Ep194: China Freezes Bitcoin Withdrawals, Ethereum Gets Big Banks, the U.S. “Debt Reckoning”

The U.S. federal government is running out of lenders. Federal Reserve Chair Janet Yellen tries defending Fed “independence” & banking regulations. Erik Voorhees discusses “the true cost of Bitcoin transactions.” Two of China’s “Big Three” Bitcoin exchanges stop BTC withdrawals for one month. Rumors swarm that JP Morgan & Santander joined new “Enterprise Ethereum” blockchain group. Vitalik blogs with updates on Ethereum core development. World Government Summit in Dubai focuses on “Smart Cities” and “Building the Hyperconnected Future on Blockchains.” Jaguar releases first in-car “Pay-for-Gas” app. Plus our friend Pedro joins us in-studio once again!

All this and more on the Neocash Radio podcast, episode 194 — Wednesday, February 15th, 2017!

We’ve written out short overviews of the topics discussed on today’s show below! Be sure to listen in to the whole podcast to get more information, insights, and thoughts on each of them from JJ, Darren, and Randy!

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Traditional Markets Crypto Markets
Gold $1,234 Bitcoin (BTC) $1,009
Silver $17.95 Litecoin (LTC) $3.81
Oil $53.00 Zcash (ZEC) $33.75
Dow Jones 20,611 points Ethereum (ETH) $13.00
30Y UST Yield 3.08% DASH $19.31
Euro (EUR) $1.06 Monero (XMR) $13.66
Chinese Yuan (CNY) $0.15 Augur REP $4.90
British Pound (GBP) $1.25 1 Doge = 1 Doge

The U.S.' $20 trillion national debt is already twice the annual revenues collected by all the world’s governments combined.

“Reckoning With Incomprehensible Debt”: U.S. federal government running out of lenders

The U.S. government wants to sell you a bridge… but don’t mind all those worthless treasury bonds taped to it. Darren discusses what happens when there are no buyers left to fund the government bonds, and talks about the dangers of leaving a central bank & quantitative easing to be the “saviors.”

Just a short excerpt from the above-referenced article:

“The $20 trillion debt is already twice the annual revenues collected by all the world’s governments combined. Including unfunded liabilities, though, which include promised Social Security, Medicare and government pension payments that Washington will not have the money to pay, the federal government actually owes somewhere between $100 trillion and $200 trillion. The numbers are so ridiculously large that even the uncertainty in the figures exceeds the annual economic output of the entire planet.”

Federal Reserve Chair Janet Yellen Defends Fed “Independence” & Banking Regulations to G.O.P. Lawmakers

In a meeting that lasted more than four hours, GOP lawmakers repeatedly challenged Yellen’s handling of the economy and her leadership in implementing the 2010 Dodd-Frank Act, a measure that President Trump has vowed to overhaul.

“After eight years there is zero evidence that zero interest rates and a bloated Fed balance sheet lead to a healthy economy,” House Financial Services Chairman Jeb Hensarling, R-Texas, told Yellen. “Clearly, American have a newfound expectation that our economy will grow healthier with different policies coming out of Washington.”

Yellen was asked when the Fed would begin reducing the size of its more than $4 trillion balance sheet, and she replied that Fed officials felt bond holdings shouldn’t be reduced until the benchmark rate—recently raised to a range of 0.5 percent to 0.75 percent—was raised to a “more normal level.” As always, a nebulous non-answer.

Related listening: In episode 183, we discussed the massive U.S. debt and how it is enslaving future generations. We also chat extensively about President Trump’s strong feelings about the Federal Reserve & Janet Yellen, as well as how Trump will be poised to fill several of the Fed governors seats during his term.

Erik Voorhees: “The True Cost of Bitcoin Transactions”

How much time does it take you to figure out the correct fee? How many blocks can you wait for? ShapeShift.io CEO Erik Voorhees submits that these two items contribute to the total cost of a bitcoin transaction on top of the miners fee.

Two of China’s Biggest Bitcoin Exchanges Halt BTC Withdrawals for One Month

China's Biggest BTC exchanges stop Bitcoin withdrawals for a monthCiting a need for upgrades to combat money laundering, exchange, pyramid schemes and other illegal activities, Chinese Bitcoin exchanges OKcoin and Huobi have put a halt to ALL Bitcoin and Litecoin withdrawals for one month. The third exchange of the Chinese “Big Three”—BTCC—is requiring a 72-hour delay for withdrawals. The move comes not long after a surprise inspection from the People’s Bank of China. The Chinese central bank also issued a warning to domestic Bitcoin exchanges and other cryptocurrency start-ups: toe the line or be shuttered.

UPDATE: Hours after recording this podcast, Coindesk reported that Chinese cryptocurrency exchange BTCC announced it too would be temporarily halting Bitcoin and Litecoin withdrawals for one month, not the 72-hour period that had been reported.

ETH brings on bankers? JP Morgan, Santander Rumored to Join New “Enterprise Ethereum” Blockchain Group

Big banks are looking at private Ethereum blockchains to optimize bank-to-bank settlements. While no official statement has been made, Coindesk sources report that a blockchain consortium (similar to R3 CEV) called rumored to be called “Enterprise Ethereum” will soon be announcing a founding membership that includes well-known banking, technology, and energy companies such as “JP Morgan, CME Group, BNY Mellon, Banco Santander, Microsoft, Red Hat, Cisco, Wipro and British Petroleum.”

ConsenSys chief of staff Jeremy Millar describes Enterprise Ethereum to CoinDesk:

“We are collaborating with a number of large corporate users of Ethereum in banking, energy, supply chain, insurance and other industries along with leading enterprise technology vendors and blockchain startups to establish a standard for private Ethereum networks.”

Santander was previously a member of the R3 blockchain consortium, but left after Goldman Sachs withdrew from R3 in November. Santander and Goldman Sachs are also investors in Digital Asset Holdings, a rival blockchain start-up run by CEO Blythe Masters, the former Head of Global Commodities at J.P. Morgan.

Ethereum (ETH) founder Vitalik ButerinEthereum Founder Vitalik Buterin Issues Update on ETH ‘Metropolis’ Upgrade

Taking to the Ethereum blog, ETH founder Vitalik Buterin shared that the core dev team had been accomplishing a great deal now that the security issues that arose last year are behind them. Though no firm dates are given for any updates, Vitalik discusses the roadmap toward the “Metropolis” release as well as the ongoing collaboration with the Zcash team with the implementation of zk-SNARKs (a kind of zero-knowledge proof)… most items just get a brief mention (laundry-list style) along with links to Github repositories where people can follow along: Swarm, Mist, Solidity, and all the other hot phrases are in there!

“A key focus of our work has been on a notion of ‘protocol armor’, which can turn many classes of traditional Byzantine-fault-tolerant consensus algorithms into ‘attributable-fault consensus algorithms’, where if there is a protocol failure then not only do you know that a large number of validators were faulty, but you also know whom to blame.”

ConsenSys, Dubai, and the City of the Future

This past week the World Government Summit took place in Dubai and included a new white paper from Ethereum venture production studio ConsenSys. The white paper is titled Building the Hyperconnected Future on Blockchains and provides a roadmap for governments to harness the power of blockchains. The Crown Prince of Dubai announced in 2016 that Dubai would become “the first government in the world to execute all its transactions using blockchain technology by 2020.”

A $100,000 prize was granted to a group called Project Oaken, which has created a “Smart City” prototype device that allows vehicles to automatically pay tolls over the Ethereum blockchain using an IPFS hash:

The Project Oaken toll road model “greatly reduce[s] back end infrastructure, enable[s] transparent automation behind payments, and allow[s] for new economic models.” (One could buy bonds in a toll road rather than use taxes.)

Jaguar’s New Pay-for-Gas App Signals the Future of Connected Cars

The touchscreen of several new Jaguar models are debuting a new in-car cashless payment app that launched in the U.K. today. The app, developed with gasoline giant Shell, will allow drivers to pay for gas using PayPal or Apple Pay. Integration with Android Pay and a roll out to other markets (including the U.S.) are planned for later this year.

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