8 big things you need to know about Bitcoin this week

Author: 1. Italy's large taxi company continues to innovate and has announced that it will accept Bitcoin payments

Cooperativa RadioTaxi 3570, a large Italian taxi company, has announced that it will accept Bitcoin payments. It is reported that the company has more than 3,700 taxis in Rome and can provide more than 10 million services each year.

RadioTaxi 3570

RadioTaxi 3570 was founded in November 1968 with more than 100 founding members. It is said that the company's taxi prices are the lowest in Europe. They receive about 30,000 taxi calls every day, of which 7,000 are from foreign tourists.

RadioTaxi 3570 is ISO 9001 certified, the first taxi company in Italy to receive this quality certification.

Accept Bitcoin Payments

RadioTaxi 3570's official website states that Bitcoin, credit cards, debit cards and PayPal are all payment methods currently supported by the company.

RadioTaxi 3570 is able to accept Bitcoin thanks to the efforts of Bitcoin startup Chainside, which in September partnered with the Italian Taxi Union (URI) and its founder Loreno Bittarelli, who is also the president of RadioTaxi 3570, to provide wallet, invoicing and monitoring services.

Chainside platform is integrated with URI's ride-hailing app IT Taxi. Users can use IT Taxi to check the price and route information of ride-hailing. Customers who pay with Bitcoin will jump directly to the Chainside platform when paying. Once the payment is completed, the confirmation information will be sent to IT Taxi. It is reported that IT Taxi's services cover more than 50 cities across the country.

Taxi Industry Hackathon

This collaboration with Chainside is not the first time URI and RadioTaxi 3570 have explored Bitcoin payments. Last June, URI hosted a hackathon in Rome, which was also the first competition for innovation in the taxi industry.

The winner at the time was BitTaxi, an app that allows users to pay for taxi fares with Bitcoin. Bittarelli said after the game:

Of course, it is difficult to get everyone to accept Bitcoin payments. Our goal in hosting this competition is to show that our industry is not as conservative as the outside world thinks, and we are not against innovation. We see innovation as an effective incentive for development. It is necessary to let competitors know our ideas.

Once BitTaxi and IT Taxi’s payment models are integrated, URI and RadioTaxi 3570 will be able to accept Bitcoin payments in a variety of ways.

2. Minsheng Bank joins R3 blockchain alliance! Becomes the fourth institution in mainland China to join

China Minsheng Bank recently announced that it has established a partnership with international financial innovation company R3 and officially joined the R3 blockchain alliance.

According to the Securities Times on November 8, the R3 Blockchain Alliance was established by the blockchain technology startup R3 CEV. Currently, the alliance members include more than 60 large international financial institutions such as Morgan Stanley, Wells Fargo, Goldman Sachs, HSBC, ING, Citibank, etc. Not long ago, the alliance released Corda, a distributed ledger platform for financial institutions, which is used to record, manage and synchronize financial agreements between regulated financial institutions.

Minsheng Bank is the third company in mainland China to join the R3 blockchain alliance. In an email welcoming Minsheng Bank, the R3 blockchain alliance wrote:

“We are delighted that China Minsheng Bank has become a member of the R3 blockchain consortium. The consortium will continue to collaborate and work hard to research and develop the next generation of financial services transaction networks based on distributed ledger technology.”

As a pilot for China's banking reform, Minsheng Bank has been paying attention to emerging technologies for many years and actively exploring the integration of the financial industry and new technologies. "The future of banks must be based on the Internet, cloud big data as the driving force, and intelligence as the direction, developing in the direction of technology companies, thereby realizing the transformation of traditional banks." Hong Qi, chairman of Minsheng Bank, said that the bank is focusing on cultivating its own team of scientific and technological talents, big data talents and new technology engineers.

“Blockchain, a new technology that combines cryptographic distributed database technology with market technology, is likely to facilitate the formation of new financial formats.”

Zheng Wanchun, president of China Minsheng Bank, pointed out at the 2016 China Financial Annual Forum that currently large global banks represented by Goldman Sachs, Citigroup, Deutsche Bank, HSBC, and JPMorgan Chase are actively deploying blockchain, and China Minsheng Bank has also dared to enter this field and has achieved positive results.

It is reported that Minsheng Bank has built a blockchain service cloud platform and conducted in-depth research on blockchain consensus algorithms, smart contracts, transaction accounting, data transmission, smart wallets, decentralized applications and other aspects.

An official from the Information Technology Department of China Minsheng Bank said that joining the R3 blockchain alliance will not only help the bank to work closely with large international financial institutions to jointly explore business models based on blockchain distributed ledger technology, but will also help improve China Minsheng Bank's research level and application capabilities for new technologies.

In this regard, Huobi COO Zhu Jiawei said in an interview:

This move shows that China's blockchain practice is increasingly focusing on international integration. Blockchain is very popular now, and both China and foreign countries focus on researching underlying technologies and formulating relevant standards. From our past development experience, standard setters will gain absolute voice in the later market competition. This is also what China's blockchain participants are beginning to realize. Minsheng Bank's announcement to join R3 is an important move for China to participate in the development and application of international blockchain. Blockchain itself has no borders. We need to have a dialogue with the international community.

3. Trump won the election, global markets were shaken, and the rise of Bitcoin this time was triggered by the United States

On November 9, the price of Bitcoin surged again. According to data from Huobi.com, a domestic digital currency trading platform, the price of Bitcoin surged from 4,836 yuan to nearly 5,000 yuan, an increase of 3%.

Market participants generally believe that the dust has settled on the 2016 US presidential election, the global stock market has fluctuated violently, and the market's risk aversion has driven up the price of Bitcoin. According to CoinMarketCap.com, a large number of Bitcoin transactions are conducted in US dollars, which means that it is American investors who have driven the rise of Bitcoin.

Huobi COO Zhu Jiawei said: "Bitcoin, like other globally circulated investment products, will be affected by major international political events in the short term. After the successful Brexit in June, Bitcoin rose by 20.94% on the same day. The US election is a major event that has attracted the attention of the global economic market. Although the long-term impact on Bitcoin prices is limited as Trump's policies are gradually implemented, it has brought a great boost to Bitcoin prices in the short term."

In the domestic market, the overall performance of Bitcoin this year shows that the price trend is similar to that of gold, and it seems to be a safe-haven investment. Financial blog Zeohedge reported that the sharp rise in Bitcoin prices before this may have an impact on the results of the US election, as well as the Fed's interest rate hike. The "black swan" event in the next few months may also push Bitcoin prices to new highs. However, some Bitcoin players said that the current short-term fluctuations are relatively large, and operations need to be cautious.

The price of Bitcoin has been fluctuating since the end of June. Market data shows that in June this year, the price of Bitcoin was above 5,000 yuan for several days. The last time the price was above 5,000 yuan was at the end of 2013, when Bitcoin soared 10 times.

4. Shinhan Bank will open a Bitcoin remittance channel from South Korea to China next month

Shinhan Bank, a major financial institution in South Korea, recently announced that it will launch a Bitcoin remittance service between South Korea and China in December this year. Shinhan Bank is the first major financial institution to announce the opening of a Bitcoin transfer system.

Bitcoin Korea

Shinhan Bank is headquartered in Seoul, with 723 branches, 8,531 employees, and total assets of 285 trillion won (about 251 billion U.S. dollars). The bank has 140 overseas branches in 19 countries around the world.

Shinhan Bank's Bitcoin remittance service is powered by the startup Streami, which is reportedly a "blockchain remittance and financial services architecture provider." Traditional remittance networks usually charge high fees and take a long time. Streami has noticed this and helps its customers conduct cross-border Bitcoin remittances, greatly saving the time required (within a few minutes) and fees.

Streami was founded last year and its CEO, Junhaeng Lee, formerly of McKinsey, said the company was originally focused on building a remittance corridor from South Korea to China, but has now started working with other companies to open more remittance corridors.

Streami emerged from the incubator program initiated by Shinhan Bank Lab. In 2015, Shinhan Bank acquired a portion of Streami's equity for 500 million won (about 430,000 US dollars). In December last year, Streami also received a $2 million seed round of financing led by Shinhan Bank.

Lee said:

At present, in addition to Shinhan Bank, we have also established cooperative relationships with other companies. We hope to shift our business focus to the domestic market as soon as possible, but given the domestic banking system deployment and compliance issues, it may take quite some time.

South Korea is arguably the easiest country in the world to buy Bitcoin. There are several major Bitcoin exchanges in South Korea, and people can also buy Bitcoin from more than 17,000 ATMs and 24,000 stores in the country.

The South Korean government also seems to have taken notice of Bitcoin activity, as they recently announced plans to issue a blockchain-based digital currency in the next few years.

In order to legalize digital currency as a payment method, South Korea's monetary law must be adjusted accordingly. Therefore, the Financial Services Commission (FSC) recently announced that it will institutionalize digital currency before 2017.

Before digital currency transactions are fully legalized, Streami's transfer method can only remain the same: first transfer the cash to a Bitcoin exchange in Hong Kong, and then transfer the funds to a large exchange in mainland China and convert them into RMB to the recipient.

Lee said:

We do not rely on any one exchange and only use those that are regulated.

South Korea has become the center of the Bitcoin remittance market because it is very convenient for Koreans to buy Bitcoin, and there are many job seekers from the Philippines who usually send money back home. Payphil, Hyphen and Coinplug are all dedicated to Bitcoin remittance channels from the Philippines to South Korea. All three companies have their own business focus and are likely to become strong competitors for Shinhan Bank's remittance services.

5. The IRS will carry out tax reforms on virtual currencies. Where will compliance go?

The U.S. Internal Revenue Service (IRS) has agreed to three major recommendations made by TIGTA (Inspector General for Tax Administration) that could bring changes to virtual currencies such as Bitcoin.

According to a newly released tax review report, these virtual currencies are currently being used for tax avoidance purposes, especially by US companies.

TIGTA now considers that virtual currencies — particularly Bitcoin, which controls 82% of the virtual currency market — allow taxpayers to pay for goods and services in the same way as they would with traditional currencies. The purpose of the review is to evaluate the IRS’s strategy for addressing income generated by virtual currencies.

TIGTA has recommended to the IRS that the IRS needs to develop a holistic strategy to address taxpayers’ use of virtual currencies as both assets and currency.

In addition, the IRS needs a way to collect virtual currency transaction data to identify and measure noncompliance risks as it develops strategies to ensure taxpayer compliance related to virtual currency.

The audit office stated:

“The IRS has determined that taxpayer compliance is greater when income is reported by a third-party information reporting organization. We believe that by identifying virtual currency transactions through third-party information reporting organizations, taxpayer noncompliance risk will be reduced.”

In what areas should changes be made?

The three TIGTA recommendations are intended to have the IRS develop a coordinated virtual currency strategy that includes outcome goals, a description of how the agency intends to achieve those goals, and an action plan with an implementation timeline. The action plan is required to provide updated guidance on the necessary documentation and tax treatment for various uses of virtual currency, as well as to modify third-party information reporting documents to determine the amount of virtual currency used in taxable transactions.

In its report, “As the Use of Virtual Currency in Taxable Transactions Becomes More Common, Additional Actions Are Required to Ensure Taxpayer Compliance,” TIGTA said:

“None of the IRS’ various components has developed any compliance program or guidelines for examinations or investigations specifically addressing virtual currency-related noncompliance. Additionally, all actions taken by the IRS to address virtual currency tax noncompliance do not appear to be coordinated to ensure that the IRS has an overall ‘blueprint’ for taxpayers’ use of virtual currency.

However, according to the Large Business and International Division (LBID) Administration, in January 2016, VICT established a small group to investigate the feasibility of creating a plan around how the IRS could address non-compliance issues for virtual currency taxpayers. This work is still in the discussion stage.”

Why are IRS changes urgent?

Several factors may have prompted the IRS to take action, including the fact that the estimated annual tax increase from 2008 to 2010 averaged about $458 billion, according to an IRS report compiled in April 2016, while the annual tax increase was only $387 billion due to underreporting.

TIGTA also noted that the IRS has not evaluated the tax compliance risks of virtual currencies developed and used outside the virtual economy because they were introduced after the IRS last reviewed compliance with virtual economy transactions. Instead, it has focused its work on virtual currencies on limited tax compliance issues.

Likewise, the IRS has not identified virtual currencies used outside of virtual economies as a tax compliance risk worthy of special attention, and its position remains relatively unchanged at this time.

The IRS believes that LBID will work with other business units to identify and resolve potential non-compliance issues in the virtual currency field. It pointed out that in the current fiscal situation, it faces competing funding priorities and needs to prioritize information technology spending based on needs. At this time, it does not consider modifying information reporting files to identify virtual currency amounts as a priority.

6. The Central Bank of Ukraine plans to issue blockchain electronic national currency in 2017 to achieve cashless nationalization

The National Bank of Ukraine (Ukraine’s central bank) plans to use blockchain technology (or distributed ledger technology) to promote a cashless economy in the country.

According to Forklog, the National Bank of Ukraine (NBU) Committee has approved a roadmap for the development of a cashless economy, which is the first time it has been published in an official plan. The roadmap gives an expected timeline for Ukraine to use blockchain.

According to the roadmap, the NBU plans to issue ‘electronic money’ as a cashless payment tool. The bank plans to optimize the use of blockchain technology by issuing electronic money and create an alternative to bank card payments. The plan will be implemented by the fourth quarter of 2017.

The NBU has been considering using blockchain to implement a cashless economy for a long time. In September, Serhii Shatsky, head of the NBU’s payment systems and innovative development department, said:

“NBU is committed to helping the Ukrainian market go cashless; to achieve this, the latest financial technologies may help. Therefore, we try to maintain an open dialogue with the market. In turn, we are also looking for solutions that can facilitate payments for citizens and small and medium-sized enterprises. These technological solutions include cloud technology, mobile payments, QR code technology for payment of goods and services, blockchain solutions.”

The entry barriers to the Bitcoin and blockchain markets in Ukraine are very low, which has driven the booming development of blockchain technology in the country. As early as 2015, PrivatBank, Ukraine's largest commercial bank, integrated Bitcoin payment services, allowing online retailers to use Bitcoin as a payment method. The Ukrainian government has also launched a blockchain auction platform to eliminate shady operations.

7. Hyperledger is expected to establish a Chinese technical working group soon to become a bridge between China and the global blockchain

If blockchain is used well, national borders will begin to disappear. An immutable, shared ledger of transactions and goods can make us realize that everything we cultivate, create, buy and sell comes from the same planet. But this future is not guaranteed, and various developer teams scrambling to implement blockchain technology are currently engaged in a global talent war.

For example, the blockchain consortium Hyperledger was initially founded almost entirely with the support of Western companies, but this year it added more than 20 new members from China, 10 from Japan and South Korea, and a number of other countries.

With these successes under his belt, Hyperledger CEO Brian Behlendorf now faces a new challenge—creating a system that allows information to flow among these multilingual members as seamlessly as blockchain data.

Behlendorf hopes to overcome this challenge by creating a China Technical Working Group, which, if accepted by members, could help bridge multicultural gaps around the world.

Behlendorf said:

“If we create these systems correctly, they can help us reach across borders and use a common technology platform to help us integrate faster.”

Behlendorf’s plan is to create a Hyperledger China community to strengthen the sense of belonging of Chinese companies, making it easier for these companies to connect with each other and build bridges between these corporate members.

Several of the Chinese companies in Hyperledger are blockchain startups, and the two newest Chinese members are also the largest Chinese companies in the blockchain alliance.

In October this year, Huawei joined the Hyperledger, which had revenue of $60 billion last year. Earlier, in September, Wanda Group became China's first senior member of the Hyperledger, with annual revenue of $38.8 billion.

In theory, the more members a Hyperledger has, the greater its influence.

Blockchain China

Although China’s contingent in Hyperledger continues to expand, China’s blockchain development is not limited to Hyperledger.

Chinese investors and financial institutions have begun embracing blockchain technology across the country this year, and even the government has sent some positive signals.

On May 11, Chinese companies came together to form the China Distributed Ledger Alliance, or ChinaLedger. By the end of the month, 31 companies had co-founded the Shenzhen Financial Blockchain Alliance. Both alliances aim to help China benefit more from the efficiency of blockchain. Just days after the Shenzhen Financial Blockchain Alliance was established, Ping An Insurance became the first Chinese financial institution to join the New York-based R3CEV blockchain alliance.

However, China’s push to create cross-border financial infrastructure also includes collaboration with public blockchain companies. Less than a month later, blockchain startup Circle announced it had raised $60 million in Series D funding led by Beijing IDG Capital to expand the company’s operations in China.

Hyperledger Proposal

It is in this context that Brian Behlendorf, Executive Director of Hyperledger, proposed the creation of the Hyperledger China Technical Working Group.

On October 26, Behlendorf wrote in an email to members that the working group could serve as a "bridge" connecting the Hyperledger global community with the Chinese region. Behlendorf said that the various members responded very positively to the proposal.

At the Technical Steering Committee meeting last Thursday, he furthered the idea, explaining that the working group could be made up of 11 people, including co-chairs who would rotate to attend English-language Technical Steering Committee meetings. If the proposal is passed, those co-chairs would likely be volunteers, he said. A member of the Technical Steering Committee from Huawei volunteered in a public forum to help bridge the community and remove language barriers.

Behlendorf said:

“The mission of this working group is not just to ask questions and get support, but to help these developers become actual contributors to the project. We get more than just rewards for sharing intellectual property.”

More than just a language issue

Of course, language issues are not the only barrier isolating Chinese Hyperledger members from the rest of the community. There are other factors as well. A representative from Wanda, who spoke fluent English at last week’s meeting, said he thought the language issue was not as serious as the time difference issue.

Zhibei Yu, product manager at Hyperledger member Yunxiang Group, said they plan to participate voluntarily and think the idea of ​​establishing a Chinese technical working group is a great one.

Qian Dejun, founder and CEO of Shanghai-based Bitse, an early Hyperledger member, said his company had not encountered problems with cross-border cooperation, but they believed the proposal was valuable.

Qian told CoinDesk that the working group will be helpful in integrating new members into Hyperledger’s unique multinational culture.

“We think this is a great tool for new Chinese members. It will accelerate the progress of blockchain work around the world.”

down to earth

Currently, the executive director of Hyperledger is preparing a formal proposal and intends to submit it to members for a formal vote today. If all goes well, the China Technical Working Group will be officially established at the first Hyperledger China Hackathon held on January 7 and 8, 2017.

Wanda Internet Technology Group, the sole organizer of the hackathon, said it expects "all Hyperledger members" to participate in the hackathon. Currently, a company specializing in helping foreign companies find professionals in China is working with the recently appointed Hyperledger sales and accounting manager to expand the alliance's influence.

Behlendorf concluded:

“We are seeing a continued expansion of the Hyperledger team.”

8. 10 R3 bank members successfully tested blockchain identity registration system

Ten banks from the R3 blockchain consortium have successfully tested a KYC (know your customer) registry based on a distributed ledger.

Blockchain identity

Earlier this week, R3 said that the three-month project involved financial institutions including BBVA, CIBC, ING, Intesa Sanpaolo, Natixis, Nordea, Northern Trust, Société Générale, UBS and US Bank. The registry serves as a shared platform between banks to create and manage digital identities, providing a KYC management mechanism for the financial sector.

Regarding this test, R3 said:

Based on KYC data, the project records and collects identity information of enterprises and individuals, providing third-party identity authentication services.

Not long ago, R3 announced the establishment of an innovation lab in Singapore, which aims to create a blockchain application testing environment and provide an excellent platform for financial institutions interested in researching the technology. The establishment of the lab has also received strong support from the Monetary Authority of Singapore (MAS), the central bank of Singapore.

Over the past two months, there have been reports that the bank alliance is conducting distributed ledger experiments. First, 12 R3 alliance bank members tested the liquidity of Ripple (XRP) in global bank accounts; second, there are reports that 8 R3 blockchain alliance bank members successfully tested Intel's Sawtooth Lake blockchain platform. Earlier this month, Deutsche Bank also announced that it would join the R3 alliance.