cryptography for security. It is organic and is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.

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By: Jeffrey Owuraku Sarpong/citimfonline.com/Ghana

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