Top UK Tax Agency to Eliminate 20% Levy on Bitcoin Trading
Pete Rizzo (@pete_rizzo_) | Published on March 2, 2014 at 21:21 GMT | Europe, Regulation
The UK’s top tax agency is set to reverse an earlier ruling that classified virtual currencies as gift vouchers, exempting digital currency trading from a 20% value added tax (VAT).
Expected to be formally announced this week, the ruling would find HM Revenue and Customs (HMRC), the UK’s customs and tax department, classifying virtual currencies as assets or private money, not as vouchers that required a tax on the value of the coins.
Tom Robinson, co-founder of London-based digital currency storage specialist Elliptic and a director of the soon-to-launch industry group U.K. Digital Currency Association, lauded the decision by the tax agency, telling CoinDesk:
“I think this is the most progressive treatment of cryptocurrencies in the world. This is the most forward thinking and comprehensive advice in regards to taxation.”
HMRC had previously indicated it would consider rethinking its treatment of digital currency in December.
Reports say other taxes would still apply to businesses that buy, sell or exchange bitcoin. However, notably, bitcoin businesses will not be charged a tax on margins.
The news follows reports that the UK’s Payments Council, the organisation that sets strategy for payments, is assessing digital currencies, and amid increasing innovation from the local community that has seen the opening of bitcoin ATM alternatives and release of physical bitcoin price tags.
An open dialogue
Elliptic and other UK-based bitcoin businesses had earlier contacted the HMRC in an attempt to inspire UK lawmakers to rethink their classification of bitcoin, suggesting that it would discourage UK consumers from investing in the ecosystem and make it harder for domestic companies to compete globally.
The result, however, was that HMRC opened up discussions with the community.
Robinson indicates that in early meetings, UK lawmakers asked questions about various digital currency activities, such as mining, though the larger focus was the overall taxation of the new currencies.
Impact
The news spread quickly across the bitcoin community, with many lauding it as a validation of bitcoin at a time when the industry is in need of good news.
Further, though undeniably positive, others in the community suggested that still more work needs to be done to ensure the growth of digital currencies in the UK.
Screen Shot 2014-03-02 at 3.45.29 PM
The news is notable as most recent regulatory statements in the wake of operational issues at the now-bankrupt Japan-based exchange Mt. Gox had been trending negative. Vietnam became the latest to speak out against bitcoin this week, though over the last month, a slew of countries – from Hungary to Cyprus to Kazakhstan – have all issued warnings.
Topic: BITCOIN NEWS EVRYDAY! From multiple sources. - page 20. (Read 51244 times)
Will Florida’s Money Laundering Laws Apply to Bitcoin?
Cathy Reisenwitz (@CathyReisenwitz) | Published on March 2, 2014 at 15:56 GMT | Crime, Law, News, Regulation, US & Canada
Lawyers for the two men recently arrested in Miami for engaging in “too-large” bitcoin transactions are claiming that the men’s actions were legal because state law covers only money issued by the US or another country.
Many in the bitcoin community are hopeful that this argument is persuasive, seeing money laundering laws as an attempt to regulate thoughtcrime in finance. Others also argue that citizens do not currently owe the state of Florida any kind of explanation for why they want to buy or sell bitcoin.
Sting operation
In what may be the first instance of citizens being charged under state law for buying or selling bitcoin, Pascal Reid, 29, and Michell Abner Espinoza, 30, were charged on 6th February with money laundering and engaging in an unlicensed money-servicing business.
The two were contacted by undercover officers who were looking to exchange $30,000 dollars each for bitcoin, an amount that violates the state’s money laundering laws.
Those laws makes exchanges above $10,000 illegal without offering information to the government. The state also forbids frequent unlicensed transactions of more than $300 but less than $20,000 in any 12-month period.
However, Reid’s attorney, Ron Lowy, argues that “the language of the Florida statutes excludes and was never intended to cover bitcoins.”
It appears that, despite this, undercover police officers were conducting stings which were aimed at netting “individuals engaged in high volume bitcoin activity,” according to Miami-Dade State Attorney Katherine Fernandez Rundle.
Contrasting views
The prosecutor’s office claims that “bitcoins are often seen as a perfect means of laundering dirty money or for buying and selling illegal goods, such as drugs or stolen credit card information.”
Bitcoin is far from an ideal, or even particularly popular, method for laundering money, however.
Katherine Mangu-Ward noted for online magazine Slate: “About $8 billion worth of transactions were conducted in bitcoin from October 2012 to October 2013. During 2012, Bank of America processes $244.4 trillion in wire transfers and PayPal processed $145 billion.”
She summed up:
“The bitcoin haystack just isn’t big enough or messy enough to be a useful place to launder money right now. A better option: cash-heavy businesses, such as casinos or – yes – laundromats.”
“High level international cybercriminals have not by-and-large gravitated to peer-to-peer cryptocurrency, such as bitcoin,”said Secret Service Special Agent Edward Lowery. Adding:
“Instead, they prefer ‘centralized digital currency’ that is based somewhere with looser regulations and lazier enforcement.”
A spokesman for the Miami-Dade State Attorney’s Office told Bloomberg in a recent email correspondence, “As prosecutors, we relish the opportunity to help define the law regarding this potentially important field.”
Considering that money laundering laws are mostly useless, unevenly applied and very costly to comply with, many hope that Florida will not define the laws as applying to bitcoin.
Cathy Reisenwitz (@CathyReisenwitz) | Published on March 2, 2014 at 15:56 GMT | Crime, Law, News, Regulation, US & Canada
Lawyers for the two men recently arrested in Miami for engaging in “too-large” bitcoin transactions are claiming that the men’s actions were legal because state law covers only money issued by the US or another country.
Many in the bitcoin community are hopeful that this argument is persuasive, seeing money laundering laws as an attempt to regulate thoughtcrime in finance. Others also argue that citizens do not currently owe the state of Florida any kind of explanation for why they want to buy or sell bitcoin.
Sting operation
In what may be the first instance of citizens being charged under state law for buying or selling bitcoin, Pascal Reid, 29, and Michell Abner Espinoza, 30, were charged on 6th February with money laundering and engaging in an unlicensed money-servicing business.
The two were contacted by undercover officers who were looking to exchange $30,000 dollars each for bitcoin, an amount that violates the state’s money laundering laws.
Those laws makes exchanges above $10,000 illegal without offering information to the government. The state also forbids frequent unlicensed transactions of more than $300 but less than $20,000 in any 12-month period.
However, Reid’s attorney, Ron Lowy, argues that “the language of the Florida statutes excludes and was never intended to cover bitcoins.”
It appears that, despite this, undercover police officers were conducting stings which were aimed at netting “individuals engaged in high volume bitcoin activity,” according to Miami-Dade State Attorney Katherine Fernandez Rundle.
Contrasting views
The prosecutor’s office claims that “bitcoins are often seen as a perfect means of laundering dirty money or for buying and selling illegal goods, such as drugs or stolen credit card information.”
Bitcoin is far from an ideal, or even particularly popular, method for laundering money, however.
Katherine Mangu-Ward noted for online magazine Slate: “About $8 billion worth of transactions were conducted in bitcoin from October 2012 to October 2013. During 2012, Bank of America processes $244.4 trillion in wire transfers and PayPal processed $145 billion.”
She summed up:
“The bitcoin haystack just isn’t big enough or messy enough to be a useful place to launder money right now. A better option: cash-heavy businesses, such as casinos or – yes – laundromats.”
“High level international cybercriminals have not by-and-large gravitated to peer-to-peer cryptocurrency, such as bitcoin,”said Secret Service Special Agent Edward Lowery. Adding:
“Instead, they prefer ‘centralized digital currency’ that is based somewhere with looser regulations and lazier enforcement.”
A spokesman for the Miami-Dade State Attorney’s Office told Bloomberg in a recent email correspondence, “As prosecutors, we relish the opportunity to help define the law regarding this potentially important field.”
Considering that money laundering laws are mostly useless, unevenly applied and very costly to comply with, many hope that Florida will not define the laws as applying to bitcoin.
The Bitcoin perspective: When is a crisis not a crisis?
PJ Delaney 01/03/2014
Bankruptcy Protection
http://www.cryptocoinsnews.com/wp-content/uploads/2014/02/Dollarz1.jpg
So, Mt. Gox filed for bankruptcy protection in Tokyo on Friday. The details emerging today of the magnitude of the losses are frankly, staggering. Karpeles may have overseen the loss of up to half a billion dollars worth of Bitcoins. The first lawsuit has already been lodged by Gregory Greene in the US District Court in Chicago. Mr. Greene had approximately $25,000 worth of Bitcoin. Greene’s money is gone; everyone’s money is gone. Mt. Gox has lost roughly 750,000 of client’s Bitcoins as well as 100,000 of its own, almost 7% of total circulation.
Karpeles apologized today before saying: Dollarz
“The Bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point.”
This may not fully reassure Mr. Greene or the many other small investors that are now finding themselves to be significantly poorer.
The cost of Mt. Gox going forward
Assuming the direct cost to investors will be in the region of half a billion dollars, and this close to the event this may prove not be an accurate assumption, let us then look at the indirect costs of the collapse. Bitcoin and almost every other cryptocurrency, with the exception of Ripple, has taken a heavy hit. There is a problem out there with contagion. Politicians tend to be negative towards cryptocurrency as it forces them to address new issues and there are powers available to them which have been honed on the creation and tracking of fiat money. Statements from politicians on both sides of the Pacific Ocean are adding fuel to the flames and we must remember that it is the bad news that sells newspapers. Bitcoin has clearly been damaged and the cynics are waiting in the wings, smiling and readying their “I told you so” speeches. Karpeles is right about one thing though, the Bitcoin project is ongoing and is strong and will survive.
The cost of the collapse of Mt. Gox may well end up topping one Billion dollars and the true cost may not be fully assessed in the short term. Investors are currently looking at the situation and are surely taking advice. It is blindingly that the level of oversight was not what they, as clients, should have reasonably expected. Gregory Greene has hit the ground running in Chicago with his legal team. This will certainly not be the last lawsuit. Remember as you listen to the bankers and politicians going forward that there is another agenda. Remember that crypto is the enemy. Let me leave with a quote from the late Josiah Stamp, a British Civil servant, an industrialist, an economist, a statistician, a writer and… oh, yes… a banker.
“Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.”
Josiah Stamp (1880-1941)
PJ Delaney 01/03/2014
Bankruptcy Protection
http://www.cryptocoinsnews.com/wp-content/uploads/2014/02/Dollarz1.jpg
So, Mt. Gox filed for bankruptcy protection in Tokyo on Friday. The details emerging today of the magnitude of the losses are frankly, staggering. Karpeles may have overseen the loss of up to half a billion dollars worth of Bitcoins. The first lawsuit has already been lodged by Gregory Greene in the US District Court in Chicago. Mr. Greene had approximately $25,000 worth of Bitcoin. Greene’s money is gone; everyone’s money is gone. Mt. Gox has lost roughly 750,000 of client’s Bitcoins as well as 100,000 of its own, almost 7% of total circulation.
Karpeles apologized today before saying: Dollarz
“The Bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point.”
This may not fully reassure Mr. Greene or the many other small investors that are now finding themselves to be significantly poorer.
The cost of Mt. Gox going forward
Assuming the direct cost to investors will be in the region of half a billion dollars, and this close to the event this may prove not be an accurate assumption, let us then look at the indirect costs of the collapse. Bitcoin and almost every other cryptocurrency, with the exception of Ripple, has taken a heavy hit. There is a problem out there with contagion. Politicians tend to be negative towards cryptocurrency as it forces them to address new issues and there are powers available to them which have been honed on the creation and tracking of fiat money. Statements from politicians on both sides of the Pacific Ocean are adding fuel to the flames and we must remember that it is the bad news that sells newspapers. Bitcoin has clearly been damaged and the cynics are waiting in the wings, smiling and readying their “I told you so” speeches. Karpeles is right about one thing though, the Bitcoin project is ongoing and is strong and will survive.
The cost of the collapse of Mt. Gox may well end up topping one Billion dollars and the true cost may not be fully assessed in the short term. Investors are currently looking at the situation and are surely taking advice. It is blindingly that the level of oversight was not what they, as clients, should have reasonably expected. Gregory Greene has hit the ground running in Chicago with his legal team. This will certainly not be the last lawsuit. Remember as you listen to the bankers and politicians going forward that there is another agenda. Remember that crypto is the enemy. Let me leave with a quote from the late Josiah Stamp, a British Civil servant, an industrialist, an economist, a statistician, a writer and… oh, yes… a banker.
“Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.”
Josiah Stamp (1880-1941)
What are the Consumer Benefits of Spending Bitcoin?
Nicholas Tomaino (@ntmoney) | Published on March 2, 2014 at 11:02 GMT | Analysis, Lifestyle, Merchants, News
Nick Tomaino is currently on the business development team at Coinbase, and is also a first-year business school student at the Yale School of Management. Prior to that, he worked in venture capital, most recently for Softbank Capital.
It is becoming increasingly clear to the public that Bitcoin is a compelling option for merchants as a more efficient payment processing option.
But one question that is far from clear and will likely take longer to become apparent is: what are the consumer benefits to using the digital currency, outside of investment and speculation?
Most mainstream consumers view bitcoin as a volatile asset that has no true benefit for consumers looking to spend on goods and services. In Senator Joe Manchin’s letter to the Treasury Department, he wrote:
“Its deflationary trends ensure that only speculators such as so-called ‘Bitcoin miners’ will benefit from possessing the virtual currency.”
This is a dangerous misconception that is often voiced by newcomers to bitcoin. While bitcoin is currently volatile and there are clear risks associated with it, there are also major benefits to spending bitcoin that are likely to become apparent as consumers learn more about the digital currency: cost savings, privacy, and ease of use.
Cost savings
save
Cost savings may ultimately be the most compelling benefit for bitcoin consumers.
The cost savings on the merchant side are clear when you consider the interchange fees, assessment fees, chargeback fees and false declines that merchants currently incur by using existing payment methods.
Ultimately, these fees are passed on to consumers, evidenced by the $0.75 fee you may pay for a transaction under $10.
We’re already seeing large merchants pass the cost savings bitcoin brings on to consumers. Tiger Direct is currently offering $20 off all orders over $100. Fancy.com is currently offering a 25% off coupon on all bitcoin purchases until Sunday.
These promotions are short term, but we expect many large merchants to offer long term discounts on bitcoin purchases in the near future.
As these cost savings continue, consumers will soon realize that unlike credit cards companies, who cause merchants to price their goods higher and pass savings back to only a subset of the consumer base (credit card holders in the form of reward points), bitcoin enables lower prices for the masses.
Privacy
Privacy is on the minds of many US consumers right now, following the significant security breaches that occurred over the past few months at large retailers such as Target and Neiman Marcus.
privacy
These security breaches highlight a fundamental difference between bitcoin and traditional online payment methods.
Generally, when you pay for something online with a debit or credit card, you are giving that merchant personally identifiable information about yourself that is susceptible to theft.
While tokenization techniques are becoming more commonly used by credit card companies, these techniques are still susceptible to error. The full details of the Target breach haven’t emerged yet but many believe that the perpetrator found a way to circumvent Target’s tokenization.
When a consumer uses bitcoin to pay for goods or services online, they only share the public key and the amount of the payment with the merchant. There is no personally identifiable information shared that makes the consumer susceptible to identity theft.
In order for a consumer’s funds to be used, the public key and private key must be obtained by the thief. For consumers that value privacy and want to prevent identify theft, bitcoin provides an alternative to existing payment options.
Ease of use
Anyone that has used a Coinbase wallet to make a purchase on Overstock, Fancy or any of our 25,000 merchants has likely recognized that our two-click check out process is a truly seamless buying experience.
Paying in bitcoin eliminates the need to enter personal information and jump through additional verification hoops, steps which most existing payment methods require.
dollars
Coinbase and other bitcoin companies provide what is arguably the most frictionless checkout experience on the internet.
These three key benefits are likely to appeal to different consumers, and it is unclear which one will become the primary driver of long-term consumer adoption.
When the consumer Internet became widespread, we couldn’t have imagined amazing services like Airbnb or Uber being built on top of it – we’re at a similar place with the Bitcoin network.
Since Bitcoin is still in the early stages of its development, the benefits to consumers are myriad, and those listed above will be realized very soon. But as the technology matures and becomes ever more mainstream, the possibilities are endless.
Nicholas Tomaino (@ntmoney) | Published on March 2, 2014 at 11:02 GMT | Analysis, Lifestyle, Merchants, News
Nick Tomaino is currently on the business development team at Coinbase, and is also a first-year business school student at the Yale School of Management. Prior to that, he worked in venture capital, most recently for Softbank Capital.
It is becoming increasingly clear to the public that Bitcoin is a compelling option for merchants as a more efficient payment processing option.
But one question that is far from clear and will likely take longer to become apparent is: what are the consumer benefits to using the digital currency, outside of investment and speculation?
Most mainstream consumers view bitcoin as a volatile asset that has no true benefit for consumers looking to spend on goods and services. In Senator Joe Manchin’s letter to the Treasury Department, he wrote:
“Its deflationary trends ensure that only speculators such as so-called ‘Bitcoin miners’ will benefit from possessing the virtual currency.”
This is a dangerous misconception that is often voiced by newcomers to bitcoin. While bitcoin is currently volatile and there are clear risks associated with it, there are also major benefits to spending bitcoin that are likely to become apparent as consumers learn more about the digital currency: cost savings, privacy, and ease of use.
Cost savings
save
Cost savings may ultimately be the most compelling benefit for bitcoin consumers.
The cost savings on the merchant side are clear when you consider the interchange fees, assessment fees, chargeback fees and false declines that merchants currently incur by using existing payment methods.
Ultimately, these fees are passed on to consumers, evidenced by the $0.75 fee you may pay for a transaction under $10.
We’re already seeing large merchants pass the cost savings bitcoin brings on to consumers. Tiger Direct is currently offering $20 off all orders over $100. Fancy.com is currently offering a 25% off coupon on all bitcoin purchases until Sunday.
These promotions are short term, but we expect many large merchants to offer long term discounts on bitcoin purchases in the near future.
As these cost savings continue, consumers will soon realize that unlike credit cards companies, who cause merchants to price their goods higher and pass savings back to only a subset of the consumer base (credit card holders in the form of reward points), bitcoin enables lower prices for the masses.
Privacy
Privacy is on the minds of many US consumers right now, following the significant security breaches that occurred over the past few months at large retailers such as Target and Neiman Marcus.
privacy
These security breaches highlight a fundamental difference between bitcoin and traditional online payment methods.
Generally, when you pay for something online with a debit or credit card, you are giving that merchant personally identifiable information about yourself that is susceptible to theft.
While tokenization techniques are becoming more commonly used by credit card companies, these techniques are still susceptible to error. The full details of the Target breach haven’t emerged yet but many believe that the perpetrator found a way to circumvent Target’s tokenization.
When a consumer uses bitcoin to pay for goods or services online, they only share the public key and the amount of the payment with the merchant. There is no personally identifiable information shared that makes the consumer susceptible to identity theft.
In order for a consumer’s funds to be used, the public key and private key must be obtained by the thief. For consumers that value privacy and want to prevent identify theft, bitcoin provides an alternative to existing payment options.
Ease of use
Anyone that has used a Coinbase wallet to make a purchase on Overstock, Fancy or any of our 25,000 merchants has likely recognized that our two-click check out process is a truly seamless buying experience.
Paying in bitcoin eliminates the need to enter personal information and jump through additional verification hoops, steps which most existing payment methods require.
dollars
Coinbase and other bitcoin companies provide what is arguably the most frictionless checkout experience on the internet.
These three key benefits are likely to appeal to different consumers, and it is unclear which one will become the primary driver of long-term consumer adoption.
When the consumer Internet became widespread, we couldn’t have imagined amazing services like Airbnb or Uber being built on top of it – we’re at a similar place with the Bitcoin network.
Since Bitcoin is still in the early stages of its development, the benefits to consumers are myriad, and those listed above will be realized very soon. But as the technology matures and becomes ever more mainstream, the possibilities are endless.
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.
Dude this is thread only dedicated to BTC.. leave the other altcoins ... Only discuss about BTC and stop promoting something which doesn't worth for now.
Can that promoting post above be deleted or moved into separate thread? The post spoils this thread's purpose in my opinion
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.
Dude this is thread only dedicated to BTC.. leave the other altcoins ... Only discuss about BTC and stop promoting something which doesn't worth for now.
Buttercoin Promises To Launch *Very* Soon… But Where And What?
Caleb Chen 28/02/2014
Buttercoin has just emailed everyone that signed up for their early access list!
buttercoin launch
That’s right, they made a PR campaign out of their launch.
If you are interesting in pushing me further up the queue to get more information on Buttercoin to the masses faster, please follow this link and register for early access.
http://www.cryptocoinsnews.com/wp-content/uploads/2014/02/thank-you-for-your-interest.png
Who Is Buttercoin?
Buttercoin was founded by Cedric Dahl and Bennet Hoffman, formerly of CoinHarvest, back in 2013 and received roughly $1.6 million in funding from various sources including Google Ventures and Y Combinator.
Dahl and Hoffman are targeting the International Remittance market, a $550 billion USD market that is currently run by “cartels” such as Western Union which charge up to 10% for a transfer. Buttercoin seeks to rebuild this crucial international infrastructure using Bitcoin as the centerpiece instead of the current hodgepodge mesh of bank transfer systems riddled with middlemen and governments which is currently used.
As I mentioned back in 2013, both domestic and international remittances highlight Bitcoin’s superiority to the USD as a medium of exchange. I posited that we may soon find ourselves in a world where Bitcoin and other cryptocoins are the best “bank account” that someone in a third world country could conceivably own or have steady access to. A Bitcoin wallet in a fiat denominated world is useless without trusted exchanges though, and that’s where Buttercoin comes in.
How is Buttercoin Launching?
Buttercoin’s plan, as revealed to TechCrunch in an interview last August, is to partner with existing local money transfer businesses in order to guarantee regulatory compliance within the country. However, they plan to keep these local partners’ hands out of the pot, so to say, by only giving them 50% of generated fees. Buttercoin is merely using these existing local money transfer businesses, or third party payment processors as China likes to call them, for regulatory compliance. The hands off partnership offers the established fiat businesses a way to legally tap into the growing Bitcoin economy and in turn allows Buttercoin to bring Bitcoin to that specific country.
What And Where Exactly Is Buttercoin Launching?
It isn’t yet clear what exactly Buttercoin has lined up for the launch. Back in August they informed the press that they planned to open in India by the end of 2014; however, it is likely that the regulatory haze within the Indian government that delayed Unocoin for awhile may have also delayed Buttercoin’s plans in the region.
Astute Bitcoiners may recall that Sunny Ray is involved with both Unocoin and Buttercoin. The connection is simple, Sunny Ray works with BitPay in India and likely knows all the channels (read: existing local money transfer businesses) that will settle Bitcoin with Indian Rupee. Whether or not Buttercoin’s new launch effects Unocoin in any way, remains to be seen.
Buttercoin’s announcement hints that they will be launching their Bitcoin trading platform globally; however, I still sincerely hope that they also have a fully established Bitcoin exchange to announce in a new country.
Caleb Chen 28/02/2014
Buttercoin has just emailed everyone that signed up for their early access list!
buttercoin launch
That’s right, they made a PR campaign out of their launch.
If you are interesting in pushing me further up the queue to get more information on Buttercoin to the masses faster, please follow this link and register for early access.
http://www.cryptocoinsnews.com/wp-content/uploads/2014/02/thank-you-for-your-interest.png
Who Is Buttercoin?
Buttercoin was founded by Cedric Dahl and Bennet Hoffman, formerly of CoinHarvest, back in 2013 and received roughly $1.6 million in funding from various sources including Google Ventures and Y Combinator.
Dahl and Hoffman are targeting the International Remittance market, a $550 billion USD market that is currently run by “cartels” such as Western Union which charge up to 10% for a transfer. Buttercoin seeks to rebuild this crucial international infrastructure using Bitcoin as the centerpiece instead of the current hodgepodge mesh of bank transfer systems riddled with middlemen and governments which is currently used.
As I mentioned back in 2013, both domestic and international remittances highlight Bitcoin’s superiority to the USD as a medium of exchange. I posited that we may soon find ourselves in a world where Bitcoin and other cryptocoins are the best “bank account” that someone in a third world country could conceivably own or have steady access to. A Bitcoin wallet in a fiat denominated world is useless without trusted exchanges though, and that’s where Buttercoin comes in.
How is Buttercoin Launching?
Buttercoin’s plan, as revealed to TechCrunch in an interview last August, is to partner with existing local money transfer businesses in order to guarantee regulatory compliance within the country. However, they plan to keep these local partners’ hands out of the pot, so to say, by only giving them 50% of generated fees. Buttercoin is merely using these existing local money transfer businesses, or third party payment processors as China likes to call them, for regulatory compliance. The hands off partnership offers the established fiat businesses a way to legally tap into the growing Bitcoin economy and in turn allows Buttercoin to bring Bitcoin to that specific country.
What And Where Exactly Is Buttercoin Launching?
It isn’t yet clear what exactly Buttercoin has lined up for the launch. Back in August they informed the press that they planned to open in India by the end of 2014; however, it is likely that the regulatory haze within the Indian government that delayed Unocoin for awhile may have also delayed Buttercoin’s plans in the region.
Astute Bitcoiners may recall that Sunny Ray is involved with both Unocoin and Buttercoin. The connection is simple, Sunny Ray works with BitPay in India and likely knows all the channels (read: existing local money transfer businesses) that will settle Bitcoin with Indian Rupee. Whether or not Buttercoin’s new launch effects Unocoin in any way, remains to be seen.
Buttercoin’s announcement hints that they will be launching their Bitcoin trading platform globally; however, I still sincerely hope that they also have a fully established Bitcoin exchange to announce in a new country.
Great finds, keep them coming 
HighKart Launches as India’s First Bitcoin E-Tailer
Roop Gill (@roopgill) | Published on February 28, 2014 at 20:30 GMT | Companies, Merchants, Startups
HighKart.com has become the first e-commerce site in India to exclusively accept bitcoin as a payment method.
Launched by Delhi-based entrepreneur Amit Kumar, the online store retails more than 150 products, ranging from digital currency mining equipment to fashion accessories.
Currently, there are more than 500 e-commerce startups in India – most having popped up within the last five years. Companies like Flipkart are dominating the local market, making it difficult for new players to enter.
HighKart is taking an unusual, and brave, route into this mêlée by eliminating the large potential consumer base that uses fiat currencies and opting to accept only bitcoin.
However, HighKart’s model relies on rejecting fiat in order to turn over profits. Kumar explains that being an exclusively bitcoin retailer helps him offer competitive prices because he does not have to pay commission to payment processors. He added:
“I can also hold onto the bitcoin and wait for the valuation increase and still make money out of it, which is not possible with the fiat currency.”
Bank jitters
While HighKart is not the first Indian business to say ‘yes’ to bitcoin, other ventures are accepting it alongside fiat.
WeRwired, a Bangalore-based geospatial, security and entertainment consulting company, is one of them. The owners started accepting bitcoin payments in order to give more choice to their customers, they say.
Castle Bloom, a salon in Chandigarh, became the first physical outlet to start accepting the digital currency late last year. However, that honour was short-lived and they reversed their decision following the recent Reserve Bank of India raids on bitcoin exchanges. Castle Bloom refused to comment further.
Those raids, along with an RBI warning on virtual currencies, have raised alarm in the Indian bitcoin community, but Kumar is not worried about the warnings because he says that all of the products in his catalogue are legal in India.
He says that a big reason for starting this venture was to get people to start using their bitcoin, as opposed to simply holding them:
“In the Indian ecosystem, bitcoin is still just a holding asset – this is not going to help the Indian bitcoin community to grow.
If you want to make it a sustainable currency in the longer run, then there should be an intrinsic value to the currency. And that comes when you start using that currency.”
Kumar is so confident about his business model that he is planning to expand its operations in the American market as well.
Coins in the wrong basket
While HighKart is the first stab at a bitcoin-exclusive e-commerce venture in India, many other enterprises are already up and running. Currency exchanges are the most popular bitcoin-based business right now.
Venture capitalist Maninder Gulati says, however, that both e-commerce and exchanges are not useful for the Indian bitcoin ecosystem at the moment.
Gulati is the vice president at Lightspeed Ventures, a company that has invested in three bitcoin startups including BTC China.
“Most of the startups that have come about have taken a short-term view,” he explained. “Their view is ‘let me build an exchange’ rather than actually solving some of the core problems: liquidity, awareness, convenience, security.”
He is encouraging entrepreneurs to take a different approach:
“If I was an entrepreneur, I would look at things differently. I would say, what is really the India-specific case that solves a certain problem using bitcoin that cannot be solved otherwise. E-commerce is not that problem right now.”
Another concern with launching a bitcoin e-commerce site in India is the low popularity of digital currencies in the country. However, Kumar debunks that myth:
“There is a misconception about the bitcoin community in India being small. People have bitcoin; they are just afraid to use it. We are getting orders from very remote parts of India, which we never imagined.”
Roop Gill (@roopgill) | Published on February 28, 2014 at 20:30 GMT | Companies, Merchants, Startups
HighKart.com has become the first e-commerce site in India to exclusively accept bitcoin as a payment method.
Launched by Delhi-based entrepreneur Amit Kumar, the online store retails more than 150 products, ranging from digital currency mining equipment to fashion accessories.
Currently, there are more than 500 e-commerce startups in India – most having popped up within the last five years. Companies like Flipkart are dominating the local market, making it difficult for new players to enter.
HighKart is taking an unusual, and brave, route into this mêlée by eliminating the large potential consumer base that uses fiat currencies and opting to accept only bitcoin.
However, HighKart’s model relies on rejecting fiat in order to turn over profits. Kumar explains that being an exclusively bitcoin retailer helps him offer competitive prices because he does not have to pay commission to payment processors. He added:
“I can also hold onto the bitcoin and wait for the valuation increase and still make money out of it, which is not possible with the fiat currency.”
Bank jitters
While HighKart is not the first Indian business to say ‘yes’ to bitcoin, other ventures are accepting it alongside fiat.
WeRwired, a Bangalore-based geospatial, security and entertainment consulting company, is one of them. The owners started accepting bitcoin payments in order to give more choice to their customers, they say.
Castle Bloom, a salon in Chandigarh, became the first physical outlet to start accepting the digital currency late last year. However, that honour was short-lived and they reversed their decision following the recent Reserve Bank of India raids on bitcoin exchanges. Castle Bloom refused to comment further.
Those raids, along with an RBI warning on virtual currencies, have raised alarm in the Indian bitcoin community, but Kumar is not worried about the warnings because he says that all of the products in his catalogue are legal in India.
He says that a big reason for starting this venture was to get people to start using their bitcoin, as opposed to simply holding them:
“In the Indian ecosystem, bitcoin is still just a holding asset – this is not going to help the Indian bitcoin community to grow.
If you want to make it a sustainable currency in the longer run, then there should be an intrinsic value to the currency. And that comes when you start using that currency.”
Kumar is so confident about his business model that he is planning to expand its operations in the American market as well.
Coins in the wrong basket
While HighKart is the first stab at a bitcoin-exclusive e-commerce venture in India, many other enterprises are already up and running. Currency exchanges are the most popular bitcoin-based business right now.
Venture capitalist Maninder Gulati says, however, that both e-commerce and exchanges are not useful for the Indian bitcoin ecosystem at the moment.
Gulati is the vice president at Lightspeed Ventures, a company that has invested in three bitcoin startups including BTC China.
“Most of the startups that have come about have taken a short-term view,” he explained. “Their view is ‘let me build an exchange’ rather than actually solving some of the core problems: liquidity, awareness, convenience, security.”
He is encouraging entrepreneurs to take a different approach:
“If I was an entrepreneur, I would look at things differently. I would say, what is really the India-specific case that solves a certain problem using bitcoin that cannot be solved otherwise. E-commerce is not that problem right now.”
Another concern with launching a bitcoin e-commerce site in India is the low popularity of digital currencies in the country. However, Kumar debunks that myth:
“There is a misconception about the bitcoin community in India being small. People have bitcoin; they are just afraid to use it. We are getting orders from very remote parts of India, which we never imagined.”
Fortress May be First Public Company to Own Millions of Dollars in Bitcoins, Discloses $20m Worth
Nermin Hajdarbegovic | Published on February 28, 2014 at 14:06 GMT | Investors
Fortress Investment Group purchased $20m worth of bitcoins last year, according to a recent filing with the SEC.
Back in December it was rumoured that Fortress had plans to launch a bitcoin investment fund. The news was first reported by CNN, but it could not be confirmed until now.
Fortress is said to be developing a new investment vehicle based on bitcoin which is expected to be an unlisted Exchange Traded Fund (ETF).
The move appears to have been connected to San Francisco-based Pantera Capital. Pantera then registered an investment advisor entity called Pantera Bitcoin Advisors LLC and it filed the necessary paperwork with the Securities and Exchange Commission (SEC).
$20m for bitcoins last year
According to the 10-K filed with the SEC by Fortress, the investment group set aside $20m for the purchase of bitcoins in 2013. The $20m represents a balance sheet investment by Fortress, and no Fortress-managed funds were used in conjunction with the purchase.
The filing was scrutinized by Gil Luria, who tweeted that Fortress may be the first publicly traded company to report substantial bitcoin holdings.
As of 31st December, Fortress reported having $16,260,000 worth of bitcoins – listed as “other assets”. In addition, Fortress reported $3,702,000 of losses or unrealized gains on its bitcoin investments, but there is a bit of a caveat, as Fortress points out:
“Digital Currency (Bitcoin) – Represents Fortress’s holdings of digital currency which is recorded at the lower of cost or fair value. If fair value is below cost, Fortress records an unrealized loss measured as the excess of cost over fair value of the digital currency. Subsequently, to the extent that fair value increases, Fortress records an unrealized gain but shall not report digital currency above cost.
Fortress determines fair value based on estimated exit value using significant observable inputs as of the balance sheet date. Fortress recorded $3.7 million in unrealized losses on digital currency during 2013, which was included in gains (losses) in the Consolidated Statements of Operations.”
Still, with a balance sheet of $2.6bn, the move represents a relatively small investment for the company that may be immaterial given its holdings.
But, though the purchase may be exploratory, the price of bitcoin has dropped quite a bit since late 2013, so the $3.7m figure might be even lower now, provided Fortress is still holding on to the coins. It notably did not disclose the holdings in its third quarter filings.
What’s the endgame?
There has been quite a bit of interest in digital currencies from institutional investors. Several interesting reports have been published over the last week, including bullish reports from Wedbush Securities and PriceWaterhouseCoopers.
The Winklevoss twins are also vying for a slice of the market through the Winklevoss Bitcoin Trust. The pair have recently filed a revised ETF with the SEC, but it is still unclear when the Winklevoss ETF will launch.
Many of these developments have been overshadowed by the highly publicised collapse of Mt. Gox, DDoS attacks on major exchanges and the arrest of Charlie Shrem. However, if major institutional investors are serious about investing in bitcoin, a deflated price could be just what they need.
Nermin Hajdarbegovic | Published on February 28, 2014 at 14:06 GMT | Investors
Fortress Investment Group purchased $20m worth of bitcoins last year, according to a recent filing with the SEC.
Back in December it was rumoured that Fortress had plans to launch a bitcoin investment fund. The news was first reported by CNN, but it could not be confirmed until now.
Fortress is said to be developing a new investment vehicle based on bitcoin which is expected to be an unlisted Exchange Traded Fund (ETF).
The move appears to have been connected to San Francisco-based Pantera Capital. Pantera then registered an investment advisor entity called Pantera Bitcoin Advisors LLC and it filed the necessary paperwork with the Securities and Exchange Commission (SEC).
$20m for bitcoins last year
According to the 10-K filed with the SEC by Fortress, the investment group set aside $20m for the purchase of bitcoins in 2013. The $20m represents a balance sheet investment by Fortress, and no Fortress-managed funds were used in conjunction with the purchase.
The filing was scrutinized by Gil Luria, who tweeted that Fortress may be the first publicly traded company to report substantial bitcoin holdings.
As of 31st December, Fortress reported having $16,260,000 worth of bitcoins – listed as “other assets”. In addition, Fortress reported $3,702,000 of losses or unrealized gains on its bitcoin investments, but there is a bit of a caveat, as Fortress points out:
“Digital Currency (Bitcoin) – Represents Fortress’s holdings of digital currency which is recorded at the lower of cost or fair value. If fair value is below cost, Fortress records an unrealized loss measured as the excess of cost over fair value of the digital currency. Subsequently, to the extent that fair value increases, Fortress records an unrealized gain but shall not report digital currency above cost.
Fortress determines fair value based on estimated exit value using significant observable inputs as of the balance sheet date. Fortress recorded $3.7 million in unrealized losses on digital currency during 2013, which was included in gains (losses) in the Consolidated Statements of Operations.”
Still, with a balance sheet of $2.6bn, the move represents a relatively small investment for the company that may be immaterial given its holdings.
But, though the purchase may be exploratory, the price of bitcoin has dropped quite a bit since late 2013, so the $3.7m figure might be even lower now, provided Fortress is still holding on to the coins. It notably did not disclose the holdings in its third quarter filings.
What’s the endgame?
There has been quite a bit of interest in digital currencies from institutional investors. Several interesting reports have been published over the last week, including bullish reports from Wedbush Securities and PriceWaterhouseCoopers.
The Winklevoss twins are also vying for a slice of the market through the Winklevoss Bitcoin Trust. The pair have recently filed a revised ETF with the SEC, but it is still unclear when the Winklevoss ETF will launch.
Many of these developments have been overshadowed by the highly publicised collapse of Mt. Gox, DDoS attacks on major exchanges and the arrest of Charlie Shrem. However, if major institutional investors are serious about investing in bitcoin, a deflated price could be just what they need.
Mac Malware CoinThief Now Disguised as Angry Birds and Other Popular Apps
Neil Sardesai 28/02/2014 Posted 5 hours ago
Mac Malware CoinThief Now Disguised as Angry Birds and Other Popular Apps
Pirated versions of popular Mac apps like Angry Birds are coming bundled with CoinThief, a Bitcoin-stealing trojan.
Just two weeks ago, we reported that a new trojan called CoinThief was stealing thousands of dollars worth of Bitcoin from Mac users. One unfortunate reddit user lost 20 BTC (~$11,340 at the time of this post) due to the malware. CoinThief spread through cryptocurrency-related applications such as Bitcoin Ticker TTM (To The Moon), Litecoin Ticker, BitVanity, and StealthBit. However, security firm ESET has discovered that the trojan is now masquerading as cracked versions of popular Mac applications, including Angry Birds, Pixelmator, BBEdit, and Delicious Library. According to ESET,
“There is clearly strong evidence that the trojan was specifically designed to profit from the current Bitcoin craze and fluctuating exchange rates.
According to detection statistics gathered by the ESET LiveGrid, the threat is mostly active amongst Mac users based in the United States.”
In case you’re not familiar with the malware, CoinThief installs a rogue browser extension that monitors for popular Bitcoin exchanges and wallets like BTC-E and Blockchain respectively. CoinThief also installs a background application (a keylogger) to capture login credentials and send them to a remote server. This makes it really easy for the malware author(s) to steal Bitcoins, since users unwittingly hand over their account credentials to Bitcoin exchanges and wallets.
Detecting and removing CoinThief is not too difficult, and instructions can be found here. If you’re really interested in just exactly how CoinThief works on a deep, code level, check out this analysis at Reverse Engineering Mac OS X. And finally, this should go without saying, but if you want to avoid CoinThief (and other types of malware), avoid pirated software. Official Mac App Store versions of apps like Angry Birds and Pixelmator obviously don’t come bundled with CoinThief. And anyway, if you can spend over $1000 on a Mac, you can surely afford a $5 game.
Neil Sardesai 28/02/2014 Posted 5 hours ago
Mac Malware CoinThief Now Disguised as Angry Birds and Other Popular Apps
Pirated versions of popular Mac apps like Angry Birds are coming bundled with CoinThief, a Bitcoin-stealing trojan.
Just two weeks ago, we reported that a new trojan called CoinThief was stealing thousands of dollars worth of Bitcoin from Mac users. One unfortunate reddit user lost 20 BTC (~$11,340 at the time of this post) due to the malware. CoinThief spread through cryptocurrency-related applications such as Bitcoin Ticker TTM (To The Moon), Litecoin Ticker, BitVanity, and StealthBit. However, security firm ESET has discovered that the trojan is now masquerading as cracked versions of popular Mac applications, including Angry Birds, Pixelmator, BBEdit, and Delicious Library. According to ESET,
“There is clearly strong evidence that the trojan was specifically designed to profit from the current Bitcoin craze and fluctuating exchange rates.
According to detection statistics gathered by the ESET LiveGrid, the threat is mostly active amongst Mac users based in the United States.”
In case you’re not familiar with the malware, CoinThief installs a rogue browser extension that monitors for popular Bitcoin exchanges and wallets like BTC-E and Blockchain respectively. CoinThief also installs a background application (a keylogger) to capture login credentials and send them to a remote server. This makes it really easy for the malware author(s) to steal Bitcoins, since users unwittingly hand over their account credentials to Bitcoin exchanges and wallets.
Detecting and removing CoinThief is not too difficult, and instructions can be found here. If you’re really interested in just exactly how CoinThief works on a deep, code level, check out this analysis at Reverse Engineering Mac OS X. And finally, this should go without saying, but if you want to avoid CoinThief (and other types of malware), avoid pirated software. Official Mac App Store versions of apps like Angry Birds and Pixelmator obviously don’t come bundled with CoinThief. And anyway, if you can spend over $1000 on a Mac, you can surely afford a $5 game.
BitTorrent Client Integrates Bitcoin Donations
Nermin Hajdarbegovic | Published on February 28, 2014 at 12:40 GMT | Technology
Popular BitTorrent client Frostwire has integrated an experimental mechanism that will allow users to donate bitcoins to torrent sharers. In addition to bitcoin, the same mechanism can be used for litecoin, dogecoin and even PayPal.
FrostWire believes the idea will allow small content creators to easily monetize their content simply by getting tips from those who download it using the P2P client. Needless to say, Big Content is probably not thrilled by the prospect of decentralised content markets, let alone the fact that the technology could even be used to monetize piracy.
However, that is not what FrostWire has in mind, not even close.
Fighting piracy through P2P?
In fact, Frostwire developers believe they are combating piracy by adding the tip mechanism. FrostWire’s Angel Leon told Torrentfreak:
“We believe piracy is best fought by giving consumers the options of getting legal content, and we want to build solutions that use this technology to empower content creators no matter how big or small they are. We want them to try BitTorrent as an alternative, an additional channel. We think it will be easier to convince more and more artists to join us with the new possibilities.”
“Putting it bluntly, Bitcoin and BitTorrent integration give us the tools to create the P2P equivalents of iTunes and Netflix, which are centralized venues which work great for big content but not so much for the little guys who have to jump through many hoops to get in.”
If piracy scares Big Content, then this idea could leave it shell-shocked. Depending on how it is implemented, it could allow just about anyone to monetize huge amounts of content with relatively little in the way of resources and infrastructure. The P2P network would provide both the hardware and bandwidth, as well as cash.
FrostWire sees endless possibilities
In addition to simply selling content via P2P networks, using P2P currencies, FrostWire believes the concept could be applied to other commercial and non-commercial ideas.
Leon believes it could result in a decentralised media store owned by nobody and available to all. The network would allow content creators to deal directly with customers, eliminating corporate interests in the process.
Cutting out the middleman tends to be good for business, so content prices could go down, while at the same time content creators could earn even more than they would if they used a traditional publisher or distributor.
It would also give content creators more freedom, as they would not have to water down their works to meet corporate standards. In other words, it may lead to even more explicit lyrics, mental bass lines and gratuitous nudity in videos.
Non-commercial efforts could help charities raise more money and more awareness, simply by tapping P2P networks with the help of a few popular artists. Artists could share content, while people who enjoy it could make bitcoin donations to their charity of choice.
It sounds like a very practical and useful concept, but at the end of the day it still relies on people – which might not be a bad thing.
From a moral perspective, it is one thing to rip off a huge corporation by illegally downloading its content – as many people simply don’t care.
However, they might think twice if their cash is going directly to the artist and if the price is much lower without corporate middlemen.
If you are interested, you can check up FrostWire’s GitHub for more information.
Nermin Hajdarbegovic | Published on February 28, 2014 at 12:40 GMT | Technology
Popular BitTorrent client Frostwire has integrated an experimental mechanism that will allow users to donate bitcoins to torrent sharers. In addition to bitcoin, the same mechanism can be used for litecoin, dogecoin and even PayPal.
FrostWire believes the idea will allow small content creators to easily monetize their content simply by getting tips from those who download it using the P2P client. Needless to say, Big Content is probably not thrilled by the prospect of decentralised content markets, let alone the fact that the technology could even be used to monetize piracy.
However, that is not what FrostWire has in mind, not even close.
Fighting piracy through P2P?
In fact, Frostwire developers believe they are combating piracy by adding the tip mechanism. FrostWire’s Angel Leon told Torrentfreak:
“We believe piracy is best fought by giving consumers the options of getting legal content, and we want to build solutions that use this technology to empower content creators no matter how big or small they are. We want them to try BitTorrent as an alternative, an additional channel. We think it will be easier to convince more and more artists to join us with the new possibilities.”
“Putting it bluntly, Bitcoin and BitTorrent integration give us the tools to create the P2P equivalents of iTunes and Netflix, which are centralized venues which work great for big content but not so much for the little guys who have to jump through many hoops to get in.”
If piracy scares Big Content, then this idea could leave it shell-shocked. Depending on how it is implemented, it could allow just about anyone to monetize huge amounts of content with relatively little in the way of resources and infrastructure. The P2P network would provide both the hardware and bandwidth, as well as cash.
FrostWire sees endless possibilities
In addition to simply selling content via P2P networks, using P2P currencies, FrostWire believes the concept could be applied to other commercial and non-commercial ideas.
Leon believes it could result in a decentralised media store owned by nobody and available to all. The network would allow content creators to deal directly with customers, eliminating corporate interests in the process.
Cutting out the middleman tends to be good for business, so content prices could go down, while at the same time content creators could earn even more than they would if they used a traditional publisher or distributor.
It would also give content creators more freedom, as they would not have to water down their works to meet corporate standards. In other words, it may lead to even more explicit lyrics, mental bass lines and gratuitous nudity in videos.
Non-commercial efforts could help charities raise more money and more awareness, simply by tapping P2P networks with the help of a few popular artists. Artists could share content, while people who enjoy it could make bitcoin donations to their charity of choice.
It sounds like a very practical and useful concept, but at the end of the day it still relies on people – which might not be a bad thing.
From a moral perspective, it is one thing to rip off a huge corporation by illegally downloading its content – as many people simply don’t care.
However, they might think twice if their cash is going directly to the artist and if the price is much lower without corporate middlemen.
If you are interested, you can check up FrostWire’s GitHub for more information.
Coinbase Talks 1 Million Wallet Milestone, Mt. Gox and What’s Next
Pete Rizzo (@pete_rizzo_) | Published on February 27, 2014 at 22:42 GMT | Coinbase, Companies, News, Wallets
San Francisco-based bitcoin wallet provider Coinbase has revealed that it officially passed 1 million wallet downloads on 27th February, a major milestone in the lifecycle of the less than two-year-old company.
Founded in June 2012, Coinbase is the second most downloaded consumer bitcoin wallet behind rival Blockchain, which passed its 1 million wallet mark in January.
But, that doesn’t make Coinbase’s numbers any less impressive. At the beginning of 2013, Coinbase had facilitated just 13,000 wallet downloads, meaning it saw more than 7,000% growth over the course of 2013. Further, the company’s internal estimates suggest it’s now adding five new users a minute.
Coinbase co-founder Fred Ehrsam told CoinDesk that growth is coming so quickly in both its consumer and merchant services that he’s barely had the time to reflect since learning of the news:
“Honestly, there’s been so much going on so quickly, you want to make sure you’re iterating on the product as much as possible.”
But during the interview, Ehrsam did stop to reflect on his company’s last year and his own personal journey in the bitcoin space.
Throughout the talk, Ehrsam showed that he’s eager to put past challenges behind so that he can focus on what lies ahead.
Improving the product
Ehrsam addressed the challenge that comes with operating in a space with seemingly endless opportunities, but said he’s always grounded himself with the knowledge that Coinbase is, at its core, about making bitcoin easy to use.
Said Ehrsam:
“You can think about going out doing things like deterministic hierarchical wallets or building other unique things on top of the block chain or doing a full blown industrial exchange.
There’s a lot of opportunity out there, but I want to propel this into the mainstream.”
The personal goal for Ehrsam is for one of those 1 million wallet users to be his mom or a friend from school, the kind of users that will require bitcoin to become more approachable for mainstream commerce.
Right now, Ehrsam estimates Coinbase is 70 to 80% of the way there, but that obstacles remain.
The impact of Mt. Gox
Of course, one vital part of convincing more consumers to enroll will be providing education, a matter that is particularly noteworthy given the media storm surrounding bitcoin as the result of troubled Japan-based exchange Mt. Gox.
For his part, Ehrsam chooses to see the good that has come out of the development, noting that he’s been impressed by the resilience of the bitcoin space.
Still, Ehrsam acknowledges this likely won’t be the last bad news that surfaces as part of a broader transition, one where bitcoin businesses must now play by the rules of regulators. Ehrsam even went so far as to suggest that Coinbase could have ended up falling victim to the same fate as Mt. Gox, had it not made key early decisions.
He traces Coinbase’s success back to its decision to embrace regulatory compliance, one he noted at the NYDFS hearings came with considerable cost:
“When we saw [the FinCEN decision] come out, there was definitely a decision that needed to be made. We could take a risky or defiant route and say ‘Hey maybe we don’t fall under money services business [MSB] standards,’ or meet it head on.’”
2014 and beyond
Despite recent challenges, Ehrsam is still optimistic about his company’s user growth and the growth of the ecosystem in 2014.
This year, he suggested that bitcoin will become more liquid around the world and enter the remittance market. It’s possible that he even shared a hint with a rather bold prediction:
“I think 2014 is going to be the year where you see 10 $1 billion retailers, probably almost exclusively online ones, start accepting bitcoin,” he said.
Pete Rizzo (@pete_rizzo_) | Published on February 27, 2014 at 22:42 GMT | Coinbase, Companies, News, Wallets
San Francisco-based bitcoin wallet provider Coinbase has revealed that it officially passed 1 million wallet downloads on 27th February, a major milestone in the lifecycle of the less than two-year-old company.
Founded in June 2012, Coinbase is the second most downloaded consumer bitcoin wallet behind rival Blockchain, which passed its 1 million wallet mark in January.
But, that doesn’t make Coinbase’s numbers any less impressive. At the beginning of 2013, Coinbase had facilitated just 13,000 wallet downloads, meaning it saw more than 7,000% growth over the course of 2013. Further, the company’s internal estimates suggest it’s now adding five new users a minute.
Coinbase co-founder Fred Ehrsam told CoinDesk that growth is coming so quickly in both its consumer and merchant services that he’s barely had the time to reflect since learning of the news:
“Honestly, there’s been so much going on so quickly, you want to make sure you’re iterating on the product as much as possible.”
But during the interview, Ehrsam did stop to reflect on his company’s last year and his own personal journey in the bitcoin space.
Throughout the talk, Ehrsam showed that he’s eager to put past challenges behind so that he can focus on what lies ahead.
Improving the product
Ehrsam addressed the challenge that comes with operating in a space with seemingly endless opportunities, but said he’s always grounded himself with the knowledge that Coinbase is, at its core, about making bitcoin easy to use.
Said Ehrsam:
“You can think about going out doing things like deterministic hierarchical wallets or building other unique things on top of the block chain or doing a full blown industrial exchange.
There’s a lot of opportunity out there, but I want to propel this into the mainstream.”
The personal goal for Ehrsam is for one of those 1 million wallet users to be his mom or a friend from school, the kind of users that will require bitcoin to become more approachable for mainstream commerce.
Right now, Ehrsam estimates Coinbase is 70 to 80% of the way there, but that obstacles remain.
The impact of Mt. Gox
Of course, one vital part of convincing more consumers to enroll will be providing education, a matter that is particularly noteworthy given the media storm surrounding bitcoin as the result of troubled Japan-based exchange Mt. Gox.
For his part, Ehrsam chooses to see the good that has come out of the development, noting that he’s been impressed by the resilience of the bitcoin space.
Still, Ehrsam acknowledges this likely won’t be the last bad news that surfaces as part of a broader transition, one where bitcoin businesses must now play by the rules of regulators. Ehrsam even went so far as to suggest that Coinbase could have ended up falling victim to the same fate as Mt. Gox, had it not made key early decisions.
He traces Coinbase’s success back to its decision to embrace regulatory compliance, one he noted at the NYDFS hearings came with considerable cost:
“When we saw [the FinCEN decision] come out, there was definitely a decision that needed to be made. We could take a risky or defiant route and say ‘Hey maybe we don’t fall under money services business [MSB] standards,’ or meet it head on.’”
2014 and beyond
Despite recent challenges, Ehrsam is still optimistic about his company’s user growth and the growth of the ecosystem in 2014.
This year, he suggested that bitcoin will become more liquid around the world and enter the remittance market. It’s possible that he even shared a hint with a rather bold prediction:
“I think 2014 is going to be the year where you see 10 $1 billion retailers, probably almost exclusively online ones, start accepting bitcoin,” he said.
Bitcoin Transaction Fees To Be Slashed Tenfold
Danny Bradbury (@dannybradbury) | Published on February 28, 2014 at 05:23 GMT | Bitcoin protocol, News, Technology
The bitcoin developers are about to reduce the transaction fees on the bitcoin network tenfold, thanks to the relatively high value of the digital currency.
Transaction fees are small amounts paid to send bitcoin transactions around the network (think of them like postage stamps) and to get miners to confirm them by including them in a mining block. They’re paid in satoshis (tiny amounts of bitcoins), which means that as the price of bitcoin rises, the transaction fees get higher.
Recent fluctuations in the bitcoin world may have set the price yo-yoing, but that doesn’t mean that it isn’t doing relatively well. The CoinDesk Bitcoin Price Index is still hovering in the $540 range at the time of writing, a little over six times the price last July, when the Index was first introduced.
Making it cheaper to send transactions
The core developers first started discussing the possibility of slashing transaction fees for the coin around three months ago, in this post on the mailing list. At the time, developer Mike Hearn mentioned that the last reduction in transaction fees were about six months earlier, from 50k satoshis to 10k satoshis, in the 0.8.2 release of the reference client (which was released in May 2013).
That held up for a while, but with the spike in pricing, it puts the average transaction fee at around 5 cents of the US dollar. This latest patch would reduce it to half a cent.
There are two thresholds to meet when creating a bitcoin transaction and deciding what fee to charge, explains core developer Jeff Garzik. The first enables the network to relay your transaction, while the second persuades bitcoin miners to include your transaction in a block that they are mining. The first must occur before the second, so that the transaction gets to the miners in the first place.
“In order to avoid spam, there is a hardcoded minimum, to avoid relaying transactions across the payment network that will never confirm (due to low fees or other reasons),” said Garzik. “This anti-spam minimum had not been adjusted since before the large price increase. Now, it’s been adjusted.”
The change is still working its way through the development process, though, said Hearn.
“It’s what’s currently in git master, although of course that’s open to be changed any time before the final release of 0.9,” he said.
Git is the online version control system used by the core developers to manage the various submissions to the code, and ‘master’ is the ‘official’ version, although this doesn’t mean that it has actually been released .
“Actually 0.9 should have been out already,” Hearn continued. “We went to a [release candidate] 1, but the recent malleability stuff means that it got delayed a bit I think.”
The one worry with lowering these hard-coded relay transaction fees is that it could open the door to denial of service attacks, in which people take advantage of very low transaction fees to flood the system with useless transactions designed to clog up the network. Gavin Andresen, who heads up the open source development team behind bitcoin, has explained that the ‘dust’ rule, which defines a minimum amount that can be sent over the network, is set by the transaction relay fee.
“I really don’t want to start playing whack-a-mole with spamming DoS attacks,” said Andresen. One proposal to try and limit spam involves restructuring the bitcoin memory pool (this is the collective memory around the network, that holds bitcoin transactions that have been received but not yet confirmed).
“I’d much rather get to a floating fee system with NO hard-coded relay fee rule sooner,” Andresen has said. What he means is that ultimately, transaction fees won’t be hard coded at all.
Garzik calls hard coded fees a bug, and a dynamic system of ‘floating’ transaction fees is preferable. In this scenario, the free market would decide both the relay limits and the block inclusion thresholds.
This is what smart fees are about. This enhancement to the bitcoin client would see both relay and mining fees handled dynamically, said Garzik. Only transactions likely to be confirmed in the blockchain within 48 hours would be relayed.
Smart fees aren’t yet complete, though, so for now, lowering the transaction fees is a way to make it cheaper to relay transactions. Let’s just hope it doesn’t create a deluge of crud along the way.
Danny Bradbury (@dannybradbury) | Published on February 28, 2014 at 05:23 GMT | Bitcoin protocol, News, Technology
The bitcoin developers are about to reduce the transaction fees on the bitcoin network tenfold, thanks to the relatively high value of the digital currency.
Transaction fees are small amounts paid to send bitcoin transactions around the network (think of them like postage stamps) and to get miners to confirm them by including them in a mining block. They’re paid in satoshis (tiny amounts of bitcoins), which means that as the price of bitcoin rises, the transaction fees get higher.
Recent fluctuations in the bitcoin world may have set the price yo-yoing, but that doesn’t mean that it isn’t doing relatively well. The CoinDesk Bitcoin Price Index is still hovering in the $540 range at the time of writing, a little over six times the price last July, when the Index was first introduced.
Making it cheaper to send transactions
The core developers first started discussing the possibility of slashing transaction fees for the coin around three months ago, in this post on the mailing list. At the time, developer Mike Hearn mentioned that the last reduction in transaction fees were about six months earlier, from 50k satoshis to 10k satoshis, in the 0.8.2 release of the reference client (which was released in May 2013).
That held up for a while, but with the spike in pricing, it puts the average transaction fee at around 5 cents of the US dollar. This latest patch would reduce it to half a cent.
There are two thresholds to meet when creating a bitcoin transaction and deciding what fee to charge, explains core developer Jeff Garzik. The first enables the network to relay your transaction, while the second persuades bitcoin miners to include your transaction in a block that they are mining. The first must occur before the second, so that the transaction gets to the miners in the first place.
“In order to avoid spam, there is a hardcoded minimum, to avoid relaying transactions across the payment network that will never confirm (due to low fees or other reasons),” said Garzik. “This anti-spam minimum had not been adjusted since before the large price increase. Now, it’s been adjusted.”
The change is still working its way through the development process, though, said Hearn.
“It’s what’s currently in git master, although of course that’s open to be changed any time before the final release of 0.9,” he said.
Git is the online version control system used by the core developers to manage the various submissions to the code, and ‘master’ is the ‘official’ version, although this doesn’t mean that it has actually been released .
“Actually 0.9 should have been out already,” Hearn continued. “We went to a [release candidate] 1, but the recent malleability stuff means that it got delayed a bit I think.”
The one worry with lowering these hard-coded relay transaction fees is that it could open the door to denial of service attacks, in which people take advantage of very low transaction fees to flood the system with useless transactions designed to clog up the network. Gavin Andresen, who heads up the open source development team behind bitcoin, has explained that the ‘dust’ rule, which defines a minimum amount that can be sent over the network, is set by the transaction relay fee.
“I really don’t want to start playing whack-a-mole with spamming DoS attacks,” said Andresen. One proposal to try and limit spam involves restructuring the bitcoin memory pool (this is the collective memory around the network, that holds bitcoin transactions that have been received but not yet confirmed).
“I’d much rather get to a floating fee system with NO hard-coded relay fee rule sooner,” Andresen has said. What he means is that ultimately, transaction fees won’t be hard coded at all.
Garzik calls hard coded fees a bug, and a dynamic system of ‘floating’ transaction fees is preferable. In this scenario, the free market would decide both the relay limits and the block inclusion thresholds.
This is what smart fees are about. This enhancement to the bitcoin client would see both relay and mining fees handled dynamically, said Garzik. Only transactions likely to be confirmed in the blockchain within 48 hours would be relayed.
Smart fees aren’t yet complete, though, so for now, lowering the transaction fees is a way to make it cheaper to relay transactions. Let’s just hope it doesn’t create a deluge of crud along the way.
Unilateral Statement Regarding Mt. Gox from an Insider
Jesse Powell (@jespow) | Published on February 27, 2014 at 16:32 GMT | Analysis, Companies, Exchanges, Mt. Gox, News
Jesse Powell is founder and CEO of cryptocurrency trading platform Kraken. Here, he shares his reaction to the recent Mt. Gox revelations, and offers advice to fellow ‘goxed’ customers who have lost both funds and faith in bitcoin. This article was originally posted on Jesse’s blog.
I am deeply saddened to hear of the tremendous loss suffered by the bitcoin community today.
Undoubtedly, thousands of lives have been destroyed and innocent people have been left in financial ruin. I’m not often short on imagination but how the damage got to be so severe without anyone noticing is unfathomable.
I can’t help but be angry, and frustrated and depressed. All the hard work we’ve done to bring bitcoin in to the mainstream and now this, and the people. Fuck.
I actually had lunch with Mark and Gonzague in Tokyo just a month ago and despite their banking woes, they were upbeat and excited about their Bitcoin Café. We talked about how we were in it for bitcoin, and the greater good, and how we should work together.
“Clearly, we need to be more demanding as a community of our wallets and exchanges.”
They certainly gave no indication that they were worried about insolvency. Perhaps it was something they’d come to live with, or perhaps they really were oblivious.
In time we’ll have the true story. After all, second to Bernie Madoff this is the biggest heist/giveaway/debacle of the century. The replacement value of those 744,408 lost coins must be north of $1bn – surely international law enforcement bodies will be tripping over themselves to take such a high profile case.
I was just thinking how grateful I am for not having any funds in Gox, and then I realized that I actually do have funds in Gox. You see, the last time I tried to make a withdrawal from Gox, back in 2012, they’d taken 3+ weeks and still hadn’t processed my wire.
I determined that they were insolvent, canceled my wire and immediately withdrew my funds via coupon to Bitcoinica.
As luck would have it, Bitcoinica got hacked shortly thereafter, never to recover, and what funds remained have been tied up in liquidation proceedings since. And guess who was holding those funds for the liquidator. Can you guess? Mt. Gox, that’s who!
I just ate a whole box of Thin Mints.
You know, when Gox got hacked in June of 2011, Roger Ver, one of my oldest friends from the high school Magic: the Gathering days called me up:
“I’m at the Mt. Gox office. How soon can you be in Tokyo?”
I was on the next plane, on my own dime. I spent the next two weeks volunteering at Gox, leveraging my own personal and company resources to help them get the situation under control.
I even wrote the press release about the event. I did that for the greater good of bitcoin, and when I left, I thought—for the greater good—somebody oughta make another exchange pronto because this ship is going down in flames. We founded Payward in July of 2011.
The internal Mt. Gox ‘Crisis Strategy Draft’ that was released yesterday, if authentic, seems to indicate both a disconnect with reality and a determination that operating on a fractional reserve was a necessity, for the greater good of bitcoin.
A similar approach was discovered to have been taken by Bitcoinica, unbeknownst to its users. In both cases, if the exchange had simply exposed the truth, the damage would have been lessened.
btc
Clearly, we need to be more demanding as a community of our wallets and exchanges. Regulators have been kind enough to not enforce against unlicensed bitcoin businesses, allowing the industry to flourish, but that means the onus is on us to keep our custodians honest.
I’ve been wracking my brain trying to make sense of everything. What gets me is that Mark isn’t an idiot. If I assume that the Crisis Strategy Draft is truthy, a scenario like this is more plausible than what we’ve been fed:
Gox was robbed of a massive amount of coins (800k+) at some prior point in time, possibly June 2011, and has been operating a fractional reserve since.
Gox determined that it was better to continue operating the exchange, probably both for the sake of Bitcoin, and for their customers who would eventually be made whole from fees earned.
Gox knew of transaction malleability and had been keeping that scapegoat in their back pocket to use in the event of a bank run. Or, they didn’t know but the losses from TM were actually recent and minor. Or, they didn’t know but the losses from TM occurred over a long period of time and they never noticed because they never reconciled the books, because they knew they wouldn’t match anyway because they were already fractional.
Fiat withdrawal problems led to an increased uptick of BTC withdrawals, outpacing BTC deposits and draining reserves to 0. This may have been compounded by an actual problem with transaction malleability that accelerated the process.
Gox spent its fiat reserves and customers’ fiat reserves to buy up BTC in order to keep the ship afloat until they could launch their rebranded Gox.com and Bitpocket wallet, which they’d hoped would provide more runway in the form of additional BTC deposits.
Gox doesn’t make it happen in time and is forced to shut down, negative on fiat by millions and having lost all BTC.
Look, I was supposed to write some lawyer-approved PR statement about how Kraken kicks ass and is super secure and compliant, and Payward is leading the charge at DATA, and all the great things we’re doing right.
Obviously, all of that is irrelevant to the guy who just lost his life savings, wondering where he can find a good bridge.
If you got goxed too, I want to appeal to you to hang in there, and stick with it and not do anything stupid. I’ve been broke, and I’ve been robbed for every dime, and did I mention I sold ALL my bitcoin very early to get Kraken to launch?
You’ve got your life, and you’ve got your freedom, and you’ve got tremendous value to this community and cause. Bitcoin just lost a major battle and needs all the reinforcements it can get. The core dev team is underfunded and understaffed, girlscouts can’t get a wallet on iOS, banks are frozen solid, services are lacking in competent technical and business acumen.
I was standing outside of 20Mission tonight talking with Jered Kenna when we were informed by a random woman passing by that “Bitcoin is hacked and dead”.
It’s a goddamn war and it’s not going to be won without you. How many opportunities in history have we had as a people to change the world in such a positive way? If you want to join the effort, call me. If you want to jump off a bridge, call me.
Jesse Powell (@jespow) | Published on February 27, 2014 at 16:32 GMT | Analysis, Companies, Exchanges, Mt. Gox, News
Jesse Powell is founder and CEO of cryptocurrency trading platform Kraken. Here, he shares his reaction to the recent Mt. Gox revelations, and offers advice to fellow ‘goxed’ customers who have lost both funds and faith in bitcoin. This article was originally posted on Jesse’s blog.
I am deeply saddened to hear of the tremendous loss suffered by the bitcoin community today.
Undoubtedly, thousands of lives have been destroyed and innocent people have been left in financial ruin. I’m not often short on imagination but how the damage got to be so severe without anyone noticing is unfathomable.
I can’t help but be angry, and frustrated and depressed. All the hard work we’ve done to bring bitcoin in to the mainstream and now this, and the people. Fuck.
I actually had lunch with Mark and Gonzague in Tokyo just a month ago and despite their banking woes, they were upbeat and excited about their Bitcoin Café. We talked about how we were in it for bitcoin, and the greater good, and how we should work together.
“Clearly, we need to be more demanding as a community of our wallets and exchanges.”
They certainly gave no indication that they were worried about insolvency. Perhaps it was something they’d come to live with, or perhaps they really were oblivious.
In time we’ll have the true story. After all, second to Bernie Madoff this is the biggest heist/giveaway/debacle of the century. The replacement value of those 744,408 lost coins must be north of $1bn – surely international law enforcement bodies will be tripping over themselves to take such a high profile case.
I was just thinking how grateful I am for not having any funds in Gox, and then I realized that I actually do have funds in Gox. You see, the last time I tried to make a withdrawal from Gox, back in 2012, they’d taken 3+ weeks and still hadn’t processed my wire.
I determined that they were insolvent, canceled my wire and immediately withdrew my funds via coupon to Bitcoinica.
As luck would have it, Bitcoinica got hacked shortly thereafter, never to recover, and what funds remained have been tied up in liquidation proceedings since. And guess who was holding those funds for the liquidator. Can you guess? Mt. Gox, that’s who!
I just ate a whole box of Thin Mints.
You know, when Gox got hacked in June of 2011, Roger Ver, one of my oldest friends from the high school Magic: the Gathering days called me up:
“I’m at the Mt. Gox office. How soon can you be in Tokyo?”
I was on the next plane, on my own dime. I spent the next two weeks volunteering at Gox, leveraging my own personal and company resources to help them get the situation under control.
I even wrote the press release about the event. I did that for the greater good of bitcoin, and when I left, I thought—for the greater good—somebody oughta make another exchange pronto because this ship is going down in flames. We founded Payward in July of 2011.
The internal Mt. Gox ‘Crisis Strategy Draft’ that was released yesterday, if authentic, seems to indicate both a disconnect with reality and a determination that operating on a fractional reserve was a necessity, for the greater good of bitcoin.
A similar approach was discovered to have been taken by Bitcoinica, unbeknownst to its users. In both cases, if the exchange had simply exposed the truth, the damage would have been lessened.
btc
Clearly, we need to be more demanding as a community of our wallets and exchanges. Regulators have been kind enough to not enforce against unlicensed bitcoin businesses, allowing the industry to flourish, but that means the onus is on us to keep our custodians honest.
I’ve been wracking my brain trying to make sense of everything. What gets me is that Mark isn’t an idiot. If I assume that the Crisis Strategy Draft is truthy, a scenario like this is more plausible than what we’ve been fed:
Gox was robbed of a massive amount of coins (800k+) at some prior point in time, possibly June 2011, and has been operating a fractional reserve since.
Gox determined that it was better to continue operating the exchange, probably both for the sake of Bitcoin, and for their customers who would eventually be made whole from fees earned.
Gox knew of transaction malleability and had been keeping that scapegoat in their back pocket to use in the event of a bank run. Or, they didn’t know but the losses from TM were actually recent and minor. Or, they didn’t know but the losses from TM occurred over a long period of time and they never noticed because they never reconciled the books, because they knew they wouldn’t match anyway because they were already fractional.
Fiat withdrawal problems led to an increased uptick of BTC withdrawals, outpacing BTC deposits and draining reserves to 0. This may have been compounded by an actual problem with transaction malleability that accelerated the process.
Gox spent its fiat reserves and customers’ fiat reserves to buy up BTC in order to keep the ship afloat until they could launch their rebranded Gox.com and Bitpocket wallet, which they’d hoped would provide more runway in the form of additional BTC deposits.
Gox doesn’t make it happen in time and is forced to shut down, negative on fiat by millions and having lost all BTC.
Look, I was supposed to write some lawyer-approved PR statement about how Kraken kicks ass and is super secure and compliant, and Payward is leading the charge at DATA, and all the great things we’re doing right.
Obviously, all of that is irrelevant to the guy who just lost his life savings, wondering where he can find a good bridge.
If you got goxed too, I want to appeal to you to hang in there, and stick with it and not do anything stupid. I’ve been broke, and I’ve been robbed for every dime, and did I mention I sold ALL my bitcoin very early to get Kraken to launch?
You’ve got your life, and you’ve got your freedom, and you’ve got tremendous value to this community and cause. Bitcoin just lost a major battle and needs all the reinforcements it can get. The core dev team is underfunded and understaffed, girlscouts can’t get a wallet on iOS, banks are frozen solid, services are lacking in competent technical and business acumen.
I was standing outside of 20Mission tonight talking with Jered Kenna when we were informed by a random woman passing by that “Bitcoin is hacked and dead”.
It’s a goddamn war and it’s not going to be won without you. How many opportunities in history have we had as a people to change the world in such a positive way? If you want to join the effort, call me. If you want to jump off a bridge, call me.
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