Sunday Digest: Bitcoin Price, Politics, and Poppycock

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Sunday Digest: Bitcoin Price, Politics, and Poppycock


The G7 summit is being held this weekend, with several weighty issues to be discussed by some of the most powerful leaders on the planet. Rumour has it that Bitcoin may also feature on the bill.


Bitcoin Price: Short-Term, It’s Anyone’s Guess

It’s been another one of those weeks for bitcoin price, with not much serious movement in either direction. The only thing we really learned is that nobody has the faintest clue what’s going to happen in the short term.

At the start of the week, a rising wedge saw predictions of a break-down and pullback to $8.8k. Price of course, then jumped up to $10,900, though never really looked like troubling $11k.

Bolstered by this, we were told that an influx of new volume could propel price to $12k next week. Which immediately led the price to drop back, and ultimately break lower than the psychological $10k level.

Bear market signals were apparently looming… so price dragged itself back into five figures by its shirt collar. Then promptly dropped back into four. Could losses be down to a drop in global sentiment generally, or perhaps manipulation by bitcoin whales? More pain was predicted either way.

But then it wasn’t… we suddenly had bullish divergence at $10k and were told that $11,000 was a target. Unfortunately, that rally petered out at around $10.4k, only to drop back to around the $10k level where it has roughly stayed ever since.

Longer-term we have more of a consensus, and still, appear to be looking at $50-60k spurred on by next year’s halving event.

Happy Bitcoin, Mr. President

John McAfee isn’t the only Bitcoin-toting cowboy with his sights on the US Presidency. 2020 candidate, Andrew Yang, came out in support of blockchain voting and vowed to bring in the change if he succeeds in his presidential bid.

Yang’s championing of Bitcoin is well documented, but this week we also looked at how other candidates were showing their support for Bitcoin.

And today we learned that Bitcoin influencer, Jameson Lopp, is considering a presidential bid. His sole running platform is on the issue of universal income paid in BTC.

Whatever happens, Bitcoin has already made it to the G7.

News In Brief

Coinbase admitted had put 3,500 crypto-traders funds at risk.

Bitmex was ordered to provide documents to a US court as its motion to dismiss was thrown out.

This month’s Satoshi Nakamoto reveal started promisingly, only to end up a bit of a lame duck.

Silk Road founder, Ross Ulbricht’s, mum has started a petition for clemency and gathered over 200k signatures so far.

China plans to release a Libra competitor before Facebook has the chance to launch Libra.

And Bitmain plans to increase its hashing power by 50% with 600,000 new mining chips.

And Finally…

Bitcoin appears to have split up with Roger Ver. After a confusing period where the @Bitcoin Twitter account was churning out pro-Bitcoin Cash tweets, normality has now resumed.

@Bitcoin now once again plugs Bitcoin, sparking speculation that the owner of the handle may have had a spat with BCash proponent, Roger Ver.

What do you think of this week’s Bitcoin news roundup? Let us know your thoughts in the comment section below!


 

Early Bitcoin Contributor Projected $10 Million BTC Price 10 Years Ago

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Early Bitcoin Contributor Projected $10 Million BTC Price 10 Years Ago


Just a week after the bitcoin genesis block in January 2009, computer scientist Hal Finney published a price prediction model of $10,000,000 per coin based on it becoming the world’s dominant payments system.


Ten Million Dollars Per Bitcoin

The assumption was based on the premise that bitcoin would eventually become the world’s dominant currency. He concluded that it should be equated to all of the wealth in the world if it became the top payments system. The excerpt from a paper on the release of bitcoin v0.1 a decade ago has made it onto crypto twitter.

“You think bitcoin twitter is bullish? Hal Finney, was calculating a bitcoin price of $10,000,000 per coin just ONE WEEK after the the genesis block on January 3rd, 2009. Absolute legend.”

He also noted that bitcoin’s acceptance rate would be slow at first. This is still clearly evident a decade later as very few people on the planet hold more than one of them. Finney noted:

“One immediate problem with any new currency is how to value it. Even ignoring the practical problem that virtually no one will accept it at first, there is still a difficulty in coming up with a reasonable argument in favor of a non-zero value for the coins.”

He went on to work out total worldwide household wealth at the time which was estimated to be around $100-$300 trillion. With 20 million coins only, that puts each one at around $10 million. Interestingly Finney did not use the 21 million BTC that is the actual limit, presumably accounting for Satoshi’s stash that would remain locked up forever.

It appears that their ‘little experiment’ has been a wild success. Despite just a fraction of the world’s population holding and using bitcoin, its price has skyrocketed over the past few years and it has become the disruptive force that it was intended to be. Governments and central banks are rattled which means that bitcoin has the potential to become a dominant payments system, though ten million bucks per coin is probably a little farfetched.

Finney, who said computers can be used as tools to liberate and protect people rather than to control them, was a noted cryptographic activist and cypherpunk. He created the first reusable proof of work system before bitcoin in 2004. In January 2009 he was the first recipient of a bitcoin transaction and he sadly passed away in late August 2014.

How high can Bitcoin price possibly go? Add your thoughts below.


Images via Bitcoinist Image Library, Twitter: @DrBitcoinMD

Bitcoin Influencer Plans To Run For POTUS, Proposes Universal BTC Income

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Bitcoin Influencer Plans To Run For POTUS, Proposes Universal BTC Income


It has been made clear that the current POTUS is not a fan of Bitcoin however his tenure will not be forever. A pro-crypto United States president would likely ease the regulatory pain that is hampering the industry in the US. One may even take a step further by giving away BTC.


Monthly Payouts in Bitcoin

Cypherpunk and CTO Jameson Lopp recently posted that he was considering running for the lofty position on a single issue platform. The bitcoin advocate clearly recognizes current issues with the economic model which involves printing more fiat and devaluing it at the same time.

While his tweet garnered 1,400 likes it is a long way off the number he’ll need to secure the position of the world’s most powerful man. The offer to pay citizens in bitcoin every month could well be viable though with an unlimited supply of dollars, which appears to be the current objective.

“Thinking about running for POTUS on a single issue platform: if elected I’ll give every citizen $1,000 in Bitcoin a month. This is doable because we’ll never run out of dollars and the economics will benefit America in the long run since we’ll end up with the most BTC.”

Unsurprisingly with twitter, the first response was a scam and a few others followed. There were a couple of interesting responses to the premise though. Partner at Xsquared Ventures Brad Mills made an attempt at the math:

“3.9 Trillion per year. At the end of your first term you’ll have the US National debt at 37 trillion dollars. The marketcap of Bitcoin will be about 18 trillion dollars after year 4, nearly $1 million per Bitcoin. It’s actually mathematically feasible given gov’t spending.”

According to usdebtclock.org, the current state is not pretty at $22.5 trillion. Things are not going to improve either with US national debt slated to hit $30 trillion by 2023. Either way, Lopp’s aspirations for the POTUS position were purely based on sarcasm in a mockery of the current system.

Bitcoin has a long way to go before reaching such status and price heights. At the time of writing it was still ranging between $10k and $10.2k this Sunday morning. The 50-hour moving average appears to be providing a level of resistance at the moment so a further slide into four figures could well be inevitable.

Are monthly payments in Bitcoin a viable option? Add your thoughts below.


Images via Shutterstock, Twitter: @lopp

CNBC Analyst Explains Why He is Bearish on Bitcoin

Earlier this week CNBC Fast Money host Brian Kelly said he is short-term bearish on Bitcoin price based on a drop in daily active addresses. Does this mean BTC will drop lower? 


Bitcoin bobs and weaves

Bitcoin has spent the last week bobbing and weaving at the $10K line. $10,350 stood as a stiff resistance level for nearly 3 days, then when overcome, $10,500 delivered the uppercut that smashed BTC back to a former resistance turned soft-support. 

Unsurprisingly, Bitcoin price failed to find firm footing at $10,350 and overnight the digital-asset tripped and fell below $10k again. 

At the time of writing, BTC is mustering up strength and attempting to have another go at the resistance level at  $10,200 but the lack of bull volume calls the sincerity of this move into question.   

Brian Kelly says, keep an eye on active addresses

Investor sentiment is growing increasingly bearish regarding Bitcoin price action and since the fall from $13,800 and repeated rejections in the $12k zone it seems a drop to low 9s and below is becoming a real possibility. 

CNBC Fast Money host Brian Kelly seems to agree. Earlier this week Kelly said Bitcoin has been in this correction for a while and the lack of “supporting fundamentals” is why the digital asset has failed to retake $13,000

Kelly explained that he assesses Bitcoin’s price action by keeping an eye on daily active addresses. Since June / July the 30 daily moving average for active daily addresses have dropped sharply.

BK says this metric is just as important as the daily and monthly active user rate for social media platforms. 

He posits that this data supports his belief that Bitcoin’s price “got ahead of itself” and is cooling off after a high energy parabolic run from $4,000 to $13,800.

With this said, Brian believes that there will be a chance for investors to buy Bitcoin as what he describes as a “generational buy” but he doesn’t consider the current price point a bargain.

When asked to elaborate on this “generational buy”, Kelly said: 

Number 1 we will see the price going down and active addresses going up. That’s what we saw in December and January. We saw the price continuing to crash down and active the activity on the network was really increasing.

Second thing is sentiment, in terms of does everyone think Bitcoin’s dead, again? When people start saying that then I’ll get real interested. 

But what if this time it’s different? 

When asked whether or not things could turn out differently this time, Kelly conceded that the growing number of institutional investors trading Bitcoin derivatives and these institution’s don’t necessarily represent a ‘spot address’ like a bank account.

This means that Bitcoin’s price action could spike in either direction without there being a noticeable difference in daily active addresses. This could impact Bitcoin’s future price action.

Do you think Brian Kelly’s tactic of monitoring active Bitcoin addresses is accurate? Share your thoughts in the comments below! 


Images from Shutterstock, Twitter: @CNBCFastMoney

 

Is Lightning Network the Most Optimum Bitcoin Scaling Solution?

The Lightning Network has been subject to controversy since it’s rise to prominence in 2016. Championed as BTC’s solution to scaling, thousands of people in the Bitcoin community voiced their opinions on how it wouldn’t work. Now, nearly a year and a half later, it is still receiving criticism regarding its centralization, routing issues, and poor user experience.


The Lighting What?

If you already understand how the LN works, I suggest skipping to the next section.

During the Bitcoin scaling debate in 2016/2017, the lightning network and other layer-two solutions were considered the best path forward for the network, instead of a minor blocksize increase. The Lightning Network uses routed payment channel technology, something that even Satoshi discussed back in the day.

Instead of broadcasting transactions to the whole network, two users can send money back and forth between each other without ever touching the blockchain. Using cryptography and a hefty helping of game theory, the idea is to be able to pay anyone in the world even if you don’t have a channel directly with them.

Let’s just start with payment channels first. For example, let’s say Alice and Bob want to transact. They each fund their payment channel with 1 BTC. This “funding” just goes into a special type of address. Think of it like beads on a string, they both have an equal number of beads on each of their respective sides. If Alice wants to pay Bob, she can just slide a bead over to his side.

In reality, those “beads” are signed transactions. Both parties sign the transaction, but they don’t broadcast it. If either party wants to end the channel and withdraw their money, they can simply broadcast the last signed transaction and the balances are settled on the blockchain. So Alice can send Bob 0.1, Bob can send back 0.2, back and forth until one party no longer wishes to keep the channel active.

Image result for alice bob lightning network

Now, let’s bring Carol in the mix. He sold some goods to Alice, but he does not have a channel with Alice. However, he does have a funded channel with Bob! Using some cool cryptography, Alice can send money to Bob who will, in turn, slide some beads over to Carol. This is done in a trustless, safe way and every party can verify the outcome.

From there, you can think along the lines of six degrees of separation. Every node should be able to route a payment to every other node, provided a path is available.

Economics of the Lightning Network

The idea is that every node will have some passive income, as a routing node can charge a small fee to route the transaction. These fees can be extremely low, even sub-satoshi amounts.

According to BitcoinVisuals.com, there are just under 10,000 currently operating LN nodes. The network’s capacity, or the number of bitcoins currently locked in LN nodes, is roughly 850 bitcoin, or around $9M. That number has been dropping in recent months, coming down from a high of almost 1100 bitcoin in April of this year.

While that sounds like a high number, keep in mind that only 0.0047% of all the Bitcoins in existence today.

On top of this, a single organization known as LNBig.com controls around $5M of the $9M on the LN currently. With over 1800 payment channels between nodes, they are the biggest entity on the LN by a long shot.

On Reddit, LNBig talked about their fee structure and their outlook for the future of the LN

I have 200-300 transactions through all nodes a day, rarely 600 when. On commissions, I earn 5,000-10,000 sats per day. It’s $0.4-$0.8. It’s $20 in month maximum…. At the opening of the channels (closing-opening again) i spent, probably, more than one thousand dollars. Therefore, no earnings now

That $20 of income for $5M locked up. In other words, that’s a $48 yearly return per million dollars locked in the network. With the cost of opening and closing channels at $1,000, not to mention the hardware needed to run all those nodes, it seems as the whole LNBig operation has been a purely charitable venture.

In the Reddit thread, LNBig also said that they had started closing unused/unresponsive channels a few months ago. In turn, the capacity of the network dropped by over 200 BTC.

Will the LN Work?

Despite the network growing massively in the first half of 2019, the number of channels and network capacity continues to drop.

Ethereum founder Vitalik Buterin tweeted about layer two technology, speaking specifically about Ethereum’s own version of the LN known as Plasma.

Despite some proponents claiming it works fine right now, some serious development work is needed if the LN is ever going to live up to some of its promises. Things like having to keep your wallet online 24/7, not being able to receive money until you’ve sent money, or losing all your money in the event of a computer crash has made people understandably cautious about using the LN.

New technology like splicing atomic multi-pathways and others may be able to dig LN out of the hole its currently in. But as of now, a year and a half after the first release of a Lightning Network implementation, things aren’t looking great Bitcoin’s second layer.

What do you think about the Lightning Network? Will Bitcoin need a different scaling strategy, or will LN end up working out? Let us know your thoughts in the comments below!


Images Courtesy of Bitcoinist Media Library, BitcoinVisuals, Twitter: @VitalikButerin

BoE Governor Mark Carney Proposes Global Cryptocurrency

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BoE Governor Mark Carney Proposes Global Cryptocurrency


Governor of the Bank of England Mark Carney put forward the idea of replacing the U.S. dollar with a central bank-issued cryptocurrency like Facebook’s Libra.


Carney Proposes The Synthetic Hegemonic Currency

On August 23, 2019, while addressing the Federal Reserve Symposium in Jackson Hole, Wyoming, Carney described how Brexit uncertainties, persistent world trade tensions, and overall weaker business activity are deteriorating the global economy.

Carney also underlined that, because of globalization and the widespread dominance of the U.S. dollar, U.S. developments have significant worldwide implications in terms of trade and financial conditions, including in countries with relatively little direct exposure to the U.S. economy. The BOE Governor explains,

“In particular, growing dominant currency pricing (DCP) is reducing the shock-absorbing properties of flexible exchange rates and altering the inflation-output volatility trade-off facing monetary policymakers. And most fundamentally, a destabilizing asymmetry at the heart of the IMFS is growing. While the world economy is being reordered, the US dollar remains as important as when Bretton Woods collapsed.”

He also warned that these dynamics had increased the risks of a “global liquidity trap.”

The International and Monetary System Requires Improvement

Thus, given the new economic environment, Carney called for radically improving the structure of the current IMFS (international monetary and financial system). And to create a better IMFS, he advised countries to consider every opportunity, including those presented by new technologies.

As reported earlier by Bitcoinist, the bank governor had already expressed his openness to the idea of a central bank-issued cryptocurrency.

Now, in his speech at the Federal Reserve Symposium, Carney was more specific. He put forward the idea of a Synthetic Hegemonic Currency (SHC) provided by the public sector, “perhaps through a network of digital currencies.” He stated,

“An SHC could dampen the domineering influence of the US dollar on global trade. If the share of trade invoiced in SHC were to rise, shocks in the US would have less potent spillovers through exchange rates, and trade would become less synchronized across countries.”

To strengthen his case, the CBE chief highlighted that retail transactions increasingly occur online through digital payments. And the high costs of both domestic and cross-border electronic payments are boosting innovation. For example, Carney mentioned Facebook’s Libra. And he pointed out,

“Technology has the potential to disrupt the network externalities that prevent the incumbent global reserve currency from being displaced.”

Do you think a central-bank-issued Synthetic Hegemonic Digital Currency will overthrow the U.S.Dollar? Let us know in the comments below.


Images courtesy of Shutterstock, Bank of England, Bank of America Merrill Lynch Global Fund Manager

Bitmain to Increase Hashrate By 50% With 600,000 New Mining Chips

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Bitmain to Increase Hashrate By 50% With 600,000 New Mining Chips


Showing renewed optimism, Bitmain is increasing its investments in the crypto mining industry. Now, Bitmain is reportedly buying 600,000 new crypto mining chips. As a result of this new investment, the company expects to make over $1 billion in profits.


Bitmain to Increase its Capacity By 50% Hash rate

The battle to produce fast cryptocurrency mining gear is heating up. In this context, Chinese Bitcoin mining giant, Bitmain Technologies Ltd, is placing orders for new mining machines with high hash rate capacity.

In this connection, and according to a Chinese news outlet, “Recently, a supply chain person close to TSMC broke the news.” This source reported that Bitmain has recently placed new orders for 600,000 mining chips.

As Bitcoinist reported earlier, Taiwan Semiconductor Manufacturing Company (TSMC) is Bitmain’s chip supplying contractor. TSMC ranks as one of the most profitable chipmakers in the world.

Moreover, according to the same source, some of these chips include the latest 7nm model, with a single power of 50 Tera hashes per second. The recent Bitmain order also comprises 16nm model chips.

Therefore, within a few months, observers believe that Bitmain’s total network computing power could skyrocket by about 50%.

Company Hopes to Reach a Valuation of $12 Billion

Despite losses in the first quarter of 2019, which reached approximately $625 million, Bitmain remains optimistic about the strengthening of the mining industry. In effect, with this new investment, the company expects to hit a valuation of $12 billion.

Last February, Bitmain announced its next-generation 7nm ASIC chip, BM1397, which boasts improvements in performance and energy efficiency. These chips are designed to mine cryptocurrencies using the SHA256 algorithm for proof-of-work purposes, such as Bitcoin and Bitcoin Cash.

Moreover, the Antminer models come with enhanced hash rate capacity. Last April, the chipmaker announced the specifications for the latest 7nm Antminer 17 series. For example, the Antminer 17 Pro comes in two variants, a 53 TH/s and a 50 TH/s capacity models.

In addition, according to Bloomberg sources, Bitmain is working with specialists to prepare for a U.S. share sale that could occur as soon as the second half of 2019.

What do you think about Bitmain’s new investments in crypto mining? Let us know in the comments below!
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Images via Shutterstock

Bitcoin Price Analysis: Bullish Divergence Forms At $10K, is $11K Next?

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Bitcoin Price Analysis: Bullish Divergence Forms At $10K, is $11K Next?


Bitcoin breaks 5-day long up-trend, dropping back to key support levels at $9,800. Since then bullish divergence appears to have formed on lower time-frames and could spur a reversal in the coming days.


Bitcoin 1-Hour Analysis
btc77

On the 1 hour chart for the XBT/USD pair, we can see the ascending wedge that formed throughout the middle of August. This wedge was broken two days ago on the 21st of August and has since dropped to key support at $9,800, as mentioned in my previous analysis on Bitcoin.  Since re-testing key support, price action has begun to bounce, and form a short-term reversal.

MACD can be seen visibly rising at the same point in which Bitcoin created two lower lows around $9,800. This could indicate bullish divergence forming around this price point. POC (Point of Control) clearly acting as support around $10,100 as price action test this level multiple times within the last 24 hours.

The market price is seeing a small pump as candlesticks touch the 200 EMA. It’s likely another ascending channel will form over the coming days taking Bitcoin back up to re-test $11,100 which was previously rejected. 500 MA sitting at $10,900 will also be a big resistance point that Bitcoin will need to cross in order to sustain a breakout.

4-Hour Analysis
xbt78

On the 4 hour chart for the XBT/USD pair, we can see the breakout zone highlighted. If price action can muster up enough volume, and bulls clearly re-gain control of the market once the breakout zone has been entered around $11,300, we should expect further upside. It’s likely once price levels breakout through the overhead resistance just below the breakout zone, Bitcoin will surpass both of these highs and proceed to create a higher high.

It appears as if Bitcoin has created a very large consolidation range from around $9,100 to $14,000 over the last few months. Once a break to the upside takes place, this consolidation phase will essentially act as fuel for another volatile move to the upside, similar to what we saw in June.

If the 0.382 Fibonacci level at $9,600 is broken to the downside, it’s highly likely that a strong down-trend will form and will most likely play out for the remainder of 2019. Whichever direction BTC decides to go, for example breaking upwards into the aforementioned breakout zone, or breaking down through the 0.382 the prior phase of consolidation, will act as rocket fuel for that given market direction, whether that be bullish or bearish. Risk management is essential over the coming days and weeks as BTC looks to come out of this consolidation phase.

Do you think BTC will break upwards or start a new long down-trend? Please leave your thoughts in the comments below!

This article is strictly for educational purposes and should not be construed as financial advice.


Images via Shutterstock, XBT/USD charts by Tradingview

US Government Vague On Bitcoin Role In Fentanyl Drug ‘Epidemic’

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US Government Vague On Bitcoin Role In Fentanyl Drug ‘Epidemic’


The US government has singled out cryptocurrencies including Bitcoin as a funding mechanism for the ongoing trend for smuggling the drug fentanyl.


FinCEN Advisory Mentions Cryptocurrencies

In an advisory issued on August 21, the Financial Crimes Enforcement Network (FinCEN) highlighted the use of “convertible virtual currency” (“CVC”) in facilitating the black market.

According to the organization, the US is “in the midst of an unparalleled epidemic of addiction and death” from fentanyl, an opioid used in pain prevention and anaesthesia. 

Specifically, it claims, payments occur using Bitcoin 00, Bitcoin Cash 00, Ethereum 00 and Monero 00.

Also named were purchases “using money services businesses…, bank transfers or online payment processors,” both within the US and abroad.

The advisory further referenced “other, more general money laundering mechanisms” without naming specific examples.

The vague language of the advisory likewise gave no hint of the volume of funds involved for either cryptocurrency or other financing methods.

Nonetheless, mainstream media titles seized on the warning as proof that the Trump administration via FinCEN was looking to crack down on cryptocurrency once again. 

As Bitcoinist reported, Trump himself had delivered terse comments on Bitcoin in July, claiming all cryptocurrencies were “based on thin air.” The comments had only a temporary impact on markets. 

Bitcoin A Friend To Law Enforcement

FinCEN meanwhile noted crypto’s use in darknet markets to procure fentanyl, specifically via AlphaBay. 

“The Darknet is commonly used for a number of illicit activities, including fentanyl trafficking,” it reads. 

In July 2017, the U.S. Department of Justice seized AlphaBay servers and assets; AlphaBay was the largest criminal Darknet market on the Internet at the time. 44 AlphaBay required its users to transact in CVC (including bitcoin, monero, and ethereum) to obfuscate transactions and related parties.

Beyond fentanyl, the role of crypto worldwide in illicit activities remains a topic of constant debate. Despite various warnings from governments, independent studies routinely find that cash and other fiat-based options remain criminals’ medium of choice for transacting. 

Bitcoin’s traceability makes it suboptimal as an anonymous payment method, with even US authorities saying it would in fact be helpful to them if its use continued. 

Lilia Infante, an operations lead at the US Drug Enforcement Administration (DEA), made the comments during an interview last year. 

“The blockchain actually gives us a lot of tools to be able to identify people. I actually want them to keep using [cryptocurrencies],” she said.

What do you think about cryptocurrency’s role in fentanyl trafficking? Let us know in the comments below!


Images via Shutterstock

BitPay Under Fire For Rejecting $100K Bitcoin Amazon Rainforest Donation

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BitPay Under Fire For Rejecting $100K Bitcoin Amazon Rainforest Donation


A blocked Bitcoin donation to help the fight against the Amazon Rainforest fires has become the latest publicity headache for BitPay.


BitPay Fails To Resolve BTC Freeze

According to a social media exchange on August 23, the embattled cryptocurrency payment processor is facing fresh criticism after it failed to allow a $100,000 Bitcoin 00 donation to go through.

The payment came from a donor to the Amazon Watch charity, which uses BitPay to accept cryptocurrency payments. 

BitPay reportedly rejected the payment because Amazon Watch’s maximum permitted amount was lower than $100,000. After ignoring a formal complaint, BitPay staff told the charity on Twitter it could resolve the issue itself by changing the settings in its account.

This turned out to be untrue, however, as in order to allow a higher level, the company must first submit compliance documentation.

“…We tried to increase the volume but can’t do it through the dashboard and were told we needed to email compliance,” it confirmed. 

The debacle adds further fuel to the criticism which frequently engulfs BitPay. Overzealous bureaucracy, compounded by a separate scandal about fake transaction fees, have led to frequent calls for businesses to use open source alternative payment processors.

The logic, as one Twitter user pointed out in comments on Amazon Watch’s difficulties, is that Bitcoin is a free and open payment system. Third parties vetting transactions arbitrarily contradicts its sole purpose.

“…You don’t need (BitPay) to reject your transactions when you can verify them yourselves for free,” the response reads.

A Lesson In Bitcoin Principles

BitPay’s PR difficulties have a long history. As far back as 2017, executives opted to support the controversial SegWit2x Bitcoin scaling proposal, which led to hardware wallet Trezor publicly ditching the company.

Amazon Watch said it would look into using BTCPay, an alternative open source option, in a move which would copy that of travel agent CheapAir last year.

A backlash over BitPay’s previous actions meanwhile had led to many wallet providers freezing out support for its invoices. Unless they use a handful of wallets, Bitcoin holders find themselves unable to send transactions to BitPay addresses. 

The company has curiously sought to make it as hard as possible to extract Bitcoin addresses from invoices. Doing so requires technical knowledge far beyond the scope of the average user.

BitPay says the setup is in order to mitigate risk from bad actors, and advises clients to use its own wallet instead.

What do you think about BitPay? Let us know in the comments below!


Images via Shutterstock