What the UK’s Tax Reversal Means for Bitcoin
Kadhim Shubber (@kadhimshubber) | Published on March 16, 2014 at 10:08 GMT | Analysis, Europe, Lifestyle, Regulation
The regular drumbeat of governments warnings on bitcoin continues apace. Last month, Israel, Vietnam and Cyprus joined the chorus.
However, in addition to this din (not entirely unwarranted many would argue) one government body has begun to undo its earlier mistakes in the bitcoin space.
The body in question is the UK’s tax authority, HMRC, which this month effectively recognised bitcoin as a currency after months of lobbying by London’s bitcoin community, led by members of the soon-to-launch UK Digital Currency Association.
But will HMRC’s decision turn the UK into a leading centre for new financial services based around bitcoin or should those arguing for greater government engagement be careful what they wish for?
A sensible approach?
The positive arguments are obvious. HMRC has flip-flopped around the issue for months, first saying bitcoins were ‘taxable vouchers’ in November 2013, meaning that any purchase of bitcoin would require a VAT payment of 20% of the value of the bitcoin. This is the equivalent of paying €100 in tax if you wanted to buy €500 for your holiday in Spain.
Not long after, at the start of December 2013, they began to backtrack, beginning discussions with bitcoiners and indicating that they might reconsider their earlier position. At the time, Elliptic CEO Tom Robinson said:
“The general feeling I got from [our meeting with HMRC] was that they don’t think VAT should be levied on the bitcoin value itself.”
The fact that this was just weeks after HMRC decided the exact opposite indicates their rather haphazard approach to the role of cryptocurrencies.
Firing the starting gun
In their guidance issued on 3rd March, HMRC stepped back from explicitly recognising bitcoin as a currency, but their approach effectively treats it like any other form of payment for tax purposes:
“In all instances, VAT will be due in the normal way from suppliers of any goods or services sold in exchange for Bitcoin or other similar cryptocurrency.”
For Richard Asquith, Head of Tax at the TMF Group, this creates a stable framework that will encourage bitcoin businesses to look at the UK as a base for their operations. Other countries are going to have to come to a decision about how to tax bitcoin, he says:
“It’s going to force tax authorities around Europe and particularly the US to make a decision about how to tax it. The UK has fired the starting gun.”
Few other countries have taken a similar approach. Germany previously classed bitcoin as “private money”, while Singapore has classed it as a good, rather than a currency, and Russia has gone as far as to say bitcoin transactions are illegal, although they have allegedly softened their stance somewhat.
“HMRC’s decision is quite forward thinking in terms of other countries,” says Asquith. “It gives it the proper recognition for how it’s used in day-to-day activities.”
How much is 20%?
But before everyone breaks out the champagne, it should be remembered that there’s a lot that the guidance doesn’t cover.
For one, HMRC deals with tax issues, so their advice doesn’t even touch on the question of how bitcoin businesses might be regulated, unlike the New York Department of Financial Services (NYDFS), which recently announced they would begin regulating bitcoin exchanges.
Furthermore, the question of which exchange rate to use is still one that’s up for debate. HMRC merely says that merchants should use “sterling value of the cryptocurrency at the point the transaction takes place”, which is fine if you are using BitPay or Coinbase, merchant services that instantly convert bitcoin payments into fiat currency. However, if you are taking bitcoin from customers directly then you need to be careful, and consistent, about converting from bitcoin into sterling.
With the recent collapse of Mt. Gox and hacks of other exchanges, it would be dangerous for HMRC to pin their colours to any single bitcoin exchange, or even a group of exchanges says Richard Howlett, whose firm Selachii LLP is launching a lawsuit against Mt. Gox:
“If the government were to implicitly back an exchange, it could be disastrous. They’re not going to want people to think that ‘this is a safe place to trade my bitcoin’.”
Conversely, for fiat currencies HMRC currently publishes exchange rate figures from the Financial Times. As measures of the price of bitcoin become more established (for example, the CoinDesk Bitcoin Price Index), this should become less of an issue.
For now, merchants should choose a popular exchange and ensure they’re not moving around to get the best rate.
“You have to take the fair market value,” says Richard Asquith. “HMRC insist that you use the most popular exchanges and you stick to it.”
Giving bitcoin legitimacy
In a blog post published in response to HMRC’s guidance, Elliptic CEO Tom Robinson, who has arguably driven the change in policy, praised the tax authority, writing that they had taken “a thoughtful and logical approach” to cryptocurrencies.
At the same time, there doesn’t appear to be a consistent attitude towards bitcoin among the UK establishment. The Bank of England, for example, this week suggested that bitcoin is more like a commodity than a currency:
“Digital currencies … may have more conceptual similarities to commodities, such as gold, than money”
Aside from the practical implications, HMRC’s decision gives bitcoin a significant reputation boost. It’s even taxed like a currency, supporters in the UK can now say. Howlett agrees: “[HMRC is] acknowledging that this is something that’s here to stay.”
But if further government regulation is to follow, as Robinson’s post suggests, the next battle for bitcoin’s supporters is ensuring that it’s the “right” regulation. Indeed, getting bitcoiners to agree what regulation is welcome will likely be a challenge all in itself.
Topic: BITCOIN NEWS EVRYDAY! From multiple sources. - page 10. (Read 51244 times)
Why Regulation Could Help Bitcoin
Bob Swarup (@bobswarup) | Published on March 16, 2014 at 11:07 GMT | Analysis, Companies, Law, Regulation
A couple of weeks ago, we published a piece called ‘Why Regulating Bitcoin Won’t Work‘. Here Bob Swarup provides the counter argument, assessing what regulations could do for bitcoin. Bob has extensive global experience in financial markets, macroeconomics and regulation. He has also recently released his new book Money Mania: Booms, Panics, and Busts from Ancient Rome to the Great Meltdown.
Is it a commodity? Is it a currency? No, it’s bitcoin.
There is a touch of Messianic fervour about virtual currencies these days, most notably bitcoin.
Newsweek relaunched its print edition on 6th March, with an exclusive scoop on the unmasking of one Satoshi Nakamoto, the founder of bitcoin, sparking a Keystone Cops farcical chase of reporters rushing to question him.
regulation-thumbs-up
A fortnight earlier, the Winklevoss twins (of Facebook fame) launched the Winkdex to track the price of bitcoin and talked of the market being as large as $400bn – some 50 times larger than the current valuation.
Meanwhile, countless firms now talk of taking bitcoins as payment, including Richard Branson for anyone wanting to hitch a spaceflight on Virgin Galactic; Bitcoin ATMs have mushroomed since the first launched in Vancouver, Canada, in November 2013; and an army of bitcoin miners are recreating the digital equivalent of the California Gold Rush.
Bitcoin supporters are everywhere right now, if a tad more defensive in the wake of Mt. Gox. They invoke – in sentiment at least – the arguments of the noted Austrian economist, Friedrich Hayek, who advocated a free market of competing denationalised currencies. Provide people with choice, Hayek held, and they would instinctively choose those currencies that retained their value best and were least subject to the whims of errant policymakers.
Certainly, in an era where trust in the traditional monetary system has been shaken, bitcoin’s limited supply and freedom from human interference are powerful assets. They have transformed what was an interesting intellectual experiment into a living economy. Today, over 100 virtual currencies – bitcoin, Ripple, Unobtanium, HoboNickels, iCoin and their tribe – are fighting it out in a market $10bn large and growing.
But let’s not get ahead of ourselves. None of this is enough to create a sustainable pervasive currency. The reason is simple: currencies that thrive do so because they are endorsed and, thereby, legitimised by the state.
Money and state
Money is a social construct. History shows us anything – wooden sticks, huge stones, coins, gold, boxes of detergent and now, bits of enigmatic computer code – can function as money.
Any meaning we attach is imparted through the polyglot of social interactions – status, social conformity and human behaviour – that money encodes. Without the trust born of these, no medium of exchange can exist. Even when two nations trade, the money exchanged needs to be credible and convertible, which is why they often use a reserve currency, such as the US dollar.
“The currencies that succeed are not those that circumvent the state, but rather those that are legitimised by the state.”
But for a currency to become widespread, lots of people need to accept it. That implies the presence of society and the overarching institutions it creates. In other words, it presupposes the existence of a dominant state that can influence the behaviour of individuals. The currencies that succeed, therefore, are not those that circumvent the state, but rather those that are legitimised by the state.
Once the state accepts said trinkets – digital or otherwise – and starts to regulate them, you also drive individuals to find new ways of acquiring this new medium. They now work for others, trade goods or services, and importantly, begin to use this new medium as a pervasive social hierarchy begins to emerge.
History demonstrates this time and time again. Most notably, in 1100, Henry I of England issued an edict that going forward, taxes could only be paid using tallies – humble wooden sticks. He also prescribed their form – rudimentary medieval regulation – stating that each tally was to be cleaved in half between debtor and creditor, with the sum of money represented by an abacus of carefully delineated notches.
The results were dramatic. Growing confidence created a natural demand. The need to acquire the sticks for taxes meant that transactions began to be done using them. For the next seven centuries, wood passed as proxy for money and the English even evolved a sophisticated system of government financing based around tallies.
The upside of regulation
Done intelligently, regulation can solve key problems that bitcoin is now facing in its efforts to become a proper currency.
First, regulation can create demand for bitcoins. By making them a means of paying taxes or closing major financial transactions, it provides legitimacy to the currency. That naturally diffuses knowledge, familiarity and demand for bitcoins across a wider swathe of people, breeding acceptance. This is essential. The majority of Americans today – 80% according to a recent poll by TheStreet.com – still have no idea what bitcoin is.
This increased demand in turn can help manage the volatile swings that typify bitcoin today. The currency’s volatility may be loved by speculators looking to claw profits, but businesses still file tax returns and accounts in dollars, euros and other mainstream currencies.
The need to convert back from bitcoins to these and maintain consistent margins means many will prioritise earnings stability over continual monitoring of fluctuating bitcoin prices. But as more people embrace bitcoin, the marketplace gains more liquidity, naturally dampening volatility and making bitcoin transactions more than a marketing gimmick.
Second, the rationale for regulation is always simple: markets may fail and cause financial crisis. This is not surprising – what we term financial markets are little more than a collective noun for the hopes, greed and fears of countless individuals jostling with each other in the continual pursuit of wealth (and status).
The widespread use of any currency, including bitcoin, is predicated on the assurance that it is ‘safe’. Thus, currencies are dependent on the qualitative metric of confidence for their long-term survival.
Fiat vs bitcoin
Bitcoin – more than most other currencies – runs the risk of ‘bank runs’. The limited quantum – a maximum of 21 million – is problematic for the needs of a wider economy that is structurally dependent on borrowing. If bitcoins gain wider acceptance, simple transactions involving exchange will soon give way to borrowing and lending in bitcoins.
This financialisation is an inevitable consequence of human innovation, as people seek to make money out of these contours of supply and demand. But given the limited number of bitcoins, there will inevitably also be bottlenecks as demand occasionally outstrips supply and people overextend themselves.
In the absence of externally imposed safeguards to instil social confidence, people are more likely to panic at the first whiff of trouble, creating a disorderly stampede that could irreparably harm bitcoin’s credibility in the eyes of consumers.
Regulation will not prevent future bitcoin crises, but it can help manage their impact and minimise the disruption caused. This is critical. As humans, we have strong aversions to loss and uncertainty. Regulation provides an emotional salve that soothes our tail risk. It creates an abstract implicit trust that the economic infrastructure we are using is sound, with better behaviour enforced by the threat of sanction. Good regulation also focuses on transparency – an important component of allowing us to judge risks and make reasoned decisions.
Given regulation and the sanction of the state, bitcoin has a chance of progressing past its adolescence. Otherwise, it remains just another interesting economic experiment, confined to niche corners of the digiverse, much like cigarettes in prison or trading cards in the playground.
Bob Swarup (@bobswarup) | Published on March 16, 2014 at 11:07 GMT | Analysis, Companies, Law, Regulation
A couple of weeks ago, we published a piece called ‘Why Regulating Bitcoin Won’t Work‘. Here Bob Swarup provides the counter argument, assessing what regulations could do for bitcoin. Bob has extensive global experience in financial markets, macroeconomics and regulation. He has also recently released his new book Money Mania: Booms, Panics, and Busts from Ancient Rome to the Great Meltdown.
Is it a commodity? Is it a currency? No, it’s bitcoin.
There is a touch of Messianic fervour about virtual currencies these days, most notably bitcoin.
Newsweek relaunched its print edition on 6th March, with an exclusive scoop on the unmasking of one Satoshi Nakamoto, the founder of bitcoin, sparking a Keystone Cops farcical chase of reporters rushing to question him.
regulation-thumbs-up
A fortnight earlier, the Winklevoss twins (of Facebook fame) launched the Winkdex to track the price of bitcoin and talked of the market being as large as $400bn – some 50 times larger than the current valuation.
Meanwhile, countless firms now talk of taking bitcoins as payment, including Richard Branson for anyone wanting to hitch a spaceflight on Virgin Galactic; Bitcoin ATMs have mushroomed since the first launched in Vancouver, Canada, in November 2013; and an army of bitcoin miners are recreating the digital equivalent of the California Gold Rush.
Bitcoin supporters are everywhere right now, if a tad more defensive in the wake of Mt. Gox. They invoke – in sentiment at least – the arguments of the noted Austrian economist, Friedrich Hayek, who advocated a free market of competing denationalised currencies. Provide people with choice, Hayek held, and they would instinctively choose those currencies that retained their value best and were least subject to the whims of errant policymakers.
Certainly, in an era where trust in the traditional monetary system has been shaken, bitcoin’s limited supply and freedom from human interference are powerful assets. They have transformed what was an interesting intellectual experiment into a living economy. Today, over 100 virtual currencies – bitcoin, Ripple, Unobtanium, HoboNickels, iCoin and their tribe – are fighting it out in a market $10bn large and growing.
But let’s not get ahead of ourselves. None of this is enough to create a sustainable pervasive currency. The reason is simple: currencies that thrive do so because they are endorsed and, thereby, legitimised by the state.
Money and state
Money is a social construct. History shows us anything – wooden sticks, huge stones, coins, gold, boxes of detergent and now, bits of enigmatic computer code – can function as money.
Any meaning we attach is imparted through the polyglot of social interactions – status, social conformity and human behaviour – that money encodes. Without the trust born of these, no medium of exchange can exist. Even when two nations trade, the money exchanged needs to be credible and convertible, which is why they often use a reserve currency, such as the US dollar.
“The currencies that succeed are not those that circumvent the state, but rather those that are legitimised by the state.”
But for a currency to become widespread, lots of people need to accept it. That implies the presence of society and the overarching institutions it creates. In other words, it presupposes the existence of a dominant state that can influence the behaviour of individuals. The currencies that succeed, therefore, are not those that circumvent the state, but rather those that are legitimised by the state.
Once the state accepts said trinkets – digital or otherwise – and starts to regulate them, you also drive individuals to find new ways of acquiring this new medium. They now work for others, trade goods or services, and importantly, begin to use this new medium as a pervasive social hierarchy begins to emerge.
History demonstrates this time and time again. Most notably, in 1100, Henry I of England issued an edict that going forward, taxes could only be paid using tallies – humble wooden sticks. He also prescribed their form – rudimentary medieval regulation – stating that each tally was to be cleaved in half between debtor and creditor, with the sum of money represented by an abacus of carefully delineated notches.
The results were dramatic. Growing confidence created a natural demand. The need to acquire the sticks for taxes meant that transactions began to be done using them. For the next seven centuries, wood passed as proxy for money and the English even evolved a sophisticated system of government financing based around tallies.
The upside of regulation
Done intelligently, regulation can solve key problems that bitcoin is now facing in its efforts to become a proper currency.
First, regulation can create demand for bitcoins. By making them a means of paying taxes or closing major financial transactions, it provides legitimacy to the currency. That naturally diffuses knowledge, familiarity and demand for bitcoins across a wider swathe of people, breeding acceptance. This is essential. The majority of Americans today – 80% according to a recent poll by TheStreet.com – still have no idea what bitcoin is.
This increased demand in turn can help manage the volatile swings that typify bitcoin today. The currency’s volatility may be loved by speculators looking to claw profits, but businesses still file tax returns and accounts in dollars, euros and other mainstream currencies.
The need to convert back from bitcoins to these and maintain consistent margins means many will prioritise earnings stability over continual monitoring of fluctuating bitcoin prices. But as more people embrace bitcoin, the marketplace gains more liquidity, naturally dampening volatility and making bitcoin transactions more than a marketing gimmick.
Second, the rationale for regulation is always simple: markets may fail and cause financial crisis. This is not surprising – what we term financial markets are little more than a collective noun for the hopes, greed and fears of countless individuals jostling with each other in the continual pursuit of wealth (and status).
The widespread use of any currency, including bitcoin, is predicated on the assurance that it is ‘safe’. Thus, currencies are dependent on the qualitative metric of confidence for their long-term survival.
Fiat vs bitcoin
Bitcoin – more than most other currencies – runs the risk of ‘bank runs’. The limited quantum – a maximum of 21 million – is problematic for the needs of a wider economy that is structurally dependent on borrowing. If bitcoins gain wider acceptance, simple transactions involving exchange will soon give way to borrowing and lending in bitcoins.
This financialisation is an inevitable consequence of human innovation, as people seek to make money out of these contours of supply and demand. But given the limited number of bitcoins, there will inevitably also be bottlenecks as demand occasionally outstrips supply and people overextend themselves.
In the absence of externally imposed safeguards to instil social confidence, people are more likely to panic at the first whiff of trouble, creating a disorderly stampede that could irreparably harm bitcoin’s credibility in the eyes of consumers.
Regulation will not prevent future bitcoin crises, but it can help manage their impact and minimise the disruption caused. This is critical. As humans, we have strong aversions to loss and uncertainty. Regulation provides an emotional salve that soothes our tail risk. It creates an abstract implicit trust that the economic infrastructure we are using is sound, with better behaviour enforced by the threat of sanction. Good regulation also focuses on transparency – an important component of allowing us to judge risks and make reasoned decisions.
Given regulation and the sanction of the state, bitcoin has a chance of progressing past its adolescence. Otherwise, it remains just another interesting economic experiment, confined to niche corners of the digiverse, much like cigarettes in prison or trading cards in the playground.
What the UK’s Tax Reversal Means for Bitcoin
Kadhim Shubber (@kadhimshubber) | Published on March 16, 2014 at 10:08 GMT | Analysis, Europe, Lifestyle, News, Regulation
The regular drumbeat of governments warnings on bitcoin continues apace. Last month, Israel, Vietnam and Cyprus joined the chorus.
However, in addition to this din (not entirely unwarranted many would argue) one government body has begun to undo its earlier mistakes in the bitcoin space.
The body in question is the UK’s tax authority, HMRC, which this month effectively recognised bitcoin as a currency after months of lobbying by London’s bitcoin community, led by members of the soon-to-launch UK Digital Currency Association.
But will HMRC’s decision turn the UK into a leading centre for new financial services based around bitcoin or should those arguing for greater government engagement be careful what they wish for?
A sensible approach?
The positive arguments are obvious. HMRC has flip-flopped around the issue for months, first saying bitcoins were ‘taxable vouchers’ in November 2013, meaning that any purchase of bitcoin would require a VAT payment of 20% of the value of the bitcoin. This is the equivalent of paying €100 in tax if you wanted to buy €500 for your holiday in Spain.
Not long after, at the start of December 2013, they began to backtrack, beginning discussions with bitcoiners and indicating that they might reconsider their earlier position. At the time, Elliptic CEO Tom Robinson said:
“The general feeling I got from [our meeting with HMRC] was that they don’t think VAT should be levied on the bitcoin value itself.”
The fact that this was just weeks after HMRC decided the exact opposite indicates their rather haphazard approach to the role of cryptocurrencies.
Firing the starting gun
In their guidance issued on 3rd March, HMRC stepped back from explicitly recognising bitcoin as a currency, but their approach effectively treats it like any other form of payment for tax purposes:
“In all instances, VAT will be due in the normal way from suppliers of any goods or services sold in exchange for Bitcoin or other similar cryptocurrency.”
For Richard Asquith, Head of Tax at the TMF Group, this creates a stable framework that will encourage bitcoin businesses to look at the UK as a base for their operations. Other countries are going to have to come to a decision about how to tax bitcoin, he says:
“It’s going to force tax authorities around Europe and particularly the US to make a decision about how to tax it. The UK has fired the starting gun.”
Few other countries have taken a similar approach. Germany previously classed bitcoin as “private money”, while Singapore has classed it as a good, rather than a currency, and Russia has gone as far as to say bitcoin transactions are illegal, although they have allegedly softened their stance somewhat.
“HMRC’s decision is quite forward thinking in terms of other countries,” says Asquith. “It gives it the proper recognition for how it’s used in day-to-day activities.”
How much is 20%?
But before everyone breaks out the champagne, it should be remembered that there’s a lot that the guidance doesn’t cover.
For one, HMRC deals with tax issues, so their advice doesn’t even touch on the question of how bitcoin businesses might be regulated, unlike the New York Department of Financial Services (NYDFS), which recently announced they would begin regulating bitcoin exchanges.
Furthermore, the question of which exchange rate to use is still one that’s up for debate. HMRC merely says that merchants should use “sterling value of the cryptocurrency at the point the transaction takes place”, which is fine if you are using BitPay or Coinbase, merchant services that instantly convert bitcoin payments into fiat currency. However, if you are taking bitcoin from customers directly then you need to be careful, and consistent, about converting from bitcoin into sterling.
With the recent collapse of Mt. Gox and hacks of other exchanges, it would be dangerous for HMRC to pin their colours to any single bitcoin exchange, or even a group of exchanges says Richard Howlett, whose firm Selachii LLP is launching a lawsuit against Mt. Gox:
“If the government were to implicitly back an exchange, it could be disastrous. They’re not going to want people to think that ‘this is a safe place to trade my bitcoin’.”
Conversely, for fiat currencies HMRC currently publishes exchange rate figures from the Financial Times. As measures of the price of bitcoin become more established (for example, the CoinDesk Bitcoin Price Index), this should become less of an issue.
For now, merchants should choose a popular exchange and ensure they’re not moving around to get the best rate.
“You have to take the fair market value,” says Richard Asquith. “HMRC insist that you use the most popular exchanges and you stick to it.”
Giving bitcoin legitimacy
In a blog post published in response to HMRC’s guidance, Elliptic CEO Tom Robinson, who has arguably driven the change in policy, praised the tax authority, writing that they had taken “a thoughtful and logical approach” to cryptocurrencies.
At the same time, there doesn’t appear to be a consistent attitude towards bitcoin among the UK establishment. The Bank of England, for example, this week suggested that bitcoin is more like a commodity than a currency:
“Digital currencies … may have more conceptual similarities to commodities, such as gold, than money”
Aside from the practical implications, HMRC’s decision gives bitcoin a significant reputation boost. It’s even taxed like a currency, supporters in the UK can now say. Howlett agrees: “[HMRC is] acknowledging that this is something that’s here to stay.”
But if further government regulation is to follow, as Robinson’s post suggests, the next battle for bitcoin’s supporters is ensuring that it’s the “right” regulation. Indeed, getting bitcoiners to agree what regulation is welcome will likely be a challenge all in itself.
Kadhim Shubber (@kadhimshubber) | Published on March 16, 2014 at 10:08 GMT | Analysis, Europe, Lifestyle, News, Regulation
The regular drumbeat of governments warnings on bitcoin continues apace. Last month, Israel, Vietnam and Cyprus joined the chorus.
However, in addition to this din (not entirely unwarranted many would argue) one government body has begun to undo its earlier mistakes in the bitcoin space.
The body in question is the UK’s tax authority, HMRC, which this month effectively recognised bitcoin as a currency after months of lobbying by London’s bitcoin community, led by members of the soon-to-launch UK Digital Currency Association.
But will HMRC’s decision turn the UK into a leading centre for new financial services based around bitcoin or should those arguing for greater government engagement be careful what they wish for?
A sensible approach?
The positive arguments are obvious. HMRC has flip-flopped around the issue for months, first saying bitcoins were ‘taxable vouchers’ in November 2013, meaning that any purchase of bitcoin would require a VAT payment of 20% of the value of the bitcoin. This is the equivalent of paying €100 in tax if you wanted to buy €500 for your holiday in Spain.
Not long after, at the start of December 2013, they began to backtrack, beginning discussions with bitcoiners and indicating that they might reconsider their earlier position. At the time, Elliptic CEO Tom Robinson said:
“The general feeling I got from [our meeting with HMRC] was that they don’t think VAT should be levied on the bitcoin value itself.”
The fact that this was just weeks after HMRC decided the exact opposite indicates their rather haphazard approach to the role of cryptocurrencies.
Firing the starting gun
In their guidance issued on 3rd March, HMRC stepped back from explicitly recognising bitcoin as a currency, but their approach effectively treats it like any other form of payment for tax purposes:
“In all instances, VAT will be due in the normal way from suppliers of any goods or services sold in exchange for Bitcoin or other similar cryptocurrency.”
For Richard Asquith, Head of Tax at the TMF Group, this creates a stable framework that will encourage bitcoin businesses to look at the UK as a base for their operations. Other countries are going to have to come to a decision about how to tax bitcoin, he says:
“It’s going to force tax authorities around Europe and particularly the US to make a decision about how to tax it. The UK has fired the starting gun.”
Few other countries have taken a similar approach. Germany previously classed bitcoin as “private money”, while Singapore has classed it as a good, rather than a currency, and Russia has gone as far as to say bitcoin transactions are illegal, although they have allegedly softened their stance somewhat.
“HMRC’s decision is quite forward thinking in terms of other countries,” says Asquith. “It gives it the proper recognition for how it’s used in day-to-day activities.”
How much is 20%?
But before everyone breaks out the champagne, it should be remembered that there’s a lot that the guidance doesn’t cover.
For one, HMRC deals with tax issues, so their advice doesn’t even touch on the question of how bitcoin businesses might be regulated, unlike the New York Department of Financial Services (NYDFS), which recently announced they would begin regulating bitcoin exchanges.
Furthermore, the question of which exchange rate to use is still one that’s up for debate. HMRC merely says that merchants should use “sterling value of the cryptocurrency at the point the transaction takes place”, which is fine if you are using BitPay or Coinbase, merchant services that instantly convert bitcoin payments into fiat currency. However, if you are taking bitcoin from customers directly then you need to be careful, and consistent, about converting from bitcoin into sterling.
With the recent collapse of Mt. Gox and hacks of other exchanges, it would be dangerous for HMRC to pin their colours to any single bitcoin exchange, or even a group of exchanges says Richard Howlett, whose firm Selachii LLP is launching a lawsuit against Mt. Gox:
“If the government were to implicitly back an exchange, it could be disastrous. They’re not going to want people to think that ‘this is a safe place to trade my bitcoin’.”
Conversely, for fiat currencies HMRC currently publishes exchange rate figures from the Financial Times. As measures of the price of bitcoin become more established (for example, the CoinDesk Bitcoin Price Index), this should become less of an issue.
For now, merchants should choose a popular exchange and ensure they’re not moving around to get the best rate.
“You have to take the fair market value,” says Richard Asquith. “HMRC insist that you use the most popular exchanges and you stick to it.”
Giving bitcoin legitimacy
In a blog post published in response to HMRC’s guidance, Elliptic CEO Tom Robinson, who has arguably driven the change in policy, praised the tax authority, writing that they had taken “a thoughtful and logical approach” to cryptocurrencies.
At the same time, there doesn’t appear to be a consistent attitude towards bitcoin among the UK establishment. The Bank of England, for example, this week suggested that bitcoin is more like a commodity than a currency:
“Digital currencies … may have more conceptual similarities to commodities, such as gold, than money”
Aside from the practical implications, HMRC’s decision gives bitcoin a significant reputation boost. It’s even taxed like a currency, supporters in the UK can now say. Howlett agrees: “[HMRC is] acknowledging that this is something that’s here to stay.”
But if further government regulation is to follow, as Robinson’s post suggests, the next battle for bitcoin’s supporters is ensuring that it’s the “right” regulation. Indeed, getting bitcoiners to agree what regulation is welcome will likely be a challenge all in itself.
it will contain only news or discussions as well? if it is something like reddit with lots of useless stuff I won't visit it
Well idea is to be only news. But as u can see since this thread have so many reads, it starting to attract spammers , so pls just report them.
it will contain only news or discussions as well? if it is something like reddit with lots of useless stuff I won't visit it
Hello everybody!
I see that there are lots of experts on bitcoin, and I would like to ask you to complete the following form.
It would really help us with our assignment at the Faculty of Economics. Your answers are completly ANONYMOUS, and they will be used only for student purposes.
Thank you very much!:)
(just lead the following link)
https://docs.google.com/forms/d/1VEP1klGDfGXetGNDiq0GwuddzVx769gTYT7GayMcpCk/viewform
I see that there are lots of experts on bitcoin, and I would like to ask you to complete the following form.
It would really help us with our assignment at the Faculty of Economics. Your answers are completly ANONYMOUS, and they will be used only for student purposes.
Thank you very much!:)
(just lead the following link)
https://docs.google.com/forms/d/1VEP1klGDfGXetGNDiq0GwuddzVx769gTYT7GayMcpCk/viewform
Bitcoin receives award at CeBIT 2014
Christoph Marckx 14/03/2014 Bitcoin, Business, Events, News, Services
Posted 1 day ago
Oliver Flasskämper accepts Bitcoin award
Oliver Flaßkämper accepted Bitcoin’s award at CeBIT 2014
CeBIT, one of the most important exhibitions about technology and innovations in the world, is going on this week. The German festival attracts lots of attention. It has several famous key speakers, countless exhibitions, expert panels, everything to make this an interesting week. And, of course, Bitcoin was a trending topic at CeBIT as well.
Award for Bitcoin
After being talk of the town at SXSW 2014, Bitcoin managed to snag an award at CeBIT. This happened yesterday, during the presentation of the Linux New Media Awards. Bitcoin received the award in the category “most innovative open-source project”.
, managing director of Bitcoin.de,was officially representing the Bitcoin Federation and the scene. He, gladly, accepted the award.
The award is handed out by two parties. Medialinx AG, a company that resides in Munich, is the world’s largest content provider when it comes to Linux and open-source projects in general. Together with CeBIT Open Source, they try to find suitable candidates for this reward. They look for projects, organizations, individuals and companies for their outstanding services to Linux and open-source. Once a year, they hand out this reward to the project they think did the best work for the open-source business.
Yesterday that once a year momen,t finally, arrived again. Moderator Michael Fellner gave the microphone to open-source expert Thomas Uhl. Uhl had a fine way of introducing the winner, saying this year’s awarded project was “a bit of IT and bit of cryptography. A damn lot of cryptography.” If there still was anyone left who had no clue about who or what was going to win, these doubts were taken away with Uhl’s next words. ”Some would say it’s a gamble, others that it was fraud. Some claimed that one could lose a lot of money and someone else said it was no money at all, while others said it was the future of the digital economy.”
After that second sentence, everyone knew what he was talking about. In normal circumstances, the award would be granted to Bitcoin’s original creator Satoshi Nakamoto. Obviously, it was impossible to do this, so Uhl presented the award to Flaskämper instead. He praised him for being the manager of Bitcoin.de and addressed him as the representative of the German Bitcoin scene.
Revolutionizing money
In his acceptance speech, Flaskämper explained that Bitcoin.de, the largest marketplace for the virtual currency in Europe, is doing really well. The exchange is healthy and free of problems as the ones Mt. Gox has been facing the past few months. Immediately after saying that, he expressed his desire to get a better infrastructure. It was his ending sentence that was the most inspirational: “Wikipedia has revolutionized the way we share knowledge, Twitter and Facebook redefined freedom of expression; Bitcoin will revolutionize the way we work with money.”
This kind of award is vital for Bitcoin’s acceptance. We focus too much on the bad news, while there are so many exciting, good things happening right under our noses.
For those that are interested, Linux Magazin promised to put up a stream of the ceremony on its website.
Christoph Marckx 14/03/2014 Bitcoin, Business, Events, News, Services
Posted 1 day ago
Oliver Flasskämper accepts Bitcoin award
Oliver Flaßkämper accepted Bitcoin’s award at CeBIT 2014
CeBIT, one of the most important exhibitions about technology and innovations in the world, is going on this week. The German festival attracts lots of attention. It has several famous key speakers, countless exhibitions, expert panels, everything to make this an interesting week. And, of course, Bitcoin was a trending topic at CeBIT as well.
Award for Bitcoin
After being talk of the town at SXSW 2014, Bitcoin managed to snag an award at CeBIT. This happened yesterday, during the presentation of the Linux New Media Awards. Bitcoin received the award in the category “most innovative open-source project”.
, managing director of Bitcoin.de,was officially representing the Bitcoin Federation and the scene. He, gladly, accepted the award.
The award is handed out by two parties. Medialinx AG, a company that resides in Munich, is the world’s largest content provider when it comes to Linux and open-source projects in general. Together with CeBIT Open Source, they try to find suitable candidates for this reward. They look for projects, organizations, individuals and companies for their outstanding services to Linux and open-source. Once a year, they hand out this reward to the project they think did the best work for the open-source business.
Yesterday that once a year momen,t finally, arrived again. Moderator Michael Fellner gave the microphone to open-source expert Thomas Uhl. Uhl had a fine way of introducing the winner, saying this year’s awarded project was “a bit of IT and bit of cryptography. A damn lot of cryptography.” If there still was anyone left who had no clue about who or what was going to win, these doubts were taken away with Uhl’s next words. ”Some would say it’s a gamble, others that it was fraud. Some claimed that one could lose a lot of money and someone else said it was no money at all, while others said it was the future of the digital economy.”
After that second sentence, everyone knew what he was talking about. In normal circumstances, the award would be granted to Bitcoin’s original creator Satoshi Nakamoto. Obviously, it was impossible to do this, so Uhl presented the award to Flaskämper instead. He praised him for being the manager of Bitcoin.de and addressed him as the representative of the German Bitcoin scene.
Revolutionizing money
In his acceptance speech, Flaskämper explained that Bitcoin.de, the largest marketplace for the virtual currency in Europe, is doing really well. The exchange is healthy and free of problems as the ones Mt. Gox has been facing the past few months. Immediately after saying that, he expressed his desire to get a better infrastructure. It was his ending sentence that was the most inspirational: “Wikipedia has revolutionized the way we share knowledge, Twitter and Facebook redefined freedom of expression; Bitcoin will revolutionize the way we work with money.”
This kind of award is vital for Bitcoin’s acceptance. We focus too much on the bad news, while there are so many exciting, good things happening right under our noses.
For those that are interested, Linux Magazin promised to put up a stream of the ceremony on its website.
The importance of Overstock’s Bitcoin sales
Christoph Marckx 15/03/2014 Accepts Bitcoin, Bitcoin, Bitcoin Analysis, Bitcoin Merchants, Bitcoin Regulation, Business, News
Posted 4 hours ago
Patrick Byrne is a firm believer in Bitcoin
Overstock CEO Patrick Byrne keeps believing in Bitcoin’s future.
Overstock was one of the first major online retailers to accept Bitcoin as a payment method. The announcement was a big step for Bitcoin. The cryptocoin is trying to find mainstream acceptance and events like this are important when trying to convince common people to start using Bitcoins.
Small Bitcoin revenue
Right after announcing the possibility to pay with Bitcoins, Overstock saw massive purchases made with the virtual currency. Earlier this month, Overstock said they crossed the million dollar mark in Bitcoin payments. Now, when the novelty has worn off, Overstock took another look at the Bitcoin numbers in their sales database. According to Patrick Byrne, CEO of Overstock, they are getting roughly $20k to $30k a day in Bitcoin payments.
It’s a decent amount for sure but, in reality, this is hardly a fraction of Overstock’s daily sales. When we compare these numbers to the company’s 2013 sales figures, the total share of Bitcoin is 0.83% of their total revenue. Of course, there are other things playing here. The percentage may be low, but prospect of the Bitcoin market for Overstock are still good. That’s not even mentioning the amount of free publicity Overstock got after accepting Bitcoin.
To understand the cause of the current problem, we just have to take a closer look at what Bitcoin ‘is’ right now. Half of all the coins are owned by less than 1,000 people. This is a very tiny amount of wallets that make the number of potential shoppers relatively small. If Overstock wants to see their Bitcoin revenue increase, it has to wait for the Bitcoin market to grow. Once the coin becomes a part of everyday life, the mainstream acceptance we talked about earlier, sales using the coin will increase tremendously.
Bitcoin is here to stay
One could fear that the company would think of abandoning Bitcoin until the coin has matured, but Overstock is a different case. Byrne is a believer. He thinks Bitcoin is the future of money and believes the entire situation can only be positive for both his business and Bitcoins. When asked about his perspective, he said that there is no doubt the market will continue to grow and that he stands by the company’s decision.
Overstock isn’t the only company that accepts Bitcoin as a method of payment. Nearly every merchant that works with Bitcoins has received similar results. People are spending Bitcoins daily, but it is only a fraction of their overall revenue. Some people report that Bitcoin’s future is uncertain. People aren’t sure about what Bitcoins are and how they are used. On top of that, the recent scandals that have been hitting the newspapers are spreading fear among the people.
That’s why it is so important to have companies like Overstock around. These are authorities that people believe in. When a CEO like Byrne pronounces his faith in Bitcoin, it gets people’s attention. They become curious as to why someone successful as Byrne would firmly believe in the future of something they heard so much bad things about. They will start looking up things about cryptocurrencies, not because they have to but because they want to. And that is the most important step towards mainstream acceptance. You need people that are interested and willing to learn. Companies like Overstock are pioneers. Every revolution needs pioneers.
Christoph Marckx 15/03/2014 Accepts Bitcoin, Bitcoin, Bitcoin Analysis, Bitcoin Merchants, Bitcoin Regulation, Business, News
Posted 4 hours ago
Patrick Byrne is a firm believer in Bitcoin
Overstock CEO Patrick Byrne keeps believing in Bitcoin’s future.
Overstock was one of the first major online retailers to accept Bitcoin as a payment method. The announcement was a big step for Bitcoin. The cryptocoin is trying to find mainstream acceptance and events like this are important when trying to convince common people to start using Bitcoins.
Small Bitcoin revenue
Right after announcing the possibility to pay with Bitcoins, Overstock saw massive purchases made with the virtual currency. Earlier this month, Overstock said they crossed the million dollar mark in Bitcoin payments. Now, when the novelty has worn off, Overstock took another look at the Bitcoin numbers in their sales database. According to Patrick Byrne, CEO of Overstock, they are getting roughly $20k to $30k a day in Bitcoin payments.
It’s a decent amount for sure but, in reality, this is hardly a fraction of Overstock’s daily sales. When we compare these numbers to the company’s 2013 sales figures, the total share of Bitcoin is 0.83% of their total revenue. Of course, there are other things playing here. The percentage may be low, but prospect of the Bitcoin market for Overstock are still good. That’s not even mentioning the amount of free publicity Overstock got after accepting Bitcoin.
To understand the cause of the current problem, we just have to take a closer look at what Bitcoin ‘is’ right now. Half of all the coins are owned by less than 1,000 people. This is a very tiny amount of wallets that make the number of potential shoppers relatively small. If Overstock wants to see their Bitcoin revenue increase, it has to wait for the Bitcoin market to grow. Once the coin becomes a part of everyday life, the mainstream acceptance we talked about earlier, sales using the coin will increase tremendously.
Bitcoin is here to stay
One could fear that the company would think of abandoning Bitcoin until the coin has matured, but Overstock is a different case. Byrne is a believer. He thinks Bitcoin is the future of money and believes the entire situation can only be positive for both his business and Bitcoins. When asked about his perspective, he said that there is no doubt the market will continue to grow and that he stands by the company’s decision.
Overstock isn’t the only company that accepts Bitcoin as a method of payment. Nearly every merchant that works with Bitcoins has received similar results. People are spending Bitcoins daily, but it is only a fraction of their overall revenue. Some people report that Bitcoin’s future is uncertain. People aren’t sure about what Bitcoins are and how they are used. On top of that, the recent scandals that have been hitting the newspapers are spreading fear among the people.
That’s why it is so important to have companies like Overstock around. These are authorities that people believe in. When a CEO like Byrne pronounces his faith in Bitcoin, it gets people’s attention. They become curious as to why someone successful as Byrne would firmly believe in the future of something they heard so much bad things about. They will start looking up things about cryptocurrencies, not because they have to but because they want to. And that is the most important step towards mainstream acceptance. You need people that are interested and willing to learn. Companies like Overstock are pioneers. Every revolution needs pioneers.
Finally, a Congressman Who Understands Bitcoin
Neil Sardesai 15/03/2014 Bitcoin, Bitcoin Regulation, Funny, Litecoin, News
Posted 8 hours ago
Finally, a Congressman Who Understands Bitcoin
Congressman Jared Polis is an outspoken supporter of Bitcoin and other digital currencies.
A lot of politicians, such as Senator Joe Manchin, don’t really seem to understand how Bitcoin works. They often have misinformed beliefs about the virtual currency, such as the belief that Bitcoin is mostly used by criminals, leading them to the conclusion that Bitcoin needs to be banned. However, a few politicians actually understand and appreciate the cryptocurrency. Take U.S. House of Representatives member Jared Polis, for example. Last week, Polis essentially trolled Senator Manchin and Capitol Hill with a satirical letter stating that the United States should ban dollar bills.
“Dollar bills have gained notoriety in relation to illegal transactions; suitcases full of dollars used for illegal transactions were recently featured in popular movies such as American Hustle and Dallas Buyers Club, as well as the gangster classic, Scarface, among others. Dollar bills are present in nearly all major drug busts in the United States and many abroad. According to the U.S. Department of Justice study, “Crime in the United States,” more than $1 billion in cash was stolen in 2012, of which less than 3% was recovered. The United States’ Dollar was present by the truck load in Saddam Hussein’s compound, by the carload when Noriega was arrested for drug trafficking, and by the suitcase full in the Watergate case. “
Polis’s spokesperson Scott Overland stated that Polis’s goal is to “help move the serious debate on digital currency forward so we can come up with ways to maximize the potential positive impacts that digital currency can have on the world economy, not ban them in their infancy.” And unlike many politicians, it seems like Polis will be keeping this promise. Just today, the congressman sent out this email to his followers.
Jared Polis Bitcoin EmailPolis highlights the illogical arguments used by those wishing to ban digital currencies. Furthermore, he believes that “decentralized digital currencies provide a transactional alternative to fiat currencies and that this new competition will benefit consumers.” Currencies such as Bitcoin, Litecoin, and Dogecoin (yes, he even mentioned Dogecoin) “should stand or fall on their own and let the marketplace, not the government, determine their success or failure.” Polis concludes the letter with a reassuring promise that he will “continue to oppose bans or restrictions on digital currencies.”
Jared Polis is widely considered to be one of the most technologically knowledgeable members of Congress. He participated in an AMA on reddit last year, fought against SOPA, and even plays League of Legends. Bitcoin and other new technologies are sure to benefit from politicians who actually understand these new inventions.
Neil Sardesai 15/03/2014 Bitcoin, Bitcoin Regulation, Funny, Litecoin, News
Posted 8 hours ago
Finally, a Congressman Who Understands Bitcoin
Congressman Jared Polis is an outspoken supporter of Bitcoin and other digital currencies.
A lot of politicians, such as Senator Joe Manchin, don’t really seem to understand how Bitcoin works. They often have misinformed beliefs about the virtual currency, such as the belief that Bitcoin is mostly used by criminals, leading them to the conclusion that Bitcoin needs to be banned. However, a few politicians actually understand and appreciate the cryptocurrency. Take U.S. House of Representatives member Jared Polis, for example. Last week, Polis essentially trolled Senator Manchin and Capitol Hill with a satirical letter stating that the United States should ban dollar bills.
“Dollar bills have gained notoriety in relation to illegal transactions; suitcases full of dollars used for illegal transactions were recently featured in popular movies such as American Hustle and Dallas Buyers Club, as well as the gangster classic, Scarface, among others. Dollar bills are present in nearly all major drug busts in the United States and many abroad. According to the U.S. Department of Justice study, “Crime in the United States,” more than $1 billion in cash was stolen in 2012, of which less than 3% was recovered. The United States’ Dollar was present by the truck load in Saddam Hussein’s compound, by the carload when Noriega was arrested for drug trafficking, and by the suitcase full in the Watergate case. “
Polis’s spokesperson Scott Overland stated that Polis’s goal is to “help move the serious debate on digital currency forward so we can come up with ways to maximize the potential positive impacts that digital currency can have on the world economy, not ban them in their infancy.” And unlike many politicians, it seems like Polis will be keeping this promise. Just today, the congressman sent out this email to his followers.
Jared Polis Bitcoin EmailPolis highlights the illogical arguments used by those wishing to ban digital currencies. Furthermore, he believes that “decentralized digital currencies provide a transactional alternative to fiat currencies and that this new competition will benefit consumers.” Currencies such as Bitcoin, Litecoin, and Dogecoin (yes, he even mentioned Dogecoin) “should stand or fall on their own and let the marketplace, not the government, determine their success or failure.” Polis concludes the letter with a reassuring promise that he will “continue to oppose bans or restrictions on digital currencies.”
Jared Polis is widely considered to be one of the most technologically knowledgeable members of Congress. He participated in an AMA on reddit last year, fought against SOPA, and even plays League of Legends. Bitcoin and other new technologies are sure to benefit from politicians who actually understand these new inventions.
How Bitcoin is Changing Everything
Ariel Deschapell | Published on March 15, 2014 at 12:50 GMT | Analysis
Perhaps the single most prominent, and telling, feature of bitcoin today is its massive controversy in the media. Not a single day goes by without an article or televised mention about its dangers, risks, and dubious mainstream appeal.
Many in the mainstream seem set in their beliefs that bitcoin is a fad, or even worse a ponzi scheme, and is destined to fail. Yet when was the last time a ponzi scheme attracted global attention and prominent venture capital investment? Since when has a fad incited the simultaneous and largely hostile reactions of governments across the globe?
Why did other payment technologies like PayPal or Western Union apparently fail to meet the requirements to be discussed in virtually every central bank on the planet, yet cryptocurrency is being so thoroughly scrutinised? Ironically enough, the on-going debate about whether or not bitcoin is truly a valuable disruptive technology, is all the evidence you need that it is.
This is because bitcoin as a technology isn’t just challenging business models, or even an entire industry. Plenty of innovative outfits do that with much less flare. Bitcoin is challenging the financial infrastructure of the whole global economy, and even more, it is challenging entire generations of established political and economic theory that that infrastructure is built on.
Bitcoin’s exponential growth flouts all of the traditional monetary theory that is the mainstream ideology amongst academics and politicians today. Its very existence and growing success cannot be accounted for within these old paradigms.
It challenges not only the basis and underlying assumptions of the modern financial system, but calls into question the beliefs and even livelihood of so many politicians, economic advisors, and media pundits. That is why so many are so sceptical of it, and others even outright hostile.
Bitcoin the currency
As a currency, bitcoin is in many ways the antithesis of modern fiat currencies. It has grown exponentially in usage the last year, and all without being declared by any state or central bank as “legal tender”. That simple fact astonishes many in academia, who could never have guessed a currency could spontaneously form and organically grow within the modern free market.
It was something that was never even discussed theoretically, and is still taking time to sink in amidst the denials that bitcoin is here to stay.
Yet this occurrence is surprisingly not entirely without precedence. Bitcoin is not the only example of a homogenous “good” being adopted by a population as a currency, for nothing but its underlying natural value and universal appeal. We have a much older example of that: gold, more than 5,000 years ago.
Cryptocurrency is following the same path as precious metals in ancient civilization. Where gold was valued for its color, easy malleability, purity and its anti-corrosive properties, bitcoin is valued for it’s speed, decentralization, anonymity and ultra low transaction costs.
gold
Gold was discovered by practically every world civilization and became a good of such universal value it slowly became the de facto means of exchange (along with silver) across much of the planet, eventually culminating in the Classical Gold Standard. That is a span of dominance of thousands of years, compared with the 43 years of the global fiat system we have today.
History thus clearly shows that the idea of a currency deriving value primarily from the “backing” of some central state is nonsense.
For the vast majority of civilization, money was gold or silver, and both originated not as centrally issued currency that, as a result, magically had value, but as universally valued substances.
Bitcoin is fast becoming the first commodity since gold to become a widely accepted means of exchange without the need of a central authority backing it.
However unlike gold, Bitcoin is completely out of the reach of governments and can’t be regulated, centralized, or ultimately shut down and replaced with inflationary fiat money. For all its durability and timeless lustre, gold my pale to the longevity of a cryptocurrency system.
Reacting to Big Data
However Bitcoin is not just a currency that promises to eventually end the trend of patchwork national currencies that exist for the almost sole purpose of allowing governments to endlessly fund their own deficit spending.
When the Internet was growing in the 90s it promised a future in which everyone everywhere had access to all the knowledge in the world, a future where technology ultimately empowered the individual.
Indeed, this promise is coming closer and closer everyday as more people in underdeveloped countries have access to cheaper and cheaper smartphones and Internet access. However behind this positive outward development, the big players have long since been behind a much different trend.
“Businesses will hopefully creatively utilize the open source design of Bitcoin to provide entirely secure and anonymous end-to-end experiences.”
Google, Facebook, as well as many others, all keep meticulous track of user data for advertising and other purposes. On several occasions, the massive amounts of data collected by Internet service and telecommunications companies have been utilized by agencies such as the NSA, under morally questionable motives at best.
The result is a system that has evolved with the ability to track everything you do, like, go, and know, and then provide all of that data to one central authority you may or may not trust, all with little choice for the consumer. The Internet has recently been more reminiscent of Orwell’s 1984, rather than the future of individual empowerment that was promised.
Cryptocurrency is the first major technological advancement that, intentionally or not, is a massive reaction to the trend of Big Data. It is decentralized and anonymous by design, and it is these key features within the Bitcoin protocol itself that may be the key to weakening the hold of massive data collecting service companies like Google.
Already, all payments with Bitcoin are anonymous, which could allow users to opt out of advertising with anonymous micropayments. Yet many other cryptocurrencies such as Namecoin are attempting to take the protocol that enables this and use it to build other decentralized networks.
Among these can be email, domain names, and other such systems.
Decentralized applications
This is only the beginning however, businesses will hopefully creatively utilize the open source design of Bitcoin to provide entirely secure and anonymous end-to-end experiences. The possibilities for the emerging wave of decentralized applications are endless, and only time will tell what it does result in. As David Johnson, the $1m sponsor of the Austin Bitcoin Hackathon put it:
“[Decentralized applications] have the potential to become self-sustaining because they empower their stakeholders to invest in the development of the DA.
Because of that, it is conceivable that DAs for payments, social networking, and cloud computing may one day surpass the valuation of multinational corporations like Western Union, Visa, Facebook, Google, and Amazon that are are currently active in the space.”
At the very least, the ever-growing success of bitcoin thus far candidly illustrates that there is indeed a massive demand for anonymity online, one companies would be wise to take advantage of.
It’s far too tempting to compare bitcoin to PCs, the Internet, or even to gold 5,000 years ago. While it does possess similarities with many of these things, and comparing it to such landmark achievements underscores its importance, bitcoin is it’s own phenomena.
PCs may have had a huge amount of industry leaders shrugging it off or denouncing it entirely like bitcoin does now, but it never had whole governments attempting to shut down or regulate its use.
Precious metals may have been the first and last good to become universally adopted as a means of exchange, but this was a slow process that took centuries if not millennia, whereas the usage of cryptocurrencies has exploded in just a few short years.
While bitcoin may have many old conceptual roots, it is altogether new and powerful. It is ushering in a new paradigm in various aspects of society, and creating a new benchmark for future technological achievements to inevitably be compared to.
Bitcoin is changing everything, and if you aren’t on board, then you’re already a dinosaur.
Ariel Deschapell | Published on March 15, 2014 at 12:50 GMT | Analysis
Perhaps the single most prominent, and telling, feature of bitcoin today is its massive controversy in the media. Not a single day goes by without an article or televised mention about its dangers, risks, and dubious mainstream appeal.
Many in the mainstream seem set in their beliefs that bitcoin is a fad, or even worse a ponzi scheme, and is destined to fail. Yet when was the last time a ponzi scheme attracted global attention and prominent venture capital investment? Since when has a fad incited the simultaneous and largely hostile reactions of governments across the globe?
Why did other payment technologies like PayPal or Western Union apparently fail to meet the requirements to be discussed in virtually every central bank on the planet, yet cryptocurrency is being so thoroughly scrutinised? Ironically enough, the on-going debate about whether or not bitcoin is truly a valuable disruptive technology, is all the evidence you need that it is.
This is because bitcoin as a technology isn’t just challenging business models, or even an entire industry. Plenty of innovative outfits do that with much less flare. Bitcoin is challenging the financial infrastructure of the whole global economy, and even more, it is challenging entire generations of established political and economic theory that that infrastructure is built on.
Bitcoin’s exponential growth flouts all of the traditional monetary theory that is the mainstream ideology amongst academics and politicians today. Its very existence and growing success cannot be accounted for within these old paradigms.
It challenges not only the basis and underlying assumptions of the modern financial system, but calls into question the beliefs and even livelihood of so many politicians, economic advisors, and media pundits. That is why so many are so sceptical of it, and others even outright hostile.
Bitcoin the currency
As a currency, bitcoin is in many ways the antithesis of modern fiat currencies. It has grown exponentially in usage the last year, and all without being declared by any state or central bank as “legal tender”. That simple fact astonishes many in academia, who could never have guessed a currency could spontaneously form and organically grow within the modern free market.
It was something that was never even discussed theoretically, and is still taking time to sink in amidst the denials that bitcoin is here to stay.
Yet this occurrence is surprisingly not entirely without precedence. Bitcoin is not the only example of a homogenous “good” being adopted by a population as a currency, for nothing but its underlying natural value and universal appeal. We have a much older example of that: gold, more than 5,000 years ago.
Cryptocurrency is following the same path as precious metals in ancient civilization. Where gold was valued for its color, easy malleability, purity and its anti-corrosive properties, bitcoin is valued for it’s speed, decentralization, anonymity and ultra low transaction costs.
gold
Gold was discovered by practically every world civilization and became a good of such universal value it slowly became the de facto means of exchange (along with silver) across much of the planet, eventually culminating in the Classical Gold Standard. That is a span of dominance of thousands of years, compared with the 43 years of the global fiat system we have today.
History thus clearly shows that the idea of a currency deriving value primarily from the “backing” of some central state is nonsense.
For the vast majority of civilization, money was gold or silver, and both originated not as centrally issued currency that, as a result, magically had value, but as universally valued substances.
Bitcoin is fast becoming the first commodity since gold to become a widely accepted means of exchange without the need of a central authority backing it.
However unlike gold, Bitcoin is completely out of the reach of governments and can’t be regulated, centralized, or ultimately shut down and replaced with inflationary fiat money. For all its durability and timeless lustre, gold my pale to the longevity of a cryptocurrency system.
Reacting to Big Data
However Bitcoin is not just a currency that promises to eventually end the trend of patchwork national currencies that exist for the almost sole purpose of allowing governments to endlessly fund their own deficit spending.
When the Internet was growing in the 90s it promised a future in which everyone everywhere had access to all the knowledge in the world, a future where technology ultimately empowered the individual.
Indeed, this promise is coming closer and closer everyday as more people in underdeveloped countries have access to cheaper and cheaper smartphones and Internet access. However behind this positive outward development, the big players have long since been behind a much different trend.
“Businesses will hopefully creatively utilize the open source design of Bitcoin to provide entirely secure and anonymous end-to-end experiences.”
Google, Facebook, as well as many others, all keep meticulous track of user data for advertising and other purposes. On several occasions, the massive amounts of data collected by Internet service and telecommunications companies have been utilized by agencies such as the NSA, under morally questionable motives at best.
The result is a system that has evolved with the ability to track everything you do, like, go, and know, and then provide all of that data to one central authority you may or may not trust, all with little choice for the consumer. The Internet has recently been more reminiscent of Orwell’s 1984, rather than the future of individual empowerment that was promised.
Cryptocurrency is the first major technological advancement that, intentionally or not, is a massive reaction to the trend of Big Data. It is decentralized and anonymous by design, and it is these key features within the Bitcoin protocol itself that may be the key to weakening the hold of massive data collecting service companies like Google.
Already, all payments with Bitcoin are anonymous, which could allow users to opt out of advertising with anonymous micropayments. Yet many other cryptocurrencies such as Namecoin are attempting to take the protocol that enables this and use it to build other decentralized networks.
Among these can be email, domain names, and other such systems.
Decentralized applications
This is only the beginning however, businesses will hopefully creatively utilize the open source design of Bitcoin to provide entirely secure and anonymous end-to-end experiences. The possibilities for the emerging wave of decentralized applications are endless, and only time will tell what it does result in. As David Johnson, the $1m sponsor of the Austin Bitcoin Hackathon put it:
“[Decentralized applications] have the potential to become self-sustaining because they empower their stakeholders to invest in the development of the DA.
Because of that, it is conceivable that DAs for payments, social networking, and cloud computing may one day surpass the valuation of multinational corporations like Western Union, Visa, Facebook, Google, and Amazon that are are currently active in the space.”
At the very least, the ever-growing success of bitcoin thus far candidly illustrates that there is indeed a massive demand for anonymity online, one companies would be wise to take advantage of.
It’s far too tempting to compare bitcoin to PCs, the Internet, or even to gold 5,000 years ago. While it does possess similarities with many of these things, and comparing it to such landmark achievements underscores its importance, bitcoin is it’s own phenomena.
PCs may have had a huge amount of industry leaders shrugging it off or denouncing it entirely like bitcoin does now, but it never had whole governments attempting to shut down or regulate its use.
Precious metals may have been the first and last good to become universally adopted as a means of exchange, but this was a slow process that took centuries if not millennia, whereas the usage of cryptocurrencies has exploded in just a few short years.
While bitcoin may have many old conceptual roots, it is altogether new and powerful. It is ushering in a new paradigm in various aspects of society, and creating a new benchmark for future technological achievements to inevitably be compared to.
Bitcoin is changing everything, and if you aren’t on board, then you’re already a dinosaur.
TigerDirect Tops $1 Million in Total Bitcoin Sales
Pete Rizzo (@pete_rizzo_) | Published on March 15, 2014 at 00:48 GMT | News
Florida-based online high-tech retailer TigerDirect passed $1m in total bitcoin sales on 13th March, less than two months after it began accepting the digital currency.
TigerDirect began taking bitcoin on 23rd January, partnering with Georgia-based merchant processor BitPay, and has been active at incentivizing its budding bitcoin customer base.
Steven Leeds, director of marketing at Tiger Direct, told CoinDesk that his company has been very pleased with its decision so far.
Said Leeds:
“The overwhelming response from our customers validates our decision.”
In addition to the sales increase, Leeds indicates that customers have benefitted from the arrangement as well, saving money on transaction fees when compared to other forms of online payment such as credit cards.
TigerDirect joins Overstock as the second merchant to pass the $1m bitcoin sales mark. Overstock announced that it reached the milestone on 4th March.
Winning combination
So far, TigerDirect’s results indicate that bitcoin has resonated with its predominantly high-tech customer base. TigerDirect took roughly 50 days to pass the $1m mark, based on its own projections.
Notably, TigerDirect saw a 50% spike on sales of some items in the aftermath of the announcement. The top-selling items on the site were video cards, power units, tablets, Xbox units and other high-tech items.
Overstock did not provide hard figures as to when it passed $1m in total, citing legal reasons, but did suggest that this mark was passed in mid-February. The Utah-based e-commerce giant later confirmed this figure on 4th March.
The similar timelines indicate that TigerDirect may not have had a sales advantage, though its audience and bitcoin’s were more likely to overlap.
Merchant impact
TigerDirect’s success is likely to play a key role in convincing more merchants to accept bitcoin payments, given that it has now proven to be a large and consistent revenue stream for two major merchants.
Earlier this week, US retailer Lord & Taylor’s parent company Hudson Bay Co. revealed Overstock played a key role in convincing it that it was time to test the waters with bitcoin.
The news comes as bitcoin merchant processors such as BitPay and Coinbase continue to add merchants at an increasing rate. BitPay has indicated it is now adding more than 1,000 merchants per week.
Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.
Pete Rizzo (@pete_rizzo_) | Published on March 15, 2014 at 00:48 GMT | News
Florida-based online high-tech retailer TigerDirect passed $1m in total bitcoin sales on 13th March, less than two months after it began accepting the digital currency.
TigerDirect began taking bitcoin on 23rd January, partnering with Georgia-based merchant processor BitPay, and has been active at incentivizing its budding bitcoin customer base.
Steven Leeds, director of marketing at Tiger Direct, told CoinDesk that his company has been very pleased with its decision so far.
Said Leeds:
“The overwhelming response from our customers validates our decision.”
In addition to the sales increase, Leeds indicates that customers have benefitted from the arrangement as well, saving money on transaction fees when compared to other forms of online payment such as credit cards.
TigerDirect joins Overstock as the second merchant to pass the $1m bitcoin sales mark. Overstock announced that it reached the milestone on 4th March.
Winning combination
So far, TigerDirect’s results indicate that bitcoin has resonated with its predominantly high-tech customer base. TigerDirect took roughly 50 days to pass the $1m mark, based on its own projections.
Notably, TigerDirect saw a 50% spike on sales of some items in the aftermath of the announcement. The top-selling items on the site were video cards, power units, tablets, Xbox units and other high-tech items.
Overstock did not provide hard figures as to when it passed $1m in total, citing legal reasons, but did suggest that this mark was passed in mid-February. The Utah-based e-commerce giant later confirmed this figure on 4th March.
The similar timelines indicate that TigerDirect may not have had a sales advantage, though its audience and bitcoin’s were more likely to overlap.
Merchant impact
TigerDirect’s success is likely to play a key role in convincing more merchants to accept bitcoin payments, given that it has now proven to be a large and consistent revenue stream for two major merchants.
Earlier this week, US retailer Lord & Taylor’s parent company Hudson Bay Co. revealed Overstock played a key role in convincing it that it was time to test the waters with bitcoin.
The news comes as bitcoin merchant processors such as BitPay and Coinbase continue to add merchants at an increasing rate. BitPay has indicated it is now adding more than 1,000 merchants per week.
Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.
Bitcoin Businesses and Canadian Banks: The ‘Catch 22’ Dilemma
Matthew Burgoyne | Published on March 15, 2014 at 11:29 GMT | Law, News, US & Canada
Matt Burgoyne is an associate at Canadian legal firm McLeod Law. He is involved with Canadian and international counsel in the developing area of virtual currency law, specifically including bitcoin currency.
One of the most frustrating things I encounter when being retained by a new client or working with an existing client operating in the bitcoin space is that without exception, I have the unfortunate task of advising them that as it stands now in Canada, the chances of them obtaining a regular commercial services based bank account are 0%.
“Canada is an attractive environment for bitcoin entities to set up operations”
Sometimes this is a non-starter and the bitcoin entity makes the decision to set up operations in another country, which is extremely unfortunate for a variety of reasons, including the economic loss to Canada derived from losing a potential new Canadian business and the more important loss to the potential client in regards to their bitcoin business.
This is a shame, because, as I have previously mentioned on CoinDesk, Canada is an attractive environment for bitcoin entities to set up operations since our country does not have, for example, the state-by-state money transmitting regulations that currently exist in the US.
Businesses need banks
eBankingWithout basic commercial banking services, most bitcoin businesses would have a tough time operating, as businesses in general often need, as an example, the ability to deposit money somewhere and require some level of online banking.
I have personally spoken with presidents and senior vice-presidents of major Canadian banking institutions and credit unions, and the impressions I get can be summed up as follows:
(a) Banks are still in the process of figuring out what bitcoin is and how to deal with it, since it is a disruptive technology which could arguably compete with the bank’s own existing services and products (although no banking executives on my calls explicitly mentioned the competition concern).
(b) Banks are apprehensive about boarding new bitcoin clients because Canada’s federal government, via the Department of Finance, has yet to introduce regulations which specifically target bitcoin and digital currency operations.
(c) Banks are apprehensive about boarding bitcoin entities over concerns related to money laundering activities which could be carried out by their newly boarded digital currency clients.
Guidance lacking
As mentioned in section (b) above, Canadian bitcoin entities are presently victims of a ‘catch 22’ type of situation: they are caught in a situation from which they cannot escape because they are subject to arbitrary banking rules and the lack of Canadian legislation, which effectively places them in a situation in which they have no control over.
Buried on page 134 of the 419-page recently released Canadian 2014 Federal Budget, the Canadian federal government confirms that it will “introduce anti-money laundering and anti-terrorist financing regulations for virtual currencies, such as bitcoin”.
OK, so regulations will be introduced by the Canadian government which will specifically address bitcoin, which would, in my opinion, put Canadian banks and credit unions at least partially at ease as per (b) above, but when are these regulations going to be announced and come into effect?
There has been absolutely no guidance from the federal government on this issue. It could be next week or it could be in six months. In the meantime, bitcoin entities are caught in this unfortunate ‘catch 22’ predicament.
Banking hypocrisy?
HSBC bank, New YorkAn issue which deserves some serious attention is the way that both Canadian and international banks execute their anti-money laundering and anti-terrorist financing regulations.
It’s great that banks have anti-money laundering and anti-terrorist financing policies, but often the execution of those policies are abhorrent and sloppy at best.
Case in point, in an article published by elitedaily.com on February 21st 2014, entitled ‘The Ugly Truth Behind Major Banks Financing Mexico’s Drug Cartels‘, the author noted that:
“Since 2006, more than a dozen banks have reached settlements with the Justice Department (United States) as restitution for violations related to money laundering. American Express Bank International admitted to processing more than $55 million in drug money that had been laundered through offshore shell accounts that it operates.”
Readers may recall that last December, the British bank HSBC (which has a large Canadian presence) agreed to settle with the US Justice Department to pay approximately $2 billion in penalties for having moved $881 million in drug proceeds from cartels in Mexico and Columbia during a recent five-year period.
Arguments have been made that banks in general often do not face criminal prosecution for violating anti-money laundering and anti-terrorist financing regulations, but instead, according to the author of the aforementioned article referred to above, “(accept) settlements that either defer or erase the threat of criminal suits.”
If this is true, it can be argued that there is little incentive for banks to actually toughen internal regulatory compliance.
There have been instances of senior bank executives leaving their positions at their respective banks because of this lack of internal regulatory compliance.
For example, in the aforementioned article, reference is made to a gentlemen named Martin Woods, who served as director of Wachovia’s anti-money laundering unit in London for three years before leaving his position ‘in disgust’ after his repeated requests to executives to put a stop to ongoing drug money laundering operations, which were allegedly occurring in Wachovia’s branch network, were ignored).
Ignored issue
Canadian and international banks take the position that they won’t board bitcoin clients because of concerns that bitcoin entities could be used to facilitate drug money laundering activities. At the same time as a result of sloppy execution some of these banks are guilty themselves of facilitating drug money laundering activities and as a result have paid billion dollar settlement fines.
Is this hypocrisy? At a minimum it appears to be an inconsistent application of anti-money laundering policies internally versus externally to bitcoin clients.
I believe that the mainstream media, when discussing bitcoin and the risk of money laundering activities associated with it, fails to consider or comment on the hypocrisy issue discussed above. This is most unfortunate.
Matthew Burgoyne | Published on March 15, 2014 at 11:29 GMT | Law, News, US & Canada
Matt Burgoyne is an associate at Canadian legal firm McLeod Law. He is involved with Canadian and international counsel in the developing area of virtual currency law, specifically including bitcoin currency.
One of the most frustrating things I encounter when being retained by a new client or working with an existing client operating in the bitcoin space is that without exception, I have the unfortunate task of advising them that as it stands now in Canada, the chances of them obtaining a regular commercial services based bank account are 0%.
“Canada is an attractive environment for bitcoin entities to set up operations”
Sometimes this is a non-starter and the bitcoin entity makes the decision to set up operations in another country, which is extremely unfortunate for a variety of reasons, including the economic loss to Canada derived from losing a potential new Canadian business and the more important loss to the potential client in regards to their bitcoin business.
This is a shame, because, as I have previously mentioned on CoinDesk, Canada is an attractive environment for bitcoin entities to set up operations since our country does not have, for example, the state-by-state money transmitting regulations that currently exist in the US.
Businesses need banks
eBankingWithout basic commercial banking services, most bitcoin businesses would have a tough time operating, as businesses in general often need, as an example, the ability to deposit money somewhere and require some level of online banking.
I have personally spoken with presidents and senior vice-presidents of major Canadian banking institutions and credit unions, and the impressions I get can be summed up as follows:
(a) Banks are still in the process of figuring out what bitcoin is and how to deal with it, since it is a disruptive technology which could arguably compete with the bank’s own existing services and products (although no banking executives on my calls explicitly mentioned the competition concern).
(b) Banks are apprehensive about boarding new bitcoin clients because Canada’s federal government, via the Department of Finance, has yet to introduce regulations which specifically target bitcoin and digital currency operations.
(c) Banks are apprehensive about boarding bitcoin entities over concerns related to money laundering activities which could be carried out by their newly boarded digital currency clients.
Guidance lacking
As mentioned in section (b) above, Canadian bitcoin entities are presently victims of a ‘catch 22’ type of situation: they are caught in a situation from which they cannot escape because they are subject to arbitrary banking rules and the lack of Canadian legislation, which effectively places them in a situation in which they have no control over.
Buried on page 134 of the 419-page recently released Canadian 2014 Federal Budget, the Canadian federal government confirms that it will “introduce anti-money laundering and anti-terrorist financing regulations for virtual currencies, such as bitcoin”.
OK, so regulations will be introduced by the Canadian government which will specifically address bitcoin, which would, in my opinion, put Canadian banks and credit unions at least partially at ease as per (b) above, but when are these regulations going to be announced and come into effect?
There has been absolutely no guidance from the federal government on this issue. It could be next week or it could be in six months. In the meantime, bitcoin entities are caught in this unfortunate ‘catch 22’ predicament.
Banking hypocrisy?
HSBC bank, New YorkAn issue which deserves some serious attention is the way that both Canadian and international banks execute their anti-money laundering and anti-terrorist financing regulations.
It’s great that banks have anti-money laundering and anti-terrorist financing policies, but often the execution of those policies are abhorrent and sloppy at best.
Case in point, in an article published by elitedaily.com on February 21st 2014, entitled ‘The Ugly Truth Behind Major Banks Financing Mexico’s Drug Cartels‘, the author noted that:
“Since 2006, more than a dozen banks have reached settlements with the Justice Department (United States) as restitution for violations related to money laundering. American Express Bank International admitted to processing more than $55 million in drug money that had been laundered through offshore shell accounts that it operates.”
Readers may recall that last December, the British bank HSBC (which has a large Canadian presence) agreed to settle with the US Justice Department to pay approximately $2 billion in penalties for having moved $881 million in drug proceeds from cartels in Mexico and Columbia during a recent five-year period.
Arguments have been made that banks in general often do not face criminal prosecution for violating anti-money laundering and anti-terrorist financing regulations, but instead, according to the author of the aforementioned article referred to above, “(accept) settlements that either defer or erase the threat of criminal suits.”
If this is true, it can be argued that there is little incentive for banks to actually toughen internal regulatory compliance.
There have been instances of senior bank executives leaving their positions at their respective banks because of this lack of internal regulatory compliance.
For example, in the aforementioned article, reference is made to a gentlemen named Martin Woods, who served as director of Wachovia’s anti-money laundering unit in London for three years before leaving his position ‘in disgust’ after his repeated requests to executives to put a stop to ongoing drug money laundering operations, which were allegedly occurring in Wachovia’s branch network, were ignored).
Ignored issue
Canadian and international banks take the position that they won’t board bitcoin clients because of concerns that bitcoin entities could be used to facilitate drug money laundering activities. At the same time as a result of sloppy execution some of these banks are guilty themselves of facilitating drug money laundering activities and as a result have paid billion dollar settlement fines.
Is this hypocrisy? At a minimum it appears to be an inconsistent application of anti-money laundering policies internally versus externally to bitcoin clients.
I believe that the mainstream media, when discussing bitcoin and the risk of money laundering activities associated with it, fails to consider or comment on the hypocrisy issue discussed above. This is most unfortunate.
Icelandic Parliament Committee Holds Closed Session to Discuss Auroracoin
Daniel Cawrey (@danielcawrey) | Published on March 14, 2014 at 23:11 GMT | Altcoins, News, Prices, Regulation, Technology
Iceland’s Parliamentary Economic Affairs and Trade Committee held a formal discussion regarding auroracoin in closed meeting on 14th March.
Auroracoin is a digital currency based on the litecoin source code, and a portion of it will be provided for free to Icelandic citizens. It has experienced a remarkable surge in popularity as an alternative to bitcoin, passing litecoin in total market cap in early March for a short period. It is currently the number four digital currency by market cap.
Only political figures and central bankers reportedly attended the Parliament meeting, however, representatives of the digital currency were noticeably absent.
Auroracoin’s creator, Baldur Friggjar Óðinsson, told CoinDesk:
“The Committee did not reach out to the auroracoin community or anyone involved in cryptocurrencies to my knowledge.”
The Icelandic media outlet Mbl.is has a story on the Committee’s vice-chair Pétur Blöndal confirming that the session took place. An English translation of the article is available on the auroracoin forums.
Government Response
Iceland’s Chairman of the Committee for Economic Affairs and Trade is Frosti Sigurjónsson of the ruling Progressive Party.
Sigurjónsson has been asking the Central Bank and the Financial Supervisory Authority to issue warnings about cryptocurrencies such as auroracoin, according to Óðinsson.
He says Sigurjónsson “is a staunch and vocal enemy of bitcoin, auroracoin and other cryptocurrencies.”
On Sigurjónsson’s website, he has a short blog post on auroracoin suggesting that the coin is a scam. At the end of the post, he writes, translated from Icelandic:
“There is evidence however that this is a case of [a money] scam and illegal.”
“They can make it illegal to own or trade auroracoin,” said Óðinsson. ”However, they will never be able to control such a decentralized system, or stop Icelanders from using the currency, without turning Iceland into a police state.”
Sigurjónsson has been contacted for comment, and has not yet replied.
Speculation
Auroracoin was created as decentralized digital currency for the people of Iceland. Óðinsson, its inventor, is aiming to give Icelanders an alternative to that country’s fiat krona denomination.
After the 2008 financial collapse, the banking industry in Iceland was mired in turmoil. The inflation rate of the krona shot to 18% by the end of 2009.
Iceland vs. UK GDP as measured in British pound. Source: Icelandic Economics
Óðinsson plans to give every one of Iceland’s 320m people 31.8 AUR starting March 25 via an initiative he has dubbed ‘AirDrop’. A web interface that has an online verification system using Iceland’s personal identification will be used to dole out the coins.
Community
The purpose of giving premined auroracoin to Icelanders in particular is to build a community around the coin.
Another effort, called scotcoin is working on a similar effort. Scotcoin is giving everyone in Scotland over the age of 18 the opportunity to obtain its coins. At 980 million premined coins for Scotland’s population of 3.5 million, each person would receive 280 scotcoins.
Fifty percent of the auroracoin’s 10,619,651 units circulation is reserved for the Icelandic community. This likely led to AUR’s price to speculate upwards of $45. It is currently trading at $21.
One month AUR/BTC trading. Source: Cryptsy
Many industry observers are eagerly awaiting what happens when auroracoin’s ‘AirDrop’ commences, with some suggesting it could lead to a sharp decline in auroracoin’s value should new recipients immediately cash out their coins.
Circulation, however, might be more important than price for auroracoin to remain strong. And at a current supply of just over 10 million, auroracoin still has a lot more coins to be mined. The total number of auroracoins is set to be 21 million.
CoinDesk is monitoring this developing story, and will post updates as they become known.
Daniel Cawrey (@danielcawrey) | Published on March 14, 2014 at 23:11 GMT | Altcoins, News, Prices, Regulation, Technology
Iceland’s Parliamentary Economic Affairs and Trade Committee held a formal discussion regarding auroracoin in closed meeting on 14th March.
Auroracoin is a digital currency based on the litecoin source code, and a portion of it will be provided for free to Icelandic citizens. It has experienced a remarkable surge in popularity as an alternative to bitcoin, passing litecoin in total market cap in early March for a short period. It is currently the number four digital currency by market cap.
Only political figures and central bankers reportedly attended the Parliament meeting, however, representatives of the digital currency were noticeably absent.
Auroracoin’s creator, Baldur Friggjar Óðinsson, told CoinDesk:
“The Committee did not reach out to the auroracoin community or anyone involved in cryptocurrencies to my knowledge.”
The Icelandic media outlet Mbl.is has a story on the Committee’s vice-chair Pétur Blöndal confirming that the session took place. An English translation of the article is available on the auroracoin forums.
Government Response
Iceland’s Chairman of the Committee for Economic Affairs and Trade is Frosti Sigurjónsson of the ruling Progressive Party.
Sigurjónsson has been asking the Central Bank and the Financial Supervisory Authority to issue warnings about cryptocurrencies such as auroracoin, according to Óðinsson.
He says Sigurjónsson “is a staunch and vocal enemy of bitcoin, auroracoin and other cryptocurrencies.”
On Sigurjónsson’s website, he has a short blog post on auroracoin suggesting that the coin is a scam. At the end of the post, he writes, translated from Icelandic:
“There is evidence however that this is a case of [a money] scam and illegal.”
“They can make it illegal to own or trade auroracoin,” said Óðinsson. ”However, they will never be able to control such a decentralized system, or stop Icelanders from using the currency, without turning Iceland into a police state.”
Sigurjónsson has been contacted for comment, and has not yet replied.
Speculation
Auroracoin was created as decentralized digital currency for the people of Iceland. Óðinsson, its inventor, is aiming to give Icelanders an alternative to that country’s fiat krona denomination.
After the 2008 financial collapse, the banking industry in Iceland was mired in turmoil. The inflation rate of the krona shot to 18% by the end of 2009.
Iceland vs. UK GDP as measured in British pound. Source: Icelandic Economics
Óðinsson plans to give every one of Iceland’s 320m people 31.8 AUR starting March 25 via an initiative he has dubbed ‘AirDrop’. A web interface that has an online verification system using Iceland’s personal identification will be used to dole out the coins.
Community
The purpose of giving premined auroracoin to Icelanders in particular is to build a community around the coin.
Another effort, called scotcoin is working on a similar effort. Scotcoin is giving everyone in Scotland over the age of 18 the opportunity to obtain its coins. At 980 million premined coins for Scotland’s population of 3.5 million, each person would receive 280 scotcoins.
Fifty percent of the auroracoin’s 10,619,651 units circulation is reserved for the Icelandic community. This likely led to AUR’s price to speculate upwards of $45. It is currently trading at $21.
One month AUR/BTC trading. Source: Cryptsy
Many industry observers are eagerly awaiting what happens when auroracoin’s ‘AirDrop’ commences, with some suggesting it could lead to a sharp decline in auroracoin’s value should new recipients immediately cash out their coins.
Circulation, however, might be more important than price for auroracoin to remain strong. And at a current supply of just over 10 million, auroracoin still has a lot more coins to be mined. The total number of auroracoins is set to be 21 million.
CoinDesk is monitoring this developing story, and will post updates as they become known.
Bitmain does it again with the new Antminer S2 1th/s Miner.
Scott Fargo 14/03/2014 Bitcoin, Bitcoin Merchants, Bitcoin Mining, Breaking News, Mining, News
Posted 2 hours ago
https://www.bitmaintech.com/userfiles/image/003201401071629042468e3298pa0638.jpg
Today I was excited to see the release news on 112bit.com, a US distributor for Bitmain that they were starting to sell the new Antminer S2 1 th/s unit. The best part is just like the S1 no huge wait times. They will be shipping the first batch roughly April 1st of 2014.
The Antminer S1 is a hit due to the competitive price and excellent availability of the units. With distributors like 112bit also shipping fast and keeping pricing current each day the S1 had many miners very happy and created many loyal customers.
Antminer S1
Antminer S1
Juan from 112bit is going to be demonstrating the Antminer S2 at the Inside Bitcoins New York convention on April 7-8.
When I asked Juan Garavaglia owner of 112bit about this debut, he said.
We are very excited, is a big step forward we have the most competitive mining hardware and fast delivery we are receiving many orders and the Bitmain website sold out in 6 hours the 1st batch.
Here is the release that 112bit owner Juan Garavaglia, posted on BitcoinTalk.
Bitmain Technologies Limited is proud to announce ANTMINER S2 that features 1TH/s Bitcoin Miner consist of high-density chip chains and ultra low power consumption.
AntMiner S2 is using the state of the art BM1380 chip, targeting the best possible power efficiency. S2 is built into a 4U size box, and it will come with PSU manufactured by Enermax. S2 will be very convenient to deploy. S2 is still running quietly.
Since November of 2013, BM1380 has been proven to be the most effective IC on the 55nm process among all competitors, even comparable to the most Bitcoin Mining ICs developed on 28nm process nodes. Our first generation Bitcoin Miner, AntMiner S1, demonstrated low power consumption but high performance. Currently, S1 is most popular miner for mining enthusiasts. S1 is currently deployed in large binary trees structures within the private and public mining pools servicing 20.3% of the entire network hash rate.
The 1st Batch of AntMiner S2 will be shipped out on April 1st. AntMiner S2 will be available in the global market for a price of $3,899.
AntMiner S2 SPEC:
Hash rate: more than 1,000GH/s
Power consumption: 1,000W from the wall
Power efficiency: 1Watt/GH/s
PSU: 1000W produced by Enermax, 80PLUS gold
4U Rack
PSU inside
Plug and Mining
Stable and quiet
With the great price and performance of the S1, it looks like Bitmain is going to be able to do it again with their new S2 model, as well. Sipping power 1 watt per gh/s it will make it a very profitable Bitcoin miner over the long haul, as well.
I am very much looking forward to trying one of these out and bringing my results here on cryptocoinsnews.com
In the near future, I will be testing and reviewing the S2′s predecessor the Antminer S1 and will have it on CCN for you all.
Happy Mining
Scott Fargo 14/03/2014 Bitcoin, Bitcoin Merchants, Bitcoin Mining, Breaking News, Mining, News
Posted 2 hours ago
https://www.bitmaintech.com/userfiles/image/003201401071629042468e3298pa0638.jpg
Today I was excited to see the release news on 112bit.com, a US distributor for Bitmain that they were starting to sell the new Antminer S2 1 th/s unit. The best part is just like the S1 no huge wait times. They will be shipping the first batch roughly April 1st of 2014.
The Antminer S1 is a hit due to the competitive price and excellent availability of the units. With distributors like 112bit also shipping fast and keeping pricing current each day the S1 had many miners very happy and created many loyal customers.
Antminer S1
Antminer S1
Juan from 112bit is going to be demonstrating the Antminer S2 at the Inside Bitcoins New York convention on April 7-8.
When I asked Juan Garavaglia owner of 112bit about this debut, he said.
We are very excited, is a big step forward we have the most competitive mining hardware and fast delivery we are receiving many orders and the Bitmain website sold out in 6 hours the 1st batch.
Here is the release that 112bit owner Juan Garavaglia, posted on BitcoinTalk.
Bitmain Technologies Limited is proud to announce ANTMINER S2 that features 1TH/s Bitcoin Miner consist of high-density chip chains and ultra low power consumption.
AntMiner S2 is using the state of the art BM1380 chip, targeting the best possible power efficiency. S2 is built into a 4U size box, and it will come with PSU manufactured by Enermax. S2 will be very convenient to deploy. S2 is still running quietly.
Since November of 2013, BM1380 has been proven to be the most effective IC on the 55nm process among all competitors, even comparable to the most Bitcoin Mining ICs developed on 28nm process nodes. Our first generation Bitcoin Miner, AntMiner S1, demonstrated low power consumption but high performance. Currently, S1 is most popular miner for mining enthusiasts. S1 is currently deployed in large binary trees structures within the private and public mining pools servicing 20.3% of the entire network hash rate.
The 1st Batch of AntMiner S2 will be shipped out on April 1st. AntMiner S2 will be available in the global market for a price of $3,899.
AntMiner S2 SPEC:
Hash rate: more than 1,000GH/s
Power consumption: 1,000W from the wall
Power efficiency: 1Watt/GH/s
PSU: 1000W produced by Enermax, 80PLUS gold
4U Rack
PSU inside
Plug and Mining
Stable and quiet
With the great price and performance of the S1, it looks like Bitmain is going to be able to do it again with their new S2 model, as well. Sipping power 1 watt per gh/s it will make it a very profitable Bitcoin miner over the long haul, as well.
I am very much looking forward to trying one of these out and bringing my results here on cryptocoinsnews.com
In the near future, I will be testing and reviewing the S2′s predecessor the Antminer S1 and will have it on CCN for you all.
Happy Mining
Icelandic government warns against Auroracoin
Christoph Marckx 14/03/2014 Altcoins, Bitcoin, Bitcoin Regulation, Economics, News, Security 1 Comment
Posted 2 hours ago
Pétur Blöndal warns against Auroracoin
Pétur Blöndal warns Icelandic people for the risks of virtual currency Auroracoin.
Early this morning, the Auroracoin medium of exchange was discussed by the Economic and Trade Committee of Parliament. The Icelandic authorities expressed their concern about the currency, calling it risky business. They claimed that consumers needed to be educated and warned of the risks this virtual coin may pose. Pétur Blöndal, member of Parliament for the Independence Party and vice-chairman of the Committee, had little details to disclose but said there was an agreement regarding the fact that using the medium of exchange held great risk for everyone.
It seemed there were many things unclear and the launch of the coin seems to bring multiple issues to the table. The Committee was especially concerned about taxation. It’s difficult to work this out since politicians around the globe can’t seem to find a solution for taxing cryptocurrencies. Next to taxing, Blöndal also felt that the concept the coin was dangerous. The developers behind the medium had promised a limited supply, but according to Blöndal people had to blindly trust that this would not be changed. There was also a concern about how property rights were protected? To enforce his opinion, he claimed that it has been shown that Bitcoin has no real protection for rights of individuals.
“What is missing is that consumers be warned against this cryptocurrency,” said Blöndal. In ten days time, Auroracoin’s 50% premine will be distributed among all Icelanders.
But what will be the final verdict on Auroracoin? Will the government take special measures or just look at the launch from a distance, ready to intervene when necessary? According to Blöndal, representatives of the Central Bank of Iceland were present during the meeting. They were discussing if the cryptocoin could be deemed illegal and how the authorities could respond to this. There was an in-depth diagnosis of measures taken by other countries. The Bitcoin movement has received lots of bad publicity lately, and some other countries have been putting restraints on the cryptocurrency and even banning it. Up until now, nothing has been decided regarding the Central Bank’s stance towards Auroracoin.
Blöndal says that people have to realize that Auroracoin is not backed by anyone other than its developers. ”Currencies exist in many different forms, but this one is an example of a currency that is not backed by any government. We have laws regarding currencies, and they do not apply to this exchange method.”
Iceland has seen a few rough years, but they managed to stand up again because of their ‘alternative’ handling of the financial crisis. It was only a matter of time before people would come up with their own solutions, looking at the causes of the crisis in the first place. The whole world is, slowly but surely, starting to realize that fiat money can’t survive in its current form. The initiation of Bitcoin and other cryptocurrencies has shown that there can be another way. As usual, governments want to regulate but this takes a long time and the world doesn’t want to wait any longer. There’s potential danger to virtual money, denying this would be naive. On the other hand, there’s also an opportunity in it. Iceland is the first example of how a cryptocurrency might do something for one nation. In ten days, Auroracoin will make its airdrop and Icelanders will receive their coins.
Christoph Marckx 14/03/2014 Altcoins, Bitcoin, Bitcoin Regulation, Economics, News, Security 1 Comment
Posted 2 hours ago
Pétur Blöndal warns against Auroracoin
Pétur Blöndal warns Icelandic people for the risks of virtual currency Auroracoin.
Early this morning, the Auroracoin medium of exchange was discussed by the Economic and Trade Committee of Parliament. The Icelandic authorities expressed their concern about the currency, calling it risky business. They claimed that consumers needed to be educated and warned of the risks this virtual coin may pose. Pétur Blöndal, member of Parliament for the Independence Party and vice-chairman of the Committee, had little details to disclose but said there was an agreement regarding the fact that using the medium of exchange held great risk for everyone.
It seemed there were many things unclear and the launch of the coin seems to bring multiple issues to the table. The Committee was especially concerned about taxation. It’s difficult to work this out since politicians around the globe can’t seem to find a solution for taxing cryptocurrencies. Next to taxing, Blöndal also felt that the concept the coin was dangerous. The developers behind the medium had promised a limited supply, but according to Blöndal people had to blindly trust that this would not be changed. There was also a concern about how property rights were protected? To enforce his opinion, he claimed that it has been shown that Bitcoin has no real protection for rights of individuals.
“What is missing is that consumers be warned against this cryptocurrency,” said Blöndal. In ten days time, Auroracoin’s 50% premine will be distributed among all Icelanders.
But what will be the final verdict on Auroracoin? Will the government take special measures or just look at the launch from a distance, ready to intervene when necessary? According to Blöndal, representatives of the Central Bank of Iceland were present during the meeting. They were discussing if the cryptocoin could be deemed illegal and how the authorities could respond to this. There was an in-depth diagnosis of measures taken by other countries. The Bitcoin movement has received lots of bad publicity lately, and some other countries have been putting restraints on the cryptocurrency and even banning it. Up until now, nothing has been decided regarding the Central Bank’s stance towards Auroracoin.
Blöndal says that people have to realize that Auroracoin is not backed by anyone other than its developers. ”Currencies exist in many different forms, but this one is an example of a currency that is not backed by any government. We have laws regarding currencies, and they do not apply to this exchange method.”
Iceland has seen a few rough years, but they managed to stand up again because of their ‘alternative’ handling of the financial crisis. It was only a matter of time before people would come up with their own solutions, looking at the causes of the crisis in the first place. The whole world is, slowly but surely, starting to realize that fiat money can’t survive in its current form. The initiation of Bitcoin and other cryptocurrencies has shown that there can be another way. As usual, governments want to regulate but this takes a long time and the world doesn’t want to wait any longer. There’s potential danger to virtual money, denying this would be naive. On the other hand, there’s also an opportunity in it. Iceland is the first example of how a cryptocurrency might do something for one nation. In ten days, Auroracoin will make its airdrop and Icelanders will receive their coins.
Bitcoin Exchange Doing Security Right: Bitcurex Successfully Blocked A Hacking Attack
Caleb Chen 14/03/2014 Bitcoin, Bitcoin Exchanges, Breaking News, News, Security
Posted 4 hours ago
Some 9 hours ago, astute Bitcoiners watching Bitcoin exchange charts were greeted by a surprising blip on Poland’s largest Bitcoin Exchange: Bitcurex. Bitcurex has been in operation since July 2012, and is operated out of Lodz, Poland under the registered Digital Future Ltd. It seems that a hacker managed to create 94 million PLN (The Polish Zloty) and used the fiat to buy Bitcoin orders on the order book. According to witness reports from traders on Bitcurex at the time, the hacker used his hacked PLN to buy the order book and caused a noticeable ~10% change in the exchange rate. The hacker then left a buy order for ~19,000 Bitcoins on the order book which was in the process of being filled when trading was halted.
Some Bitcoiners are all “doom and gloom” at the news of another Bitcoin exchange shutting its doors for a little while. There are many people that are still smarting from the news of Mt. Gox halting Bitcoin withdrawals first then all operations later. There are several differences between Mt. Gox and Bitcurex that are quickly becoming clear. While the occurrence of a hack of any kind against a Bitcoin Exchange is unsettling, the way in which Bitcurex has dealt with the matter is commendable.
bitcurex 19000 buy
Within 5 minutes of the market buy and buy order being placed Bitcurex shut down trading on their site. A few hours ago, the Bitcurex team made an official statement via their Facebook page.
Dear Users,
http://www.cryptocoinsnews.com/wp-content/uploads/2014/03/bitcurex-19000-buy1.jpg
We successfully blocked a hacking attack on Bitcurex, preventing mass theft of BTC funds of our users. Thanks to automatic safety procedures, hackers managed to defraud only a portion of the funds stored in operational Hot Wallet Bitcurex. The majority of funds from Hot Wallet, as well the entirety of funds from Cold Wallet and FIAT monetary funds remained intact.
Our team located and removed the source of the problem. We are working on resuming normal service, at the same time an external audit is being conducted: we will soon provide the exact date of resuming all Bitcurex functionalities. More information will be provided in further statements.
We are sorry for the inconvenience, and most of all we thank the whole BTC community for the support we received: we were put to a test that will make us stronger.
Best regards,
Bitcurex Team
This is not the death of Bitcoin
Personally, I am curious to see how the mainstream media will present this story. I will not be surprised if some western sources of news report the facts in a skewed manner in order to paint Bitcoin in a dangerous light. The real important reaction to watch for will be from Polish language news sources. No matter what the world and global Bitcoin community at large think about the hack and subsequent recovery, it is the Polish people that will ultimately decide whether or not Bitcurex lives on.
The good news is this: Bitcurex “successfully blocked” the hacking attempt. Though the wording of their statement implies that some funds from Bitcurex’s hot wallet may have been automatically transferred out it also implies that all Bitcurex users will have 100% of their funds once Bitcurex resumes service. Bitcoin exchange security is a very big deal, the automatic security precautions that Bitcurex adopted ended up thwarting a major heist.
In comparison, a few other Bitcoin exchanges that have been hacked in the past few weeks are Poloniex and Flexcoin. The former opted to continue operating and will pay back users from future fees while the latter was put out of business. Stay tuned to CCN for more updates on the Bitcurex hack and other Bitcoin news.
Caleb Chen 14/03/2014 Bitcoin, Bitcoin Exchanges, Breaking News, News, Security
Posted 4 hours ago
Some 9 hours ago, astute Bitcoiners watching Bitcoin exchange charts were greeted by a surprising blip on Poland’s largest Bitcoin Exchange: Bitcurex. Bitcurex has been in operation since July 2012, and is operated out of Lodz, Poland under the registered Digital Future Ltd. It seems that a hacker managed to create 94 million PLN (The Polish Zloty) and used the fiat to buy Bitcoin orders on the order book. According to witness reports from traders on Bitcurex at the time, the hacker used his hacked PLN to buy the order book and caused a noticeable ~10% change in the exchange rate. The hacker then left a buy order for ~19,000 Bitcoins on the order book which was in the process of being filled when trading was halted.
Some Bitcoiners are all “doom and gloom” at the news of another Bitcoin exchange shutting its doors for a little while. There are many people that are still smarting from the news of Mt. Gox halting Bitcoin withdrawals first then all operations later. There are several differences between Mt. Gox and Bitcurex that are quickly becoming clear. While the occurrence of a hack of any kind against a Bitcoin Exchange is unsettling, the way in which Bitcurex has dealt with the matter is commendable.
bitcurex 19000 buy
Within 5 minutes of the market buy and buy order being placed Bitcurex shut down trading on their site. A few hours ago, the Bitcurex team made an official statement via their Facebook page.
Dear Users,
http://www.cryptocoinsnews.com/wp-content/uploads/2014/03/bitcurex-19000-buy1.jpg
We successfully blocked a hacking attack on Bitcurex, preventing mass theft of BTC funds of our users. Thanks to automatic safety procedures, hackers managed to defraud only a portion of the funds stored in operational Hot Wallet Bitcurex. The majority of funds from Hot Wallet, as well the entirety of funds from Cold Wallet and FIAT monetary funds remained intact.
Our team located and removed the source of the problem. We are working on resuming normal service, at the same time an external audit is being conducted: we will soon provide the exact date of resuming all Bitcurex functionalities. More information will be provided in further statements.
We are sorry for the inconvenience, and most of all we thank the whole BTC community for the support we received: we were put to a test that will make us stronger.
Best regards,
Bitcurex Team
This is not the death of Bitcoin
Personally, I am curious to see how the mainstream media will present this story. I will not be surprised if some western sources of news report the facts in a skewed manner in order to paint Bitcoin in a dangerous light. The real important reaction to watch for will be from Polish language news sources. No matter what the world and global Bitcoin community at large think about the hack and subsequent recovery, it is the Polish people that will ultimately decide whether or not Bitcurex lives on.
The good news is this: Bitcurex “successfully blocked” the hacking attempt. Though the wording of their statement implies that some funds from Bitcurex’s hot wallet may have been automatically transferred out it also implies that all Bitcurex users will have 100% of their funds once Bitcurex resumes service. Bitcoin exchange security is a very big deal, the automatic security precautions that Bitcurex adopted ended up thwarting a major heist.
In comparison, a few other Bitcoin exchanges that have been hacked in the past few weeks are Poloniex and Flexcoin. The former opted to continue operating and will pay back users from future fees while the latter was put out of business. Stay tuned to CCN for more updates on the Bitcurex hack and other Bitcoin news.
Bitcoin receives award at CeBIT 2014
Christoph Marckx 14/03/2014 Bitcoin, Business, Events, News, Services
Posted 8 hours ago
Oliver Flasskämper accepts Bitcoin award
Oliver Flaßkämper accepted Bitcoin’s award at CeBIT 2014
CeBIT, one of the most important exhibitions about technology and innovations in the world, is going on this week. The German festival attracts lots of attention. It has several famous key speakers, countless exhibitions, expert panels, everything to make this an interesting week. And, of course, Bitcoin was a trending topic at CeBIT as well.
Award for Bitcoin
After being talk of the town at SXSW 2014, Bitcoin managed to snag an award at CeBIT. This happened yesterday, during the presentation of the Linux New Media Awards. Bitcoin received the award in the category “most innovative open-source project”.
, managing director of Bitcoin.de,was officially representing the Bitcoin Federation and the scene. He, gladly, accepted the award.
The award is handed out by two parties. Medialinx AG, a company that resides in Munich, is the world’s largest content provider when it comes to Linux and open-source projects in general. Together with CeBIT Open Source, they try to find suitable candidates for this reward. They look for projects, organizations, individuals and companies for their outstanding services to Linux and open-source. Once a year, they hand out this reward to the project they think did the best work for the open-source business.
Yesterday that once a year momen,t finally, arrived again. Moderator Michael Fellner gave the microphone to open-source expert Thomas Uhl. Uhl had a fine way of introducing the winner, saying this year’s awarded project was “a bit of IT and bit of cryptography. A damn lot of cryptography.” If there still was anyone left who had no clue about who or what was going to win, these doubts were taken away with Uhl’s next words. ”Some would say it’s a gamble, others that it was fraud. Some claimed that one could lose a lot of money and someone else said it was no money at all, while others said it was the future of the digital economy.”
After that second sentence, everyone knew what he was talking about. In normal circumstances, the award would be granted to Bitcoin’s original creator Satoshi Nakamoto. Obviously, it was impossible to do this, so Uhl presented the award to Flaskämper instead. He praised him for being the manager of Bitcoin.de and addressed him as the representative of the German Bitcoin scene.
Revolutionizing money
In his acceptance speech, Flaskämper explained that Bitcoin.de, the largest marketplace for the virtual currency in Europe, is doing really well. The exchange is healthy and free of problems as the ones Mt. Gox has been facing the past few months. Immediately after saying that, he expressed his desire to get a better infrastructure. It was his ending sentence that was the most inspirational: “Wikipedia has revolutionized the way we share knowledge, Twitter and Facebook redefined freedom of expression; Bitcoin will revolutionize the way we work with money.”
This kind of award is vital for Bitcoin’s acceptance. We focus too much on the bad news, while there are so many exciting, good things happening right under our noses.
For those that are interested, Linux Magazin promised to put up a stream of the ceremony on its website.
Christoph Marckx 14/03/2014 Bitcoin, Business, Events, News, Services
Posted 8 hours ago
Oliver Flasskämper accepts Bitcoin award
Oliver Flaßkämper accepted Bitcoin’s award at CeBIT 2014
CeBIT, one of the most important exhibitions about technology and innovations in the world, is going on this week. The German festival attracts lots of attention. It has several famous key speakers, countless exhibitions, expert panels, everything to make this an interesting week. And, of course, Bitcoin was a trending topic at CeBIT as well.
Award for Bitcoin
After being talk of the town at SXSW 2014, Bitcoin managed to snag an award at CeBIT. This happened yesterday, during the presentation of the Linux New Media Awards. Bitcoin received the award in the category “most innovative open-source project”.
, managing director of Bitcoin.de,was officially representing the Bitcoin Federation and the scene. He, gladly, accepted the award.
The award is handed out by two parties. Medialinx AG, a company that resides in Munich, is the world’s largest content provider when it comes to Linux and open-source projects in general. Together with CeBIT Open Source, they try to find suitable candidates for this reward. They look for projects, organizations, individuals and companies for their outstanding services to Linux and open-source. Once a year, they hand out this reward to the project they think did the best work for the open-source business.
Yesterday that once a year momen,t finally, arrived again. Moderator Michael Fellner gave the microphone to open-source expert Thomas Uhl. Uhl had a fine way of introducing the winner, saying this year’s awarded project was “a bit of IT and bit of cryptography. A damn lot of cryptography.” If there still was anyone left who had no clue about who or what was going to win, these doubts were taken away with Uhl’s next words. ”Some would say it’s a gamble, others that it was fraud. Some claimed that one could lose a lot of money and someone else said it was no money at all, while others said it was the future of the digital economy.”
After that second sentence, everyone knew what he was talking about. In normal circumstances, the award would be granted to Bitcoin’s original creator Satoshi Nakamoto. Obviously, it was impossible to do this, so Uhl presented the award to Flaskämper instead. He praised him for being the manager of Bitcoin.de and addressed him as the representative of the German Bitcoin scene.
Revolutionizing money
In his acceptance speech, Flaskämper explained that Bitcoin.de, the largest marketplace for the virtual currency in Europe, is doing really well. The exchange is healthy and free of problems as the ones Mt. Gox has been facing the past few months. Immediately after saying that, he expressed his desire to get a better infrastructure. It was his ending sentence that was the most inspirational: “Wikipedia has revolutionized the way we share knowledge, Twitter and Facebook redefined freedom of expression; Bitcoin will revolutionize the way we work with money.”
This kind of award is vital for Bitcoin’s acceptance. We focus too much on the bad news, while there are so many exciting, good things happening right under our noses.
For those that are interested, Linux Magazin promised to put up a stream of the ceremony on its website.
How Bitcoin Leads to Voluntary Government
Kyle Torpey 14/03/2014 Bitcoin, Bitcoin Regulation, Economics, News 1 Comment
Posted 11 hours ago
http://www.cryptocoinsnews.com/wp-content/uploads/2014/03/dontsteal_ronpaul-300x225.jpg
Bitcoin Voluntary Government
More people could view taxation theft when Bitcoin gives them a chance to opt-out.
While the Bitcoin community is usually willing to accept anyone with open arms and no political discrimination, the reality is that there is certainly a political aspect to the technology surrounding cryptocurrencies. The politics of Bitcoin are rather supportive of a more voluntary government, and there isn’t really any way to get around this issue. While bitcoins or other cryptocurrencies could definitely be used as the main form of currency to support basically any form of government, the difference with this type of money is that it requires permission from the people. This means that the increased popularity of Bitcoin does not mean that we’re entering an age where there is no government; however, some governments will find it more difficult to suppress the rights of certain individuals who do not wish to opt-into the law of the land.
Collecting Income Taxes
The main issue that some governments are going to face when it comes to Bitcoin or some other form of future cryptocurrency is that people can more easily hide their income and sources of revenue when they use this type of money. In most developed countries, a lot of the financial transactions in one’s daily life are basically hosted in the cloud. Edward Snowden famously stated that he had access to anyone’s email account when he was working on the NSA, which is one of the main issues with hosting private data in centralized cloud services. When you give your personal information, private messages, or financial activity over to a third-party, it’s important to realize that the company hosting the data and the government in that local jurisdiction also have access to that data. Many people in the United States already avoid taxation by working for cash under the table, but this form of tax evasion could explode when it’s also applied to transfers of value over the Internet. As new innovations in the cryptocurrency space are created to enhance financial privacy, the chances of getting caught are lowered dramatically. What’s going to happen when people are able to store value in a brain wallet for basically no cost as opposed to setting up a Swiss bank account? Bitcoin basically democratizes the ability to hide money from the taxman.
Checks on Government Spending from the People
As taxation becomes more voluntary over time, we could see a situation where people decide to opt-out of the system. When your options are hiding your financial activity and taxable income rather easily or handing over 30-50% of your money to a government that has policies you don’t agree with 90% of the time, finding a reason to pay taxes becomes difficult. More people view taxation as nothing more than theft on a yearly basis, largely thanks to the rise in popularity of certain political figures, such as Ron Paul and Daniel Hannan. In addition to a majority of the population not wanting to pay for endless wars, throwing people in jail for non-violent crimes, warrantless spying, and a litany of other issues found with modern governments, they may also decide to find their own solutions when it comes to helping the less fortunate gain access to basic necessities, such as food, healthcare, shelter, and education. It will be interesting to see how much government spending people in different countries are willing to accept when they actually have a choice when it comes to the amount of money they’re going to send the government.
Can the People Organize Their Own Solutions?
As government becomes more voluntary due to the prevalence of Bitcoin and other new technologies related to cryptography, it’s possible that the people will decide to find their own solutions for local issues. Just because the overall role of government could be largely diminished does not mean people aren’t going to find solutions for real issues that still exist. When you’re talking about the difference between government and locally organized communities, the differences between the two can become blurry rather quickly. Instead of national healthcare systems, could we see local communities organize their own distributed autonomous healthcare systems? Could someone create a fair autonomous organization for the distribution of welfare or unemployment insurance at a local level? In reality, how are you going to stop people from creating their own distributed autonomous governments by using platforms such as Ethereum, Open Transactions, and Bitcloud? At the end of the day, we may come across a situation where many of the basic functions of government are still in place. The only differences are that bureaucrats are going to be replaced by code and people will actually have a choice between different types of automated governments and societies. If the controllers of the current system are able to prevent free people from making their own decisions, then there’s always the idea of creating new, startup countries through seasteading.
Kyle Torpey 14/03/2014 Bitcoin, Bitcoin Regulation, Economics, News 1 Comment
Posted 11 hours ago
http://www.cryptocoinsnews.com/wp-content/uploads/2014/03/dontsteal_ronpaul-300x225.jpg
Bitcoin Voluntary Government
More people could view taxation theft when Bitcoin gives them a chance to opt-out.
While the Bitcoin community is usually willing to accept anyone with open arms and no political discrimination, the reality is that there is certainly a political aspect to the technology surrounding cryptocurrencies. The politics of Bitcoin are rather supportive of a more voluntary government, and there isn’t really any way to get around this issue. While bitcoins or other cryptocurrencies could definitely be used as the main form of currency to support basically any form of government, the difference with this type of money is that it requires permission from the people. This means that the increased popularity of Bitcoin does not mean that we’re entering an age where there is no government; however, some governments will find it more difficult to suppress the rights of certain individuals who do not wish to opt-into the law of the land.
Collecting Income Taxes
The main issue that some governments are going to face when it comes to Bitcoin or some other form of future cryptocurrency is that people can more easily hide their income and sources of revenue when they use this type of money. In most developed countries, a lot of the financial transactions in one’s daily life are basically hosted in the cloud. Edward Snowden famously stated that he had access to anyone’s email account when he was working on the NSA, which is one of the main issues with hosting private data in centralized cloud services. When you give your personal information, private messages, or financial activity over to a third-party, it’s important to realize that the company hosting the data and the government in that local jurisdiction also have access to that data. Many people in the United States already avoid taxation by working for cash under the table, but this form of tax evasion could explode when it’s also applied to transfers of value over the Internet. As new innovations in the cryptocurrency space are created to enhance financial privacy, the chances of getting caught are lowered dramatically. What’s going to happen when people are able to store value in a brain wallet for basically no cost as opposed to setting up a Swiss bank account? Bitcoin basically democratizes the ability to hide money from the taxman.
Checks on Government Spending from the People
As taxation becomes more voluntary over time, we could see a situation where people decide to opt-out of the system. When your options are hiding your financial activity and taxable income rather easily or handing over 30-50% of your money to a government that has policies you don’t agree with 90% of the time, finding a reason to pay taxes becomes difficult. More people view taxation as nothing more than theft on a yearly basis, largely thanks to the rise in popularity of certain political figures, such as Ron Paul and Daniel Hannan. In addition to a majority of the population not wanting to pay for endless wars, throwing people in jail for non-violent crimes, warrantless spying, and a litany of other issues found with modern governments, they may also decide to find their own solutions when it comes to helping the less fortunate gain access to basic necessities, such as food, healthcare, shelter, and education. It will be interesting to see how much government spending people in different countries are willing to accept when they actually have a choice when it comes to the amount of money they’re going to send the government.
Can the People Organize Their Own Solutions?
As government becomes more voluntary due to the prevalence of Bitcoin and other new technologies related to cryptography, it’s possible that the people will decide to find their own solutions for local issues. Just because the overall role of government could be largely diminished does not mean people aren’t going to find solutions for real issues that still exist. When you’re talking about the difference between government and locally organized communities, the differences between the two can become blurry rather quickly. Instead of national healthcare systems, could we see local communities organize their own distributed autonomous healthcare systems? Could someone create a fair autonomous organization for the distribution of welfare or unemployment insurance at a local level? In reality, how are you going to stop people from creating their own distributed autonomous governments by using platforms such as Ethereum, Open Transactions, and Bitcloud? At the end of the day, we may come across a situation where many of the basic functions of government are still in place. The only differences are that bureaucrats are going to be replaced by code and people will actually have a choice between different types of automated governments and societies. If the controllers of the current system are able to prevent free people from making their own decisions, then there’s always the idea of creating new, startup countries through seasteading.
Online storage vault for Bitcoins raises funds
Christoph Marckx 14/03/2014 Bitcoin, Bitcoin Exchanges, Business, News, Security, Services
Posted 12 hours ago
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo Ltd., a provider of secure online storage for Bitcoins, has raised $20 million in a first round of funding led by venture capital firm Benchmark.
Underground vaults and armed guards
Among the investors were Ribbit Capital — a Silicon Valley venture firm that invests in technologies for financial services, and Fortress Investment Group LLC (FIG) — a New York-based private-equity and hedge-fund manager. Wences Casares, Xapo’s founder and CEO, was thrilled by the amount of interest Xapo Ltd. gathered during the funding round. He confirmed the $20 million raise, but gave no further comment when asked about Xapo’s total valuation.
The cry for a safe and secure way to store Bitcoins has been going on for some time. Ever since the cryptocoin appeared, hackers and thieves have been looking for ways to steal Bitcoins. This has led to a growing industry of enterprises that focus on protecting investors’ coins. ”The security of Bitcoin holdings entrusted to online service providers came into focus following the bankruptcy last month of Mt. Gox. Xapo’s servers are stored in secret underground locations around the world, which are staffed by armed security guards.”, Casares said.
Casares founded Xapo little over two years ago. At that time, he was CEO of Lemon.com, a mobile-payments provider. Xapo’s mission was to provide secure storage vaults for Bitcoins. To facilitate that, Xapo offers web-based wallets, as well.
“Right now, Xapo already has several thousand accounts, including holders of large Bitcoin deposits such as hedge funds, venture capital funds, sovereign wealth funds and family offices.”, said Casares, who declined to comment on their identity.
“We have been talking to Wences about Bitcoin for a long time, and we think Xapo offers a unique wallet-with-vault service which is secure offline and online and, therefore, compelling for institutional as well as retail investors.”, said Matt Cohler, who led Benchmark’s investment in Xapo.
The reason Benchmark made an investment in Xapo was because Cohler himself owns Bitcoins and has been storing them with Xapo for some time. Xapo is Benchmark’s first public investment in a Bitcoin company.
As for that other investor, Ribbit Capital, we have to go back into time. Casares has been working with Micky Malka, Ribbit’s founder, for many years. They have started four financial-service companies together. On top of that, Ribbit is known to invest directly in Bitcoins, as well. Their holdings have been, obviously, stored with Xapo for a long time now.
Other competitors
As said before, there are several companies offering a similar service. One of Xapo’s main competitors is Elliptic Enterprises Ltd. This London-based Bitcoin vault is pretty new, having debuted in January 2014. James Smith, Elliptic’s CEO, claims his company can guarantee total safety towards its customers. He found an underwriter for insuring the company against any loss of Bitcoins via Lloyds of London Ltd.
While Smith had initially said Elliptic clients would be reimbursed in British pounds in the event of any loss, the company issued a statement yesterday after learning of Xapo to say that it will also compensate customers by purchasing Bitcoins at market rates using payouts in pounds.
Casares, Cohler and Malka said Xapo has no competitors offering similar services. It seems there are though.
Christoph Marckx 14/03/2014 Bitcoin, Bitcoin Exchanges, Business, News, Security, Services
Posted 12 hours ago
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo Ltd., a provider of secure online storage for Bitcoins, has raised $20 million in a first round of funding led by venture capital firm Benchmark.
Underground vaults and armed guards
Among the investors were Ribbit Capital — a Silicon Valley venture firm that invests in technologies for financial services, and Fortress Investment Group LLC (FIG) — a New York-based private-equity and hedge-fund manager. Wences Casares, Xapo’s founder and CEO, was thrilled by the amount of interest Xapo Ltd. gathered during the funding round. He confirmed the $20 million raise, but gave no further comment when asked about Xapo’s total valuation.
The cry for a safe and secure way to store Bitcoins has been going on for some time. Ever since the cryptocoin appeared, hackers and thieves have been looking for ways to steal Bitcoins. This has led to a growing industry of enterprises that focus on protecting investors’ coins. ”The security of Bitcoin holdings entrusted to online service providers came into focus following the bankruptcy last month of Mt. Gox. Xapo’s servers are stored in secret underground locations around the world, which are staffed by armed security guards.”, Casares said.
Casares founded Xapo little over two years ago. At that time, he was CEO of Lemon.com, a mobile-payments provider. Xapo’s mission was to provide secure storage vaults for Bitcoins. To facilitate that, Xapo offers web-based wallets, as well.
“Right now, Xapo already has several thousand accounts, including holders of large Bitcoin deposits such as hedge funds, venture capital funds, sovereign wealth funds and family offices.”, said Casares, who declined to comment on their identity.
“We have been talking to Wences about Bitcoin for a long time, and we think Xapo offers a unique wallet-with-vault service which is secure offline and online and, therefore, compelling for institutional as well as retail investors.”, said Matt Cohler, who led Benchmark’s investment in Xapo.
The reason Benchmark made an investment in Xapo was because Cohler himself owns Bitcoins and has been storing them with Xapo for some time. Xapo is Benchmark’s first public investment in a Bitcoin company.
As for that other investor, Ribbit Capital, we have to go back into time. Casares has been working with Micky Malka, Ribbit’s founder, for many years. They have started four financial-service companies together. On top of that, Ribbit is known to invest directly in Bitcoins, as well. Their holdings have been, obviously, stored with Xapo for a long time now.
Other competitors
As said before, there are several companies offering a similar service. One of Xapo’s main competitors is Elliptic Enterprises Ltd. This London-based Bitcoin vault is pretty new, having debuted in January 2014. James Smith, Elliptic’s CEO, claims his company can guarantee total safety towards its customers. He found an underwriter for insuring the company against any loss of Bitcoins via Lloyds of London Ltd.
While Smith had initially said Elliptic clients would be reimbursed in British pounds in the event of any loss, the company issued a statement yesterday after learning of Xapo to say that it will also compensate customers by purchasing Bitcoins at market rates using payouts in pounds.
Casares, Cohler and Malka said Xapo has no competitors offering similar services. It seems there are though.
Online storage vault for Bitcoins raises funds
Christoph Marckx 14/03/2014 Bitcoin, Bitcoin Exchanges, Business, News, Security, Services
Posted 12 hours ago
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo Ltd., a provider of secure online storage for Bitcoins, has raised $20 million in a first round of funding led by venture capital firm Benchmark.
Underground vaults and armed guards
Among the investors were Ribbit Capital — a Silicon Valley venture firm that invests in technologies for financial services, and Fortress Investment Group LLC (FIG) — a New York-based private-equity and hedge-fund manager. Wences Casares, Xapo’s founder and CEO, was thrilled by the amount of interest Xapo Ltd. gathered during the funding round. He confirmed the $20 million raise, but gave no further comment when asked about Xapo’s total valuation.
The cry for a safe and secure way to store Bitcoins has been going on for some time. Ever since the cryptocoin appeared, hackers and thieves have been looking for ways to steal Bitcoins. This has led to a growing industry of enterprises that focus on protecting investors’ coins. ”The security of Bitcoin holdings entrusted to online service providers came into focus following the bankruptcy last month of Mt. Gox. Xapo’s servers are stored in secret underground locations around the world, which are staffed by armed security guards.”, Casares said.
Casares founded Xapo little over two years ago. At that time, he was CEO of Lemon.com, a mobile-payments provider. Xapo’s mission was to provide secure storage vaults for Bitcoins. To facilitate that, Xapo offers web-based wallets, as well.
“Right now, Xapo already has several thousand accounts, including holders of large Bitcoin deposits such as hedge funds, venture capital funds, sovereign wealth funds and family offices.”, said Casares, who declined to comment on their identity.
“We have been talking to Wences about Bitcoin for a long time, and we think Xapo offers a unique wallet-with-vault service which is secure offline and online and, therefore, compelling for institutional as well as retail investors.”, said Matt Cohler, who led Benchmark’s investment in Xapo.
The reason Benchmark made an investment in Xapo was because Cohler himself owns Bitcoins and has been storing them with Xapo for some time. Xapo is Benchmark’s first public investment in a Bitcoin company.
As for that other investor, Ribbit Capital, we have to go back into time. Casares has been working with Micky Malka, Ribbit’s founder, for many years. They have started four financial-service companies together. On top of that, Ribbit is known to invest directly in Bitcoins, as well. Their holdings have been, obviously, stored with Xapo for a long time now.
Other competitors
As said before, there are several companies offering a similar service. One of Xapo’s main competitors is Elliptic Enterprises Ltd. This London-based Bitcoin vault is pretty new, having debuted in January 2014. James Smith, Elliptic’s CEO, claims his company can guarantee total safety towards its customers. He found an underwriter for insuring the company against any loss of Bitcoins via Lloyds of London Ltd.
While Smith had initially said Elliptic clients would be reimbursed in British pounds in the event of any loss, the company issued a statement yesterday after learning of Xapo to say that it will also compensate customers by purchasing Bitcoins at market rates using payouts in pounds.
Casares, Cohler and Malka said Xapo has no competitors offering similar services. It seems there are though.
Christoph Marckx 14/03/2014 Bitcoin, Bitcoin Exchanges, Business, News, Security, Services
Posted 12 hours ago
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo CEO Casares believes his vault is the safest way to store Bitcoins online
Xapo Ltd., a provider of secure online storage for Bitcoins, has raised $20 million in a first round of funding led by venture capital firm Benchmark.
Underground vaults and armed guards
Among the investors were Ribbit Capital — a Silicon Valley venture firm that invests in technologies for financial services, and Fortress Investment Group LLC (FIG) — a New York-based private-equity and hedge-fund manager. Wences Casares, Xapo’s founder and CEO, was thrilled by the amount of interest Xapo Ltd. gathered during the funding round. He confirmed the $20 million raise, but gave no further comment when asked about Xapo’s total valuation.
The cry for a safe and secure way to store Bitcoins has been going on for some time. Ever since the cryptocoin appeared, hackers and thieves have been looking for ways to steal Bitcoins. This has led to a growing industry of enterprises that focus on protecting investors’ coins. ”The security of Bitcoin holdings entrusted to online service providers came into focus following the bankruptcy last month of Mt. Gox. Xapo’s servers are stored in secret underground locations around the world, which are staffed by armed security guards.”, Casares said.
Casares founded Xapo little over two years ago. At that time, he was CEO of Lemon.com, a mobile-payments provider. Xapo’s mission was to provide secure storage vaults for Bitcoins. To facilitate that, Xapo offers web-based wallets, as well.
“Right now, Xapo already has several thousand accounts, including holders of large Bitcoin deposits such as hedge funds, venture capital funds, sovereign wealth funds and family offices.”, said Casares, who declined to comment on their identity.
“We have been talking to Wences about Bitcoin for a long time, and we think Xapo offers a unique wallet-with-vault service which is secure offline and online and, therefore, compelling for institutional as well as retail investors.”, said Matt Cohler, who led Benchmark’s investment in Xapo.
The reason Benchmark made an investment in Xapo was because Cohler himself owns Bitcoins and has been storing them with Xapo for some time. Xapo is Benchmark’s first public investment in a Bitcoin company.
As for that other investor, Ribbit Capital, we have to go back into time. Casares has been working with Micky Malka, Ribbit’s founder, for many years. They have started four financial-service companies together. On top of that, Ribbit is known to invest directly in Bitcoins, as well. Their holdings have been, obviously, stored with Xapo for a long time now.
Other competitors
As said before, there are several companies offering a similar service. One of Xapo’s main competitors is Elliptic Enterprises Ltd. This London-based Bitcoin vault is pretty new, having debuted in January 2014. James Smith, Elliptic’s CEO, claims his company can guarantee total safety towards its customers. He found an underwriter for insuring the company against any loss of Bitcoins via Lloyds of London Ltd.
While Smith had initially said Elliptic clients would be reimbursed in British pounds in the event of any loss, the company issued a statement yesterday after learning of Xapo to say that it will also compensate customers by purchasing Bitcoins at market rates using payouts in pounds.
Casares, Cohler and Malka said Xapo has no competitors offering similar services. It seems there are though.
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