The People’s Bank of China and a Shenzhen district will provide 10 million digital yuan (worth about the US $ 1.5 million) as “red envelope” gifts to citizens.

This initiative is presented as yet another pilot of the digital currency in development; it has been in testing with commercial entities and state banks during this year. According to a report by Sina.com.cn, in the pilot, 50,000 candidates will be selected to each receive 200 digital yuan (it would be the equivalent of about $30).

Digital yuan to test in Shenzhen

Anyone living in Shenzhen can apply for the gift starting today, October 9. This amount can be spent in 3,389 stores that are configured to carry out transactions in the digital currency.

By calling them “red envelopes” they are appealing to a metaphor. For the Chinese, red envelopes are a culture. This is a traditional way of giving cash in that country on holidays or for special occasions such as weddings.

 This same week, the Chinese government reported that it has already used digital yuan “red envelopes” to reward some 5,000 medical workers who are actively fighting the coronavirus pandemic.

The pilot is being assisted by the central bank in partnership with Shenzhen’s Luohu District, which is funding the effort. This test is one more demonstration that the digital yuan is coming soon.

Details revealed by the central bank representative shows that China’s digital yuan, officially known as Digital Currency Electronic Payment (DC / EP), is very close to its official launch as China began researching digital currencies in 2014, far ahead of other major world economies, among them, there is the United States and the European Union, which have only recently started their initiatives.

Last week, the European Central Bank published a full report on the digital euro. In the document, he explained that you need to be prepared to issue a digital currency when the need arises. The United States Federal Reserve has also been researching digital currencies along with several regional federal banks.

The first tests of this digital yuan were conducted in conjunction with large companies such as DiDi (the Chinese version of Uber) and Meituan Dianping, a food delivery platform with more than 600 million users. McDonald’s and Starbucks also make the list.

Also, the central bank clarified a few weeks ago that the tests of the digital Yuan were only being conducted with small transactions. The statements offered were intended to disprove rumors of the purchase of a house and other higher-volume deals around the CBDC.

By: Jenson Nuñez.

The campaign seeks to allow the members of the Spanish Congress to experiment with Bitcoin. They only need to download an application and import a Bitcoin wallet.

In recent days, the 350 members of the Spanish Congress received an invitation to accept 1 euro worth of Bitcoin. This was part of an initiative seeking to raise awareness in the political class about the benefits of cryptocurrencies. Previously, the US Chamber of Digital Commerce organized a similar activity in which the members of the US Congress received USD 27,000 worth of freshly mined Bitcoin.

The Blockchain Observatory and Tutellus, an educational platform, are in charge of conducting this educational campaign. They argue that the initiative seeks to expose the “transcendental role that cryptocurrencies are playing in the transformation of the economy and society.”

It is worth mentioning that there was no coordination with the members of the Congress regarding the initiative. However, this could demonstrate the general disinterest of the Lower House in seeing first-hand a technology that they intend to regulate.

On the contrary, the Political Action Committee of the US Chamber of Commerce drove the activity in the US Congress. In other words, members of the Congress and companies like Microsoft, Deloitte, Binance, and Messari composed the organization of the campaign.

They aimed to make the 541 members of Congress involved aware of the role and scope of the amount of Bitcoin that they received. For that reason, they placed special emphasis on proving the source of the funds. The members of the Spanish Congress do not seem to have received information regarding the origin of this amount of Bitcoin. However, the initiative seeks that direct and practical experience allows questioning factors such as this.

How the Members of the Spanish Congress Could Access Their Bitcoin

No one should confuse this initiative with a donation, argues the Blockchain Observatory. They say that the main objective is that the members of Congress can experiment with Bitcoin and understand its role in the current economy.

In this regard, Miguel Caballero, founder and CEO, of Tutellus contacted each of the ten political groups that compose the Chamber and sent an e-mail to each of them. It was the right way to do it as not all the congress people’s e-mails are public, he explains.

This allowed each of the members of the Congress to follow instructions to download the wallet application and import the private key through a QR code attached to the message.

Bitcoin Should Be a Topic of Interest to Spanish Congress

According to Covadonga Fernández, director of the Blockchain Observatory, the transformational process of money has accelerated greatly in recent years as a result of Bitcoin’s birth. “Things are changing very quickly and the consequences of lagging can be very serious,” said Fernández.

The President of Spain, Pedro Sánchez, announced last July a plan for the digitization of Spain within the next five years. The government seeks to close the digital gap between the different sectors of society (more evident due to the COVID-19 crisis). They are focusing efforts on developing the technology industry and digital education.

In this respect, the Spanish Congress approved in mid-September a draft law for the digital transformation of the financial system of the country. It includes the creation of a regulatory sandbox for FinTech innovations, which would involve blockchain and cryptocurrency projects.

The declarations of assets that the members of the Congress have submitted to the Spanish Congress indicate that not everyone is unaware of the concept and use of cryptocurrencies. Congressman Pablo Echenique was the first Spanish politician to declare that he owns Bitcoin and Litecoin. Air Force Captain, Carlos Fernández-Roca, declared more than EUR 14,300 worth of cryptocurrencies in 2020.

A group of people has expressed misinformed opinions about Bitcoin. For example, in late 2019, Congresswoman Adriana Lastra said that “the role of this technology is that of being a fraud.”

By Alexander Salazar

The agency disapproves of privacy-oriented cryptocurrencies. The document leans more toward more regulation rather than toward development.

The expansion of Bitcoin and other cryptocurrencies worldwide attracts supervisory entities, regulators, and law enforcement agencies. The US Department of Justice in particular reportedly has its eye on crypto assets.

The agency recently released an 83-page document, which the Cyber-Digital Task Force prepared. It reviews the potential “threats” of cryptocurrencies, how authorities have countered them, and how they affect current society.

This framework of legal action highlights how crypto assets would serve to perform criminal actions, crimes, or fraud. The report shows four aspects, two of which are: the level of disapproval of privacy-oriented cryptocurrencies and recognition of the technology that does not seem to convince the authorities.

Private Cryptocurrencies and Criminal Activities

The Justice Department report especially mentions privacy-oriented cryptocurrencies such as Monero, Zcash, and Dash. However, their inclusion is not due to a technological feature to highlight. The entity believes that these are elements that serve to hide possible “criminal activities.”

The department makes this claim as it considers that users usually trade these cryptocurrencies for others such as Bitcoin. The operations would indicate the execution of a “digital asset overlay technique” or “chain jump”.

It is striking that the agency stated that, after seizing or confiscating private cryptocurrencies, they do not usually liquidate the assets. “Doing so would send them back to the trade for possible future criminal use,” the department argues.

According to the department, those cryptocurrency services operating with Monero, Zcash, or Dash could be contributing to money laundering and the financing of criminal activities. To prevent this situation, they recommend adopting appropriate AML/CFT protocols.

Regulation Rather Than Development of Bitcoin

The document leans more towards setting stricter parameters for cryptocurrencies. However, that may limit the development of Bitcoin and other blockchain networks as digital systems. Of course, there are some prominent aspects of innovation that they would relegate to the guidelines for their control.

Sujit Raman, leader of the Cyber-Digital Task Force, introduces the report by noting that cryptocurrencies “represent a transformational way of storing and exchanging value.” Concerning blockchain, Raman stressed that “it raises great possibilities for humans to flourish.”

He mentioned that multiple organizations around the world are exploring the potential applications of DLT. Among those entities are national governments, as well as industrial and academic sectors. However, the official explained that innovations must go hand in hand with public policies establishing conditions “that help the innovative spirit thrive.”

The department assumes that cryptocurrencies and the technology that accompanies them are a “threat”. They repeat that word up to 36 times throughout the document. The situation is magnified as the “US national security” would be at risk.

The Department of Justice lists the US institutions that would be ready to act in case of possible adverse scenarios. Those entities include the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), units of the Department of the Treasury, and the Department of Justice itself.

By Alexander Salazar

Given that CBDCs will not be anonymous, there will be a record of all the movements. The platform and accounting system for these currencies will be centralized.

A report from seven central banks and the Bank for International Settlements warns of the risk of cryptocurrencies and the disadvantages of using cash. They propose a way in which they should design their central bank digital currencies (CBDCs).

According to these entities, it is risky that the populations of their countries adopt cryptocurrencies (specifically stablecoins) in significant amounts. They say that this “could limit the impact of the monetary policy or the ability to support financial stability.” This is because “the use of national fiat currencies would decrease.”

On the other hand, central bank digital currencies will have the necessary characteristics “to contribute to the aims of public policy of each central bank.”

The entities that sign the report, along with the Bank for International Settlements, are the central banks of Europe, Japan, Switzerland, Sweden, England, and the US Federal Reserve.

Principles and Characteristics of CBDCs

The report defines a CBDC as “a digital form of central bank money that is different from balances in traditional reserve or settlement accounts.” They add that these “digital payment instruments are denominated in the national unit of account, which the central bank is directly responsible for.”

Some principles that these digital currencies must comply with are: not compromising monetary or financial stability, coexisting with and complementing existing forms of money, and promoting innovation and efficiency.

The report also notes that CBDCs should have ease of use, low cost of production, convertibility, and continuous availability, among other characteristics.

CBDC as a Kind of State “PayPal”

These bank digital currencies will have neither the privacy nor the censorship resistance of Bitcoin and other cryptocurrencies. The report indicates that “a key characteristic of cash is that there are no centralized records of holdings or transactions,” as if it were something negative.

On the other hand, they say that central bank digital currencies will not make it plausible to have “total anonymity.” “There will be payment data for a CBDC and its system. A key question of national policy will be to decide who can access which parts and under what circumstances.”

The report clarifies that the accounting system of these currencies will not be decentralized either. They state that “blockchain-based systems can offer resilience benefits by replicating data on many more computers.” They add that “a centralized ledger could also do it with a smaller number of data centers.”

“There is a wide variety of mature cryptographic techniques flexible enough to be used in centralized ledgers.” They explain that “the operation of CBDCs might be similar to that of current payment systems and occurs in a 24/7/365 service.”

According to central banks, the main reason to advance this idea is “to provide a secure means of payment in tune with increasingly digitized lives.” In the report, they note that the use of cash has declined as digital payments are growing exponentially.

By Alexander Salazar

According to BitBase representatives, the Galician community is interested in Bitcoin and other cryptocurrencies. Customers can trade up to EUR 2,500 in cash or EUR 3,000 with a credit card.

Four years ago, Coruna became the first Galician city to have a Bitcoin ATM (BATM). Now, its first physical store for the purchase and sale of cryptocurrencies with cash euros is marking a new milestone. The establishment recently opened and is receiving support from Spain-based cryptocurrency firm BitBase, which has opened stores and installed ATMs throughout Spain.

The new store offers personalized service for customers who wish to buy Bitcoin, Ethereum, Ripple, and Bitcoin Vault with cash euros (up to EUR 2,500 per day per customer), a bank transfer, or a credit card (up to EUR 3,000 per day).

Customers need to go to the establishment with their ID or passport to use the service. After specifying the amount to trade for the cryptocurrency of their choice, they will receive the funds in their wallet. If they do not have one, they will receive advice to activate one.

Customers must choose the cryptocurrency that they want to buy to use the ATM. The device allows transactions of up to EUR 995 daily per customer. Users must enter their phone number to process the purchase, after which they will receive a confirmation code. Then, they must place the QR code of their wallet on the ATM screen until the device scans it. When it appears on the screen, they must enter the cash to later request confirmation of having received the funds in their wallet.

A week after opening the store, Adrià Llorens, co-founder of BitBase, explained that the Coruna community’s first impressions are very positive. He said that they receive visits from people who are anxious to learn about cryptocurrencies, as well as from others who are already within the ecosystem.

Warning about Scams Using Bitcoin’s Name

Among the cryptocurrencies that people can purchase there, it is curious that they also offer Bitcoin Vault. This is a system classified as a scam to use a multilevel Ponzi model, a potentially fraudulent scheme.

In this respect, the co-founder of BitBase said that they “inform customers, who have the freedom to decide what to buy.” He explains that they “try to be able to offer everything customers demand.” He added that they “advise customers that they must manage and keep cryptocurrencies by themselves. Giving it to third parties is an added risk that they must know,” he explained.

NGO Bitcoin Chile issued a statement warning about the operations of Bitcoin Vault and 20 other alleged scams in the country. According to the organization, these groups have an “unethical behavior” and take advantage of people’s ignorance to persuade them to invest money.

In the Philippines, they also classify Bitcoin Vault as a Ponzi scheme. The Securities and Exchange Commission warned the public that cryptocurrency mining firm Mining City operates without a permit or license in the country. The regulatory agency warned that the company, a partner of alleged scam Bitcoin Vault (BTCV), is not in a position to raise funds to issue investment contracts.

By Alexander Salazar

In an announcement made by Conner Fromknecht, head of cryptographic engineering at Lightning Labs, vulnerability

 has been disclosed in the Lightning network, affecting operators using LND versions 0.10.X or earlier, which precede the update published last October 1^st.

Full details of the vulnerability have not yet been released, and circumstances surrounding the discovery are cited to present a timeline during which more details will be provided. However, on behalf of Lightning Labs, they found no instances where this breach was exploited or exploited, and Fromknecht stated that a full report of the discovery will be released on October 20.

The Lightning Network is being developed by 3 teams: Lightning Labs, Blockstream and ACINQ. It is positioned as a possible solution to the problem of a few possible transactions per second presented by bitcoin (known as scalability).

In this network, payment channels are created between 2 individuals, allowing transactions to be immediate, since they do not enter the blockchain until the channel is closed, converting what would be multiple transactions into a single exchange.

Preventive investigations

Already during the months of March and April 2020, researchers had published academic papers where they exposed how prone is the Lightning network to simple cyberattacks that could reveal the balances, as well as the pathways and individuals who participated in fund exchanges that should be private.

Ania Piotrowska, a crypto researcher at University College London, had this to say: “As the Lightning network gains popularity, it is often sold as a more scalable and privacy alternative to Bitcoin. We felt it was an interesting research question to study how private Lightning really is. “

Fragility on the Lightning network

Unfortunately, this is not the first time that vulnerabilities have been found in this network, since just over a year ago, in September 2019, the CTO of Lightning Labs Olaoluwa Osuntokun also stated that they found vulnerabilities in the network being exploited, after that, they were reported by the LN programmer Rusty Rusell on August 30, 2019.

Who are Lightning labs?

Lightning Labs develop software that powers the Lightning Network. Their open-source, secure, and scalable Lightning systems enable users to send and receive money more efficiently. They also offer a series of verifiable, non-custodial Lightning-based financial services, creating a bridge between the world of open-source software and the next-generation of bitcoin financial software.

By Jenson Nuñez