Several major banks are banning customers from buying crypto on credit

Purchasing cryptocurrencies with a credit card is about to get significantly harder. Earlier today, the UK’s Lloyds Banking Group announced that it would prevent customers from purchasing cryptocurrencies with its credit cards.

Lloyds Banking Group is easily of the largest retail banks in the UK, and dominates a massive swathe of Britain’s retail banking market. In addition to the eponymous Lloyds Bank, it also owns Halifax, Bank of Scotland, and MBNA.

The ban solely relates to credit card transactions. Crypto purchases with Lloyds-issued debit cards should continue to work as normal.

In a statement to The Guardian , Lloyds Banking Group said: “Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies.”

Cryptocurrencies are unregulated, and the market for them is volatile and fundamentally speculative in nature. Over the past month, several major cryptocurrencies experienced major plunges in price.

This is especially true for Bitcoin. On December 17, the hugely popular cryptocurrency was worth nearly $20,000. According to CoinMarketCap, it’s today worth about $8,000.

The company fears that it the price of the cryptocurrency continues its downwards trajectory, customers will be burdened with massive levels of debt.

In practical terms, banning crypto purchases could ultimately spare Lloyds a few headaches. It seems within the realms of possibility that somebody will accumulate massive losses after a failed crypto investment, and then try to issue a chargeback in order recoup their money.

The news follows several US banks — namely JPMorgan Chase, Bank of America, Capital One, Discover, and CitiGroup — announcing their own similar bans.

On Friday, Bank of America sent a memo to staff stating it will “will begin declining credit card transactions with known cryptocurrency exchanges.”

On the same day, Citigroup issued a statement saying “We have made the decision to no longer permit credit card purchases of cryptocurrency. We will continue to review our policy as this market evolves.”

JP Morgan Chase was previously reticent to wade into this issue. However, in a CNBC interview , a spokesperson said the company would no longer process “cryptocurrency purchases using credit cards” due to risk and market volatility. The company promised to “review the issue as the market evolves.”

Capital One banned customers from purchasing crypto on credit cards on January 12 , while Discover’s ban came into effect on January 27 .

Discover’s CEO, David Nelms, is a vocal critic of cryptocurrencies having reportedly described crypto users as “crooks… trying to get money out of China or wherever.”

It seems a question of “when” and not “if” other legacy financial institutions follow suit. As crypto becomes more inconvenient to purchase, it’ll be interesting to see how the market reacts, and if this contributes to the downward pressure on Bitcoin’s price.

Blockchain isn’t the only tech behind Bitcoin

At the Blockchain Africa Conference held in Johannesburg, South Africa, prominent bitcoin and security expert Andreas Antonopoulos criticized banks and technology firms for treating the term “blockchain” as interchangeable with public blockchain networks – bitcoin in particular.

This is highly erroneous because the blockchain is just one of many technologies that supplement the bitcoin network and allow it to function as a decentralized, distributed, and peer-to-peer financial network.

The Bitcoin network consists of various solutions and cryptographic technologies, including Schnorr signatures, advanced elliptic curve applications, and ring signatures. The blockchain merely operates as a database within the Bitcoin and Ethereum blockchain networks; it keeps track of transactions and processes cryptographically secured data in real-time. It is only once all these technologies have coalesced that we have a functioning and actualized Bitcoin network.

“Blockchain is the technology behind bitcoin. Which is incorrect,” Antonopoulos stated .

He emphasized that if major banks, technology companies, or blockchain startups were asked to define the term blockchain or even to just distinguish it from the term database, they would not be able to do so. Antonopoulos went further to argue that “if what you’re doing is a database with signatures, it is not interesting. It is boring.”

A PR stunt by major conglomerates

Research conducted by Lisa Pham of Bloomberg revealed that the market valuation of technology company On-line PLC surged by around 394 percent in the 24-hour period after announcing its plans to develop a blockchain-based platform. Pham stated that the value of the company’s shares increased drastically when the company rebranded to On-line Blockchain plc.

According to her report, in the history of the 21-year-old company, the last recorded surge in its market cap was in 1996.

Earlier this month, another US-based company in Bioptix Inc. also recorded a sudden surge in its shares just prior to the public rebranding of the company as Riot Blockchain Inc. Pham noted that the price of the firm’s shares nearly doubled in value in a relatively short period.

Since January of 2017, the price of bitcoin has increased from $950 to over $7,000. This meteoric rise in its value is evidence of strong global demand for cryptocurrencies. Companies within both the technology and financial sector are adopting blockchain in a bid to create an alternative to Bitcoin.

The long-term goal of such companies is to create a blockchain network to rival public blockchains like Bitcoin and Ethereum, backed by banks.

Recently, several of the leading conglomerates and Fortune 500 financial and technology companies have been criticized for their lack of working commercial blockchain applications. Jamie Burke, CEO & Investor at Outlier Ventures, explained that most of these companies do not have a sustainable business model, a viable infrastructure, or an innovative solution to genuinely commercialize blockchain technology.

“Often it’s just technology looking for a problem with few defensible moats sadly by teams that have little real understanding of the domain they are trying to apply it to,” Burke asserted .

“Maybe some will make a buck for a while. If they are happy being an enterprise software consultancy they can even make a great living.”

Since mid-2015, the financial and technology sectors have poured in billions of dollars into the research, development, and testing of commercial blockchain solutions. The company that has come closest to using blockchain technology to successfully facilitate real-world payments is Ripple – the network recently processed hundreds of millions of dollars for a Swedish bank.

Still, as JPMorgan CEO Jamie Dimon disclosed, major banks settle trillions of dollars worth of payments on a daily basis. A $200 million payment settlement is not sufficient to demonstrate the potential of the blockchain technology. At this phase of development, the blockchain hype is well backed with substantial capital from banks, venture capital firms, angel investors, and technology conglomerates.

Many analysts like Peter Smith, the CEO of Blockchain, the most widely utilized bitcoin wallet platform globally, still maintain that the blockchain could be commercialized in the upcoming years. However, given the current track record of companies building applications around it, it is becoming increasingly difficult consider blockchain a genuinely dynamic technology .

This post was written by Joseph Young for Binary District, an international сollaborative technology community which creates unique competency-based workshops and events on new technologies. Follow them down here:

Cryptocurrency scammers dupe Singaporeans out of $78,000 in under 3 months

Singaporeans have lost $78,000 to cryptocurrency investment scams in the last three months, after authorities uncovered a wave of fraudulent marketing campaigns.

Cryptocurrency con-artists have duped citizens with phony articles featuring well-known Singaporean personalities to garner credibility, local media reports.

The advertisements falsely claim local celebrities earned huge returns on their Bitcoin investments made with fake companies. These lies eventually lured unsuspecting members of the public into sending in their cash, receiving nothing in return.

Police explained individuals who provided contact details normally received calls from supposed “representatives,” in a bid to legitimize the scams.

According to reports, these schemes originate from countries outside of Singapore. This unfortunately means they are not subject to the authority of Singapore’s top financial watchdogs .

But even if these businesses were locally based, those regulators wouldn’t be capable of doing anything at all. Singapore’s government does not actively regulate cryptocurrency. This means it is not able to impose any safeguards to protect local digital asset investors.

Surprisingly similar reports have surfaced in other parts of the world . A string of fake news articles recently hit New Zealand falsely starring local television host Daniel Faitaua.

The bogus ads claimed Faitaua doubled his money almost instantly, after buying a small amount of Bitcoin through a sham investment business in a televised interview.

He was eventually forced to make an on-air statement, clarifying he has no connection with the “business,” and had never bought any Bitcoin. Even more damning, the advertised interview never even happened. Go figure.