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The Bitcoin Halvening Is Coming

One of the controversial things about bitcoin (BTC) is that it pays the people that keep the bitcoin blockchain running and secure. These folks are called miners, purely because the process seems slightly similar to mining. The process of mining is to run software that executes the search for the solution to a puzzle that acts as the password to creating the next record on the bitcoin blockchain. Success in cracking this puzzle and then creating the next block of records is rewarded in bitcoin. At the moment the reward is 12.5 BTC, which at the rate of $8,000 a BTC is exactly $100,000.

That sounds like a lot of money to solve a lil’ ole puzzle. The trouble is the puzzle is to mash numbers to create a result with say 23 zeros, which, because of the math involved, means you have to do literally zillions of trillions of calculations to find one password code. Miners run these bazillions of calculations, sifting through the wrong answers to get to a single right one. This takes perhaps three years for a specialist machine running flat out at 50 trillion calculations a second, burning a few thousand dollars of electricity as it goes.

That doesn’t sound like a bad business model but as new mining machines enter the game, so the game gets harder, which means that the amount of time taken by any given machine to get a result goes up and so does the cost. Bitcoins difficulty has over the years gone truly exponential, so that the money a machine can make when put into a team of machines halves every six months or so as time passes. That makes making money mining tricky because while you may make great money to start with, after about 18 months it may have fallen to nothing.

Apart from increasing difficulty, mining also gets harder because every so often the blockchain will halve the reward. This last happened in July 2016. The reward is currently 12.5 bitcoin but soon enough the reward will be only 6.175 BTC. The price should rise to pay the miners more for their smaller haul of new bitcoin. If it doesn’t, unprofitable miners must stop work so the difficulty can fall and the job can get easier for those that remain or certain miners must get way more efficient and push the less efficient miners off the pitch.

Today In: Money

The general consensus is that the bitcoin price will rise.

The reason for this is that the inflation of the BTC money supply by 12.5 BTC every ten minutes, means that there is a new supply of 1,800 coins a day, let’s call it $14 million a day. This $14 million of new supply, which is currently absorbed by buyers, will suddenly be cut in half to $7 million. The demand, however, will remain roughly constant. Unchanged demand coupled with lower supply, equals price up.

This is how it has worked in the past and this is what I’m putting my money on. There are skeptics who suggest that if the price doesn’t move up then miners will wither away, block times will slow dramatically, bitcoin will be less useful, people will panic and dump and so on. However, there are a lot of people like me who would love that and would buy a lot into such a panic. Less supply, same demand, high price, wins the simple proven logical outcome of the next halvening.

But of course people are going to preempt.

To add to the price pressure, bitcoin gets lost. That happens to gold too and was also a problem for gold when it was money. That enables bitcoin to get ever more expensive overtime.

If a Satoshi was 1 cent, bitcoin’s market cap would be 21 trillion dollars, but when you think about it, if a Satoshi was $1 or $100, then it would become a currency much like gold, which in the past was used foremostly as a store of wealth, expressed in the usage for silver coins which acted as a store of wealth for the general usage of copper coins. This is the dream of all crypto fans, bitcoin as the reserve currency of crypto, an incredibly valuable blockchain fungibly linked on top of a hierarchy of other ‘lesser’ currencies.

It could happen.

The upcoming halvening speaks to this dream and it’s coming to the BTC blockchain in May. As a hodl’er I can wait.

Be among the first to get important crypto and blockchain news and information with Forbes Crypto Confidential. It’s free, sign up now.

Clem Chambers is the CEO of private investors website ADVFN.com and author of Be Rich, The Game in Wall Street and Trading Cryptocurrencies: A Beginner’s Guide. In 2018, Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards.

Follow me on Twitter. Check out my website.

I am the CEO of stocks and investment website ADVFN . As well as running Europe and South America’s leading financial market website I am a prolific financial writer. I wrote a stock column for WIRED – which described me as a ‘Market Maven’ – and am a regular columnist for numerous financial publications around the world. I have written for titles including: Working Money, Active Trader, SFO and Technical Analysis of Stocks & Commodities in the US and have written for pretty much every UK national newspaper. In the last few years I have become a financial thriller writer and have just had my first non-fiction title published: 101 ways to pick stock market winners. Find me here on US Amazon. You’ll also see me regularly on CNBC, CNN, SKY, Business News Network and the BBC giving my take on the markets.

Source: The Bitcoin Halvening Is Coming

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With the next Bitcoin ‘halvening’ event taking place on May 22nd 2020, we are now officially less than a year away from this event occurring. In this video, I’m going to explain why I believe that this is a HUGE deal for cryptocurrency investors. DISCLAIMER: This is NOT financial advice. I am just offering my opinions. I am not responsible for any investment decisions that you choose to make. ►►►Looking to get started with cryptocurrencies? Check out my crash course here (HUGE 80% OFF LINK): https://louis-thomas.teachable.com/p/… DONATIONS ♥ ETH: 0xc12f59c4e23dccd369437bbdb09470879d8c0825 ♥ BTC: 1L2LswVmTobmEK8dy6Yw9nWx93Z1zZ1jb3 ESSENTIAL CRYPTO RESOURCES ♦ Recommended place to buy Bitcoin/Ethereum: COINBASE – Sign up here: https://www.coinbase.com/join/5897724… ♦ Recommended Wallet: LEDGER NANO S – Available here: https://www.ledgerwallet.com/r/3c47 ♦ Recommended VPN provider: Nord VPN Available here: https://go.nordvpn.net/SH27y ♦ Learn to code with Ivan on Tech’s Academy. EXCLUSIVE offer – just $9 for first month: https://academy.ivanontech.com/louis SOCIAL MEDIA LINKS ● Website: louisthomas.co.uk ● Facebook: https://www.facebook.com/LouisThomasC… ● Twitter: https://twitter.com/LouisThomasYT ● Instagram: https://www.instagram.com/louisthomas… ● Steemit: https://steemit.com/@louisthomas ● Snapchat: louisxthomas

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Here’s Where $800 Of Bitcoin Buys You $10,000 Cash

Researchers from cloud security-as-a-service provider Armor’s Threat Resistance Unit (TRU) have been taking a deep dive into a dozen dark markets and forums. Analysis of the data compiled from trawling these English and Russian-speaking criminal marketplaces has been published in the annual Armor Black Market Report. As well as the usual tracking of the prices for stolen credit cards, bank account credentials and Distributed Denial of Service (DDoS) for-hire operators, there was one surprising new trend: a Bitcoin to cash conversion scheme that offers criminal buyers the opportunity to buy cash for pennies on the dollar. Paying $800 (£647) in Bitcoin gets you $10,000 (£8,095) in cash.

The Black Market Report

The Armor Black Market Report is the result of researchers from the Armor TRU trawling through underground internet markets and criminal forums. These “dark markets” are notorious for selling just about anything that can be stolen online, from personal and financial data to illicit services such as articles of incorporation for creating shell companies, the distribution malicious spam and even hackers for hire who will scrub your credit history.

The TRU research team analyzed and compiled data from twelve dark markets and criminal forums visited between February and June 2019. It came as no surprise to me that they found cybercriminal after cybercriminal selling credentials for as yet “unhacked” Windows remote desktop (RDP) servers. These are often used by ransomware actors looking for an entry point into corporate networks. That these credentials were being sold for as little as $20 (£16) was unexpected though. The cost of entry, quite literally, to the ransomware threat sector has never been cheaper.

Today In: Innovation

Neither, for that matter, has the cost of cold, hard cash. The TRU researchers found that, partly to get noticed in a crowded market and partly to offset the risk of monetizing stolen banking and credit card accounts, entrepreneurial threat actors are selling cash for between 10 and 12 cents on the dollar. This isn’t, as you might have guessed, a case of criminal philanthropy.

Instead, it’s a method for criminals to offload the risk of monetizing stolen account credentials by transferring the funds available rather than taking possession of them. It’s still money laundering, and it’s illegal, but it puts the most significant weight of risk onto the buyer.

Here’s how the buy cash for Bitcoin scheme works

The seller offers bundles of cash in various amounts, from $2,500 (£2,020) to $10,000 (£8,095) in exchange for a pre-paid fee in Bitcoin. That fee varies between 10% and 12%. Which means that $10,000 of cold cash can be bought for $800 in Bitcoin.

The buyer makes the payment and then chooses how they would like to collect the cash. This can be a straightforward transfer of funds to a bank or PayPal account or wired via Western Union. As well as getting a significant return on their illicit investment, the purchaser no longer has to worry about monetizing online bank account or credit card credentials. It’s a turn-key service; there’s no risky logging into compromised accounts, no money mules to worry about, just the (totally illegal) collection of cash.

“For those scammers who don’t possess the technical skills and a robust money mule network to monetize online bank account or credit card credentials, this is an offer that can be very attractive,” Chris Hinkley, head of Armor’s TRU team said, “the threat actors are still selling financial account and credit card credentials outright, but this clever service gives them an additional channel for monetizing the large amounts of financial data available on the underground.”

Money mules served well by dark market documentation

One of the other interesting things to come out of this analysis was the fact that cybercriminals are selling articles of incorporation and sole proprietorship papers on the dark market. Not shocking, but interesting. While the cash for Bitcoin transactions gets rid of the money mule requirement, there are still plenty of people who adopt that role, and these papers are aimed at them. A money mule is someone who transfers stolen money between accounts in exchange for a fee of between 10% and 20% of the value. For a money mule to be successful, they need to open business bank accounts that don’t trigger fraud alerts on larger transfer volumes. To open these accounts, they need an Employer Identification Number (EIN) assigned by the U.S. Internal Revenue Service, and that’s where the documentation to create shell companies enters the equation. The documentation does not come cheap, however. Sole proprietorship papers complete with EIN were found on sale for $1,611 (£1,298), and Articles of Incorporation with EIN were $811 (£653).

Follow me on Twitter or LinkedIn. Check out my website.

I’m a three-decade veteran technology journalist and have been a contributing editor at PC Pro magazine since the first issue in 1994. A three-time winner of the BT Security Journalist of the Year award (2006, 2008, 2010) I was also fortunate enough to be named BT Technology Journalist of the Year in 1996 for a forward-looking feature in PC Pro called ‘Threats to the Internet.’ In 2011 I was honored with the Enigma Award for a lifetime contribution to IT security journalism. Contact me in confidence at davey@happygeek.com if you have a story to reveal or research to share

Source: Here’s Where $800 Of Bitcoin Buys You $10,000 Cash

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How Telegram Using Mining Autobot On Mobile Phones

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There is now a plethora of Telegram bots out there that label themselves as bitcoin miners, Ethereum miners or just generic ‘Crypto’ miners. Scratch the surface and you’ll soon discover that the vast majority are just scams.

You could pour hours into these little bots gradually building up Satoshi’s, gems etc but then comes the glorious day of withdrawing your “earnings” and you are told you don’t have enough points or keys to withdraw the minimum amount. Let me save you hours more time by saying its virtually impossible to acquire these keys/points and you may as well delete the channel.
Here is a list of a few of these scam bots:

Myself and a group of others are constantly testing these bots to the point of withdraw and they all end up the same! “You do not have enough points to withdraw minimum amount”.  The list I give is small but there are probably hundreds of others out there or in the pipelines to be released soon.

Here is the program charactersitics..If you willing to install it , dont forget that it only works in telegram app…

Telegram Auto Mining Robot: fully automatic mining bot.
The simplest way to mine BTC.
Auto Mining Robot Free plan Earning Rate:
฿0.00000040/min
฿0.000576/day

Please /upgrade if you want increase mining speed!

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US Lawmakers Are Realizing They Can’t Ban Bitcoin

Those who have been longtime critics of Bitcoin usually have one key theory in common, which is that governments will eventually ban Bitcoin and cryptocurrency will then cease to exist in any meaningful form. For examples of this point of view, just look at economist Nouriel Roubini and JPMorgan Chase CEO Jamie Dimon.

That said, implementing such a ban is no easy task. After all, Bitcoin was built by cypherpunks as a form of digital money that would be unaffected by the desires of politicians and regulators around the world.

Lately, it appears that lawmakers in the United States are starting to realize the difficulties associated with a potential Bitcoin ban.

Bitcoin Ban Deemed Unlikely During Congressional Hearings

On Tuesday, the U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on cryptocurrency and blockchain technology regulation. During that hearing, Senate Banking Committee Chairman Mike Crapo (R-ID) shared his belief that the United States would not be able to succeed in banning Bitcoin.

“If the United States were to decide — and I’m not saying that it should — if the United States were to decide we don’t want cryptocurrency to happen in the United States and tried to ban it, I’m pretty confident we couldn’t succeed in doing that because this is a global innovation,” said Crapo.

This statement came in the form of a question to Jeremy Allaire, who is the co-founder and CEO of global financial services company Circle. In his response, Allaire explained the new reality created by the creation of Bitcoin.

“I think the challenge that we all face with this is some of these cryptocurrencies — they’re literally just a piece of open-source software,” said Allaire. “There’s nothing else. It exists on the internet, it’s open-source software, anyone can implement it, it runs wherever the internet runs, and these have a monetary policy where these assets are algorithmically generated . . . That is a challenge that every government in the world now faces — that money, digital money, will move frictionlessly everywhere in the world at the speed of the internet.”

These remarks made during Tuesday’s hearing follow comments made by U.S. Congressman Patrick McHenry (R-NC) from earlier in the month when he stated “there’s no capacity to kill Bitcoin” during an interview with CNBC.

Back in May, Congressman Brad Sherman (D-CA) claimed that Congress should implement a ban on Bitcoin, but Sherman did not share specific details as to how such a ban could be effectively achieved.

                                

The difficulties associated with implementing a ban on Bitcoin are behind one economist’s theory that the best way to kill the cryptocurrency would be for governments to become more competitive in terms of monetary policy and financial freedom.

Abra CEO Bill Barhydt has also pointed out that bringing forth a Bitcoin ban could be legally difficult for the U.S. Government. That said, there is growing support for bans on encryption-based technologies among various law enforcement agencies in the United States, in addition to the Trump White House.

On the other hand, more centralized cryptocurrency systems like Facebook’s Libra project, which is really a cryptocurrency in name only, would be much easier for governments to control.

It should be noted that extreme limitations on technology and financial freedom, such as the new cash-related bill making its way through the Parliament of Australia, may end up unintentionally educating more people as to why Bitcoin has value in the first place.

Follow me on Twitter. Check out my website.

I’m a writer who has been following Bitcoin since 2011. I’ve worked all over the Bitcoin media space — from being editor-in-chief at Inside Bitcoins to contributing to Bitcoin Magazine on a regular basis. My work has also been featured in Business Insider, VICE Motherboard, and many other financial and tech media outlets. I’m mostly interested in the use of Bitcoin for transactions that would be censored by the traditional financial system (think darknet markets and ransomware) in addition to the use of bitcoin as an unseizable, digital store of value. Altcoins, appcoins, and ICOs don’t make much sense to me. Find all of my work at kyletorpey.com. Disclosure: I hold some bitcoin.

Source: US Lawmakers Are Realizing They Can’t Ban Bitcoin

Bitcoin Price Crashes $800 in Minutes as Bears Eye $9K Support Next

Bitcoin Price Crashes $800 in Minutes as Bears Eye $9K Support Next

Bitcoin traders eat their wallets

Traders were scratching their heads on social media Saturday in the wake of the sudden losses, with BTC/USD crashing from $10,180 to $9,410.

At press time, the pair had recovered marginally to circle $9,500, while a lack of obvious factors left commentators struggling to understand the market.

As Cointelegraph reported, a return to $10,000 earlier came as a surprise after a similar uptick occurred in a matter of minutes.

Previously, regular commentator Josh Rager had eyed a break below $9,600 as a gateway to lower levels, with the potential for $9,000 to also fall.

Some had anticipated volatility continuing in the short term. On Twitter, the trader known as CryptoCohen sounded the alarm hours before the $800 losses.

“Could be a larger correction in play – could take a lot longer too – longer than many would expect/hope. But good things come to those who wait,” he summarized.

Bitcoin’s move meanwhile had a more predictable effect on altcoin markets, with tokens in the top twenty cryptocurrencies by market cap shedding up to 4.5%.

Monthly, Bitcoin price has lost 20%, Cointelegraph noting that end-of-year and longer-term price forecasts remain bullish.

Source: https://cointelegraph.com/news/bitcoin-price-crashes-800-in-minutes-as-bears-eye-9k-support-next

OWNBTC Cloud Mining

OWNBTC is a Cloud Mining Company. OWNBTC offers a unique opportunity in the cryptocurrency world by providing Shared Managed Mining Farms. The uniqueness of OWNBTC is that we lowered the cost of the individual miners and reduced the additional time-consuming efforts such as purchasing hardware, maintenance of equipment, utility bills and storage.

Individual miners can participate and earn a great passive income in crypto mining by only joining our crypto-mining programs at OWNBTC. We at OWNBTC aims to be the world’s leader in cloud mining by utilizing the most dynamic Mining Pools and focusing on the best paying cryptocurrencies.

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Brazilian President Jair Bolsonaro Reveals He Doesn’t Know What Bitcoin Is

Jair M. Bolsonaro, the president of Brazil, has recently revealed in an interview with a well-known TV show host that he doesn’t know what bitcoin is, while speaking about his administration’s decision to shut down an ‘indigenous cryptocurrency’ project.

According to local news outlet Portal do Bitcoin, the TV show host has been participating in various cryptocurrency-related events recently, and was speaking to the country’s president about a cryptocurrency-related project barred by Brazil’s Minister of Human Rights, Family, and women, Damares Alves.

Bolsonaro, with a disapproving tone, stated:

She [Damares] discovered at the end of the transition last year that they were earmarking Funai for RS $40 million, and do you know why Ratinho? To teach indigenous people how to mess with bitcoin.

The “indigenous cryptocurrency” project Bolsonaro refers to was signed three days before the mandate of Michel Temer, Brazil’s former president, ended. It would see the country spend roughly $12 million to bring in an “alternative currency” for its indigenous communities, in a move that purportedly could “transform the reality of these people.”

As CryptoGlobe covered, however, the project saw the government sign a contract directly with the National Indian Foundation (Funai) and with the Universidade Federal Fluminense (UFF), instead of seeing organizations compete for it through a traditional bidding process.

At the time, officials claimed the UFF was chosen because of its “expertise” in similar projects. It’s worth noting, however, that Funai employees claimed the work that was set to be done was of “questionable technical relevance.”

Reacting to Bolsonaro’s disapproving tone, Ratinho asked the Brazilian president if he knew what bitcoin was. Bolsonaro replied he didn’t know but with help from the host managed to get a little more out:

It’s that virtual coin. I do not know how to operate that ‘train’ yet.

As Portal do Bitcoin reports, Bolsonaro’s son Carlos Bolsonaro appears to not yet properly understand cryptocurrencies. On the microblogging platform Twitter, he claimed the halted cryptocurrency project blocked “millions in bitcoin,” when in reality it blocked millions in fiat currency.

Featured image via Jair Bolsonaro’s YouTube channel.

Source: CryptoGlobe

Bitcoin Plunged Below $8,000–Did This Cause The Sudden Price Drop?

bitcoin, bitcoin price, image

Bitcoin, which has been swinging wildly over recent weeks, has crashed under $8,000—suddenly losing almost $1,000 per bitcoin in a matter of minutes last night.

The bitcoin price, down around 8% over the last 24 hour trading period, is still up around double where it began this year after a terrible 2018 that saw many of the world’s biggest cryptocurrencies including bitcoin lose around 80% of their value.

It’s been suggested the latest sudden bitcoin sell-off, which sent the wider cryptocurrency market sharply lower, was caused by a so-called bitcoin whale selling a large amount of bitcoin then buying it back after the market has dropped due to the influx of supply—potentially earning millions of dollars in the process.

Last night a large bitcoin holder moved some 25,000 bitcoin, worth more than $200 million, from an off-exchange wallet to the San Francisco-based Coinbase bitcoin and cryptocurrency exchange, as reported by a bitcoin and cryptocurrency whale tracking Twitter bot.

Shortly after that, 14,000 bitcoin, worth $112 million, was moved from Coinbase to another wallet, then a further 11,000 bitcoin, worth $88 million.

“If you do a little math and follow the timeline, it’s not hard to see that someone dumped 25,000 bitcoin for $215 million and bought it back shortly after for $200 million,” wrote Reddit user u/makoveli in a post to popular cryptocurrency forum r/cryptocurrency. “In doing so, they pocketed $15 million and walked away with the same amount of bitcoin as they started with.”

Bitcoin, despite being the most widely traded cryptocurrency with trading volume into the billions of dollars every day, still struggles with wild price swings due to large holders moving significant volumes of bitcoin.

bitcoin, bitcoin price, chart

The bitcoin price has risen and fallen sharply multiple times over recent weeks.

Following the sharp bitcoin price plunge, other major cryptocurrencies including ethereum, Ripple’s XRP, litecoin, EOS, and bitcoin cash all fell with EOS leading the field lower, down over 10% on yesterday’s price, according to CoinMarketCap data.

Bitcoin SV, a variant of bitcoin cash, itself a fork of bitcoin, was the only top 10 cryptocurrency largely unaffected by the sudden sell-off—something that will likely further speculation the controversial token suffers from low liquidity and high price manipulation.

You can follow me on Twitter @billybambrough and read my other Forbes posts here

Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies

I am a journalist with significant experience covering technology, finance, economics, and business around the world.

Source: Bitcoin Plunged Below $8,000–Did This Cause The Sudden Price Drop?

Tim Draper Believes Bitcoin Will Grab 5% of the Earth’s Market Share

While Elon Musk and Jeff Bezos are focused on Mars, billionaire venture capitalist Tim Draper has his feet firmly planted on the ground. Draper might appear to have his head stuck in the clouds with a lofty $250,000 bitcoin price prediction. But from what he tells Fox Business, the early bitcoin investor isn’t stargazing:

“I’m a believer that in four years, something like that, bitcoin will be about a 5% market share of the earth.”

Draper’s Bitcoin War Chest is a Cool $189 Million

He pointed to bitcoin’s best features such as decentralization, transparency, and simply being a better currency than fiat. Draper was an early bitcoin investor, having purchased 30,000 BTC when the price was hovering at $632 per coin. He points out that the investment is worth 10x that amount today, and he’s got no doubt that it’s going much higher.

Draper envisions a future in which bitcoin further disrupts the venture capital business model.

“I eventually want to have a fund where I take in bitcoin and I fund everybody in bitcoin and they pay their employees and suppliers in bitcoin. And then I pay my investors in bitcoin. Because I would then require no acounting, no legal, no bookeeeping, no custody. It would all be done.”

Considering that transactions would be recorded on the blockchain, all relevant participants would be able to see everything. Tim is a big fan of bitcoin but he keeps an open mind about other cryptocurrencies, too. Though he does expect that the number of coins will be whittled down to only the best projects.

Tim Draper has a $250,000 price target on bitcoin. | Source: CoinMarketCap

Tim Draper on Facebook

Everyone knows Facebook is pursuing a $1 billion fund for its new stablecoin, and Draper has been linked to discussions with the company about the initiative. Incidentally, the gloves came off on one of Facebook’s founding members earlier this week, with Chris Hughes calling for the breakup of Mark Zuckerberg’s company. Draper isn’t buying into it.

“If the shareholders will benefit somehow by a breakup, then sure go ahead and do it. But the idea that he has all this centralized power…I think he’s just building a business and it’s a great business. And there are plenty of competitors to him out there. And I’m very pleased that he’s done so well.”

If his tone is any indication, perhaps we will be hearing about a VC investment into Zuckerberg’s new blockchain project.

Meanwhile, the bitcoin price is currently hovering at $6,379. It’s a far cry from Tim Draper’s $250,000 target but if he’s right and it captures 5% of the earth’s market share, the moon will seem a lot closer than it does today.

Source: Tim Draper Believes Bitcoin Will Grab 5% of the Earth’s Market Share

Crazy Crowdfund Scammer Pitched a Backpack, Stole $800,000 to Buy Bitcoin

iBackPack, Bitcoin

A prolific crowdfunder is being sued by the FTC after duping investors to use their money for himself. | Source: Kickstarter

Douglas Monahan promised consumers a ‘high-tech’ backpack known as the iBackPack, but failed to deliver the product after raising over $800,000. After allegedly scamming Indiegogo users of $720,000, Monahan staged three more crowdfund campaigns to take his total bounty to $0.8 million.

IBACKPACK ‘CREATOR’ SHUT DOWN BY FEDERAL TRADE COMMISSION

The investigation against Monahan was inadvertently revealed last year when an FTC agent’s private email exchange was made public. On May 6th, the FTC took action and levelled a Complaint for Permanent Injunction and Other Equitable Relief against the Texas man.

According to the FTC, rather than use $800,000 to create the iBackPack, Monahan used the funds for ‘personal purposes’ – among them, buying Bitcoin. From the complaint filed in the Southern District of Texas, May 6th:

“Defendants have used a large share of contributions for Defendant Monahan’ s own personal purposes, such as making bitcoin purchases and ATM withdrawals and paying off personal credit cards; for marketing efforts to raise additional funds from consumers; and for other business ventures.”

Monahan’s victims also claim that their personal data was sold, owing to the unexpected marketing communications they all received soon afterwards. This is only the second time in history that the FTC has gone after a crowdfunder. In 2015, Erik Chevalier raised $120,000 for a board game, and then sold off contributors’ personal data after failing to deliver the product.

CROWDFUND HOPPING: INDIEGOGO TO KICKSTARTER AND BACK AGAIN

After failing to produce anything from the $720,000 he raised on Indiegogo, Monahan jumped over to Kickstarter and started marketing the iBackPack 2.0. From this campaign, he raised a further $76,000, all while his original backers were still awaiting their products.

He then launched another two campaigns back on Indiegogo and siphoned a further $11,000 from gullible investors.

The Indiegogo page for the iBackPack still exists, and has been inundated with nearly 4,000 comments from disgruntled patrons. One recent comment notes:

“I love that the FTC is suing you, and I hope they make Indiegogo just as guilty for letting this continue without protecting their customers.”

GULLIBLE VICTIMS? A PARALLEL BETWEEN BITCOIN AND CROWDFUND INVESTING?

Not a week goes by where the Bitcoin isn’t lambasted by critics in one way or another. This week it was Warren Buffet who dismissed Bitcoin as nothing more than a gambling device.

Cryptocurrency adherents are often characterized as gullible victims of an obvious bubble, but if $800,000 is being thrown away on the ‘iBackPack’ then we clearly have other problems to worry about. The ‘high-tech’ iBackPack appears to be nothing more than a bag with a charger and some USB ports inside it.

The parallels between Kickstarter promises and ICO pitches are obvious here. Just like with ICOs, crowdfunders do not have to guarantee that their project will even materialize. As Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, said:

“If you raise money by crowdfunding, you don’t have to guarantee that your idea will work. But you do have to use the money to work on your idea—or expect to hear from the FTC.”

 

Source: Crazy Crowdfund Scammer Pitched a Backpack, Stole $800,000 to Buy Bitcoin

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