🔊 NEW! Neocash Radio Ep182: Massive Android Backdoor, India Cash Crunch Chaos, Ethereum’s 4th Fork, and more!

in news •  last year

India phasing out banknotes leads to much suffering. Secret backdoor in millions of Android devices. U.S. government looks to block Chinese acquisitions. John McAfee warns of the dangers of smartphone security impacting Bitcoin use. Fake news loses advertising options. IRS agrees to cryptocurrency overhaul when they have the time/funding. Ethereum fork number 4 is coming. Darren talks about his experience running for local office.

All this and more on Neocash Radio episode 182 here on Wednesday November 16th, 2016!


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We’ve written out short overviews of the topics discussed on today’s show below, along with time markers for each segment! Be sure to listen in to the whole podcast to get more information, insights, and thoughts on each of them from JJ (aka @jjepic), Darren (aka @newhampshire), and Randy (aka @randyclemens)!

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Traditional Markets Crypto Markets
Gold $1225 Bitcoin (BTC) $740
Silver $16.96 Litecoin (LTC) $3.84
Oil $45.33 Zcash (ZEC) $98.50
Dow Jones 18,868 points Ethereum (ETH) $10.07
30Y UST Yield 2.915% DASH $9.11
Euro (EUR) $1.07 Monero (XMR) $6.45
Chinese Yuan (CNY) $0.15 Augur REP $4.48
British Pound (GBP) $1.24 1 Doge = 1 Doge

Huge crowds at Indian banks to get new rupees, cash crunch affects gold market

Stampedes and scuffles in India as rupee banknotes withdrawn

India’s Prime Minister Narendra Modi made a surprise announcement last Tuesday, phasing out all 500 rupee (~$7.35 USD) and 1,000 rupee noted by year’s end. The Prime Minister wants to curb tax evasion, but also claims that the bills are being counterfeited and used to fund Islamic militants. (An estimated 3% of Indians file tax returns.)

Calamity ensued as Indians panicked and flocked to banks en masse. These two bills alone represent 86% of the country’s circulated currency, and there are hundreds of thousands of Indians who do not have bank accounts and rely strictly on cash. Lines stretched around buildings as people waited for hours. Police and paramilitary forces were called in some places to keep “order” as the banks struggled to keep up with demand.

Indian citizens were given two options in this draconian measure: 1) they could deposit an unlimited amount of the old notes into a bank account by December 31, with withdrawal limits of 10,000 rupees per day and 20,000 per week; or 2) be limited to ONE exchange of no more than 4,000 rupees (~$58.77 USD) before November 24.

Airports, railway stations, hospitals and fuel stations stopped accepting the old notes a mere three days after the announcement was made. All of the country's banks were closed last Wednesday to get stocked with the new currency, but even by Friday, nearly half of India’s 202,000 ATMs were still closed and those that were running ran out of the notes quickly.

Is India's cash crunch affecting gold & cryptocurrency markets?
This cash crunch may also be affecting the gold price, as India is one of the world’s top markets for physical gold. Rumors are circulating that Prime Minister Modi may also temporarily halt gold imports to combat conversions of cash stashes. This comes just ahead of India’s peak demand time for gold, the wedding season, which runs from Nov. 20 to Dec. 14 this year. India’s gold imports are already down around half of what they were at this time last year, due largely to a 1% excise tax on manufactured gold products enacted earlier this year, which caused many jewelers to close their shops in protest for several weeks in March. Mukesh Mehta, president of India Bullion and Jewellers Association, tells the Wall Street Journal: “The entire [gold] trade has come to a halt,” says. “India seems to be moving towards a cashless economy.”

Bitcoin volume has seen a surge in India following the announcement. Charles Hayter, CEO and founder of Crypto Compare, tells CNBC: "Bitcoin was trading at a $20 dollar premium [~3%] in India at the beginning of September and now is trading at a $70-100 premium to the USD rate."


Kryptowire Discovers a Secret Backdoor on Millions of Android Mobile Devices

Shanghai Adups Technology Co. Ltd. has firmware that secretly sends reports to Chinese servers. The Adups firmware is shipped with the mobile devices and is whitelisted by mobile anti-virus tools as part of the system. The Adups software is part of a Firmware Over The Air update software system. According to the findings of security firm Kryptowire, the Adups software would send encrypted messages to a company server in Shanghai that included precise details in how the phone was used, full chat logs, call logs, and location data. On top of that, the Adups software could install, uninstall, and update applications remotely via commands issued from a second IP address found by Kryptowire.

The Adups software is used in a vast array of mobile devices across the world. Their website claims to have a 70% market share and 700 million active users. The device that was examined by Kryptowire was a BLU R1 HD and the software is also found in many other popular and budget Android phones. The system applications are identified as com.adups.fota and com.adups.sysoper both of which cannot be disabled or stopped. The Adups application sends reports on a regular schedule; every 72 hours for text messages and call logs, every 24 hours for the other personally identifiable information.


U.S. Congressional Commission Recommends Blocking Chinese State-Owned Enterprises from Buying U.S. Companies

The U.S.-China Economic and Security Review Commission released its annual report and the Chinese Communist Party is raising red flags. This year Chinese State-Owned Business captured a record $64.5 Billion worth of acquisitions according to Thomson Reuters data. The data shows massive outflows of Chinese capital across the world with twice the acquisitions as last year. The commission recommended that a statute be amended so that the Committee on Foreign Investment in the United States could “bar Chinese state-owned enterprises from acquiring or otherwise gaining effective control of U.S. companies." Given the campaign rhetoric from president-elect Donald Trump, the change could happen sooner than later.


John McAfee: Mixing smartphones and Bitcoin will leave cryptocurrency in 'absolute chaos'

In an exclusive interview with IBTimes UK at London's Blockchain: Money event, security expert John McAfee had some terse words to say about people handling their cryptocurrencies with their smartphones, or “spying devices” as he calls them.

Gesturing at an iPhone on the table, McAfee warned: "Good god, this device was not designed to secure you and give you privacy. This device was designed to do the opposite – to open up where you are, who you are with, who your contacts are – this is a spying device.”

McAfee said that if changes are not made, it will be "absolute chaos" and added: "Not because we don't understand it or we can’t understand the math [but] because there is no security whatsoever."

He then went on to explain how malware like a simple keylogger could be used to circumvent strong encryption with ease. "We are all missing the trivial."

McAfee has taken a large interest in Bitcoin recently. His company—MGT Capital Investments Inc.—now operates a Bitcoin mining facility, which McAfee reports is running 400 machines at about five petahashes per second, with plans to expand to approximately 2,000 machines by the beginning of 2017.

Naturally, McAfee has taken security precautions to guard his facility, employing an anti-hacking machine that his company produces: “We have our own proprietary box called Sentinel which sits on the network and monitors all network traffic – it's looking for anomalies. We have tested it over and over and over.”


Fake News Sites Lose Google & Facebook Advertising OptionsFake news and viral video sites know how to game the system and Google is changing their AdSense policies to exclude the popular content. This recent election highlighted many things including the role fictional media plays against the mainstream media machine. Unbound by talking points and political correctness, fake news sites devoured clicks and attention spans. Why is this a surprise? Modern politics is boring, flat, platitudes and emotionally charged drivel. Toss in an occasional polarizing viewpoint and you have the last two decades of presidential elections.
“The shifts come as Google, Facebook and Twitter face a backlash over the role they played in the U.S. presidential election by allowing the spread of false and often malicious information that might have swayed voters toward Republican candidate Donald Trump.”
This is only half the story, the other half is the backlash from the perception that Google, Facebook, and Twitter did not do enough to help Clinton win. This is the same backlash obvious pro-clinton networks like CNN, MSNBC, and NPR are facing. These networks were saying for months or even years that Hillary was president-elect, driving a narrative that “it was inevitable”, just like the war in Iraq…

Facebook’s statement, “We do not integrate or display ads in apps or sites containing content that is illegal, misleading or deceptive, which includes fake news," which begs the question: ‘What about WikiLeaks’? The U.S. has declared the content illegal numerous times. Who determines what is admissible and what sort of appeals process is there?

Is it really so hard to believe people want to watch some funny fake news rather than the horrible reality of the past election cycle?

Twitter is taking this to another level by suspending accounts of alternative-right viewpoints. While some of the bans include truly hateful groups, Trump supporters are getting caught up in the purge. Is this how partisan social media platforms start?


IRS agrees to major cryptocurrency strategy overhaul following audit

The U.S. Treasury Inspector General for Tax Administration released a searing 31-page report of a nine-month audit that explored the IRS’ handling of virtual currencies, like Bitcoin. The report circles around how unclear the IRS’ guidelines are and what a daunting user experience it creates for anyone wishing to claim any debits or payments via Bitcoin.

One major hurdle for compliance is that the IRS wants a ridiculous amount of information for EACH virtual currency transaction. If you used Bitcoin to buy a daily cup of coffee, the IRS wants you to determine what portion of which Bitcoin was used to make each purchase based on a daily exchange rate, converted all into dollars, and then at reporting time, calculate whether there were any gains or losses from when you received those Bitcoin. (The IRS categorizes Bitcoin as property rather than a currency, which they claim subjects it to capital gains tax.)

Can you imagine having to keep a list of the serial numbers for all the dollar bills you used and the date you received them... and then figure out whether those dollars were worth more or less when you get them versus when you spent them?!

IRS to develop virtual currency strategy for taxing Bitcoin

The report also details how questions from the public seeking guidance on how to comply often went unanswered, and points out that the most common IRS tax forms, like 1099’s and the W-2, have no dedicated space for virtual currencies to be reported. Representatives from the IRS agreed with much of the report’s findings in an official response and agreed to create a new “virtual currency strategy” coordinated across all IRS divisions by September 30, 2017. But the IRS’ reply also stated that changing their forms “to capture Virtual currency amounts is not a priority at this time” ... citing tight funding.


Ethereum Update for Fork Number 4 is Released

The second half of a fix started months ago, the Ethereum Foundation released version 1.5 and according to the post at Github titled ‘Let There Be Light’, it “contains about 8 months of work and many new features and fixes”. The code will trigger on block number 2,675,000 sometime next Tuesday. The fork contains replay protection, state clearing, and code size limit. Other notable points include a restructuring of the blockchain database, Go API, iOS and Android Support, and some highly experimental features.

Coming early next year the Ethereum Name Service will be launched and will allow users to register a name to link to their various Ethereum Dapps and functions. The name would be used inplace of the ubiquitous random character string that used with all cryptocurrencies. The name would look like a website with a top level domain of “.eth” An example would be neocash.eth or donate.neocash.eth.

“Registration does not guarantee perpetual ownership”, the blog post states, indicating that the value to secure a name may go up in the future. The registration process features an auction where the winner places the amount in a deed for a year afterwhich either a price adjustment or another auction would occur. A dispute resolution is also in the works. It’s very early in the development and the blog post is soliciting feedback.


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It is great to have Darren back in the studio!