The Missing Man and the Missing Millions

If you haven’t been following this,

https://www.bbc.co.uk/news/technology-47454528

in a few short bullet points:

  1. Crypto exchange has a few problems
  2. Owner of exchange “dies” in India
  3. Crypto wallets with £105m can’t be accessed “because he was the only person with the password”
  4. Wallets get opened.
  5. Hey presto! There’s nothing in them

Now call me cynical but if the money had been there, I would have said that maybe he was dead. But the wallets were apparently cleaned out months before and there are a whole lot of unauthorised wallets that the coin might have gone to. One person access = danger, under all circumstances. It’s why quoted companies usually don’t have the same person as Chairman and CEO. You only have to think of Robert Maxwell https://en.wikipedia.org/wiki/Robert_Maxwell

This is exactly why people don’t trust crypto-currencies. For a start more than one person should have had the password available to them and indeed maybe in this kind of fiduciary situation it should have been accessible only with two or more private keys. That raises all sorts of questions as well about storing passwords, and indeed it is one of the areas where we at Scotcoin are working to achieve some sort of standard.

From our own perspective security is more important than anything. The whole point of crypto-currencies is that you can rely absolutely on what the blockchain tells you, via its decentralised approach. If that trust breaks down, what is the point?

To be fair, as far as I know, it has always been an “inside” job where things have gone wrong. But part of the problem that there has been with ICOs and exchanges is that there has been no over-arching regulatory set up to make sure everyone plays fairly by the rules. In the wild west the cattle barons made their own rules until the Federal Government imposed their laws – and profited immensely. The same situation pertains within the world of digital currencies at the moment. The nature of the beast attracts charlatans and card sharps. Until regulation is everywhere there will always be poor benighted people who lose out. That’s one reason that Malta and its legislation is so important for the future and development of blockchains and crypto-currencies.

We at Scotcoin embraced regulation and disclosure a long time ago, and we fully expect to be able to comply with any and all regulations as they are enforced. Just one more reason to believe there is a solid, secure future for Scotcoin. Get your Scotcoin here or give some to a friend or valued employee with a Gift Voucher.

meet up logo

Scotcoin Meetup talk – 26th February 2019

1. General introduction: I want to start by telling you all about the issues we had last year. Without going into too much detail as lawyers are involved and matters are sub judice, it became obvious in about May of 2018 that we were being led up the garden path and generally legged over. It took us a further 3 months to engage a new CTO who, once he had completed his review of what had happened concluded we had been sold a pup. The Initial historic review of what was being done– stripping back Hyperledger for Brooklyn – was shown not to work.

2. Engagement of world experts and academics in review process, including one of the writers of the Github protocol. We did a full gap analysis audit which detailed the shortfall in delivery. The advice we received was that the solution that had been suggested did not work and never would.

3. This led us on to Legal engagement, and we then intimated a claim for over £175,000.

4. Final concluding meeting to position the final piece of this jigsaw with a further systems expert has taken place and a final claim is in the process of being promulgated.

As a result we have vigorously defended our position. Even allowing for that, it took us nearly 8 months to disengage from our previous partnership and a lot of money. Over all we lost approaching £250,000. As a result this figure has been written off in our accounts. The contract we had was terminated and we are currently suing the previous company we were working with.

We have since that time worked extremely hard to enter a new partnership, taking on board all that had been learned, and making use of the latest Hyperledger updates. We are presently satisfied that we have the right partners and the right path to take this project to a good conclusion.

During the course of the next 6 months or so, Scotcoin will move to Version 3, on its new permissioned blockchain.

1. Hyperledger launched in 2015. In just three years, the organization has grown to over 260 members including Fortune 100 companies, like Accenture, SAP, Intel, and IBM; academia, startups, and other open source communities. An impressive number of companies are using Hyperledger (HL) in production systems. The Hyperledger Greenhouse is an ‘Open Source’ ecosystem flourishing with frameworks and tools for building business blockchains. So our requirement of Pulsant in the second half of 2018 was for Pulsant to support HL on the Pulsant Cloud, as a service to us.

The  Tender process through second half of 2018 included IBM. Scotcoin has support at board level of Pulsant UK. Pulsant are specialists in cloud solution integration and trusted partners with Amazon Web Services, Microsoft Azure Cloud  and the Google Cloud Platform . They are experts in the management of the modern cloud infrastructure. 

2. The Contract to deliver Cloud Services with Pulsant and Hyperledger in the cloud was completed on new years eve 2018. 

3. The discovery phase by Pulsant has already commenced.

4. In respect of the Potential timeline – It is anticipated that upon completion of the processes currently in train, Scotcoin Hyperledger service will go live – around mid 2019.

5. Consensus mechanism is standard Hyperledger Kafka process;

  • Kafka guarantees that all messages inside a partition or a virtual machine are sequentially ordered.

6. During testing confirmation & ordering will be done between Pulsant and Scotcoin.

7. A sales process has already commenced to identify peers for Scotcoin in the first instance (e.g. IrishCoin) these peers will become part of Scotcoin confirmation and ordering process on the blockchain in the future, as we will contribute to their process. 

8. Peers will in effect be entities with whom we do business and they may have several nodes, nodes are a technical computing term; peers are a business partner concept, Scotcoin will in effect have 2 nodes initially v3 & the Kafka ordering or consensus message security protocol. 

  • A blockchain network is comprised primarily of a set of peer nodes (or, simply, peers). Peers are a fundamental element of the network because they host ledgers and smart contracts. 
  • A peer is able to host more than one ledger, which is helpful because it allows for a flexible system design. The simplest configuration is for a peer to manage a single ledger, but it’s absolutely appropriate for a peer to host two or more ledgers when required. 
  • Nodes are the communication entities of the blockchain. A “node” is only a logical function in the sense that multiple nodes of different types can run on the same physical server. What counts is how nodes are grouped in “trust domains” and associated to logical entities that control them. 
  • There are three types of nodes: 

1. Client or submitting-client: a client that submits an actual transaction-invocation to the endorsers, and broadcasts transaction-proposals to the ordering service. 

2. Peer: a node that commits transactions and maintains the state and a copy of the ledger. Peers can have a special endorser role. 

3. Ordering-service-node or orderer: a node running the communication service that implements a delivery guarantee,  or total order broadcast. 

It should be noted that each peer needs a channel on a one to one basis. Each channel however can support multiple nodes and this will enable us to move in time from centralised to decentralised validations.

9. Identity management for Scotcoin peers and clients will initially be following the Sovrin Foundation philosophy “decentralized self sovereign identity” (DSSI or SSI).  

  • “SSI: An identity model that allows an individual or organization to control their identities, or the identity of a thing, expressed through the use of decentralized identifiers and digital credentials.” 
  • In specific technology terms how we implement that SSI will be a decision made jointly with Pulsant but only once the Hyperledger application stack is functional in the cloud. We will optimize security at the infrastructure & the application level. 
  • Crucially Scotcoin V3 will in the first instance be a permissioned blockchain so not completely decentralized,. We will as soon as practicable and subject to utter security, move to trusted third party confirmations.  
  • At the beginning of the Blockchain, there was an idealistic idea that anyone with a laptop could become a node on the Blockchain network. A group of libertarian computer experts calling themselves cypherpunks had been developing non-state currencies over decades. But all efforts to establish them as an alternative means of payment failed. This is the concept of permissionless or decentralized blockchain networks. 
  • When we  worked through the use cases in 2018, we realized that Hyperledger and the permissioned Blockchain was the only pragmatic way to get the job done with a necessary level of control and security. We are practical business technologists. In essence the partnerships with Hyperledger and Pulsant will support a general token solution for Scotcoin’s new coin. 
  • Scotcoin’s new blockchain  will be permissioned, that means that everyone on it will be allowed to be on it – there cannot be random third parties, attaching to our platform. This allows us to comply with KYC & AML regulations since by definition we KYC! 

We have had an update from our developers which I will share with you.Work is going quite intensively. At the moment we are finalizing the Wallet (frontend and backend) and already started working on Hyperledger Fabric:

  • Hyperledger Composer assembly – done
  • Asset chaincode programming – in progress
  • Asset features and logic programming – in progress
  • CA and permission level programing – in progress
  • Transaction function and fee structure programming – in progress
  • Hyperledger Explorer deployment – done
  • Rest API programming –  in progress

Currently the process is going as we have planned. The next milestone – Initial Testing stage starting 4th of March.

10. Algo for migration. 

  • V2 holders need to be kyc etc and that needs to be BEFORE the process starts for migration. 
  • Once they are clear, they need to advise in a form a) The wallet they hold SCOT in b) how many and c) whether they have a little bitcoin d) If not we send them a smidgeon to enable transaction to proceed. 
  • They need to create their own wallet with all the usual caveats. 
  • They need to confirm to us they have done this and what the address is. 
  • We then work out how many V3 they are due to receive and we so advise them. 
  • They have to confirm acceptance of that figure. 
  • We then have a white list of people who can get V3 and the numbers. 
  • We then advise them to send their entire V2 to a wallet we will designate. 
  • Once we have confirmed as received we send V3 to their wallet. 
  • V2 sent to us for migration will be “burned” and put beyond future use.

I should also say we intend that the final confirmations on this will be done manually. Those of you who remember MasterXchange will recall that they did ALL withdrawals manually. Although this meant it sometimes took a little time, it also meant there was never a hack nor a mistake.

9 reasons cryptocurrencies are better than credit cards

We might be biased, but there’s a growing voice behind using cryptocurrencies in favour of a credit card.

Dashnews reports that growing credit card charges have encouraged people to take a second look at using cryptocurrencies to exchange cash.  Some interesting points in this article – what do you think?

https://dashnews.org/9-reasons-cryptocurrency-is-better-than-credit-cards-today/

Scotcoin Meetups – first of 2019!

Africa leading the way in Cryptocurrency adoption…

Africa cryptocurrencyPeer to peer network Paxful has reported a boost in trading figures using Bitcoin as opposed to traditional currencies.  They attribute this to the instability of local currencies and the ease of using crpytocurrencies to exchange goods/services using just a mobile phone.

https://cointelegraph.com/news/crypto-payment-firm-volume-of-transactions-in-africa-has-risen-130-percent-in-2018

Scotcoin KYC and AML

KYC - AML

The Scotcoin Project CIC (“Scotcoin”)

Scotcoin announces that it has terminated its contract to develop a new KYC and AML blockchain solution for the digital currency following a lengthy and difficult period of discovery and consolidation in respect of the contract.

However, we are also pleased to announce we are in advanced discussions with a new supplier and we expect to be in a position to make an announcement in the first quarter of this calendar year. We are currently going through the financial and legal due diligence process.

The proposed new contract will provide Scotcoin with its own distributed ledger technology infrastructure which will be fully compliant with KYC and AML in all respects. It will be capable of processing a high volume of confirmations and transactions per second at minimal cost. It will also provide Scotcoin with its own fully compliant wallet.

Upon delivery of the solution it is anticipated that migration terms including incentives will be announced shortly thereafter.

Scotcoin will be entering into a consultation process with key stakeholders over the coming weeks and further announcements are anticipated.

Willie Fleming, Director, The Scotcoin Project CIC said: “We have had a very difficult year and have had many obstacles to overcome. These have held us up beyond what we expected. We are confident that now we have the right partners to take us forward to fruition”

 

Contact Details:

Director
Willie Fleming
[email protected]

Information on Scotcoin is available @

https://scotcoinproject.com
https://twitter.com/ScotcoinProject
https://facebook.com/scotcoin

Bitcoin turns 10!

Bitcoin turns 10On 3rd January Bitcoin celebrated its 10th birthday – 10 years from the very first Bitcoin transactions on the “Genesis block”, or in simple language, the very first block on Bitcoin’s blockchain.

https://cointelegraph.com/news/bitcoin-turns-ten-on-anniversary-of-genesis-block

Scotcoin Socialbite

Buy £20 of Scotcoin and we’ll give £5 to Social Bite

From now until 31st January 2019, Scotcoin and Social Bite have joined forces to help the homeless to have a better end to their year.

There is no limit on what number of Scotcoin you can buy and Scotcoin will donate £5 for every £20 you buy.
So buy £100 worth and we will donate £25. And don’t forget the more Scotcoin you buy the better the value and effectively the cheaper they are.

 

Social Bite is on a mission to build a collaborative movement to end homelessness in Scotland. Using a pioneering social enterprise model, they enable people affected by homelessness to transform their own lives. They are building a movement to end homelessness by generating funds, awareness, and action across all sections of society; believing that a Scotland where everyone has a safe place to call home is possible.

With 6 cafes across the country, one restaurant (Vesta in Edinburgh), and a central production kitchen providing corporate food delivery service to over 200 organisations in three of Scotland’s largest cities. Around one-quarter of their staff have a background in homelessness, they believe that everyone has potential and deserves opportunities to reach this. For more information, visit their website (www.social-bite.co.uk).

 

The Scotcoin Project CIC (Community Interest Company)

Scotcoin began in 2013 and is now one of the longest-lived country crypto currencies. Scotcoin presently sits on the Counterparty Protocol which makes use of the Bitcoin blockchain. Scotcoin will be moving to its own permissioned blockchain shortly which will encompass KYC (know your customer) and AML (Anti-money laundering) to comply with all present and potential future regulations. Scotcoin has several thousand holders of coin and holders in more than 50 countries worldwide. On migration to their new blockchain, present holders will be rewarded for their support by receiving a 4-for-1 bonus, an effective increase in value of up to 5 times. Scotcoin intends to occupy the social good works ecosystem and our plans are well advanced to do this. Scotcoin has been offered to the Scottish Government and discussions are ongoing.

Temple Melville of Scotcoin said: “ This is a really exciting initiative. One of our stated objectives is to help eradicate homelessness, and Social Bite is already well established within this area. We are delighted to be partnering with them, and sincerely hope we have to give them lots of money over the next few months!”

Andrew Baillie of Social Bite said: “We are thrilled to have the support of ScotCoin as we work to end of homelessness in Scotland. Their donation will help to fuel initiatives such as our Social Bite Village and Housing First programme”

 

Website: scotcoinproject.com Tel: 07494540764

Website: social-bite.co.uk Tel: 0131 220 8206

 

 

UK Tax status for crytocurrency

Cryptocurrency Tax Status

On December 15, 2017, the European Council and the European Parliament finally agreed the 5th AML (Anti Money Laundering) Directive. This directive contains the first legally binding definition of virtual currencies and is the most significant regulatory action over virtual currencies anywhere in the world.

Because of a Swedish ruling a couple of years ago, upheld by the ECJ ( European Court of Justice) recently, virtual currency transactions are exempt from VAT according to the current EU laws and regulations. The binding force of case law of the ECJ is recognized without objection by all EU member states & courts i.e. virtual currencies are exempt from VAT across all jurisdictions of EU member states. At present UK does not recognise cryptos as either currency or commodity. It is certain the UK authorities will make a determination at some point in the future.

The UK leads in Fintech innovation, as the place to be for financial entrepreneurs; however, cryptocurrency regulation in the UK is behind others. All issuance of equity and debt are regulated by the FCA  (Financial Conduct Authority) whose aim is seamless operation of financial markets, by providing protection for consumers and investors, plus promoting effective competition in markets. The FCA maintains that:

“cryptoassets designed primarily as a means of payment or exchange do not sit within the scope of FCA authority.”

anti money launderingWhile SEC and CFTC engage in crypto market regulation in the U.S, virtual currencies are mostly unregulated in the UK. The FCA doesn’t consider virtual currencies to be currencies or commodities under the MiFID II (markets in financial instruments directive)  and, therefore, has no jurisdiction over them. It has authority over activities related to virtual currency derivatives such as bitcoin futures, options, or crypto-linked ETFs (if approved). The FCA’s position is ambivalent. On the one hand, the FCA never explicitly declared authority over security offerings in the form of ICOs/STOs, but on the other, it issues consumer warnings describing ICOs as “very-high-risk speculative investments” and unhelpful statements such as “Whether an ICO falls within the FCA’s regulatory boundaries or not can only be decided case by case.” Difficult to navigate that one…

Regulatory Authorities in the UK intend to apply AML regulations in order to comply with the EU’s 5th AML Directive. Along the same lines, the Treasury has revealed their intentions to regulate cryptocurrency traders, requiring them to abide by KYC (Know Your Customer) regulations and disclose their identities as well as report suspicious activities.

UK Tax with regard to virtual currencies

On tax though the UK is ahead of the game. In 2014, HMRC published guidance regarding the tax treatment of virtual currencies. The UK was one of, if not the first to have a clear legal position on the issue – albeit “for tax purposes only.” HMRC guidelines clarify that:

(i) mining income is not subject to VAT,

(ii) any loss or gain arising from the holding and/or selling of virtual currencies will be treated in the same way as gains made in other commodities or currencies,

(iii) virtual currencies acquired and held for personal reasons instead of speculative purposes will probably not be subject to capital gains tax.

You can compare this with buying a painting and sticking it on your wall rather than popping it into Sothebys. The UK authorities are under pressure to produce a comprehensive strategy on virtual currencies as soon as possible. Other EU countries are currently ahead in legislative support. Theresa May  has suggested the UK might follow South Korea in banning anonymous trading and regulating exchanges.

Scotcoin leading the way on digital currency legislation

#We at Scotcoin are well ahead on all these matters. On a related note,  the World Bank sees the further enhanced development of blockchain  as fundamental to cryptocurrency development

 

Scotcoin - Welcoming Better Regulation

Welcoming Better Regulation

For the past 2 years, Scotcoin has performed KYC checks on all purchasers via the official exchange. We wholeheartedly welcome better regulation – and are leading the way!

 

Bitcoin and other digital currencies are a “Wild West industry” and need to be regulated to protect investors, a committee of MPs has urged. | BBC News

‘Wild West’ Bitcoin ‘should be regulated’ – FULL ARTICLE