London’s First Bitcoin ATM Launches in Trendy Shoreditch Bar
Dan Palmer | Published on March 4, 2014 at 18:12 GMT | Bitcoin ATM, News
In just a few weeks, the options have doubled for people in London who want to buy their bitcoin instantly with cash, rather than via an online transaction and all the proof of ID/bank payment rigmarole that entails.
If you hadn’t guessed, those options have gone from just one to two, but the speed at which they have appeared is a sign that bitcoin is increasingly being seen as a viable business option in the UK.
First to provide a walk-in service for bitcoin purchases was Azteco, London’s very first BTC voucher shop, which opened on 17th February in the east of the capital.
And now, less than a mile away, London’s very first bitcoin ATM machine has begun pinging digital currency to customers’ wallets at the trendy Old Shoreditch Station cafe.
Arts and coins
The cafe – as well as exhibitions, events and a shop – is operated by Jaguar Shoes, an arts collective that has been accepting bitcoin payments for its products since July last year.
The ATM takes their bitcoin operations to a new level, and is owned and run by Future Coins, a London-based startup. Joel Raziel, entrepreneur and director of Future Coins told CoinDesk:
“I was intrigued when I first saw a bitcoin ATM on display at a conference and was shocked to find that none had appeared in London. I contacted the manufacture, Lammasu, who told me that they had not received any orders from the UK. It was at this point that I started to cost up the project and move forwards.”
Setting up shop
The decision by the UK tax authority, HMRC, to classify bitcoins as VAT exempt was announced on the day Future Coins installed the ATM.
“This couldn’t have come at a better time, said Raziel. “We could have faced major difficulties otherwise, so I suppose we took quite a risk in this sense.”
There is a limit of £1,000 for transactions at the ATM and no ID is required, unlike some ATMs in other countries.
Bitcoin ATM London
Future Coins does not use an exchange partner at present, but the ATM manufacturer will be rolling out this option soon, Raziel said. “For the time being we are having to preload the machine with coins, which puts us at risk of currency fluctuations.”
Because of this, he adds, it will cost you an 8% commission to use the ATM currently.
“We will lower this once we have linked the ATM to an exchange, but in the mean time we have to protect ourselves from fluctuations.”
So novel is the bitcoin ATM in the UK, that its second customer travelled over 200 miles to use it. “We were so honoured to have him with us,” Raziel said, “we treated him to lunch (paid for with bitcoin).”
Rivals’ arrival
Future Coins may have won the title of ‘first bitcoin ATM in London’, but it will probably not have the playing field to itself for long.
Other companies have plans for similar ATMs in the capital including Global Bitcoin ATM Ltd and Satoshipoint Ltd.
Both companies have machines on order and had hoped to be the first to set up their trading business on London turf.
First or not, the city is a very big place and there is plenty of room for more ATM outlets to provide visitors and locals alike easy access to the advantages that bitcoin brings.
Topic: BITCOIN NEWS EVRYDAY! From multiple sources. - page 19. (Read 51272 times)
$1 Million Up for Grabs at Texas Bitcoin Conference Hackathon
Nermin Hajdarbegovic | Published on March 4, 2014 at 21:23 GMT | Events, Investors, News, Technology
The lucky winners of the upcoming Texas Bitcoin Conference Hackathon could walk away with up to $1m thanks to David Johnston, CEO of Engine, a personal information services startup.
While it might sound like a very generous gesture on Johnston’s part, he views it as a rather prudent investment instead.
The Hackathon will be held on 5th – 6th March in Austin, Texas, with the CEO taking to reddit to explain his plan in an AMA. There was no shortage of questions – after all, we are talking about a potentially life-changing sum of money.
Kickstarter-style fundraiser
Instead of simply giving the prize money away with no strings attached, Johnston wants to award it to the top four projects that emerge out of the hackathon.
He explained:
“Specifically I expect that the winning projects will hold open Kickstarter-style fundraisers after they get a little further down the road and I’ll commit to contributing at least $250,000 to each of their Kickstarter efforts.”
Speaking of strings attached, Johnston clearly states that all projects must be open source, have their own token, use a decentralized block chain (preferably the Bitcoin block chain) and feature a consensus mechanism. Full details are available via the official hackathon page.
Johnston points out that he accumulated his wealth by working “100-hour weeks for 10 years” and by investing in bitcoin in the good-old days. He argues that bitcoin has pioneered a new model for developing technology, as outlined in his decentralized applications whitepaper.
What is Johnston looking for?
Johnston says he is interested in projects that use the bitcoin model of a decentralized application, but that don’t compete with the features of bitcoin. He is not interested in altcoins and alternative block chains.
“Let me give an example of what I am interested in. If you came to me with a project and said: ‘It’s basically Dropbox, but people can pay in bitcoins,’ I would have no interest because one day soon Dropbox will start taking BTC and your advantage disappears.”
“If you came to me with a project and said: ‘This protocol pays people Storage Coins to contribute their extra hard drive space to the cloud and we have a cool Proof of Storage mechanism and its all open source and we store the records in the Bitcoin block chain,’ then I’d be highly interested,” he explains.
Johnston points out that it’s all about the difference between simply accepting bitcoins and building something new using bitcoin technology.
He says he expects a billion people to be using bitcoin in the next five years, but he adds that most of them simply won’t know it anymore than billions of people that use HTTP on a daily basis do.
Judging by the AMA, Johnston isn’t your run-of-the-mill angel investor: he comes across as a real enthusiast committed to the development of bitcoin.
He says he is looking forward to the launch of the Master Protocol Distributed Exchange, watching developments at Bitshares, writing an analysis of Ethereum for BitAngels, talking to the Dark Wallet team and just keeping track of digital currency developments as they happen.
Nermin Hajdarbegovic | Published on March 4, 2014 at 21:23 GMT | Events, Investors, News, Technology
The lucky winners of the upcoming Texas Bitcoin Conference Hackathon could walk away with up to $1m thanks to David Johnston, CEO of Engine, a personal information services startup.
While it might sound like a very generous gesture on Johnston’s part, he views it as a rather prudent investment instead.
The Hackathon will be held on 5th – 6th March in Austin, Texas, with the CEO taking to reddit to explain his plan in an AMA. There was no shortage of questions – after all, we are talking about a potentially life-changing sum of money.
Kickstarter-style fundraiser
Instead of simply giving the prize money away with no strings attached, Johnston wants to award it to the top four projects that emerge out of the hackathon.
He explained:
“Specifically I expect that the winning projects will hold open Kickstarter-style fundraisers after they get a little further down the road and I’ll commit to contributing at least $250,000 to each of their Kickstarter efforts.”
Speaking of strings attached, Johnston clearly states that all projects must be open source, have their own token, use a decentralized block chain (preferably the Bitcoin block chain) and feature a consensus mechanism. Full details are available via the official hackathon page.
Johnston points out that he accumulated his wealth by working “100-hour weeks for 10 years” and by investing in bitcoin in the good-old days. He argues that bitcoin has pioneered a new model for developing technology, as outlined in his decentralized applications whitepaper.
What is Johnston looking for?
Johnston says he is interested in projects that use the bitcoin model of a decentralized application, but that don’t compete with the features of bitcoin. He is not interested in altcoins and alternative block chains.
“Let me give an example of what I am interested in. If you came to me with a project and said: ‘It’s basically Dropbox, but people can pay in bitcoins,’ I would have no interest because one day soon Dropbox will start taking BTC and your advantage disappears.”
“If you came to me with a project and said: ‘This protocol pays people Storage Coins to contribute their extra hard drive space to the cloud and we have a cool Proof of Storage mechanism and its all open source and we store the records in the Bitcoin block chain,’ then I’d be highly interested,” he explains.
Johnston points out that it’s all about the difference between simply accepting bitcoins and building something new using bitcoin technology.
He says he expects a billion people to be using bitcoin in the next five years, but he adds that most of them simply won’t know it anymore than billions of people that use HTTP on a daily basis do.
Judging by the AMA, Johnston isn’t your run-of-the-mill angel investor: he comes across as a real enthusiast committed to the development of bitcoin.
He says he is looking forward to the launch of the Master Protocol Distributed Exchange, watching developments at Bitshares, writing an analysis of Ethereum for BitAngels, talking to the Dark Wallet team and just keeping track of digital currency developments as they happen.
Tinkercoin Will Sell You $20 in Bitcoin – But Only Once
Danny Bradbury (@dannybradbury) | Published on March 4, 2014 at 15:00 GMT | Companies, News, Startups, US & Canada
A Canadian company is selling bitcoins via credit card – but it’ll only sell you $20-worth, and it’ll only do it once.
Founded back in February 2012, Ontario-based Tinkercoin has only opened its service today. Initially serving North America, it is focusing on the market for new bitcoin users who don’t have any idea how to set themselves up with the new currency.
Co-founder Gareth MacLeod explains that the team kept encountering friends who had heard about the digital currency, but were put off by traditional exchanges with their know-your-client rules. He said:
“It’s designed for someone who has heard of bitcoin and it’s in their head, but they never took the plunge. Or maybe they did, but then [incumbent Canadian bitcoin exchange] Virtex asked them for a utility bill.”
Instead, the developers decided to create a near-zero effort service for users. They provide a credit card number, sign up for an account, and nominate a wallet.
Tinkercoin lets users nominate their own wallet, but also offers to set up a Coinbase one for them. They make a payment, and their coins drop into the wallet. Tinkercoin only sells $20 of bitcoins, and it will only make one sale per customer.
No regulatory worries
“It’s my job to keep tabs on [the] regulatory environment. There’s almost no future in which selling $20 of bitcoins to someone will label you as any kind of significant money transfer businesses,” said MacLeod, explaining how he expects to fly under the regulators’ radar in both the US and Canada with his service.
Money transmission licenses simply don’t cover firms dealing at his level, he suggests. “In the US, it starts at $1,000 per person per day. We sell $20 to one person, ever.” Once a person has bought their $20 of bitcoins, they’ll have to go elsewhere.
For this reason, he is equally unflustered by recent comments from Canadian finance minister Jim Flaherty about his plans to regulate bitcoin in Tinkercoin’s home country.
This seems to go against most online business models, which focus on customer retention rather than customer acquisition, which is often a high-cost activity. But there is no shortage of willing users, argues MacLeod.
“I have 25 friends off the top of my head who think that bitcoin is interesting but they don’t know where to start. We’re not worried that there’s gonna be any shortage of new bitcoin users in the next five years. Bank of America said that there were 1 million total bitcoin users in North America right now, so there are still 329 million left to go. We’re happy with that for now.”
The firm’s fees are relatively high. Most KYC exchanges will service a customer’s bitcoin-buying needs for roughly a 3% cut. Tinkercoin takes a flat $5 fee, so customers hand over $25 to get their $20 of coins.
That’s a whopping 25% fee for the service, which prices itself based on Bitstamp’s exchange rate. “We view it as a flat fee for the super-easy user experience,” he said.
However, MacLeod says that a lot of the firm’s resources went on securing a credit card payment processor willing to work with a bitcoin company (more on that here). The costs of dealing with the processor are “extraordinarily expensive”, he said, reducing his margin to around 5-6%.
“There are 1 million bitcoin users in North America right now, so there are still 329 million left to go.”
Tinkercoin is working with at least one credit card fraud prevention service provider to help it reduce the risk of credit card fraud, says MacLeod, who spent a short stint as a software engineer specialising in security at Facebook.
Measures include matching the country associated with a user’s IP address against the issuing country of the card being used, for example.
This would be a straightforward high-volume, low-value business if all the firm was doing was chewing through new users. However, there’s also another facet: customers have to sign up for an account, which means that the firm will have their email address, potentially turning the business into a large bitcoin-focused list-building operation. The service gathers your email address by requiring a connection with your Facebook account.
Brokerage service
MacLeod says that options open to Tinkercoin in the future include becoming a more fully-featured brokerage service, like BTCQuick.
That service, which also offers credit or debit card-based sales (but without the single purchase constraint), has 26,000 users. As long ago as October last year, it showed CoinDesk documents indicating that it had hit $2m in sales. BTCQuick follows anti-money laundering practices.
Tinkercoin may find it competing with ATM machines that are opening (and temporarily closing) across the country, although MacLeod says that they serve slightly different markets.
In any case, “a rising tide raises all ships,” he says. Another competitor could be QuickBT, another business based north of the border, which sells bitcoin via Interac, Canada’s online payments network. The service, built largely on Python and hosted on Heroku, launched today.
Danny Bradbury (@dannybradbury) | Published on March 4, 2014 at 15:00 GMT | Companies, News, Startups, US & Canada
A Canadian company is selling bitcoins via credit card – but it’ll only sell you $20-worth, and it’ll only do it once.
Founded back in February 2012, Ontario-based Tinkercoin has only opened its service today. Initially serving North America, it is focusing on the market for new bitcoin users who don’t have any idea how to set themselves up with the new currency.
Co-founder Gareth MacLeod explains that the team kept encountering friends who had heard about the digital currency, but were put off by traditional exchanges with their know-your-client rules. He said:
“It’s designed for someone who has heard of bitcoin and it’s in their head, but they never took the plunge. Or maybe they did, but then [incumbent Canadian bitcoin exchange] Virtex asked them for a utility bill.”
Instead, the developers decided to create a near-zero effort service for users. They provide a credit card number, sign up for an account, and nominate a wallet.
Tinkercoin lets users nominate their own wallet, but also offers to set up a Coinbase one for them. They make a payment, and their coins drop into the wallet. Tinkercoin only sells $20 of bitcoins, and it will only make one sale per customer.
No regulatory worries
“It’s my job to keep tabs on [the] regulatory environment. There’s almost no future in which selling $20 of bitcoins to someone will label you as any kind of significant money transfer businesses,” said MacLeod, explaining how he expects to fly under the regulators’ radar in both the US and Canada with his service.
Money transmission licenses simply don’t cover firms dealing at his level, he suggests. “In the US, it starts at $1,000 per person per day. We sell $20 to one person, ever.” Once a person has bought their $20 of bitcoins, they’ll have to go elsewhere.
For this reason, he is equally unflustered by recent comments from Canadian finance minister Jim Flaherty about his plans to regulate bitcoin in Tinkercoin’s home country.
This seems to go against most online business models, which focus on customer retention rather than customer acquisition, which is often a high-cost activity. But there is no shortage of willing users, argues MacLeod.
“I have 25 friends off the top of my head who think that bitcoin is interesting but they don’t know where to start. We’re not worried that there’s gonna be any shortage of new bitcoin users in the next five years. Bank of America said that there were 1 million total bitcoin users in North America right now, so there are still 329 million left to go. We’re happy with that for now.”
The firm’s fees are relatively high. Most KYC exchanges will service a customer’s bitcoin-buying needs for roughly a 3% cut. Tinkercoin takes a flat $5 fee, so customers hand over $25 to get their $20 of coins.
That’s a whopping 25% fee for the service, which prices itself based on Bitstamp’s exchange rate. “We view it as a flat fee for the super-easy user experience,” he said.
However, MacLeod says that a lot of the firm’s resources went on securing a credit card payment processor willing to work with a bitcoin company (more on that here). The costs of dealing with the processor are “extraordinarily expensive”, he said, reducing his margin to around 5-6%.
“There are 1 million bitcoin users in North America right now, so there are still 329 million left to go.”
Tinkercoin is working with at least one credit card fraud prevention service provider to help it reduce the risk of credit card fraud, says MacLeod, who spent a short stint as a software engineer specialising in security at Facebook.
Measures include matching the country associated with a user’s IP address against the issuing country of the card being used, for example.
This would be a straightforward high-volume, low-value business if all the firm was doing was chewing through new users. However, there’s also another facet: customers have to sign up for an account, which means that the firm will have their email address, potentially turning the business into a large bitcoin-focused list-building operation. The service gathers your email address by requiring a connection with your Facebook account.
Brokerage service
MacLeod says that options open to Tinkercoin in the future include becoming a more fully-featured brokerage service, like BTCQuick.
That service, which also offers credit or debit card-based sales (but without the single purchase constraint), has 26,000 users. As long ago as October last year, it showed CoinDesk documents indicating that it had hit $2m in sales. BTCQuick follows anti-money laundering practices.
Tinkercoin may find it competing with ATM machines that are opening (and temporarily closing) across the country, although MacLeod says that they serve slightly different markets.
In any case, “a rising tide raises all ships,” he says. Another competitor could be QuickBT, another business based north of the border, which sells bitcoin via Interac, Canada’s online payments network. The service, built largely on Python and hosted on Heroku, launched today.
Bitcoin Bank Flexcoin to Close After $600,000 Bitcoin Theft
Pete Rizzo (@pete_rizzo_) | Published on March 4, 2014 at 16:07 GMT | Companies, Crime, News
Alberta-based bitcoin storage specialist Flexcoin has announced that it will shut down following an attack and subsequent robbery that saw cybercriminals abscond with 896 BTC (roughly $600,000 at press time) stored in the company’s hot wallets.
Flexcoin, which styled itself as the “first bitcoin bank”, though it was not legally such an entity, took to its homepage to announce the theft and closure.
The statement reads:
“As Flexcoin does not have the resources, assets or otherwise to come back from this loss, we are closing our doors immediately.”
Flexcoin also provided the wallet addresses of the alleged hackers. The largest wallet of which received 592.1 BTC from the breach, while the smaller of the two held at one point 304 BTC supposedly taken from the website.
The entirety of the two accounts have since been withdrawn in other transactions. Neither wallet seems to have any recorded transactions prior to 2nd March.
Remaining funds
Following the announcement of the closure, customers who held bitcoins in Flexcoin’s cold storage accounts were assured that they would be able to retrieve the funds. Individuals who contact Flexcoin will be asked to provide identification, and will have their coins transferred from the bank free of charge.
The company had last week posted a tweet regarding the safety of their bitcoin storage practices.
Notably, the wording provided indicated that the attack differed from the Mt. Gox assault, which alleged its cold storage was “wiped out due to a leak in the hot wallet”.
About Flexcoin
Flexcoin aimed to differentiate itself from other electronic wallet providers by incentivizing users for keeping their bitcoin balances on the site.
The company monetized by charging employees 0.02 BTC or 1% of transaction amounts for funds transferred out of cold storage, and 0.01 BTC or one half of 1% for funds transferred to cold storage.
Flexcoin to bitcoin transactions were also subject to charges.
The announcement confirms fears that many in the bitcoin community have long harbored toward Flexcoin and other bitcoin wallet storage services.
As early as two years ago, Flexcoin was singled out as a service that many argued would not be able to protect consumer investments due to limitations in its design.
Pete Rizzo (@pete_rizzo_) | Published on March 4, 2014 at 16:07 GMT | Companies, Crime, News
Alberta-based bitcoin storage specialist Flexcoin has announced that it will shut down following an attack and subsequent robbery that saw cybercriminals abscond with 896 BTC (roughly $600,000 at press time) stored in the company’s hot wallets.
Flexcoin, which styled itself as the “first bitcoin bank”, though it was not legally such an entity, took to its homepage to announce the theft and closure.
The statement reads:
“As Flexcoin does not have the resources, assets or otherwise to come back from this loss, we are closing our doors immediately.”
Flexcoin also provided the wallet addresses of the alleged hackers. The largest wallet of which received 592.1 BTC from the breach, while the smaller of the two held at one point 304 BTC supposedly taken from the website.
The entirety of the two accounts have since been withdrawn in other transactions. Neither wallet seems to have any recorded transactions prior to 2nd March.
Remaining funds
Following the announcement of the closure, customers who held bitcoins in Flexcoin’s cold storage accounts were assured that they would be able to retrieve the funds. Individuals who contact Flexcoin will be asked to provide identification, and will have their coins transferred from the bank free of charge.
The company had last week posted a tweet regarding the safety of their bitcoin storage practices.
Notably, the wording provided indicated that the attack differed from the Mt. Gox assault, which alleged its cold storage was “wiped out due to a leak in the hot wallet”.
About Flexcoin
Flexcoin aimed to differentiate itself from other electronic wallet providers by incentivizing users for keeping their bitcoin balances on the site.
The company monetized by charging employees 0.02 BTC or 1% of transaction amounts for funds transferred out of cold storage, and 0.01 BTC or one half of 1% for funds transferred to cold storage.
Flexcoin to bitcoin transactions were also subject to charges.
The announcement confirms fears that many in the bitcoin community have long harbored toward Flexcoin and other bitcoin wallet storage services.
As early as two years ago, Flexcoin was singled out as a service that many argued would not be able to protect consumer investments due to limitations in its design.
Hello, Hello, anybody home.. MTGOX officially dead with our bitcoins hidden in cold wallet in the basement!!!
Get the K9 to sniff bitcoin and be able to trace find it for us....
Get the K9 to sniff bitcoin and be able to trace find it for us....
he Non-Expert’s Guide to the Mt. Gox Fiasco
Arianna Simpson (@ariannasimpson) | Published on March 4, 2014 at 12:13 GMT | Analysis, Mt. Gox
After being bombarded with questions about Mt. Gox, bitcoin blogger Arianna Simpson decided to explain “all this hot wallet cold storage transaction malleability business” in layman’s terms, once and for all. Read on to get the lowdown on the bitcoin story of the moment.
First, a bit of context:
Created in 2010, Mt. Gox is (was?) based in Japan and led by CEO Mark Karpeles. It started out as one of the earliest and most respected bitcoin exchanges, and quickly grew to be the largest. Since then, it has lost a significant degree of trust.
Mt. Gox has had issues with withdraws, crashes etc in the past, and most recently declared that transaction malleability, “a bug in bitcoin”, was forcing them to suspend withdrawals. Then, in a further twist, Mt. Gox bottomed out with the news that it appears to have lost over seven hundred thousand bitcoins, most of which were customer funds.
Mt. Gox closed for trading, and it is unclear if and when it will ever reopen. A crisis strategy document attributed the bitcoins’ disappearance from their location in cold storage to a leak in the hot wallet.
What’s transaction malleability?
hack keysWhenever a bitcoin transaction occurs, it is recorded in the public ledger, which is a list of all bitcoin transactions that have ever taken place.
Each of these is identified by a transaction ID (TXID). At a high level, transaction malleability describes the fact that signed transactions can be altered slightly in ways that end up changing the TXID, without invalidating the signature.
The bitcoin community has known about this since 2011, and there are legitimate reasons for which transactions could need to be modified, so it’s not necessarily a problem. Where it did become a problem, however, was where Mt. Gox was using TXIDs (which, to reiterate, are known to be modifiable) as the definitive way to track transactions.
Rather, transaction IDs were designed as an easy reference for support services. “[Processors] will issue this transaction ID, and if you have an issue with the transaction, you can call the support desk and tell them if the transaction didn’t arrive.”
The support desk at Mt. Gox repeatedly reissued disbursements to customers who reported that they hadn’t received funds from transactions linked to a modified TXID.
Mt. Gox had no way of verifying the transactions, and the fact that they issued the disbursements regardless apparently resulted in Mt. Gox’s internal records becoming more and more divergent from the public record of transactions.
What are hot wallets and cold storage?
In order to spend bitcoins, you need access to both a public and private key. The public key is your address, where you can receive bitcoin, and the private key is something like a password that allows you to spend the bitcoins.
The practice of storing bitcoin offline, not on the web server or on any computer, is known as keeping them in cold storage. This is exactly what it sounds like – printing your private keys and storing them in a physical wallet, much as you would do with cash.
Wallet
It is done in the interest of safety, so that if a malicious hacker gains access to your account, they wouldn’t be able to run off with all your bitcoins.
There are various ways to keep your funds in cold storage, including paper wallets. It’s a wise idea to keep the majority of your bitcoin in cold storage, which is why (most!) bitcoin exchanges also operate this way.
The website (exchange) will hold a certain number of bitcoin in hot storage, in an online wallet, so that it can be withdrawn instantly by people who hold accounts with that exchange.
The majority of the reserve will be kept offline in cold storage. Bitcoin exchanges keep all funds, including the amount in cold storage, on hand and do not loan funds out at any time.
So, what’s the problem?
Ostensibly, in order to avoid a “run on the bank” type scenario in which distrustful customers would withdraw from Mt. Gox en masse, the exchange halted withdrawals on February 7th.
This is not a completely unexpected development. Despite retaining a large percentage of the world’s bitcoin supply in customer accounts, Mt. Gox has been losing credibility in the bitcoin ecosystem for some time.
In November of 2013, many customers were already having issues withdrawing their funds, experiencing delays of weeks or even months.
The situation continued to compound until the full stop in withdrawals, and culminated in Mt. Gox’s site going white on February 24th. They also wiped their twitter feed, and issued a statement that reads,
Dear MtGox Customers,
In light of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.
Best regards,
MtGox Team
Is Mt. Gox guilty?
The simple fact that it took Mt. Gox several years to realize that they were missing 744,408 bitcoins, the equivalent of 6% of the world’s supply of bitcoin, worth 365 million dollars is mind-boggling.
In their crisis strategy document, they state that the theft went unnoticed for years. It is challenging to imagine ineptitude at such a grandiose scale, so the logical alternative is that they had been aware of the issue for a long time and voluntarily chose to hide this information from their investors and the public at large.
America police bitcoin
The document also states that “The cold storage has been wiped out due to a leak in the hot wallet.” If you’re doing it right, the cold storage should not be accessible via the hot wallet, leak or no leak. That’s the whole point of separating the two.
As Andreas M. Antonopoulos, Chief Security Officer of Blockchain.info and respected bitcoin entrepreneur and developer aptly put it, “Cold storage” does not “leak.” If Mt. Gox was truly robbed, it is genuinely an astounding case of carelessness in storing and managing funds on their part.
I have no particular evidence to indicate whether this was actually dishonesty or pure incompetence, and as such will refrain from comment here. Assuming the crisis strategy document is correct, and Karpeles and the rest of Mt. Gox is honest, the funds were stolen through an external attack, the details around which remain murky at best.
At the very least, the incident illustrates a formidable lack of attention to detail and a fundamental ignorance of the basic principles of accounting (these can be succinctly summarized as: 1. inputs must be ≥ outputs, 2. don’t lose everyone’s money).
What now?
I have deep sympathy for those who lost money through Mt. Gox. For the Bitcoin ecosystem as a whole, however, it’s likely to be a positive development.
Mt. Gox had been destabilizing the price and causing unrest in the market for some time. Evidence of this is the remarkable stability in bitcoin prices following the (at least temporary) demise of the exchange.
I hope I am not too naive about the implications; I fully expect there will be significant volatility in the coming months. I’m still bullish on the long term potential of bitcoin, however. Mt. Gox might be dead, but the network as a whole is finally free to move forward.
This article originally appeared on Arianna’s blog, and has been republished here with permission.
Arianna Simpson (@ariannasimpson) | Published on March 4, 2014 at 12:13 GMT | Analysis, Mt. Gox
After being bombarded with questions about Mt. Gox, bitcoin blogger Arianna Simpson decided to explain “all this hot wallet cold storage transaction malleability business” in layman’s terms, once and for all. Read on to get the lowdown on the bitcoin story of the moment.
First, a bit of context:
Created in 2010, Mt. Gox is (was?) based in Japan and led by CEO Mark Karpeles. It started out as one of the earliest and most respected bitcoin exchanges, and quickly grew to be the largest. Since then, it has lost a significant degree of trust.
Mt. Gox has had issues with withdraws, crashes etc in the past, and most recently declared that transaction malleability, “a bug in bitcoin”, was forcing them to suspend withdrawals. Then, in a further twist, Mt. Gox bottomed out with the news that it appears to have lost over seven hundred thousand bitcoins, most of which were customer funds.
Mt. Gox closed for trading, and it is unclear if and when it will ever reopen. A crisis strategy document attributed the bitcoins’ disappearance from their location in cold storage to a leak in the hot wallet.
What’s transaction malleability?
hack keysWhenever a bitcoin transaction occurs, it is recorded in the public ledger, which is a list of all bitcoin transactions that have ever taken place.
Each of these is identified by a transaction ID (TXID). At a high level, transaction malleability describes the fact that signed transactions can be altered slightly in ways that end up changing the TXID, without invalidating the signature.
The bitcoin community has known about this since 2011, and there are legitimate reasons for which transactions could need to be modified, so it’s not necessarily a problem. Where it did become a problem, however, was where Mt. Gox was using TXIDs (which, to reiterate, are known to be modifiable) as the definitive way to track transactions.
Rather, transaction IDs were designed as an easy reference for support services. “[Processors] will issue this transaction ID, and if you have an issue with the transaction, you can call the support desk and tell them if the transaction didn’t arrive.”
The support desk at Mt. Gox repeatedly reissued disbursements to customers who reported that they hadn’t received funds from transactions linked to a modified TXID.
Mt. Gox had no way of verifying the transactions, and the fact that they issued the disbursements regardless apparently resulted in Mt. Gox’s internal records becoming more and more divergent from the public record of transactions.
What are hot wallets and cold storage?
In order to spend bitcoins, you need access to both a public and private key. The public key is your address, where you can receive bitcoin, and the private key is something like a password that allows you to spend the bitcoins.
The practice of storing bitcoin offline, not on the web server or on any computer, is known as keeping them in cold storage. This is exactly what it sounds like – printing your private keys and storing them in a physical wallet, much as you would do with cash.
Wallet
It is done in the interest of safety, so that if a malicious hacker gains access to your account, they wouldn’t be able to run off with all your bitcoins.
There are various ways to keep your funds in cold storage, including paper wallets. It’s a wise idea to keep the majority of your bitcoin in cold storage, which is why (most!) bitcoin exchanges also operate this way.
The website (exchange) will hold a certain number of bitcoin in hot storage, in an online wallet, so that it can be withdrawn instantly by people who hold accounts with that exchange.
The majority of the reserve will be kept offline in cold storage. Bitcoin exchanges keep all funds, including the amount in cold storage, on hand and do not loan funds out at any time.
So, what’s the problem?
Ostensibly, in order to avoid a “run on the bank” type scenario in which distrustful customers would withdraw from Mt. Gox en masse, the exchange halted withdrawals on February 7th.
This is not a completely unexpected development. Despite retaining a large percentage of the world’s bitcoin supply in customer accounts, Mt. Gox has been losing credibility in the bitcoin ecosystem for some time.
In November of 2013, many customers were already having issues withdrawing their funds, experiencing delays of weeks or even months.
The situation continued to compound until the full stop in withdrawals, and culminated in Mt. Gox’s site going white on February 24th. They also wiped their twitter feed, and issued a statement that reads,
Dear MtGox Customers,
In light of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.
Best regards,
MtGox Team
Is Mt. Gox guilty?
The simple fact that it took Mt. Gox several years to realize that they were missing 744,408 bitcoins, the equivalent of 6% of the world’s supply of bitcoin, worth 365 million dollars is mind-boggling.
In their crisis strategy document, they state that the theft went unnoticed for years. It is challenging to imagine ineptitude at such a grandiose scale, so the logical alternative is that they had been aware of the issue for a long time and voluntarily chose to hide this information from their investors and the public at large.
America police bitcoin
The document also states that “The cold storage has been wiped out due to a leak in the hot wallet.” If you’re doing it right, the cold storage should not be accessible via the hot wallet, leak or no leak. That’s the whole point of separating the two.
As Andreas M. Antonopoulos, Chief Security Officer of Blockchain.info and respected bitcoin entrepreneur and developer aptly put it, “Cold storage” does not “leak.” If Mt. Gox was truly robbed, it is genuinely an astounding case of carelessness in storing and managing funds on their part.
I have no particular evidence to indicate whether this was actually dishonesty or pure incompetence, and as such will refrain from comment here. Assuming the crisis strategy document is correct, and Karpeles and the rest of Mt. Gox is honest, the funds were stolen through an external attack, the details around which remain murky at best.
At the very least, the incident illustrates a formidable lack of attention to detail and a fundamental ignorance of the basic principles of accounting (these can be succinctly summarized as: 1. inputs must be ≥ outputs, 2. don’t lose everyone’s money).
What now?
I have deep sympathy for those who lost money through Mt. Gox. For the Bitcoin ecosystem as a whole, however, it’s likely to be a positive development.
Mt. Gox had been destabilizing the price and causing unrest in the market for some time. Evidence of this is the remarkable stability in bitcoin prices following the (at least temporary) demise of the exchange.
I hope I am not too naive about the implications; I fully expect there will be significant volatility in the coming months. I’m still bullish on the long term potential of bitcoin, however. Mt. Gox might be dead, but the network as a whole is finally free to move forward.
This article originally appeared on Arianna’s blog, and has been republished here with permission.
Polish Soccer Club to Accept Bitcoin for Tickets and Merchandise
Jaroslaw Adamowski | Published on March 4, 2014 at 11:42 GMT | Lifestyle, News
In a bid to boost its popularity and endorse the cryptocurrency in the process, Polish soccer club GKS Katowice has announced plans to enable bitcoin payments for tickets and club-related merchandise.
The club’s supporters can now make donations to their favourite side in the digital currency, GKS Katowice said in a statement.
“We are open to new technologies. We want to be innovative and [...] show our fans that we have great ambitions,” said Wojciech Cygan, chief executive of GKS Katowice.
Under the plan, the fans will be able to pay in the digital currency through customized bitcoin wallets.
First soccer club to endorse bitcoin
Maciej Ziółkowski, an expert from local news site Satoshi.pl, was quoted in the statement saying that GKS Katowice is the first professional soccer club in the world to endorse the digital currency. Ziółkowski said:
“In Poland, there are now sixty outlets [which accept payments in bitcoin]. This area is rapidly developing.”
Ziółkowski pointed to the experience of US basketball team Sacramento Kings which in January became the first NBA team to accept bitcoin for products sold online and at its home stadium.
According to Marcin Ćwikła, the club’s press officer, the next step for GKS Katowice will be to sell match tickets and club-related merchandise such as squad jerseys and gadgets with the use of cryptocurrency payments.
Set up in 1964 and based in Katowice, in Poland’s Silesia region, GKS Katowice has a significant following in the country’s south-west.
The club is currently celebrating the 50th anniversary of its establishment. Some of the major achievements of GKS Katowice include three Cups of Poland in 1986, 1991 and 1993, as well as two Super Cups of Poland in 1991 and 1995.
Marketing strategy
After its rise to prominence in the early 1990s, the soccer club experienced a downfall which resulted in its relegation from the Ekstraklasa to the I Liga, the second tier of Poland’s professional soccer league.
Despite this, the club has remained highly popular both in Katowice and a number of neighbouring municipalities, and maintains a budget which matches those of some of the clubs which compete in the country’s top soccer league.
Warta Poznan
The GKS Katowice squad in 2011. Image credit: Roger Gor
The latest move to introduce digital currency donations is one of a wide range of initiatives designed to bolster the club’s media presence and lure new supporters.
After the first half of the 2013/2014 season, GKS Katowice is currently ranked third out of the 18 clubs which play in Poland’s I Liga. This means that the club still has a chance of being promoted to the Ekstraklasa, which will accept the top two squads of the I Liga to its ranks in the next season.
GKS Katowice’s last season in the top tier of Poland’s professional soccer league ended in 2005. The supporters of the Katowice-based side can now show appreciation of their club’s efforts to return to the Ekstraklasa with donations made with the cryptocurrency.
GKS Katowice’s stadium has a seating capacity of more than 10,000. The city of Katowice is its majority shareholder, with a 52.78% stake in the Polish club.
Bitcoin in Poland
Despite the lack of official recognition of bitcoin by the Polish government, Poles trade digital currencies on local platforms.
The question of bitcoin’s legal status was addressed in a policy document signed by the country’s Deputy Minister of Finance Wojciech Kowalczyk and released in July 2013, as earlier reported.
Under the current regulatory framework, all transactions made in bitcoins are to be considered as a result of two parties agreeing contractually to use the digital currency in settling their dealings, according to the document.
According to figures obtained from Bitcoincharts, local bitcoin exchange Bitcurex.pl had, on 3rd of March, a 30-day volume of some 17,009.7 BTC and 32.79m PLN ($10.76m). Bitcoin had a weighted price of 1927.5 PLN ($632.7).
Jaroslaw Adamowski | Published on March 4, 2014 at 11:42 GMT | Lifestyle, News
In a bid to boost its popularity and endorse the cryptocurrency in the process, Polish soccer club GKS Katowice has announced plans to enable bitcoin payments for tickets and club-related merchandise.
The club’s supporters can now make donations to their favourite side in the digital currency, GKS Katowice said in a statement.
“We are open to new technologies. We want to be innovative and [...] show our fans that we have great ambitions,” said Wojciech Cygan, chief executive of GKS Katowice.
Under the plan, the fans will be able to pay in the digital currency through customized bitcoin wallets.
First soccer club to endorse bitcoin
Maciej Ziółkowski, an expert from local news site Satoshi.pl, was quoted in the statement saying that GKS Katowice is the first professional soccer club in the world to endorse the digital currency. Ziółkowski said:
“In Poland, there are now sixty outlets [which accept payments in bitcoin]. This area is rapidly developing.”
Ziółkowski pointed to the experience of US basketball team Sacramento Kings which in January became the first NBA team to accept bitcoin for products sold online and at its home stadium.
According to Marcin Ćwikła, the club’s press officer, the next step for GKS Katowice will be to sell match tickets and club-related merchandise such as squad jerseys and gadgets with the use of cryptocurrency payments.
Set up in 1964 and based in Katowice, in Poland’s Silesia region, GKS Katowice has a significant following in the country’s south-west.
The club is currently celebrating the 50th anniversary of its establishment. Some of the major achievements of GKS Katowice include three Cups of Poland in 1986, 1991 and 1993, as well as two Super Cups of Poland in 1991 and 1995.
Marketing strategy
After its rise to prominence in the early 1990s, the soccer club experienced a downfall which resulted in its relegation from the Ekstraklasa to the I Liga, the second tier of Poland’s professional soccer league.
Despite this, the club has remained highly popular both in Katowice and a number of neighbouring municipalities, and maintains a budget which matches those of some of the clubs which compete in the country’s top soccer league.
Warta Poznan
The GKS Katowice squad in 2011. Image credit: Roger Gor
The latest move to introduce digital currency donations is one of a wide range of initiatives designed to bolster the club’s media presence and lure new supporters.
After the first half of the 2013/2014 season, GKS Katowice is currently ranked third out of the 18 clubs which play in Poland’s I Liga. This means that the club still has a chance of being promoted to the Ekstraklasa, which will accept the top two squads of the I Liga to its ranks in the next season.
GKS Katowice’s last season in the top tier of Poland’s professional soccer league ended in 2005. The supporters of the Katowice-based side can now show appreciation of their club’s efforts to return to the Ekstraklasa with donations made with the cryptocurrency.
GKS Katowice’s stadium has a seating capacity of more than 10,000. The city of Katowice is its majority shareholder, with a 52.78% stake in the Polish club.
Bitcoin in Poland
Despite the lack of official recognition of bitcoin by the Polish government, Poles trade digital currencies on local platforms.
The question of bitcoin’s legal status was addressed in a policy document signed by the country’s Deputy Minister of Finance Wojciech Kowalczyk and released in July 2013, as earlier reported.
Under the current regulatory framework, all transactions made in bitcoins are to be considered as a result of two parties agreeing contractually to use the digital currency in settling their dealings, according to the document.
According to figures obtained from Bitcoincharts, local bitcoin exchange Bitcurex.pl had, on 3rd of March, a 30-day volume of some 17,009.7 BTC and 32.79m PLN ($10.76m). Bitcoin had a weighted price of 1927.5 PLN ($632.7).
Japan Mulls Bitcoin Tax Following Mt. Gox Failure
Nermin Hajdarbegovic | Published on March 4, 2014 at 11:00 GMT | Asia, Crime, Law, Mt. Gox, News, Regulation
Japan is taking the Mt. Gox collapse seriously and is already looking into measures to address the digital currency conundrum – one of which is to levy taxes on bitcoin transactions.
According to the Yomiuri Shimbun newspaper, Japan’s ministry of finance and the national tax agency are studying “possible rules” that could govern digital currency transactions.
It appears that Japanese authorities think purchases made with digital currencies could be subject to existing consumption and corporate taxes.
As AFP points out, the Yomiuri Shimbun does not cite any sources in its report. The newspaper does say, though, that Japan and many other countries simply lack the regulatory framework to levy taxes on bitcoin transactions.
Catching up
Japanese Finance Minister Taro Aso confirmed on Tuesday that the country is still trying to understand what led to the Mt. Gox collapse and whether criminal activity was involved.
According to Reuters, Aso told reporters that authorities still do not have a “clear grasp of the situation”. He added:
“(We) don’t know if it was a crime or just a bankruptcy.”
However, Aso stopped short of commenting on possible regulation or taxes.
Regulation inevitable?
Although Aso did not say anything that would confirm the Yomiuri Shimbun report, it should be noted that he has made some interesting statements in the past.
Following the Mt. Gox collapse, Aso said he had been “thinking it would collapse sometime”, adding that Japan is very advanced in the field of digital currencies.
“I was thinking that we might face a situation where Japan has to act, but I’d say it came earlier than I thought,” he said.
In essence, it seems as if Japan was going to act with or without the Mt. Gox collapse – the embarrassing failure and bankruptcy of the Tokyo-based exchange will simply shift things into a higher gear.
The big question is how Japan plans to go about it. As the Yomiuri Shimbun points out, authorities are looking into “consumption and corporate taxes,” which is puzzling in itself. If bitcoin is treated as a commodity, even simple transactions could be taxed, much like the sale or resale of everyday goods. That would render digital currencies more or less pointless, as it would allow authorities to tax every transaction, so this is an unlikely scenario to say the least.
If bitcoin was treated as a currency, this would be a non-issue. However, as Japan does not consider bitcoin a currency, it needs to find an alternative way of taxing bitcoin transactions – that is the crux of the problem. Corporate taxes would not apply to consumers.
International effort needed
However, Japan cannot regulate bitcoin on its own. Just last week the country’s Senior Vice Finance Minister Jiro Aichi said international collaboration would be necessary if a viable regulatory framework was to be introduced.
Aichi suggested that international coordination is necessary to prevent criminals from exploiting loopholes. National regulators cannot do it on their own, because the framework has to be harmonized.
Aichi went on to stress that Japan does not consider bitcoin a currency, which is another problem legislators need to address in order to apply existing legislation to bitcoin transactions.
The Bank of Japan said it is keeping track of developments in the world of digital currencies, but so far it has not made any statements about their use.
Nermin Hajdarbegovic | Published on March 4, 2014 at 11:00 GMT | Asia, Crime, Law, Mt. Gox, News, Regulation
Japan is taking the Mt. Gox collapse seriously and is already looking into measures to address the digital currency conundrum – one of which is to levy taxes on bitcoin transactions.
According to the Yomiuri Shimbun newspaper, Japan’s ministry of finance and the national tax agency are studying “possible rules” that could govern digital currency transactions.
It appears that Japanese authorities think purchases made with digital currencies could be subject to existing consumption and corporate taxes.
As AFP points out, the Yomiuri Shimbun does not cite any sources in its report. The newspaper does say, though, that Japan and many other countries simply lack the regulatory framework to levy taxes on bitcoin transactions.
Catching up
Japanese Finance Minister Taro Aso confirmed on Tuesday that the country is still trying to understand what led to the Mt. Gox collapse and whether criminal activity was involved.
According to Reuters, Aso told reporters that authorities still do not have a “clear grasp of the situation”. He added:
“(We) don’t know if it was a crime or just a bankruptcy.”
However, Aso stopped short of commenting on possible regulation or taxes.
Regulation inevitable?
Although Aso did not say anything that would confirm the Yomiuri Shimbun report, it should be noted that he has made some interesting statements in the past.
Following the Mt. Gox collapse, Aso said he had been “thinking it would collapse sometime”, adding that Japan is very advanced in the field of digital currencies.
“I was thinking that we might face a situation where Japan has to act, but I’d say it came earlier than I thought,” he said.
In essence, it seems as if Japan was going to act with or without the Mt. Gox collapse – the embarrassing failure and bankruptcy of the Tokyo-based exchange will simply shift things into a higher gear.
The big question is how Japan plans to go about it. As the Yomiuri Shimbun points out, authorities are looking into “consumption and corporate taxes,” which is puzzling in itself. If bitcoin is treated as a commodity, even simple transactions could be taxed, much like the sale or resale of everyday goods. That would render digital currencies more or less pointless, as it would allow authorities to tax every transaction, so this is an unlikely scenario to say the least.
If bitcoin was treated as a currency, this would be a non-issue. However, as Japan does not consider bitcoin a currency, it needs to find an alternative way of taxing bitcoin transactions – that is the crux of the problem. Corporate taxes would not apply to consumers.
International effort needed
However, Japan cannot regulate bitcoin on its own. Just last week the country’s Senior Vice Finance Minister Jiro Aichi said international collaboration would be necessary if a viable regulatory framework was to be introduced.
Aichi suggested that international coordination is necessary to prevent criminals from exploiting loopholes. National regulators cannot do it on their own, because the framework has to be harmonized.
Aichi went on to stress that Japan does not consider bitcoin a currency, which is another problem legislators need to address in order to apply existing legislation to bitcoin transactions.
The Bank of Japan said it is keeping track of developments in the world of digital currencies, but so far it has not made any statements about their use.
Bitcoin Foundation Sets Record Straight on New UK Office
Pete Rizzo (@pete_rizzo_) | Published on March 4, 2014 at 02:46 GMT | Bitcoin Foundation, Companies, News
Though many in the bitcoin community were eager to distance the industry from the spectre of Mt. Gox heading into March, the failure of what was once a leading player in the market has lead high levels of uncertainty to remain.
As evidence, despite Sunday’s news that the UK would formally exempt its bitcoin traders from a 20% tax, what attracted the most attention from reports was not the progressive move by the local government.
Rather, the focal point for many was a statement related to the Bitcoin Foundation’s opening of a new UK office.
The controversy centered around comments from Bitcoin Foundation executive director Jon Matonis featured by The Financial Times, which suggested the organisation would redomicile from the US to the UK this spring. While a seemingly small detail, this was news many members said they were hearing for the first time.
Jinyoung Lee Englund, the organisation’s director of public affairs, told CoinDesk, however, that the news was not new, and that despite some confusion, this doesn’t represent any changes in the foundation’s plans.
“Bitcoin is a global protocol and to better represent our international community, we made the decision to open a UK office last December.”
In fact, the news was first reported on 12th December, though the news may have been overshadowed by the tandem announcement of new international chapters in Canada and Australia.
Community reaction
News about the Bitcoin Foundation’s move traveled fast on Sunday, with some members taking to the organisation’s official message boards to suggest that communication between the organisation and the community may need improvement.
The result was that foundation informed community members on various platforms of the announcement, providing a link to the original press release that stated the vision for its new office as well as how it would play a role in the organisation’s long-term strategy.
Global focus requires London office
Statements from the Bitcoin Foundation indicate that the new office is meant to be a sign of the organisation’s status as a global entity. For example, Seattle, while the best location for local resident and founder Peter Vessenes to create the organisation, may now be ill-equipped for the foundation and its increasing reach, past statements suggest.
Explained Matonis in the original release:
“Strengthening and equipping local Bitcoin communities worldwide is at the core of the foundation’s International Affiliate Program and a priority for 2014.
London is one of the most international cities in the world and the foundation will be best positioned to represent and support the inherently global Bitcoin community from there.”
The Bitcoin Foundation said at the time that it planned to keep its US office in Washington, DC to “focus on US individual and corporate membership, public policy and public relations”. The international office in London will supervise and support new chapters.
Pete Rizzo (@pete_rizzo_) | Published on March 4, 2014 at 02:46 GMT | Bitcoin Foundation, Companies, News
Though many in the bitcoin community were eager to distance the industry from the spectre of Mt. Gox heading into March, the failure of what was once a leading player in the market has lead high levels of uncertainty to remain.
As evidence, despite Sunday’s news that the UK would formally exempt its bitcoin traders from a 20% tax, what attracted the most attention from reports was not the progressive move by the local government.
Rather, the focal point for many was a statement related to the Bitcoin Foundation’s opening of a new UK office.
The controversy centered around comments from Bitcoin Foundation executive director Jon Matonis featured by The Financial Times, which suggested the organisation would redomicile from the US to the UK this spring. While a seemingly small detail, this was news many members said they were hearing for the first time.
Jinyoung Lee Englund, the organisation’s director of public affairs, told CoinDesk, however, that the news was not new, and that despite some confusion, this doesn’t represent any changes in the foundation’s plans.
“Bitcoin is a global protocol and to better represent our international community, we made the decision to open a UK office last December.”
In fact, the news was first reported on 12th December, though the news may have been overshadowed by the tandem announcement of new international chapters in Canada and Australia.
Community reaction
News about the Bitcoin Foundation’s move traveled fast on Sunday, with some members taking to the organisation’s official message boards to suggest that communication between the organisation and the community may need improvement.
The result was that foundation informed community members on various platforms of the announcement, providing a link to the original press release that stated the vision for its new office as well as how it would play a role in the organisation’s long-term strategy.
Global focus requires London office
Statements from the Bitcoin Foundation indicate that the new office is meant to be a sign of the organisation’s status as a global entity. For example, Seattle, while the best location for local resident and founder Peter Vessenes to create the organisation, may now be ill-equipped for the foundation and its increasing reach, past statements suggest.
Explained Matonis in the original release:
“Strengthening and equipping local Bitcoin communities worldwide is at the core of the foundation’s International Affiliate Program and a priority for 2014.
London is one of the most international cities in the world and the foundation will be best positioned to represent and support the inherently global Bitcoin community from there.”
The Bitcoin Foundation said at the time that it planned to keep its US office in Washington, DC to “focus on US individual and corporate membership, public policy and public relations”. The international office in London will supervise and support new chapters.
Has MICRO started to write news somewhere else? He used to write here many times per day but today nothing. Also Ive read that on 1st March he will move to news section but I checked his last posts and he didnt yet.
I am sorry . I had to go to cousin wedding. So i was afk whole day. We are now going as planned again.
what about
NOTE: on 1. March , I will relocate my news to new topic and first 10 readers there will be rewarded with some nice free and shiny BTC 
.
.your post here: https://bitcointalksearch.org/topic/m.5261958
(I made a btc wallet just for that!)
Yes i am so busy last few days i can't make that all happen but will soon.
Has MICRO started to write news somewhere else? He used to write here many times per day but today nothing. Also Ive read that on 1st March he will move to news section but I checked his last posts and he didnt yet.
I am sorry . I had to go to cousin wedding. So i was afk whole day. We are now going as planned again.
what about
NOTE: on 1. March , I will relocate my news to new topic and first 10 readers there will be rewarded with some nice free and shiny BTC .
.your post here: https://bitcointalksearch.org/topic/m.5261958
(I made a btc wallet just for that!)
Bitcoin price info:
Bitcoin average:
Bitcoin average:
London Student Mines Dogecoin With University’s Computers – They Don’t Know, Yet
Kadhim Shubber (@kadhimshubber) | Published on March 3, 2014 at 15:56 GMT | Dogecoin, Mining, News
Each evening, ‘Felix’ sneaks into the computer suite at his university and starts up the machines. One by one, he runs a script on each computer and his ‘workers’ begin solving complex algorithms.
You wouldn’t know just by looking, but he’s making his own money – using his university’s computers to mine dogecoin.
Felix’s story mirrors that of a Harvard researcher who used his university’s supercomputer for dogecoin mining, earning himself a permanent ban from the computer and, presumably, a heck of a lot of coins in the process.
Like others who came onto the cryptocurrency scene late, Felix (not his real name), says he was gutted about “completely missing the bitcoin craze”. Mining dogecoin is his chance at getting on the gravy train while the price is low and riding it all the way to the moon – he hopes.
Dodging the IT department
After giving his laptop a shot at mining dogecoin before Christmas, he returned to his university, Imperial College London, after the holidays with a plan: he would use rows upon rows of university computers as his personal mining pool. So far he’s managed to sneak under the radar, he says:
“I’ve not had a single issue yet, so I’ve kept scaling up! It seems they don’t have anything set up to bring attention to the fact I’m maxing out the CPUs, which is nice.”
Felix mines using an online pool, meaning that his efforts are combined with others through a website. After installing a program on to each computer, their individual processing power is counted towards his single online account, allowing him to combine many computers with very little technical know-how.
Although he is able to dodge the Symantec security software guarding the computers for CPU mining, Felix says that he has been unable to utilise the graphic cards, which would allow him to tap into yet another level of computing power.
He hasn’t tried to crack the graphics cards’ defenses yet, as he doesn’t want to draw attention to himself, so to-date he’s only had access to i7-2770k processors.
Possible repercussions
It’s unclear what repercussions Felix would face if caught. Unlike the researcher who used Harvard’s supercomputer, Felix is mining with standard desktop computers used by students for coursework and browsing reddit, not in-demand research technology.
Running unauthorised scripts when everyone’s gone home might irk the IT department, not to mention the electricity he has been burning, but it’s perhaps the least immoral tactic people have used to leverage large numbers of computers for mining without permission.
Other methods include infecting computers with malware that extorts money but also runs mining operations in the background.
The amount he’s mined so far is fairly modest: just 30,000 DOGE, which currently holds a value of just £20 ($33). His strategy is to build up a large stock of dogecoin and hope the price rises spectacularly as it did with bitcoin.
Buying himself a specialised miner is out of the question, says Felix:
“I don’t find the cryptocurrency market stable enough to make real investments, at least for now, on a student budget.”
Funding gap
The ease with which mining operations can be set up, combined with the ready availability at universities of large amounts of computing power, suggest that Felix is by no means the only student mining in this way. Indeed, the Harvard supercomputer and Imperial’s computing suites may just be the tip of the iceberg.
Perhaps it’s even time the universities themselves got in on the game – what better way to fill the funding gap caused by government cuts than with Shiba Inu-branded digital currency? Sure beats raising tuition fees again.
Kadhim Shubber (@kadhimshubber) | Published on March 3, 2014 at 15:56 GMT | Dogecoin, Mining, News
Each evening, ‘Felix’ sneaks into the computer suite at his university and starts up the machines. One by one, he runs a script on each computer and his ‘workers’ begin solving complex algorithms.
You wouldn’t know just by looking, but he’s making his own money – using his university’s computers to mine dogecoin.
Felix’s story mirrors that of a Harvard researcher who used his university’s supercomputer for dogecoin mining, earning himself a permanent ban from the computer and, presumably, a heck of a lot of coins in the process.
Like others who came onto the cryptocurrency scene late, Felix (not his real name), says he was gutted about “completely missing the bitcoin craze”. Mining dogecoin is his chance at getting on the gravy train while the price is low and riding it all the way to the moon – he hopes.
Dodging the IT department
After giving his laptop a shot at mining dogecoin before Christmas, he returned to his university, Imperial College London, after the holidays with a plan: he would use rows upon rows of university computers as his personal mining pool. So far he’s managed to sneak under the radar, he says:
“I’ve not had a single issue yet, so I’ve kept scaling up! It seems they don’t have anything set up to bring attention to the fact I’m maxing out the CPUs, which is nice.”
Felix mines using an online pool, meaning that his efforts are combined with others through a website. After installing a program on to each computer, their individual processing power is counted towards his single online account, allowing him to combine many computers with very little technical know-how.
Although he is able to dodge the Symantec security software guarding the computers for CPU mining, Felix says that he has been unable to utilise the graphic cards, which would allow him to tap into yet another level of computing power.
He hasn’t tried to crack the graphics cards’ defenses yet, as he doesn’t want to draw attention to himself, so to-date he’s only had access to i7-2770k processors.
Possible repercussions
It’s unclear what repercussions Felix would face if caught. Unlike the researcher who used Harvard’s supercomputer, Felix is mining with standard desktop computers used by students for coursework and browsing reddit, not in-demand research technology.
Running unauthorised scripts when everyone’s gone home might irk the IT department, not to mention the electricity he has been burning, but it’s perhaps the least immoral tactic people have used to leverage large numbers of computers for mining without permission.
Other methods include infecting computers with malware that extorts money but also runs mining operations in the background.
The amount he’s mined so far is fairly modest: just 30,000 DOGE, which currently holds a value of just £20 ($33). His strategy is to build up a large stock of dogecoin and hope the price rises spectacularly as it did with bitcoin.
Buying himself a specialised miner is out of the question, says Felix:
“I don’t find the cryptocurrency market stable enough to make real investments, at least for now, on a student budget.”
Funding gap
The ease with which mining operations can be set up, combined with the ready availability at universities of large amounts of computing power, suggest that Felix is by no means the only student mining in this way. Indeed, the Harvard supercomputer and Imperial’s computing suites may just be the tip of the iceberg.
Perhaps it’s even time the universities themselves got in on the game – what better way to fill the funding gap caused by government cuts than with Shiba Inu-branded digital currency? Sure beats raising tuition fees again.
Warren Buffet: Bitcoin is Not a Currency
Nermin Hajdarbegovic | Published on March 3, 2014 at 14:46 GMT | Investors
Warren Buffet hardly needs an introduction – the legendary 83-year-old investor and CEO of Berkshire Hathaway has a résumé that can put just about anyone to shame.
However, you’re unlikely to find the phrase “bitcoin believer” on this particular CV.
Speaking to CNBC, Buffet touched on many issues, from the crisis in Crimea to his eventual successor and even bitcoin. What the ‘most successful investor of the 20th century’ had to say about the latter is not very encouraging, however.
Bitcoin won’t be around in a decade or two
Buffet brought up bitcoin in a curious context. He argued that in wartime it is much better to hold stocks rather than money. He pointed out that he made his first investment in 1942, when the war in the Pacific wasn’t going very well for the US.
He was right to do so, as the stock market grew during the war, while the dollar depreciated.
“American businesses are going to be worth more money. Dollars will be worth less, so that money won’t buy you quite as much, but you’ll be much better off owning productive assets over the next 50 years than you will be holding pieces of paper or, I’m not sure, bitcoins,” he said, chuckling.
Buffet does not view bitcoin as a currency at all:
“It’s not a currency. I wouldn’t be surprised if it wasn’t around in the next 10-20 years.”
Buffet went on to point out that bitcoin is being priced off the dollar and that it is simply not a durable means of exchange.
Wars, markets, economies
Buffet appears to believe that world markets are overreacting to Russia’s decision to deploy troops to the Crimea, essentially invading Ukraine via a back door.
He said that he simply does not take such things into consideration, adding that he doesn’t buy businesses based on macro factors. In other words, even the prospect of a war in Europe doesn’t leave Buffet unfazed.
Buffet is bullish on the stock market and the US economy in general. He points to moderate, but consistent growth over the last few years and the resilience of the economy in face of public mistrust.
It is easy to see why some people may be reluctant following the crash of 2008, but Buffet thinks everything is in order – nobody is getting wildly optimistic or pessimistic, he concludes.
Nermin Hajdarbegovic | Published on March 3, 2014 at 14:46 GMT | Investors
Warren Buffet hardly needs an introduction – the legendary 83-year-old investor and CEO of Berkshire Hathaway has a résumé that can put just about anyone to shame.
However, you’re unlikely to find the phrase “bitcoin believer” on this particular CV.
Speaking to CNBC, Buffet touched on many issues, from the crisis in Crimea to his eventual successor and even bitcoin. What the ‘most successful investor of the 20th century’ had to say about the latter is not very encouraging, however.
Bitcoin won’t be around in a decade or two
Buffet brought up bitcoin in a curious context. He argued that in wartime it is much better to hold stocks rather than money. He pointed out that he made his first investment in 1942, when the war in the Pacific wasn’t going very well for the US.
He was right to do so, as the stock market grew during the war, while the dollar depreciated.
“American businesses are going to be worth more money. Dollars will be worth less, so that money won’t buy you quite as much, but you’ll be much better off owning productive assets over the next 50 years than you will be holding pieces of paper or, I’m not sure, bitcoins,” he said, chuckling.
Buffet does not view bitcoin as a currency at all:
“It’s not a currency. I wouldn’t be surprised if it wasn’t around in the next 10-20 years.”
Buffet went on to point out that bitcoin is being priced off the dollar and that it is simply not a durable means of exchange.
Wars, markets, economies
Buffet appears to believe that world markets are overreacting to Russia’s decision to deploy troops to the Crimea, essentially invading Ukraine via a back door.
He said that he simply does not take such things into consideration, adding that he doesn’t buy businesses based on macro factors. In other words, even the prospect of a war in Europe doesn’t leave Buffet unfazed.
Buffet is bullish on the stock market and the US economy in general. He points to moderate, but consistent growth over the last few years and the resilience of the economy in face of public mistrust.
It is easy to see why some people may be reluctant following the crash of 2008, but Buffet thinks everything is in order – nobody is getting wildly optimistic or pessimistic, he concludes.
Mt. Gox Lawsuit Targets Mark Karpeles’ Personal Wealth
Kadhim Shubber (@kadhimshubber) | Published on March 3, 2014 at 12:35 GMT | Crime, Law, Mt. Gox, News
A class action against Mt. Gox is being organised by a London law firm that says it will go after CEO Mark Karpeles personally to recover its clients’ lost bitcoins.
Selachii LLP says it is representing over 200 claimants from China, the US, Canada and 12 European countries, and that it will launch proceedings against Karpeles “wherever in the world he is”.
They also are in discussions with lawyers in Japan to mount a case against Mt. Gox, which has filed for bankruptcy in Japan after admitting it had lost around 750,000 its customers’ bitcoins. One of the claimants in the lawsuit has lost over 4,000 coins, which equates to $2.3m at today’s exchange rate.
The lawsuit may also make a claim against Tibanne, Mt. Gox’s parent company, which was founded by Mark Karpeles.
Separate legal action was also launched against Mt. Gox and Karpeles in Denver, Colorado, on Thursday by Mt. Gox customer Gregory Greene.
Fraud accusation possible
With Selachii taking action on multiple fronts, Mark Karpeles could find himself defending Mt. Gox’s actions on at least two continents.
Richard Howlett of Selachii says that the facts around the closure of what was once bitcoin’s largest exchange “don’t add up” and that the court action would force Mt. Gox and Mark Karpeles to prove that the huge bitcoin hack actually occurred:
“I don’t know if it’s true that they were hacked, no one knows if it’s true. but that’s something that will come out in court. I will be surprised if it’s as simple as they were just hacked.”
Howlett also raised questions about the loss of fiat funds in addition to Mt. Gox’s bitcoin, which can’t be explained by the hacking of data in the same way as a loss of bitcoin.
Mt. Gox’s public statements reassuring their customers that all was well could come back to haunt the company.
If the company and Karpeles were aware of Mt. Gox’s dire financial situation – which, considering the scale of the issue, is a plausible assumption – Howlett says they could be accused of behaving fraudulently by inducing customers to continue to invest their money in the exchange:
“They had to be honest [with their customers]. They should have stopped everything, because it appears that they were in serious financial difficulty.”
This element of potential liability could explain why Mt. Gox deleted all of its tweets in the days leading up to its eventual demise.
Furthermore, how bitcoins were allegedly stolen from cold storage will be a key technical point, with Howlett suggesting that one explanation could be they were never in cold storage and that Mt. Gox was acting negligently.
Frozen assets
Once a leading member of the bitcoin community, Mark Karpeles bowed deeply last week at the press conference in Japan announcing Mt. Gox’s bankruptcy filing.
The lawsuit could yet see him on his knees if his personal wealth is plundered to pay back Mt. Gox customers. Howlett says that every part of Karpeles’ wealth will be targeted:
“His bank accounts will be scrutinised, his finances will be scrutinised, any offshore accounts, all those sorts of things – if there’s money there, those assets could be pulled into the pot to distribute to the people in the class action.”
Hunting down a person’s assets could prove difficult, however, if they are largely held in bitcoin wallets. Proving ownership of bitcoin assets is not straightforward, even if it is possible to find them in the first place. Bitcoin’s held in cold storage could be hidden in any number of offshore locations.
It is is likely that assets owned by Karpeles, Tibanne and Mt. Gox will be frozen to prevent them being liquidated or hidden once the lawsuit is underway.
Mt. Gox win?
If the lawsuit succeeds, there will be a crucial legal battle about whether any payout should be in bitcoin or in fiat currency.
The value of bitcoin may have risen enough by the culmination of the case to make a fiat currency payout small compared to the total value of any remaining bitcoin in Mt. Gox’s control. Many of Selachii’s clients in the lawsuit are not necessarily looking for their bitcoin back, just their money, says Howlett:
“Many people have got their fingers burnt. The vast number of people we’ve spoken to would rather have the financial value back instead of bitcoin, they’ve been scared off now.”
If the lawsuit is settled in fiat currency and not in bitcoin, then “Mt. Gox could end up winning”, says Howlett, even if the allegations against them turn out to be true.
Kadhim Shubber (@kadhimshubber) | Published on March 3, 2014 at 12:35 GMT | Crime, Law, Mt. Gox, News
A class action against Mt. Gox is being organised by a London law firm that says it will go after CEO Mark Karpeles personally to recover its clients’ lost bitcoins.
Selachii LLP says it is representing over 200 claimants from China, the US, Canada and 12 European countries, and that it will launch proceedings against Karpeles “wherever in the world he is”.
They also are in discussions with lawyers in Japan to mount a case against Mt. Gox, which has filed for bankruptcy in Japan after admitting it had lost around 750,000 its customers’ bitcoins. One of the claimants in the lawsuit has lost over 4,000 coins, which equates to $2.3m at today’s exchange rate.
The lawsuit may also make a claim against Tibanne, Mt. Gox’s parent company, which was founded by Mark Karpeles.
Separate legal action was also launched against Mt. Gox and Karpeles in Denver, Colorado, on Thursday by Mt. Gox customer Gregory Greene.
Fraud accusation possible
With Selachii taking action on multiple fronts, Mark Karpeles could find himself defending Mt. Gox’s actions on at least two continents.
Richard Howlett of Selachii says that the facts around the closure of what was once bitcoin’s largest exchange “don’t add up” and that the court action would force Mt. Gox and Mark Karpeles to prove that the huge bitcoin hack actually occurred:
“I don’t know if it’s true that they were hacked, no one knows if it’s true. but that’s something that will come out in court. I will be surprised if it’s as simple as they were just hacked.”
Howlett also raised questions about the loss of fiat funds in addition to Mt. Gox’s bitcoin, which can’t be explained by the hacking of data in the same way as a loss of bitcoin.
Mt. Gox’s public statements reassuring their customers that all was well could come back to haunt the company.
If the company and Karpeles were aware of Mt. Gox’s dire financial situation – which, considering the scale of the issue, is a plausible assumption – Howlett says they could be accused of behaving fraudulently by inducing customers to continue to invest their money in the exchange:
“They had to be honest [with their customers]. They should have stopped everything, because it appears that they were in serious financial difficulty.”
This element of potential liability could explain why Mt. Gox deleted all of its tweets in the days leading up to its eventual demise.
Furthermore, how bitcoins were allegedly stolen from cold storage will be a key technical point, with Howlett suggesting that one explanation could be they were never in cold storage and that Mt. Gox was acting negligently.
Frozen assets
Once a leading member of the bitcoin community, Mark Karpeles bowed deeply last week at the press conference in Japan announcing Mt. Gox’s bankruptcy filing.
The lawsuit could yet see him on his knees if his personal wealth is plundered to pay back Mt. Gox customers. Howlett says that every part of Karpeles’ wealth will be targeted:
“His bank accounts will be scrutinised, his finances will be scrutinised, any offshore accounts, all those sorts of things – if there’s money there, those assets could be pulled into the pot to distribute to the people in the class action.”
Hunting down a person’s assets could prove difficult, however, if they are largely held in bitcoin wallets. Proving ownership of bitcoin assets is not straightforward, even if it is possible to find them in the first place. Bitcoin’s held in cold storage could be hidden in any number of offshore locations.
It is is likely that assets owned by Karpeles, Tibanne and Mt. Gox will be frozen to prevent them being liquidated or hidden once the lawsuit is underway.
Mt. Gox win?
If the lawsuit succeeds, there will be a crucial legal battle about whether any payout should be in bitcoin or in fiat currency.
The value of bitcoin may have risen enough by the culmination of the case to make a fiat currency payout small compared to the total value of any remaining bitcoin in Mt. Gox’s control. Many of Selachii’s clients in the lawsuit are not necessarily looking for their bitcoin back, just their money, says Howlett:
“Many people have got their fingers burnt. The vast number of people we’ve spoken to would rather have the financial value back instead of bitcoin, they’ve been scared off now.”
If the lawsuit is settled in fiat currency and not in bitcoin, then “Mt. Gox could end up winning”, says Howlett, even if the allegations against them turn out to be true.
London Hostel Chain Clink Now Accepts Cryptocurrencies
Kadhim Shubber (@kadhimshubber) | Published on March 3, 2014 at 13:35 GMT | Altcoins, Coinbase, Lifestyle, News
Clink Hostel customers
Bitcoiners visiting London no longer have to stray into the fiat world to pay for their accommodation. A chain of hostels in the UK capital is now accepting payments in both bitcoin and litecoin.
Clink Hostels, which owns two hostels in central London, including one in a former courthouse, began accepting the currency last month.
Dave Double, sales manager for Clink, encouraged the move towards bitcoin payments and is heavily involved in digital currencies, mining litecoin, qubitcoins, vertcoin and dogecoin – the latter of which he admits has problems in a business environment:
“It’s catchy because it’s a fun coin, but getting my CEO to take dogecoin seriously is difficult when the bank balance is at stake.”
Cheaper travel
Travellers have much to gain from using bitcoin, primarily in the avoidance of currency conversion fees.
In 2013, Austin Craig and Beccy Bingham-Craig spent 100 days living on bitcoin alone and travelling the world.
They told CoinDesk at the time that not having to worry about using a different currency in each country was a refreshing change. Double echoed those sentiments, saying:
“We love the idea that people from around the world can travel at the same exchange rate regardless of how rich or poor a country you’re in.”
At the moment Clink uses a straightforward QR code system for receiving payments, so travellers pay bitcoin straight to Clink’s wallet, but they are intending to use a third-party payment processor and “leaning towards Coinbase”.
Poor perceptions
Time and time again, small businesses that accept bitcoin cite one major problem with the use of digital currencies: public confidence in the currency.
Clink Hostels is no different. Double says that issues about converting bitcoin into fiat currency and vice-versa are no longer big problems for business – relatively mature payment processors like BitPay and Coinbase have resolved this question.
However, volatility and high-profile cases linking cryptocurrencies with incompetence, criminality and deceit continue to weigh on the minds of business owners, says Double:
“Volatility in the exchange rate puts [businesses] off as it seems complicated to make sure you get a good price for your product. Of course, this is [not true], as you can convert straight away, but things like Silk Road haven’t helped.”
From Double’s perspective, businesses will begin to feel more comfortable about getting into the bitcoin arena when there’s greater government clarity on bitcoin regulation and on bitcoin taxation, which we’re beginning to see.
For now, Clink gets to hold the crown of being the first hostel in the UK to accept bitcoin – something that gives them the edge, not over physical competitors, but online booking sites like booking.com.
“They can’t tap into [this community] at the moment,” says Double.
Perhaps, but with travel companies waking up to the potential of bitcoin, Clink won’t be alone for long.
Kadhim Shubber (@kadhimshubber) | Published on March 3, 2014 at 13:35 GMT | Altcoins, Coinbase, Lifestyle, News
Clink Hostel customers
Bitcoiners visiting London no longer have to stray into the fiat world to pay for their accommodation. A chain of hostels in the UK capital is now accepting payments in both bitcoin and litecoin.
Clink Hostels, which owns two hostels in central London, including one in a former courthouse, began accepting the currency last month.
Dave Double, sales manager for Clink, encouraged the move towards bitcoin payments and is heavily involved in digital currencies, mining litecoin, qubitcoins, vertcoin and dogecoin – the latter of which he admits has problems in a business environment:
“It’s catchy because it’s a fun coin, but getting my CEO to take dogecoin seriously is difficult when the bank balance is at stake.”
Cheaper travel
Travellers have much to gain from using bitcoin, primarily in the avoidance of currency conversion fees.
In 2013, Austin Craig and Beccy Bingham-Craig spent 100 days living on bitcoin alone and travelling the world.
They told CoinDesk at the time that not having to worry about using a different currency in each country was a refreshing change. Double echoed those sentiments, saying:
“We love the idea that people from around the world can travel at the same exchange rate regardless of how rich or poor a country you’re in.”
At the moment Clink uses a straightforward QR code system for receiving payments, so travellers pay bitcoin straight to Clink’s wallet, but they are intending to use a third-party payment processor and “leaning towards Coinbase”.
Poor perceptions
Time and time again, small businesses that accept bitcoin cite one major problem with the use of digital currencies: public confidence in the currency.
Clink Hostels is no different. Double says that issues about converting bitcoin into fiat currency and vice-versa are no longer big problems for business – relatively mature payment processors like BitPay and Coinbase have resolved this question.
However, volatility and high-profile cases linking cryptocurrencies with incompetence, criminality and deceit continue to weigh on the minds of business owners, says Double:
“Volatility in the exchange rate puts [businesses] off as it seems complicated to make sure you get a good price for your product. Of course, this is [not true], as you can convert straight away, but things like Silk Road haven’t helped.”
From Double’s perspective, businesses will begin to feel more comfortable about getting into the bitcoin arena when there’s greater government clarity on bitcoin regulation and on bitcoin taxation, which we’re beginning to see.
For now, Clink gets to hold the crown of being the first hostel in the UK to accept bitcoin – something that gives them the edge, not over physical competitors, but online booking sites like booking.com.
“They can’t tap into [this community] at the moment,” says Double.
Perhaps, but with travel companies waking up to the potential of bitcoin, Clink won’t be alone for long.
Is too much investment killing Bitcoin?
PJ Delaney 03/03/2014 Posted 2 hours ago
The function of Bitcoin
Let me pose an important question: What precisely is it that we want Bitcoin to do? Is it a secure peer to peer transaction system as it was envisioned in 2009 or has it recently been forced to undergo a metamorphosis? Has Bitcoin now become something that its developers never intended it to be?
Bitcoin, since its launch five years ago, has enjoyed massive publicity and has become widely accepted as a secure means of exchange. A cursory glance at the stats will show a tremendous success story but take a deeper dig into the figures and another tale begins to reveal itself.
Is too much investment killing Bitcoin?
The problem
The value of Bitcoin climbed in 2013 from just over $13 in January to $752 at the end of December. This is an approximate growth of just under 6000% in a world where few very banks were paying a return of over 5% on deposits. If you had cashed out in early December you would have got over $1,000. People are coming on board, investors are coming on board, and the media is coming on board. There is a rule in economics that “Good money pushes out bad money” and that seems to have been happening with our friend, Bitcoin.
A reasonable person: If a reasonable person, like you, who finds themselves to be in need of a laptop, had come into possession, or had had possession, of 100 bitcoins on January 1st 2013, and assuming these bitcoins had a fiat value of $1,350. Then that person could buy a computer to that value using their bitcoins. If that reasonable person was either, cautious, disorganised or indecisive and put off that purchase for one month then their bitcoins had climbed in value to $1,950. They could now buy a computer, assuming that prices in dollars remained stable, and have either $600 or 30 bitcoins left (change). On December 2nd, they could have bought the same dollar value of a computer for just 1.3 bitcoins.
People had a choice, would they keep their bitcoins, which were skyrocketing in value, or would they spend them? Reasonable people made the decision to spend their Dollars, Euro, Pounds and Yen and hold onto the bitcoins they had. This has led to widespread hoarding of not just bitcoins but cryptocurrencies in general, and while that makes sense for individual investors, who value a 6000% return, it has the effect of removing bitcoins from circulation. Bitcoin is by definition a currency with a capped maximum circulation of 21 million coins, if items are priced in Bitcoin and the number of coins in circulation then falls, then the value of a bitcoin must rise and also the volume of transactions will fall. As investors took over Bitcoin in the hope of short term gain their actions led to a level of reduced transactions but this fact was hidden from cursory observations by the increased value of the reduced number of coins.
Bitcoin can exist as a medium of investment, we have seen that in 2013, it can also exist as a medium of exchange and we see that on a daily basis too. I would argue that it cannot do both well. As investors move out of an overpriced bitcoin we will find that the volume of transactions begins to rise and the value, in dollars, begins to stabilise. This will, however, have the effect of rendering mining less efficient in the short term. In the longer term, we can reasonably assume that newer technologies and faster processing speeds will be available.
Maybe it is time to tackle the idea of the bitcoins that are supposedly in circulation, but have, in fact, been either deleted or lost? Remember all the computers that have been dumped since 2009, did everyone remove their bitcoins? Maybe we should give some thought to this and how to resolve it. Maybe Mt. Gox will shed some light going forward on how we should deal with lost bitcoins.
PJ Delaney 03/03/2014 Posted 2 hours ago
The function of Bitcoin
Let me pose an important question: What precisely is it that we want Bitcoin to do? Is it a secure peer to peer transaction system as it was envisioned in 2009 or has it recently been forced to undergo a metamorphosis? Has Bitcoin now become something that its developers never intended it to be?
Bitcoin, since its launch five years ago, has enjoyed massive publicity and has become widely accepted as a secure means of exchange. A cursory glance at the stats will show a tremendous success story but take a deeper dig into the figures and another tale begins to reveal itself.
Is too much investment killing Bitcoin?
The problem
The value of Bitcoin climbed in 2013 from just over $13 in January to $752 at the end of December. This is an approximate growth of just under 6000% in a world where few very banks were paying a return of over 5% on deposits. If you had cashed out in early December you would have got over $1,000. People are coming on board, investors are coming on board, and the media is coming on board. There is a rule in economics that “Good money pushes out bad money” and that seems to have been happening with our friend, Bitcoin.
A reasonable person: If a reasonable person, like you, who finds themselves to be in need of a laptop, had come into possession, or had had possession, of 100 bitcoins on January 1st 2013, and assuming these bitcoins had a fiat value of $1,350. Then that person could buy a computer to that value using their bitcoins. If that reasonable person was either, cautious, disorganised or indecisive and put off that purchase for one month then their bitcoins had climbed in value to $1,950. They could now buy a computer, assuming that prices in dollars remained stable, and have either $600 or 30 bitcoins left (change). On December 2nd, they could have bought the same dollar value of a computer for just 1.3 bitcoins.
People had a choice, would they keep their bitcoins, which were skyrocketing in value, or would they spend them? Reasonable people made the decision to spend their Dollars, Euro, Pounds and Yen and hold onto the bitcoins they had. This has led to widespread hoarding of not just bitcoins but cryptocurrencies in general, and while that makes sense for individual investors, who value a 6000% return, it has the effect of removing bitcoins from circulation. Bitcoin is by definition a currency with a capped maximum circulation of 21 million coins, if items are priced in Bitcoin and the number of coins in circulation then falls, then the value of a bitcoin must rise and also the volume of transactions will fall. As investors took over Bitcoin in the hope of short term gain their actions led to a level of reduced transactions but this fact was hidden from cursory observations by the increased value of the reduced number of coins.
Bitcoin can exist as a medium of investment, we have seen that in 2013, it can also exist as a medium of exchange and we see that on a daily basis too. I would argue that it cannot do both well. As investors move out of an overpriced bitcoin we will find that the volume of transactions begins to rise and the value, in dollars, begins to stabilise. This will, however, have the effect of rendering mining less efficient in the short term. In the longer term, we can reasonably assume that newer technologies and faster processing speeds will be available.
Maybe it is time to tackle the idea of the bitcoins that are supposedly in circulation, but have, in fact, been either deleted or lost? Remember all the computers that have been dumped since 2009, did everyone remove their bitcoins? Maybe we should give some thought to this and how to resolve it. Maybe Mt. Gox will shed some light going forward on how we should deal with lost bitcoins.
KnC and Chicago Sun-Times Launch Pre-funded Bitcoin Wallet
Nermin Hajdarbegovic | Published on March 3, 2014 at 11:09 GMT | KnCMiner, News, Wallets
Mining hardware maker KnCMiner has launched its first bitcoin wallet, with an interesting twist.
As part of the launch, the first 100,000 downloads will be awarded with a few bucks to spend.
The KnC Bitcoin Wallet app is available on the Google Play Store and it’s free. Needless to say, there’s no app for iOS or Windows Phone. The wallets are pre-funded and it appears that the first 1,000 downloads will be awarded with $5 each, while the next 95,000 wallets will get $1 each (at the current BTC/USD exchange rate).
Bitcoin wallets for the masses
In order to appeal to a wider audience, KnC has teamed up with the Chicago Sun-Times, which is supporting the launch with ads and sponsored content in the form of a “Bitcoin for Beginners” guide.
KnC co-founder Sam Cole said the move was part of the company’s effort to educate a wider audience about the possibilities of Bitcoin:
“KnC wants to share information about this evolving technology with the public. Most people don’t understand what exactly Bitcoin is or how they could benefit fromusing KnC Wallet in their daily life. We’re trying to change that.”
KnCWallet Wrapports Chief Technology Officer Josh Metnick said the Chicago Sun-Times was an obvious choice, as the paper already embraced bitcoin. Wrapports publishes the Chicago Sun-Times, the Chicago Reader and several dozen smaller publications in northern Illinois and Indiana.
“As a media company in today’s environment, it’s crucial for us to stay engaged with new forms of commerce like Bitcoin. Our initial Bitwall experiment proved successful, and we are going to keep pushing the boundaries across all types of technologies,” Metnick said.
The big hope is to equip 100,000 Chicagoans with an active bitcoin wallet, Metnick told us.
Teething problems
According to the Google Play page, the wallet is currently in version 0.9.1 and it has been installed just under 500 times.
The company’s wallet can send and receive bitcoins using phone contacts and it has an integrated QR scanner to dynamically convert BTC to local currency. However, KnC admits a couple of limitations – for example its NFC payments are still not working.
The app supports all Android versions back to 4.0 Ice Cream Sandwich, so it should work on the vast majority of devices launched over the last two to three years.
The first version of the app was uploaded on 21st February to a mediocre response. The average review score is 3.7 and some users are reporting several issues. However, KnC has acknowledged these negative comments and promises to iron out any kinks soon.
Nermin Hajdarbegovic | Published on March 3, 2014 at 11:09 GMT | KnCMiner, News, Wallets
Mining hardware maker KnCMiner has launched its first bitcoin wallet, with an interesting twist.
As part of the launch, the first 100,000 downloads will be awarded with a few bucks to spend.
The KnC Bitcoin Wallet app is available on the Google Play Store and it’s free. Needless to say, there’s no app for iOS or Windows Phone. The wallets are pre-funded and it appears that the first 1,000 downloads will be awarded with $5 each, while the next 95,000 wallets will get $1 each (at the current BTC/USD exchange rate).
Bitcoin wallets for the masses
In order to appeal to a wider audience, KnC has teamed up with the Chicago Sun-Times, which is supporting the launch with ads and sponsored content in the form of a “Bitcoin for Beginners” guide.
KnC co-founder Sam Cole said the move was part of the company’s effort to educate a wider audience about the possibilities of Bitcoin:
“KnC wants to share information about this evolving technology with the public. Most people don’t understand what exactly Bitcoin is or how they could benefit fromusing KnC Wallet in their daily life. We’re trying to change that.”
KnCWallet Wrapports Chief Technology Officer Josh Metnick said the Chicago Sun-Times was an obvious choice, as the paper already embraced bitcoin. Wrapports publishes the Chicago Sun-Times, the Chicago Reader and several dozen smaller publications in northern Illinois and Indiana.
“As a media company in today’s environment, it’s crucial for us to stay engaged with new forms of commerce like Bitcoin. Our initial Bitwall experiment proved successful, and we are going to keep pushing the boundaries across all types of technologies,” Metnick said.
The big hope is to equip 100,000 Chicagoans with an active bitcoin wallet, Metnick told us.
Teething problems
According to the Google Play page, the wallet is currently in version 0.9.1 and it has been installed just under 500 times.
The company’s wallet can send and receive bitcoins using phone contacts and it has an integrated QR scanner to dynamically convert BTC to local currency. However, KnC admits a couple of limitations – for example its NFC payments are still not working.
The app supports all Android versions back to 4.0 Ice Cream Sandwich, so it should work on the vast majority of devices launched over the last two to three years.
The first version of the app was uploaded on 21st February to a mediocre response. The average review score is 3.7 and some users are reporting several issues. However, KnC has acknowledged these negative comments and promises to iron out any kinks soon.
CCN Websites of the Week: Multi-Coin Wallet, Accurate Bitcoin Prices, and More
Neil Sardesai 02/03/2014
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Terrawallet
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Terrawallet
Terrawallet is a multi-coin, online wallet.
Terrawallet is an online, multi-coin wallet. It supports Bitcoin, Litecoin, Namecoin, and most other alt-coins. Terrawallet is beautifully designed and “95% finished,” according to the developer. There’s just one catch. The developer doesn’t have time for the project, so he’s selling it. You can try a demo of Terrawallet here. Hopefully someone purchases and continues to develop this promising project.
bkchain.org
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bkchain.org
bkchain.org is a multi-currency blockchain explorer.
As you can probably guess from the name, “bkchain.org” is a blockchain explorer. It not only supports Bitcoin, but also Litecoin, Peercoin, and Dogecoin. It’s nothing fancy, but if you’re looking for a quick and simple blockchain explorer, bkchain.org is a great choice.
CoinMap
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CoinMap
CoinMap displays a map of places that accept Bitcoin and Litecoin.
CoinMap is relatively more popular than the other sites featured on Websites of the Week, but in case you haven’t heard of it, CoinMap displays a map of places that accept Bitcoin and Litecoin. CoinMap relies on the OpenStreetMap project, making it easy to add new locations to the map.
“To list your venue go to OpenStreetMap editor and add payment:bitcoin=yes tag to it (or payment:litecoin=yes for Litecoin).”
BitcoinAverage
http://www.cryptocoinsnews.com/wp-content/uploads/2014/03/Screen-Shot-2014-03-01-at-4.58.41-PM-300x167.png
BitcoinAverage
BitcoinAverage displays a weighted average price for BTC.
BitcoinAverage is an open-source resource to get a weighted average price for BTC. The price is calculated by averaging it across almost all Bitcoin exchanges and is nearly real-time, so if you’re looking for a super accurate Bitcoin price, BitcoinAverage is a great choice. They’ve also got some nice charts to play with.
Neil Sardesai 02/03/2014
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Terrawallet
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Terrawallet
Terrawallet is a multi-coin, online wallet.
Terrawallet is an online, multi-coin wallet. It supports Bitcoin, Litecoin, Namecoin, and most other alt-coins. Terrawallet is beautifully designed and “95% finished,” according to the developer. There’s just one catch. The developer doesn’t have time for the project, so he’s selling it. You can try a demo of Terrawallet here. Hopefully someone purchases and continues to develop this promising project.
bkchain.org
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bkchain.org
bkchain.org is a multi-currency blockchain explorer.
As you can probably guess from the name, “bkchain.org” is a blockchain explorer. It not only supports Bitcoin, but also Litecoin, Peercoin, and Dogecoin. It’s nothing fancy, but if you’re looking for a quick and simple blockchain explorer, bkchain.org is a great choice.
CoinMap
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CoinMap
CoinMap displays a map of places that accept Bitcoin and Litecoin.
CoinMap is relatively more popular than the other sites featured on Websites of the Week, but in case you haven’t heard of it, CoinMap displays a map of places that accept Bitcoin and Litecoin. CoinMap relies on the OpenStreetMap project, making it easy to add new locations to the map.
“To list your venue go to OpenStreetMap editor and add payment:bitcoin=yes tag to it (or payment:litecoin=yes for Litecoin).”
BitcoinAverage
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BitcoinAverage
BitcoinAverage displays a weighted average price for BTC.
BitcoinAverage is an open-source resource to get a weighted average price for BTC. The price is calculated by averaging it across almost all Bitcoin exchanges and is nearly real-time, so if you’re looking for a super accurate Bitcoin price, BitcoinAverage is a great choice. They’ve also got some nice charts to play with.
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