⚔️Coinbase vs. Visa 🍴Litecoin Cash Fork
Kung Hei Fat Choi, Shin Nian Kuai Le, and Happy Chinese New Year!
The year of the Dog has seen a good start for the market with Bitcoin reclaiming $11,000.
Some of you expressed an interest in seeing cryptocurrency market sentiment from other countries — the project is making headway and we’ll be launching a platform that finds the most discussed cryptocurrencies in the Japanese crypto sphere. Japan currently accounts for ~60% of Bitcoin trading volumes globally. Will keep you updated on when it’s ready to launch!
⚔️ Coinbase vs. Visa
What’s the Story
Coinbase users who had previously purchased cryptocurrencies via credit card started getting hit with multiple charges for purchases made weeks ago. Users reported having to close accounts and not being able to pay rent due to the unexpected charges. One person on Reddit claimed to have been charged USD67,000.
Coinbase reported that the problem lay with Visa who had recently reclassified all credit card purchases of bitcoin. The Merchant Category Code (MCC) was reclassified as a ‘cash advance’, a category that banks often charge north of 5% for.
Visa for their part initially denied responsibility, claiming that only Coinbase had this issue so it couldn’t be Visa’s problem. They soon backtracked, however, publishing a joint press release with WorldPay, Coinbase’s payment processor absolving the exchange.
It turns out that Visa had indeed changed the MCC which resulted in the duplicate charges. These charges were meant to be refunded ‘immediately’ — which unfortunately in the current financial system means ‘in a few days’. So Coinbase users who purchased using a Visa credit card in the preceding weeks were forced to take bank cash advance charges.
What Does This Mean?
Worldpay and Visa have begun reversing the funds but it seems many are stuck with the bank charges. Increasingly it seems like the banks’ push to reclassify cryptocurrency purchases as cash advances is the genesis of this saga. For what it’s worth the US government and most other governments don’t classify cryptocurrencies as a currency, meaning this reclassification probably wasn’t necessary from a regulatory perspective.
Cynics point to the extra, very high fees generate from this MCC reclassification. Conspiracy theorists reckon the ‘banks are out to get crypto’. Chances are Hanlon’s Razor is more likely here — unintended consequences, not a concentrated effort by the legacy financial industry are the cause. Whatever the case, Coinbase and its customers are the ones who suffer from this incident.
For what it’s worth the U.S. Commodity Futures Trading Commission and Consumer Financial Protection Bureau are apparently looking into the issue. Meanwhile, the banks remain silent.
🍴Litecoin Cash Fork
What’s The Story?
Litecoin is up 60% this week, doubling the 28% gain achieved by the broader cryptocurrency market. Part of this is because of continued momentum from the launch of Litepay which makes it easier to accept Litecoin payments. The other reason is thanks to Litecoin Cash, an upcoming fork of Litecoin.
What’s Litecoin Cash?
Litecoin Cash is a new cryptocurrency that is based on Litecoin. Existing holders of Litecoin will be automatically given 10 Litecoin Cash coins for each Litecoin they hold at the time of the fork in a process known as an ‘Airdrop’. The fork will happen at block 1,371,111, which should be in a day or two.
This is similar to how Bitcoin Cash came about — existing holders of Bitcoin received tokens for free. Like then, the price of the base cryptocurrency (Bitcoin then, Litecoin now) started rising before the Airdrop as purchasers looked to cash in on the ‘free’ coins.
Why Should I Care?
Charlie Lee, Litecoin’s founder and former director of engineering at Coinbase has vocally spoken out against cryptocurrencies using another token’s name. In addition to Bitcoin Cash there are now over 20 cryptocurrencies using the name “Bitcoin X” such as Bitcoin Gold, Bitcoin Dark, and even a LiteBitcoin.
With regard Litecoin Cash, Charlie Lee has explicitly called it a ‘scam’
The Litecoin team and I are not forking Litecoin. Any forks that you hear about is a scam trying to confuse you to think it’s related to Litecoin. Don’t fall for it and definitely don’t enter your private keys or seed into their website or client. Be careful out there!
That’s not to say that Litecoin holder won’t make money off this fork — Bitcoin Cash and Bitcoin Gold both have notably high market caps after their respective forks. In defense of the Litecoin Cash team, they’ve explicitly denied any affiliation with Litecoin and Charlie Lee:
We’re using the Litecoin Cash name simply because it has become customary in recent months for a coin which forks a blockchain to prefix its name with the name of the coin being forked. This practice has become a widely understood convention. We’re not associated or affiliated with Charlie Lee or any of the Litecoin team in any way; we are big fans though.
No major exchange has announced support for the new cryptocurrency. In order to receive the new token users will have to move their Litecoin off-exchange and into a wallet they control themselves. Whether holders make money off the new fork or not, they definitely benefit from this rise in price.
📖 Extra Reading
Ellen DeGeneres on Bitcoin: It’s ‘Either Worth $20K or Nothing’ — CoinDesk — www.coindesk.com
Bitcoin had a decidedly mainstream moment this week: during a segment on the talk show hosted by comedian Ellen DeGeneres.
Telegram has raised an initial $850M for its billion-dollar ICO | TechCrunch — techcrunch.com
It looks like Telegram’s billion-dollar ICO has reached its first milestone after the chat app company raised an initial $850 million, according to a filing…
LoopX pulls exit scam, walks away with $4.5m in investor cryptocurrency | ZDNet — www.zdnet.com
The startup’s last ICO was the finale of a scammer’s performance.
Bitcoin, Ethereum, Ripple price surge as cryptocurrency ban dismissed by European Central Bank | Metro News — metro.co.uk
Things are up looking up for Bitcoin investors
Swiss Finance Regulator to Treat Some ICO Tokens As Securities — CoinDesk — www.coindesk.com
Switzerland’s finance regulator has published new guidelines that indicate it will treat some tokens sold during initial coin offerings as securities.