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Regulator begins inspections of all cryptocurrency exchanges in Japan

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Sure... like the "Regulator" actually has a clue on how to figure out if the exchange is secure or not.

2 ( +3 / -1 )

@Saiko - I was going to make the same comment. I am not sure if the regulator is technically competent to perform this type of assessment. I actually started to read about this stuff and found there are several ISO operational standards for banks but no approved standard yet for cryptography. There is an ISO Technical report on cryptography for banks (ISO/AWI TR 14742, Financial services -- Recommendations on cryptographic algorithms and their use) but no approved consensus standard for this yet

Bottom line is there are some pretty smart people developing these algorithms and I think the developers are way ahead of the "Regulator" in this case. Probably a case of some government agency feeling like they have to do something (or say something) without knowing what they are talking about.

4 ( +4 / -0 )

ponzu scheme

-1 ( +3 / -4 )

@RealCDN

Is "ponzu" a Japan-related joke, or a typo?

I'm sure you've said it before....

2 ( +2 / -0 )

Regulating a cryptocurrency sort of misses the point of a cryptocurrency, doesn’t it?

2 ( +3 / -1 )

@Borscht - considering my comment above, your point is also very well taken and understood. For some the intention is to escape the hand of regulation. There are, however, inherent risks with that (as there is with anything else).

I still stand by my comment though. These regulators will likely have no idea what they are looking that and if they even have a clue they will have no standard to use to evaluate what they see.

1 ( +1 / -0 )

Talk of a "ponzu scheme" makes me suddenly hungry for some Katsuo sashimi...

Interestingly, the head of the World Bank just this week stated that cryptocurrencies are "like a ponzi scheme" (as has the Indian government recently):

https://www.bloomberg.com/news/articles/2018-02-07/cryptocurrencies-are-like-ponzi-schemes-world-bank-chief-says

1 ( +1 / -0 )

In Japan, there are 16 registered exchanges and another 16 exchanges pending approval, the latter including Coincheck, according to the FSA.

So how was Coincheck able to do business without being approved? Wouldn't that be uhm...illegal in itself? Also who will be checking Aso's regulators? I don't trust that either.

0 ( +1 / -1 )

It's daft.

On an average day recently these cryptocurrencies have fluctuated by 30% or more, in some cases.

And the FSA is worried about whether the exchanges are all nice and secure and looking after customer data?

Who cares? People who are putting there money into these things oughta know that they could lose 30% in a day! Big difference with losing 100% in a week or more!

I don't want my taxes wasted on "protection" of silly speculators who oughta know that they are risking it all, anyway. Sheez.

Cryptocurrency has no impact on the wider economy. Let it be. The only thing I hope is that Japanese speculators beat the foreigners, and therefore pay enough tax to cover all this wasteful stuff that the FSA is now engaging in.

-1 ( +0 / -1 )

Papigiulo,

“So how was Coincheck able to do business without being approved? Wouldn't that be uhm...illegal in itself?”

Coincheck and other exchanges were already operating before the law was enacted. So they were allowed to continue to operate while their applications were under review.

2 ( +2 / -0 )

Oh boy, here we go again.

First, the reason why Coincheck was able to do business without being registered with the FSA is because they existed before the law that made mandatory for all exchanges to register to the FSA even existed, so they were kind of in their grace period.

Second, these inspections I think are a waste of time; what Coincheck did was completely stupid, and was something that even the most amateur person in the spaces knows you should never do, which is leave the wallets with their private keys accessible from the Internet. What they did was beyond stupid, and I think they should be sued for negligence.

Third, stop hating what you do not understand. Those saying that it's a "ponzi scheme" are just talking without understanding the most basic things about the space. First, these coins are open source, which means that everyone knows how it works, and everyone can take a part in them, so the idea of being a "ponzi scheme" makes no sense because there isn't any "inner group" which is required for a ponzi scheme.

Are there ponzi schemes that use cryptocurrency?, absolutely, but that doesn't mean that blockchain technology nor the cryptocurrencies using these technologies are themselves ponzi schemes.

The idea of blockchain is to improve the financial system, which is why many major banks are starting to experiment and develop their own private blockchain systems, the idea of cryptocurrencies is using blockchain to have some kind of global decentralized currency. Is there just pure mindless speculation on the market, of course there is, but also the reason why the market caps of some of these coins are getting so big cannot be just because of mindless speculation, but because people actually see potential in the idea of a global virtual currency, and they are investing in this idea.

The reason why there are so many coins, it's because right now it is the wild west of cryptocurrencies, and there are many competing technologies trying to get the crown of global virtual currency. Eventually the space will become more stable, but right now, while money is just starting to flow to this new financial system, of course it's going to fluctuate like hell.

-2 ( +2 / -4 )

A friend was trying to get me to invest just yesterday in a new crypto launch coming up. Close to 2,000 to choose from by now.

These regulators will be looking at customer guarantees regarding the consequences of theft, not at gains or losses within currency systems themselves.

0 ( +0 / -0 )

On an average day recently these cryptocurrencies have fluctuated by 30% or more, in some cases.

And the FSA is worried about whether the exchanges are all nice and secure and looking after

-2 ( +0 / -2 )

First, these coins are open source,

My one isn't! It's really awesome though, and everyone should buy buy buy!

The idea of blockchain is to improve the financial system

Potential blockchain applications could go well beyond financial systems. Personally I expect to see distributed ledger technology be ultimately more successful in areas other than the current fad of cryptocurrencies.

For example I recall that some securities depository in Australia is planning to roll out a distributed ledger based settlement system before too long. While it's an application in the financial system infrastructure, this is recording ownership of actual real world stuff (shares), unlike the tracking the ownership of a bunch of 1s and 0s that cryptocurrencies represent.

the reason why the market caps of some of these coins are getting so big cannot be just because of mindless speculation

That's what people who get burned in bubbles would assume!

People ought take care to not be deceived by the spectacular but speculative price action - in the short term it may be possible to make lots of money, but people should attempt it at their peril and understand that they may fail. Where there is huge reward there is always huge risk...

0 ( +1 / -1 )

Regulating a cryptocurrency sort of misses the point of a cryptocurrency, doesn’t it?

They are not regulating cryptocurrencies, they are regulating exchanges. They are two completely different things. Exchanges are to cryptocurrencies and banks are to national currencies.

2 ( +2 / -0 )

The friend who was trying to get me to buy into the new coins told me that I could get 5% back off the entry fees of people who I introduce.

Now, let's think, what kind of scheme did that comment remind me of?

-2 ( +0 / -2 )

I must know less about this than I thought but I do know people using bitcoin with 60 or 70 digit passwords to their wallet/locker where the money is stored. What is that for if not to prevent theft ? And what is the point of a heist anyway if the funds are just sitting at an address of unknown ownership but cannot be (easily) cashed out ?

0 ( +0 / -0 )

You want risk management? Don't leave the digital wallets/lockers ONLINE.

0 ( +0 / -0 )

@Yuko Maeda - don't leave anything online.

0 ( +0 / -0 )

The coincheck hack was probably an inside job.

The FSA may as well investigate the National Lottery system at the same time.... that's another big scam.

0 ( +0 / -0 )

@mmwkdw I'm not so paranoid as to worry about every little thing I do online. But in regards to digital currency, the issue isn't with these currencies - it's with the companies i.e. exchanges where you are forced to buy said digital currencies. There's not been a single report ever of a digital currency's blockchain being cracked/hacked. It's always the weak point, which are the exchanges.

Even if possible to allow users/members to offload their digital wallet in their entirety for safe keeping, somewhere would still be a database of accounts and passwords held by the company to match up who owns what. So how safe can it ever really be?

0 ( +0 / -0 )

Don't leave the digital wallets/lockers ONLINE.

Very true. Coincheck has talked about reimbursement it just isn't clear yet how. There are a lot of interesting applications for blockchain technology percolating but keeping money there may not be one of them.

0 ( +0 / -0 )

Is "ponzu" a Japan-related joke, or a typo?

Bit of both - I got autocorrected to ponzu from ponzi.

Regulating a cryptocurrency sort of misses the point of a cryptocurrency, doesn’t it?

It shows a lack of understanding of cryptocurrencies - they cannot be regulated. Only the exchanges can be regulated.

There are a lot of interesting applications for blockchain technology percolating but keeping money there may not be one of them.

Why not? It's a simple, secure, money store.

0 ( +0 / -0 )

 There's not been a single report ever of a digital currency's blockchain being cracked/hacked.

Actually, there have been - Ethereum being the most notable example (which led to the fork). As a token's value rises, it attracts more effort from hackers. So a new blockchain on a smaller coin may be susceptible to a hack. More established coins, like bitcoin, look pretty solid.

0 ( +0 / -0 )

My one isn't! It's really awesome though, and everyone should buy buy buy!

If you buy something without knowing what it even is, then you deserve to lose all your money.

That's what people who get burned in bubbles would assume!

People ought take care to not be deceived by the spectacular but speculative price action - in the short term it may be possible to make lots of money, but people should attempt it at their peril and understand that they may fail. Where there is huge reward there is always huge risk...

I'm obviously not talking the recent ultra price rise, but in general, the price has been going up since it's inception.

If you are in just as a speculator to make "easy money" then there are chances that you will get burned really badly, like all short term investments, specially because of the volatility, but if you are investing long term, in technologies you actually understand and support for their usability, and you believe they have a real world use, then you have a good investment, and even then there are risks, just like in any investment.

But don't blame the technology because there are people who are in to make a quick buck out of wide volatility, and a lot of people will lose money.

0 ( +0 / -0 )

Ethereum being the most notable example (which led to the fork). 

Ethereum wasn't hacked, what was hacked, which led to the fork, was "The DAO", because their smart contract had bugs. Ethereum as a platform has not been hacked, you people who program their own smart contracts using the platform have been hacked because, once again, their smart contracts are full of bugs.

0 ( +0 / -0 )

The friend who was trying to get me to buy into the new coins told me that I could get 5% back off the entry fees of people who I introduce.

Now, let's think, what kind of scheme did that comment remind me of?

Your friend was either trying to scam you, or was scammed himself, since you cannot get "5% back off" for buying cryptocurrencies.

As I said, there are scamers in the market, but that doesn't mean that the market is a scam.

0 ( +0 / -0 )

Your friend was either trying to scam you, or was scammed himself, since you cannot get "5% back off" for buying cryptocurrencies.

Actually it’s not technologically impossible.

0 ( +0 / -0 )

The friend who was trying to get me to buy into the new coins told me that I could get 5% back off the entry fees of people who I introduce.

Not just not impossible, This is done all the time with new tokens, and is not a scam. Plenty of established businesses reward customers for referrals. It's a good way to get the word out.

0 ( +0 / -0 )

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