The Benefits of Bitcoin in International Travel
Nicholas Tomaino (@ntmoney) | Published on March 29, 2014 at 16:34 GMT | Analysis
Nick Tomaino is 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.
_________________________________________________________________
Bitcoin is an open payment network that anyone in the world with an Internet connection can use.
The open, global nature of bitcoin has tremendous advantages over existing financial infrastructure for international travellers. These advantages became clear to me during a recent trip to South America.
Below are some of the problems that international travellers currently deal with.
Hassle of currency conversion
When travelling to foreign countries, it can be a major hassle to convert to local currencies and carry around local cash. I traveled to Buenos Aires, Argentina, and Rio De Janeiro, Brazil, on my trip and had to worry about exchanging currency three times (when both entering and leaving a new country).
Wouldn’t it be great to be able to eliminate one of the major hassles of international trips? As a global currency used by consumers and merchants worldwide, bitcoin eliminates the need for dealing with multiple currency conversions and carrying a lot of cash.
High fees
In addition to the hassle of dealing with currency conversion and carrying cash, it can also be quite costly to get cash and make payments in new countries. During my time in Brazil, I incurred three approximately $15 ATM fees to withdraw Brazilian Reals from a local bank – a $10 charge from my large US-based bank, in addition to $5 from the local Brazilian bank – for each withdrawal. I incurred one $15 ATM fee in Buenos Aires, as well. Additionally, I was charged a fee every time I used my card to make a purchase.
The twelve times I swiped my card to buy something ended up costing me $36 dollars. The high fees I paid ($96 in total) on my trip highlight the massive friction that exists between existing payment networks worldwide.
An open, global payment network reduces friction and fees. As the world continues to become more inter-connected, I think this will become a more obvious benefit of bitcoin.
atm-cash-machine1
Payment fraud
When you use your credit card internationally, you give unfamiliar foreign merchants your payment credentials. These merchants can either intentionally or unintentionally expose those payment credentials to criminals.
While I was in Buenos Aires, I purchased water at a convenience store. The following day, I got a call from my bank telling me I had hundreds of dollars of fraudulent charges made with my debit card.
The unfamiliar merchant in Buenos Aires must have exposed my payment credentials to a fraudster. My bank account was compromised, and while the charges were covered, my bank told me it would take five to seven business days for them to mail me a new debit card. This left me without access to my bank account for a week in a foreign country.
Luckily, I had another card to cover me from the rest of the trip, but I’m not sure what I would have done if I did not. This is a scenario I suspect is all too familiar for many who have travelled internationally.
The solution
Bitcoin solves many problems that international travellers currently deal with. It eliminates the hassle and fees associated with converting to local currencies and carrying cash, and it securely protects the payment credentials of consumers to avoid fraud risk and the potential to lose bank account access in a foreign country.
While it is tough to travel with only bitcoin on international trips at the moment, the rapid merchant adoption of bitcoin is changing this.
Travel-focused merchants such as CheapAir.com, BTCTrip and Pointshound are just a few merchants generating significant bitcoin sales from international travellers. As more travel related merchants accept bitcoin, and consumers continue to realize the huge efficiencies that bitcoin provides, I expect the travel space to continue to lead bitcoin adoption.
Next time I travel internationally, I hope to be able to leave my credit and debit cards at home.
Topic: BITCOIN NEWS EVRYDAY! From multiple sources. - page 5. (Read 51272 times)
Bitcoin is Key to Empowering Small Businesses
Hemant Taneja (@htaneja) | Published on March 29, 2014 at 14:05 GMT | Analysis, Companies, Merchants, Startups
Small businesses are the bedrock of the American economy. Today, more than half of all workers in the US are employed by businesses with less than 500 employees, and they create some 66% of new jobs as well.
Despite their importance to the economy, however, small businesses have faced serious hurdles in successfully competing on the Internet. Bitcoin has the potential to finally unleash them and fuel their growth, but first we have to ensure that the currency is trustworthy through smart regulation.
Founders looking to build a new company today have access to many effective platforms they can use to go from vision to delivery. Flextronics accelerates product development by assisting companies in managing their supply chains. Once built, companies can sell their products on top of Amazon Web Services, easily scaling their server resources with demand.
Finding customers is much easier because platforms like Facebook and Twitter provide tools to engage potential audiences. Finally, once customers are ready, FedEx and UPS provide full logistics services to ensure that products are available and delivered on time.
While small businesses have had all of these platforms available to them for years, one area has been sorely lacking: payments. Today’s financial infrastructure is ill-suited for the online and mobile commerce that increasingly is at the core of business.
Issues like fraud and identity theft deeply harm small businesses, which can’t easily manage their financial risks. Credit card chargebacks made sense when most commerce was in-person and local, but in a globalized consumer market, such policies are cumbersome. Compared to large companies, small businesses simply don’t have the resources to accept payments online easily across the world.
As I discussed this week at CoinSummit, we now have the payment infrastructure we need with bitcoin. Together with other enabling platforms, bitcoin stands to provide small businesses with the leverage they need to aggressively compete in the marketplace.
This “economies of unscale” means that entrepreneurs from San Francisco to Mumbai can create a business that can rapidly grow with just a handful of people and a dream for the future.
“Compared to large companies, small businesses simply don't have the resources to accept payments online easily across the world.”
This has not been the case since the Industrial Age started two centuries ago. Scale has been the key watchword in building profitable companies, since large enterprises have the resources to develop proprietary systems, giving them unfair power in the marketplace.
They also have the ability to spread the cost of business processes and inefficiency over a greater number of sales. Entire categories of businesses, from manufacturing to the delivery of high-quality services, could only be conducted in near-monopoly conditions, and thus, innovation often fell by the wayside.
That’s why I was excited to meet with so many passionate bitcoin entrepreneurs at this week’s CoinSummit. The world economy is on the cusp of transformation. To get to the promised land though, bitcoin founders are going to have to take a very different approach than they have in the past in supporting the progress of the cryptocurrency.
Unlike the cavalier attitude that built the Internet services we use every day, bitcoin entrepreneurs must instead actively engage with regulators to ensure that consumers (and businesses) are properly protected.
Bitcoin has a plethora of thorny issues that have to be addressed in order for it to reach mass adoption. Consumers need the ability to hold secure digital wallets, and the bitcoin market itself needs better stability mechanisms. Since transactions in bitcoin cannot be reversed, entrepreneurs must develop a framework for adjudicating issues about returns or refunds.
Regulators are not necessarily against change, but they are often understandably worried about unfamiliar technology. Founders should see this as an opportunity and not a threat. Only through the intersection of technology, finance, and government can we be sure to build a system that will meet the needs of all stakeholders.
For these reasons, General Catalyst invested in the Series A round of Circle, which is building out the key infrastructure around bitcoin to make it safe and secure for everyday use. The co-founder of Circle, Jeremy Allaire, who built platform companies in the app server and Internet video markets, believes that Circle can create a two-sided platform that allows consumers to safely buy, store and use digital currency and businesses to accept transactions without risk of volatility.
We also invested in online payments company Stripe, which will soon allow its customers to accept bitcoin payments in lieu of credit cards.
If we can build trust in bitcoin, we can begin to empower the economies of unscale that will ensure that its ubiquity reaches the levels enjoyed by Visa and Mastercard today. That will mean that entrepreneurs across the world can accept payments from anyone, anywhere, with limited fees and headaches. That’s a revolution for small businesses, and our economy as well.
Hemant Taneja is a partner at General Catalyst. The firm has invested in BigCommerce, Circle, Stripe, and ZenPayroll. Follow him on Twitter @htaneja.
Hemant Taneja (@htaneja) | Published on March 29, 2014 at 14:05 GMT | Analysis, Companies, Merchants, Startups
Small businesses are the bedrock of the American economy. Today, more than half of all workers in the US are employed by businesses with less than 500 employees, and they create some 66% of new jobs as well.
Despite their importance to the economy, however, small businesses have faced serious hurdles in successfully competing on the Internet. Bitcoin has the potential to finally unleash them and fuel their growth, but first we have to ensure that the currency is trustworthy through smart regulation.
Founders looking to build a new company today have access to many effective platforms they can use to go from vision to delivery. Flextronics accelerates product development by assisting companies in managing their supply chains. Once built, companies can sell their products on top of Amazon Web Services, easily scaling their server resources with demand.
Finding customers is much easier because platforms like Facebook and Twitter provide tools to engage potential audiences. Finally, once customers are ready, FedEx and UPS provide full logistics services to ensure that products are available and delivered on time.
While small businesses have had all of these platforms available to them for years, one area has been sorely lacking: payments. Today’s financial infrastructure is ill-suited for the online and mobile commerce that increasingly is at the core of business.
Issues like fraud and identity theft deeply harm small businesses, which can’t easily manage their financial risks. Credit card chargebacks made sense when most commerce was in-person and local, but in a globalized consumer market, such policies are cumbersome. Compared to large companies, small businesses simply don’t have the resources to accept payments online easily across the world.
As I discussed this week at CoinSummit, we now have the payment infrastructure we need with bitcoin. Together with other enabling platforms, bitcoin stands to provide small businesses with the leverage they need to aggressively compete in the marketplace.
This “economies of unscale” means that entrepreneurs from San Francisco to Mumbai can create a business that can rapidly grow with just a handful of people and a dream for the future.
“Compared to large companies, small businesses simply don't have the resources to accept payments online easily across the world.”
This has not been the case since the Industrial Age started two centuries ago. Scale has been the key watchword in building profitable companies, since large enterprises have the resources to develop proprietary systems, giving them unfair power in the marketplace.
They also have the ability to spread the cost of business processes and inefficiency over a greater number of sales. Entire categories of businesses, from manufacturing to the delivery of high-quality services, could only be conducted in near-monopoly conditions, and thus, innovation often fell by the wayside.
That’s why I was excited to meet with so many passionate bitcoin entrepreneurs at this week’s CoinSummit. The world economy is on the cusp of transformation. To get to the promised land though, bitcoin founders are going to have to take a very different approach than they have in the past in supporting the progress of the cryptocurrency.
Unlike the cavalier attitude that built the Internet services we use every day, bitcoin entrepreneurs must instead actively engage with regulators to ensure that consumers (and businesses) are properly protected.
Bitcoin has a plethora of thorny issues that have to be addressed in order for it to reach mass adoption. Consumers need the ability to hold secure digital wallets, and the bitcoin market itself needs better stability mechanisms. Since transactions in bitcoin cannot be reversed, entrepreneurs must develop a framework for adjudicating issues about returns or refunds.
Regulators are not necessarily against change, but they are often understandably worried about unfamiliar technology. Founders should see this as an opportunity and not a threat. Only through the intersection of technology, finance, and government can we be sure to build a system that will meet the needs of all stakeholders.
For these reasons, General Catalyst invested in the Series A round of Circle, which is building out the key infrastructure around bitcoin to make it safe and secure for everyday use. The co-founder of Circle, Jeremy Allaire, who built platform companies in the app server and Internet video markets, believes that Circle can create a two-sided platform that allows consumers to safely buy, store and use digital currency and businesses to accept transactions without risk of volatility.
We also invested in online payments company Stripe, which will soon allow its customers to accept bitcoin payments in lieu of credit cards.
If we can build trust in bitcoin, we can begin to empower the economies of unscale that will ensure that its ubiquity reaches the levels enjoyed by Visa and Mastercard today. That will mean that entrepreneurs across the world can accept payments from anyone, anywhere, with limited fees and headaches. That’s a revolution for small businesses, and our economy as well.
Hemant Taneja is a partner at General Catalyst. The firm has invested in BigCommerce, Circle, Stripe, and ZenPayroll. Follow him on Twitter @htaneja.
Court Grants Order to Freeze Hashfast’s Bitcoin Wallets
Jon Southurst (@southtopia) | Published on March 29, 2014 at 12:42 GMT | Companies, Law, Mining, News
A court in Fort Worth, Texas, has granted a temporary restraining order to freeze the bitcoin wallets of ASIC mining hardware manufacturer HashFast Technologies LLC and HashFast LLC, after a customer claimed it failed to deliver hardware on time or negotiate a refund.
The TRO was part of a wider lawsuit filed against HashFast on 27th March by Cypher Enterprises, who claim it ordered and paid HashFast for several items of bitcoin mining hardware in early October last year. The complaint says HashFast failed to meet its promised delivery date later that month, prompting Cypher Enterprises to cancel its orders.
No refund
Cypher Enterprises had paid for the majority of the orders for the ‘Baby Jet’ mining hardware in bitcoin but said HashFast had failed to offer or pay a refund of any kind, or even reply to the cancelation.
The complaint, which has a Background section with the question “What the heck is a Bitcoin?” also contains an attachment of 30 pages of bitcointalk forum discussion detailing the history of the story from July-August 2013. HashFast had promoted the new hardware on the forum and even invited potential customers to tour their workplace in order to promote transparency.
At the time of the order, on 1st October 2013, 1 BTC was worth around $126.
It continued that HashFast had stated on the forum that in the event a refund was necessary, it would pay in bitcoin. After failing to meet the original delivery date it promised to ship no later than 31st December, a date it also missed.
Changing the game
The granting of a court order to freeze bitcoin assets of mining hardware companies who fail to deliver on time could have ramifications in an industry beset by delays as small and inexperienced participants grapple with issues related to cutting edge hardware design and production.
“Outside of the Mt. Gox bankruptcy proceedings, I’m not aware of any other Texas courts which have entered a restraining order like this,” said Cypher Enterprises’ lawyer, Robert Bogdanowicz.
“It speaks to the legitimacy of cryptocurrencies and a growing understanding of their value and importance to businesses.”
Several mining hardware startups have struggled to deliver product anywhere near the promised time, in a field so time-critical that even a month’s delay can render an expensive purchase worthless due to bitcoin’s constantly increasing difficulty rate.
HashFast, which had been under threat of legal action over the delays since the beginning of this year, was founded just last year and promotes itself on its website as “an industry leader in bitcoin mining technology”.
Jon Southurst (@southtopia) | Published on March 29, 2014 at 12:42 GMT | Companies, Law, Mining, News
A court in Fort Worth, Texas, has granted a temporary restraining order to freeze the bitcoin wallets of ASIC mining hardware manufacturer HashFast Technologies LLC and HashFast LLC, after a customer claimed it failed to deliver hardware on time or negotiate a refund.
The TRO was part of a wider lawsuit filed against HashFast on 27th March by Cypher Enterprises, who claim it ordered and paid HashFast for several items of bitcoin mining hardware in early October last year. The complaint says HashFast failed to meet its promised delivery date later that month, prompting Cypher Enterprises to cancel its orders.
No refund
Cypher Enterprises had paid for the majority of the orders for the ‘Baby Jet’ mining hardware in bitcoin but said HashFast had failed to offer or pay a refund of any kind, or even reply to the cancelation.
The complaint, which has a Background section with the question “What the heck is a Bitcoin?” also contains an attachment of 30 pages of bitcointalk forum discussion detailing the history of the story from July-August 2013. HashFast had promoted the new hardware on the forum and even invited potential customers to tour their workplace in order to promote transparency.
At the time of the order, on 1st October 2013, 1 BTC was worth around $126.
It continued that HashFast had stated on the forum that in the event a refund was necessary, it would pay in bitcoin. After failing to meet the original delivery date it promised to ship no later than 31st December, a date it also missed.
Changing the game
The granting of a court order to freeze bitcoin assets of mining hardware companies who fail to deliver on time could have ramifications in an industry beset by delays as small and inexperienced participants grapple with issues related to cutting edge hardware design and production.
“Outside of the Mt. Gox bankruptcy proceedings, I’m not aware of any other Texas courts which have entered a restraining order like this,” said Cypher Enterprises’ lawyer, Robert Bogdanowicz.
“It speaks to the legitimacy of cryptocurrencies and a growing understanding of their value and importance to businesses.”
Several mining hardware startups have struggled to deliver product anywhere near the promised time, in a field so time-critical that even a month’s delay can render an expensive purchase worthless due to bitcoin’s constantly increasing difficulty rate.
HashFast, which had been under threat of legal action over the delays since the beginning of this year, was founded just last year and promotes itself on its website as “an industry leader in bitcoin mining technology”.
Coinbase Launches App Store
Danny Bradbury (@dannybradbury) | Published on March 29, 2014 at 01:12 GMT | Coinbase, Companies
Coinbase has launched an app store, showcasing firms that have integrated with its wallet service.
On the firm’s API page, it explains that it allows submissions from applications conducting “all major bitcoin operations”, that exchange bitcoin to local currency, send and request bit coins via email or bitcoin address, and create bitcoin wallets. It also allows merchant apps, and apps that provide access to raw bitcoin network data. Microtransactions are permitted, too.
Among the first apps to be included in the app store are OSX-based wallet Hive, and Gliph, a mobile app for making bitcoin payments, both of which have integrated with Coinbase. BitTip, the Reddit bitcoin tipping app, and a Coinbase WordPress plugin are also on the site.
And Coinbase Trader, an app that allows for the automated buying and selling of bit coins through Coinbase, is also listed.
The company did not to respond to queries about how closely those using its API would be security vetted, or any other criteria that it was using for inclusion in the store.
This appears to be part of a wider push for Coinbase to build a developer community for its bitcoin infrastructure, which exists off the block chain and includes a wallet, email-based transfers, and a merchant payment processing service. The company recently ran its BitHack competition, in which it awarded $18,000 in prizes. It announced the winners today.
The winner of that app, CoinPlanter, is an Android app that uses geotagging to let people store, share, or retrieve bitcoins based on their location. People can ‘dig’ while at any location to see if someone has left bitcoin to pick up. The tool, which received a $10,000 first prize, has some marketing potential for companies wanting to cash in on the geotagging craze and integrate the concept with their own campaigns.
The second prizewinner, Aircoin, got $5,000. It is a mobile app that lets people send bit coins to others nearby, using a drag and drop visual interface.
Finally, Coinery.io is an online site for selling digital products in bitcoin. The Coinbase-powered site charges no fees, it says. That site got $3,000.
None of these apps were listed in the Coinbase app store, although another entrant to the contest, Bitfluence, was listed on the app store. That service lets you use your Twitter identity to send and receive bitcoin, is listed on the site.
Coinbase has suffered from its own app store woes in the past, falling foul of Apple’s notorious anti-bitcoin stance. Apple removed its mobile iOS app from the app store in November, less than a month after it was launched.
Danny Bradbury (@dannybradbury) | Published on March 29, 2014 at 01:12 GMT | Coinbase, Companies
Coinbase has launched an app store, showcasing firms that have integrated with its wallet service.
On the firm’s API page, it explains that it allows submissions from applications conducting “all major bitcoin operations”, that exchange bitcoin to local currency, send and request bit coins via email or bitcoin address, and create bitcoin wallets. It also allows merchant apps, and apps that provide access to raw bitcoin network data. Microtransactions are permitted, too.
Among the first apps to be included in the app store are OSX-based wallet Hive, and Gliph, a mobile app for making bitcoin payments, both of which have integrated with Coinbase. BitTip, the Reddit bitcoin tipping app, and a Coinbase WordPress plugin are also on the site.
And Coinbase Trader, an app that allows for the automated buying and selling of bit coins through Coinbase, is also listed.
The company did not to respond to queries about how closely those using its API would be security vetted, or any other criteria that it was using for inclusion in the store.
This appears to be part of a wider push for Coinbase to build a developer community for its bitcoin infrastructure, which exists off the block chain and includes a wallet, email-based transfers, and a merchant payment processing service. The company recently ran its BitHack competition, in which it awarded $18,000 in prizes. It announced the winners today.
The winner of that app, CoinPlanter, is an Android app that uses geotagging to let people store, share, or retrieve bitcoins based on their location. People can ‘dig’ while at any location to see if someone has left bitcoin to pick up. The tool, which received a $10,000 first prize, has some marketing potential for companies wanting to cash in on the geotagging craze and integrate the concept with their own campaigns.
The second prizewinner, Aircoin, got $5,000. It is a mobile app that lets people send bit coins to others nearby, using a drag and drop visual interface.
Finally, Coinery.io is an online site for selling digital products in bitcoin. The Coinbase-powered site charges no fees, it says. That site got $3,000.
None of these apps were listed in the Coinbase app store, although another entrant to the contest, Bitfluence, was listed on the app store. That service lets you use your Twitter identity to send and receive bitcoin, is listed on the site.
Coinbase has suffered from its own app store woes in the past, falling foul of Apple’s notorious anti-bitcoin stance. Apple removed its mobile iOS app from the app store in November, less than a month after it was launched.
Price of Bitcoin Remains Under $500 Amid China Uncertainty
Pete Rizzo (@pete_rizzo_) | Published on March 28, 2014 at 20:58 GMT | Asia, News, Prices, Regulation
The price of bitcoin on the CoinDesk Bitcoin Price Index (USD BPI) remained below $500 on Friday 28th March, amid continued uncertainty over whether the Chinese government would seek to prohibit banks from working with digital currency exchanges.
Sources in China indicated that the reports, which first surfaced on 27th March, appear to be true, though the People’s Bank of China, the country’s central bank, has yet to give any formal indication that its position on bitcoin and other digital currencies has shifted.
Screen Shot 2014-03-28 at 4.27.27 PM
At press time, the price of bitcoin had recovered slightly from an open of $478.16 on the CoinDesk USD BPI to $488.17, a rise of just over 2% or $10.
The most recent decline began at roughly 13:00 GMT on 26th March, when the price, then holding at $588, dropped rapidly to a weekly low of $477 at 23:00 GMT on 27th March.
The drop was caused by a report from China-based news source Caixin about China’s possible policy change. The media outlet has not retracted its story.
One potentially troubling sign was that the PBOC has not yet come out to debunk the news, as it did on 21st March when China-based microblogging site Sina Weibo published false rumors that bitcoin would soon be banned in China.
The PBOC has yet to make a similar announcement regarding this latest news.
Exchanges keep options open
Speaking to CoinDesk at CoinSummit, BTC China CEO Bobby Lee indicated that China’s current policy motive is to ensure its nationalized banking system stays healthy by keeping the volatile digital currency bitcoin separate from mainstream businesses.
Further, Lee said he has been trying to convince the Chinese government to regulate exchanges, issue licenses and establish best practices for the industry.
Speaking separately on how he would respond should the current rumors prove true, he said:
“We will adjust our business model accordingly, and it’s too early to tell what all of the options are, and which directions we will proceed down.”
CNY bitcoin prices sees similar decline
The CoinDesk Chinese Yuan Bitcoin Price Index (CNY BPI), introduced on 26th March, has observed similar declines, falling from ¥3,603 at 13:00 GMT on 26th March to a low of ¥2,849 at 23:00 GMT on 27th March.
Screen Shot 2014-03-28 at 4.05.00 PM
At press time, the CNY BPI had increased nearly 5%, or ¥140.87 from the day’s opening price of ¥2856 to reach ¥2,996.
The CNY BPI tracks price movements on BTC China and OKCoin.
Latest USD BPI Prices
At press time, the price of bitcoin across the three USD BPI exchanges – Bitstamp, Bitfinex and BTC-e – remained below $500.
Bitfinex displayed the lowest selling price of $488.50, slightly below the $489.50 observed on UK-based exchange Bitstamp.
Screen Shot 2014-03-28 at 4.10.20 PM
BTC-e prices were the least affected by the decline, having fallen to $492.90.
CoinDesk continues to monitor the developing China story. For more details, read our initial report here.
Pete Rizzo (@pete_rizzo_) | Published on March 28, 2014 at 20:58 GMT | Asia, News, Prices, Regulation
The price of bitcoin on the CoinDesk Bitcoin Price Index (USD BPI) remained below $500 on Friday 28th March, amid continued uncertainty over whether the Chinese government would seek to prohibit banks from working with digital currency exchanges.
Sources in China indicated that the reports, which first surfaced on 27th March, appear to be true, though the People’s Bank of China, the country’s central bank, has yet to give any formal indication that its position on bitcoin and other digital currencies has shifted.
Screen Shot 2014-03-28 at 4.27.27 PM
At press time, the price of bitcoin had recovered slightly from an open of $478.16 on the CoinDesk USD BPI to $488.17, a rise of just over 2% or $10.
The most recent decline began at roughly 13:00 GMT on 26th March, when the price, then holding at $588, dropped rapidly to a weekly low of $477 at 23:00 GMT on 27th March.
The drop was caused by a report from China-based news source Caixin about China’s possible policy change. The media outlet has not retracted its story.
One potentially troubling sign was that the PBOC has not yet come out to debunk the news, as it did on 21st March when China-based microblogging site Sina Weibo published false rumors that bitcoin would soon be banned in China.
The PBOC has yet to make a similar announcement regarding this latest news.
Exchanges keep options open
Speaking to CoinDesk at CoinSummit, BTC China CEO Bobby Lee indicated that China’s current policy motive is to ensure its nationalized banking system stays healthy by keeping the volatile digital currency bitcoin separate from mainstream businesses.
Further, Lee said he has been trying to convince the Chinese government to regulate exchanges, issue licenses and establish best practices for the industry.
Speaking separately on how he would respond should the current rumors prove true, he said:
“We will adjust our business model accordingly, and it’s too early to tell what all of the options are, and which directions we will proceed down.”
CNY bitcoin prices sees similar decline
The CoinDesk Chinese Yuan Bitcoin Price Index (CNY BPI), introduced on 26th March, has observed similar declines, falling from ¥3,603 at 13:00 GMT on 26th March to a low of ¥2,849 at 23:00 GMT on 27th March.
Screen Shot 2014-03-28 at 4.05.00 PM
At press time, the CNY BPI had increased nearly 5%, or ¥140.87 from the day’s opening price of ¥2856 to reach ¥2,996.
The CNY BPI tracks price movements on BTC China and OKCoin.
Latest USD BPI Prices
At press time, the price of bitcoin across the three USD BPI exchanges – Bitstamp, Bitfinex and BTC-e – remained below $500.
Bitfinex displayed the lowest selling price of $488.50, slightly below the $489.50 observed on UK-based exchange Bitstamp.
Screen Shot 2014-03-28 at 4.10.20 PM
BTC-e prices were the least affected by the decline, having fallen to $492.90.
CoinDesk continues to monitor the developing China story. For more details, read our initial report here.
Bitcoin Enthusiast Loses Price Bet, Eats Hat
Nermin Hajdarbegovic | Published on March 28, 2014 at 21:14 GMT | Bitcoin Gambling, Lifestyle, News, Prices
An American bitcoin enthusiast has filmed himself eating his hat after losing a bet.
Acting in what, with hindsight, was extreme optimism, the man wagered that the bitcoin price would not fall below $1,000. Yes, we are fully aware that it was not a good bet to make, and so, now, is the unnamed fan of the digital currency.
The video – posted by someone titled, of course, ‘Hat Eater’ – showed up on reddit on Thursday, and soon spread through social networks and cryptocurrency communities.
Bitcoin bon appétit
What can we say? The 45-minute video depicts Hat Eater eating a hat. A red, cotton one. The unwelcome snack took him three days, a few sandwich, some ice tea and a couple of beers to force down. Some ketchup was also involved.
So far the video has notched up 120,000 views on YouTube and as you may expect, the comments are just as ridiculous as the video itself. Some called it integrity, others believed it was pointless and plain silly.
In any case, there’s one less hat in the world and bitcoin has slipped to around a half of the $1,000 minimum the naive gambler set. Let’s just hope it was a one-off bet and there’s nobody out there who made a similar wager at $500.
Nermin Hajdarbegovic | Published on March 28, 2014 at 21:14 GMT | Bitcoin Gambling, Lifestyle, News, Prices
An American bitcoin enthusiast has filmed himself eating his hat after losing a bet.
Acting in what, with hindsight, was extreme optimism, the man wagered that the bitcoin price would not fall below $1,000. Yes, we are fully aware that it was not a good bet to make, and so, now, is the unnamed fan of the digital currency.
The video – posted by someone titled, of course, ‘Hat Eater’ – showed up on reddit on Thursday, and soon spread through social networks and cryptocurrency communities.
Bitcoin bon appétit
What can we say? The 45-minute video depicts Hat Eater eating a hat. A red, cotton one. The unwelcome snack took him three days, a few sandwich, some ice tea and a couple of beers to force down. Some ketchup was also involved.
So far the video has notched up 120,000 views on YouTube and as you may expect, the comments are just as ridiculous as the video itself. Some called it integrity, others believed it was pointless and plain silly.
In any case, there’s one less hat in the world and bitcoin has slipped to around a half of the $1,000 minimum the naive gambler set. Let’s just hope it was a one-off bet and there’s nobody out there who made a similar wager at $500.
Isle of Man Welcomes Digital Currency Exchanges ‘No License Required’
Robert Paul Davis | Published on March 28, 2014 at 19:31 GMT | Europe, Exchanges, Law, News, Regulation
R Paul Davis is Group General Counsel for the Counting House Services group of companies, headquartered in Canada, and lives and works in the Isle of Man. A Canadian barrister and solicitor, his practice is specialized in international payments law and technology.
_____________________________
The Isle of Man seems to be setting itself up as a hub for bitcoin-related businesses. The self-governing British Crown dependency is already appealing to conventional businesses and wealthy individuals, and the latest indications are that this fiscally liberal environment will be extended to cryptocurrency-related activities as well.
On Wednesday 26th March, the island’s Financial Supervision Commission, responding to a legal opinion written for Canadian clients by the author, confirmed that a bitcoin exchange that holds client funds with a licensed overseas payment service provider is not required to obtain a licence in the country for its activities.
The FSC confirmed that neither Class 2 of the Regulated Activities Order, “Investment Business,” nor Class 8 “Money Transmission Services” cover bitcoin activities.
This situation may not last forever, however.
The FSC ruling continues:
“[...] it is possible that legislation could be amended in the future to bring the proposed activities within regulated activity and/or to make the activity subject to the AML Code and thus subject to the draft Designated Businesses (Registration and Oversight) Bill 2014.
It is therefore important that if the client pursues its interest in operating from the Isle of Man that it keeps abreast of relevant legislative changes and remains prepared for these possible eventualities.”
While the thought of operating a digital exchange within the regulatory framework of the FSC might be considered an unwelcome addition to activities, in fact several exchange operators considering the Isle of Man as a base would welcome their business being subjected to regulation.
This would open the doors of at least two specialized island banks who are ready to offer facilities to regulated entities, but not to unlicensed businesses.
Only very minor changes to a statutory instrument, not even primary legislation, could achieve regulation. It is likely, however, that the FSC would want considerable time to enhance its understanding of the field and put appropriate mechanisms and staff training place before taking on a new vertical.
Desirable base
The Isle of Man is highly attractive to e-business not least because of its low tax regime, where resident individuals are taxed at 20% to a maximum of £120,000 per year, while businesses pay no corporate tax and banks only 10%.
The island also boasts massive bandwith and redundancy, with world-class DDoS protection and multiple options for secure hosting.
Long renowned as a safe and compliant financial centre, the cachet of an Isle of Man base is highly desirable and in the wake of the FSC decision, two well-known bitcoin exchanges have already incorporated on the island, have established facilities and are recruiting staff.
Eric Benz of the UK Digital Currency Association has said that up to 15 further exchanges may now seriously consider basing operations on the island.
Cryptocoin hub?
On 1st April, approximately 30 individuals from the Island with interests in the bitcoin arena, ranging from hosting services and bankers to miners and exchange operators, will meet to form the Manx Digital Currency Association.
Digital currency has attracted strong government interest and the Department of Economic Development, which offers among other things generous grants and support to businesses moving to the Crown dependency, has given serious attention to bitcoin and its relatives in recent weeks.
Many see the Isle of Man as a logical centre of digital currency activity and the excess of power and concentration of financial talent on the island make it a serious contender.
Robert Paul Davis | Published on March 28, 2014 at 19:31 GMT | Europe, Exchanges, Law, News, Regulation
R Paul Davis is Group General Counsel for the Counting House Services group of companies, headquartered in Canada, and lives and works in the Isle of Man. A Canadian barrister and solicitor, his practice is specialized in international payments law and technology.
_____________________________
The Isle of Man seems to be setting itself up as a hub for bitcoin-related businesses. The self-governing British Crown dependency is already appealing to conventional businesses and wealthy individuals, and the latest indications are that this fiscally liberal environment will be extended to cryptocurrency-related activities as well.
On Wednesday 26th March, the island’s Financial Supervision Commission, responding to a legal opinion written for Canadian clients by the author, confirmed that a bitcoin exchange that holds client funds with a licensed overseas payment service provider is not required to obtain a licence in the country for its activities.
The FSC confirmed that neither Class 2 of the Regulated Activities Order, “Investment Business,” nor Class 8 “Money Transmission Services” cover bitcoin activities.
This situation may not last forever, however.
The FSC ruling continues:
“[...] it is possible that legislation could be amended in the future to bring the proposed activities within regulated activity and/or to make the activity subject to the AML Code and thus subject to the draft Designated Businesses (Registration and Oversight) Bill 2014.
It is therefore important that if the client pursues its interest in operating from the Isle of Man that it keeps abreast of relevant legislative changes and remains prepared for these possible eventualities.”
While the thought of operating a digital exchange within the regulatory framework of the FSC might be considered an unwelcome addition to activities, in fact several exchange operators considering the Isle of Man as a base would welcome their business being subjected to regulation.
This would open the doors of at least two specialized island banks who are ready to offer facilities to regulated entities, but not to unlicensed businesses.
Only very minor changes to a statutory instrument, not even primary legislation, could achieve regulation. It is likely, however, that the FSC would want considerable time to enhance its understanding of the field and put appropriate mechanisms and staff training place before taking on a new vertical.
Desirable base
The Isle of Man is highly attractive to e-business not least because of its low tax regime, where resident individuals are taxed at 20% to a maximum of £120,000 per year, while businesses pay no corporate tax and banks only 10%.
The island also boasts massive bandwith and redundancy, with world-class DDoS protection and multiple options for secure hosting.
Long renowned as a safe and compliant financial centre, the cachet of an Isle of Man base is highly desirable and in the wake of the FSC decision, two well-known bitcoin exchanges have already incorporated on the island, have established facilities and are recruiting staff.
Eric Benz of the UK Digital Currency Association has said that up to 15 further exchanges may now seriously consider basing operations on the island.
Cryptocoin hub?
On 1st April, approximately 30 individuals from the Island with interests in the bitcoin arena, ranging from hosting services and bankers to miners and exchange operators, will meet to form the Manx Digital Currency Association.
Digital currency has attracted strong government interest and the Department of Economic Development, which offers among other things generous grants and support to businesses moving to the Crown dependency, has given serious attention to bitcoin and its relatives in recent weeks.
Many see the Isle of Man as a logical centre of digital currency activity and the excess of power and concentration of financial talent on the island make it a serious contender.
Money-Spinners: This Week’s Bitcoin ATM News
Jon Southurst (@southtopia) | Published on March 28, 2014 at 17:30 GMT | Bitcoin ATM, Companies, Lifestyle, News
Step up, roll up your sleeve, and start smoothing out those crumpled banknotes as CoinDesk brings you the latest in bitcoin ATM and vending machine announcements from around the world.
We say ‘vending machines’ not as a joke, but because in some jurisdictions cash-in only machines are classified as exactly that, to remain free from additional banking regulations … or bans.
Speaking of which, the week began on a sour note in Dubai when the UAE Department of Economic Development (DED) told us there was no license to install a bitcoin ATM in the country as yet. To rub salt in the wounds, it was also revealed the 400 shiny blue terminals waiting in the warehouse weren’t even bitcoin ATMs, but everyday, unexciting bill-paying kiosks.
All that was quickly forgotten, though, when ATMs suddenly started popping up in new and exotic locations and even new currencies, like:
Tijuana, Mexico
Two Genesis1 ATMs began operating at the Bit Center in Tijuana, Baja California, Mexico last Saturday. The previously little-seen Genesis1 machines are probably the most versatile out there – not only do they feature both cash-in and cash-out functions, this announcement gave us more:
“The Genesis1 ATMs differ from other Bitcoin ATM models in that the machine supports litecoin and dogecoin as well. Bitcoin42 acquired and deployed two machines, one accommodating Mexican pesos and the other US dollars.”
You heard that right: Dogecoin ATMs!
_1170618
Tijuana’s Bit Center is a local business development, innovation and technology centre, that also serves as a co-working space for Mexican startups.
Kuala Lumpur, Malaysia
Singapore’s Numoni is the quiet achiever of the bitcoin ATM world, stealthily installing its cute and colorful bitcoin vending machines in various locations around Southeast Asia for us to discover, usually without much fanfare. So we were pleased to hear reports of another one this week, in the upscale Bangsar district on the outskirts of Kuala Lumpur.
Numoni_Malaysia
There is reportedly another Numoni machine installed at a cellphone shop in Malaysia’s island state, Penang, although we haven’t seen photos of it yet.
Taipei, Taiwan
We briefly mentioned the Taiwan ATM last week, and are happy to report it is finally up and running smoothly at the colorful Cosi I cosi Gelateria ice-cream parlor in Taipei. For the record, the parlor also accepts bitcoin and challenges you to leave the store without spending some of your newly acquired bitcoin on something cold and sweet.
Taiwan
Sydney, Australia
Australia has been teasing us for too long. As early as February, a company called Australian Bitcoin ATMs announced it would be installing 100 machines across the country. However, the company’s website is frustratingly information-free, with a broken contact form and non-functional email address.
So we were a little skeptical when we saw this story in the Australian media earlier this week, promising ATM installations “within days”.
The CEO of the other company mentioned in the story, Robert Masters of Krypto Currency Solutions, was more helpful, telling us his company had indeed secured locations and would be unveiling machines very soon, but not this week. The company also made the following announcement:
“Krypto Currency Solutions Pty Ltd. have reached an agreement on a merger and acquisition with ABA Technologies Pty Ltd. for national and international roll out of bitcoin ATMs and related services.”
In the end, it was BitRocket Capital who delivered the goods with a Lamassu installation in a Sydney cafe on Thursday.
The machine has a few quirks: it accepts Australian dollars but converts them to USD value to purchase bitcoins. It also has a $10,000 BTC-equivalent withdrawal limit to comply with anti-money laundering regulations.
BitRocket says it wants to install at least 20 more machines in public places, and also has plans to expand overseas.
Jon Southurst (@southtopia) | Published on March 28, 2014 at 17:30 GMT | Bitcoin ATM, Companies, Lifestyle, News
Step up, roll up your sleeve, and start smoothing out those crumpled banknotes as CoinDesk brings you the latest in bitcoin ATM and vending machine announcements from around the world.
We say ‘vending machines’ not as a joke, but because in some jurisdictions cash-in only machines are classified as exactly that, to remain free from additional banking regulations … or bans.
Speaking of which, the week began on a sour note in Dubai when the UAE Department of Economic Development (DED) told us there was no license to install a bitcoin ATM in the country as yet. To rub salt in the wounds, it was also revealed the 400 shiny blue terminals waiting in the warehouse weren’t even bitcoin ATMs, but everyday, unexciting bill-paying kiosks.
All that was quickly forgotten, though, when ATMs suddenly started popping up in new and exotic locations and even new currencies, like:
Tijuana, Mexico
Two Genesis1 ATMs began operating at the Bit Center in Tijuana, Baja California, Mexico last Saturday. The previously little-seen Genesis1 machines are probably the most versatile out there – not only do they feature both cash-in and cash-out functions, this announcement gave us more:
“The Genesis1 ATMs differ from other Bitcoin ATM models in that the machine supports litecoin and dogecoin as well. Bitcoin42 acquired and deployed two machines, one accommodating Mexican pesos and the other US dollars.”
You heard that right: Dogecoin ATMs!
_1170618
Tijuana’s Bit Center is a local business development, innovation and technology centre, that also serves as a co-working space for Mexican startups.
Kuala Lumpur, Malaysia
Singapore’s Numoni is the quiet achiever of the bitcoin ATM world, stealthily installing its cute and colorful bitcoin vending machines in various locations around Southeast Asia for us to discover, usually without much fanfare. So we were pleased to hear reports of another one this week, in the upscale Bangsar district on the outskirts of Kuala Lumpur.
Numoni_Malaysia
There is reportedly another Numoni machine installed at a cellphone shop in Malaysia’s island state, Penang, although we haven’t seen photos of it yet.
Taipei, Taiwan
We briefly mentioned the Taiwan ATM last week, and are happy to report it is finally up and running smoothly at the colorful Cosi I cosi Gelateria ice-cream parlor in Taipei. For the record, the parlor also accepts bitcoin and challenges you to leave the store without spending some of your newly acquired bitcoin on something cold and sweet.
Taiwan
Sydney, Australia
Australia has been teasing us for too long. As early as February, a company called Australian Bitcoin ATMs announced it would be installing 100 machines across the country. However, the company’s website is frustratingly information-free, with a broken contact form and non-functional email address.
So we were a little skeptical when we saw this story in the Australian media earlier this week, promising ATM installations “within days”.
The CEO of the other company mentioned in the story, Robert Masters of Krypto Currency Solutions, was more helpful, telling us his company had indeed secured locations and would be unveiling machines very soon, but not this week. The company also made the following announcement:
“Krypto Currency Solutions Pty Ltd. have reached an agreement on a merger and acquisition with ABA Technologies Pty Ltd. for national and international roll out of bitcoin ATMs and related services.”
In the end, it was BitRocket Capital who delivered the goods with a Lamassu installation in a Sydney cafe on Thursday.
The machine has a few quirks: it accepts Australian dollars but converts them to USD value to purchase bitcoins. It also has a $10,000 BTC-equivalent withdrawal limit to comply with anti-money laundering regulations.
BitRocket says it wants to install at least 20 more machines in public places, and also has plans to expand overseas.
UBS: Banks Could ‘Absorb the Benefits’ of Bitcoin
Pete Rizzo (@pete_rizzo_) | Published on March 28, 2014 at 14:46 GMT | Bitcoin protocol, News, Technology
Global financial services firm UBS, a leading provider of retail and commercial banking services, released an extensive report on 28th March that weighed in on bitcoin’s potential to disrupt the existing financial system.
Entitled ‘Bitcoins and Banks’, the report concluded that bitcoin is not just a ‘problematic currency’ – though this garnered a mention in the headline, but more interestingly, a technology that could bring widespread benefits if co-opted by the traditional banking system.
The 31-page write-up suggested that bitcoin, as a currency or an alternative to traditional banking, poses little threat to traditional institutions, but that the underlying technology could be used to improve global payment systems provided the right business incentives could be identified.
Wrote UBS:
“Setting aside its political agenda, we see Bitcoin as having some potential as a new transaction technology, where a bitcoin-like technology could provide a basis for a new shared payments and transfer system using existing currencies and securities. Such a system could reduce systemic costs, and provide faster, secure, transfers – particularly in the international arena.”
Though it was careful to describe such hypotheticals as “blue-sky ideas”, the bank noted that the distributed block chain “offers a robust and secure way of storing consumer funds”, and that current issues such as the computational intensity bitcoin requires are merely “quirks” inherent in the first implementations that could later be improved.
Further, it suggested that banks could benefit from realizing the technological implications of bitcoin:
“Rather than trying to develop a completely new financial system as Bitcoin is trying to do, it makes more sense that banks, as existing money managers, absorb the benefits of the technological innovation.”
Bitcoin technology has bright future
UBS noted that the block chain could just as easily use existing fiat currencies, and that such a system “offers a radical opportunity to drastically reduce duplication in the existing system”.
It even went so far as to offer an example of what this reimagined financial system would look like, describing a system whereby banks across the world maintained a ledger that kept track of public addresses and balances.
Wrote UBS:
“Customers have control of their private keys, possibly with the option of authorizing their banks to handle their keys for them as well, while keeping the customer front-end broadly similar (i.e. with bank account numbers, etc).”
Derivatives and swaps could be attractive for banks
The report found bitcoin most appeal for banks when used as an investment service, similar to an ETF, mentioning specifically the model suggested by the Winklevoss Bitcoin Trust.
In these instances, the authors noted that banks would not have to expose themselves to market risk, money laundering or other potential negatives.
Bitcoin derivatives, it said, could prove attractive, provided banks were allowed to legally participate in this sector. Further, the report stated that this could help reduce bitcoin’s volatility, while providing banks a source of fee revenue.
It seemed to suggested that this avenue would likely be one of the next ways the traditional financial system could look to safely explore alternative currencies and their market implications.
Credit card fees are more at risk
UBS suggested that the bigger risk was that a third party set up a “bitcoin-like payment system” that threatens to bring down credit card and money wire fees.
The report noted that cross-border transfers take days, whereas with the bitcoin block chain, they can take minutes. Further, it noted that bitcoin the technology has implemented security improvements that traditional service providers would need to adjust to.
“On a national level, a bitcoin-like system could enhance security and reduce fraud on an everyday level. In the US in particular, credit cards are regularly used for everyday transactions for convenience – but this leaves both the merchant and the banks open to risks of chargebacks.”
Banks, it noted, could adapt these advantages of the bitcoin system, but that they may be hesitant to do so as it would cannibalize current revenue.
“A possible incentive for banks to develop such a system would be increased money transfer volumes sufficient to offset decreased fees, or if costs are lowered enough to still boost profits, but any such projection would be highly speculative at this stage.”
Merchant acceptance has little appeal
UBS also took on the question of whether bitcoin the currency represents any cost savings for merchants. To tackle this question, it looked at the daily fees paid out to miners as a percentage of transaction volume, noting it has fluctuated over the last 15 months.
During this study period, it indicated that the 30-day moving average for these costs was 4%, though this excludes the added 1% fee merchants would need to pay to convert money to fiat.
“While these figures are more or less in line with credit card fees (which range from 1% to 3%), since the beginning of 2014, the rate has trended upwards and been significantly more volatile – peaking at 8.3% at the beginning of February.”
Notably, the report, as many other recent attempts on the subject, doesn’t take into account the services of companies like BitPay and Coinbase which handle such transactions directly; nor did it mention the success being enjoyed by early adopters such as Overstock and TigerDirect.
Disintermediation risk is low
Still, while UBS believes bitcoin the technology is promising, bitcoin the currency was given a thorough critique. In particular, UBS indicated that bitcoin “exists in a regulatory vacuum”, which is damaging to its global trust.
UBS indicated that smaller, local banks, particularly in emerging markets and countries with high economic turmoil faced the biggest threat from bitcoin the currency, but that economic turmoil is already a threat to traditional banking services, even without bitcoin.
Said UBS:
“Without these stress factors, we see little threat from bitcoin.”
UBS noted that even those who used bitcoin the currency for transactions would likely require banking services such as deposits and lending from traditional outlets. It predicted that in the face of this pressure, either bitcoin would fail, or a bitcoin bank would emerge, which it suggested may be counterintuitive to its goal.
Still, the report noted that among certain groups, such as China (with its strict capital controls) and among libertarian thinkers, the bitcoin’s pros could outweigh the cons. Such examples were noted as part of a larger, three-part section that analyzed bitcoin as a store of value, means of exchange and unit of account.
Pete Rizzo (@pete_rizzo_) | Published on March 28, 2014 at 14:46 GMT | Bitcoin protocol, News, Technology
Global financial services firm UBS, a leading provider of retail and commercial banking services, released an extensive report on 28th March that weighed in on bitcoin’s potential to disrupt the existing financial system.
Entitled ‘Bitcoins and Banks’, the report concluded that bitcoin is not just a ‘problematic currency’ – though this garnered a mention in the headline, but more interestingly, a technology that could bring widespread benefits if co-opted by the traditional banking system.
The 31-page write-up suggested that bitcoin, as a currency or an alternative to traditional banking, poses little threat to traditional institutions, but that the underlying technology could be used to improve global payment systems provided the right business incentives could be identified.
Wrote UBS:
“Setting aside its political agenda, we see Bitcoin as having some potential as a new transaction technology, where a bitcoin-like technology could provide a basis for a new shared payments and transfer system using existing currencies and securities. Such a system could reduce systemic costs, and provide faster, secure, transfers – particularly in the international arena.”
Though it was careful to describe such hypotheticals as “blue-sky ideas”, the bank noted that the distributed block chain “offers a robust and secure way of storing consumer funds”, and that current issues such as the computational intensity bitcoin requires are merely “quirks” inherent in the first implementations that could later be improved.
Further, it suggested that banks could benefit from realizing the technological implications of bitcoin:
“Rather than trying to develop a completely new financial system as Bitcoin is trying to do, it makes more sense that banks, as existing money managers, absorb the benefits of the technological innovation.”
Bitcoin technology has bright future
UBS noted that the block chain could just as easily use existing fiat currencies, and that such a system “offers a radical opportunity to drastically reduce duplication in the existing system”.
It even went so far as to offer an example of what this reimagined financial system would look like, describing a system whereby banks across the world maintained a ledger that kept track of public addresses and balances.
Wrote UBS:
“Customers have control of their private keys, possibly with the option of authorizing their banks to handle their keys for them as well, while keeping the customer front-end broadly similar (i.e. with bank account numbers, etc).”
Derivatives and swaps could be attractive for banks
The report found bitcoin most appeal for banks when used as an investment service, similar to an ETF, mentioning specifically the model suggested by the Winklevoss Bitcoin Trust.
In these instances, the authors noted that banks would not have to expose themselves to market risk, money laundering or other potential negatives.
Bitcoin derivatives, it said, could prove attractive, provided banks were allowed to legally participate in this sector. Further, the report stated that this could help reduce bitcoin’s volatility, while providing banks a source of fee revenue.
It seemed to suggested that this avenue would likely be one of the next ways the traditional financial system could look to safely explore alternative currencies and their market implications.
Credit card fees are more at risk
UBS suggested that the bigger risk was that a third party set up a “bitcoin-like payment system” that threatens to bring down credit card and money wire fees.
The report noted that cross-border transfers take days, whereas with the bitcoin block chain, they can take minutes. Further, it noted that bitcoin the technology has implemented security improvements that traditional service providers would need to adjust to.
“On a national level, a bitcoin-like system could enhance security and reduce fraud on an everyday level. In the US in particular, credit cards are regularly used for everyday transactions for convenience – but this leaves both the merchant and the banks open to risks of chargebacks.”
Banks, it noted, could adapt these advantages of the bitcoin system, but that they may be hesitant to do so as it would cannibalize current revenue.
“A possible incentive for banks to develop such a system would be increased money transfer volumes sufficient to offset decreased fees, or if costs are lowered enough to still boost profits, but any such projection would be highly speculative at this stage.”
Merchant acceptance has little appeal
UBS also took on the question of whether bitcoin the currency represents any cost savings for merchants. To tackle this question, it looked at the daily fees paid out to miners as a percentage of transaction volume, noting it has fluctuated over the last 15 months.
During this study period, it indicated that the 30-day moving average for these costs was 4%, though this excludes the added 1% fee merchants would need to pay to convert money to fiat.
“While these figures are more or less in line with credit card fees (which range from 1% to 3%), since the beginning of 2014, the rate has trended upwards and been significantly more volatile – peaking at 8.3% at the beginning of February.”
Notably, the report, as many other recent attempts on the subject, doesn’t take into account the services of companies like BitPay and Coinbase which handle such transactions directly; nor did it mention the success being enjoyed by early adopters such as Overstock and TigerDirect.
Disintermediation risk is low
Still, while UBS believes bitcoin the technology is promising, bitcoin the currency was given a thorough critique. In particular, UBS indicated that bitcoin “exists in a regulatory vacuum”, which is damaging to its global trust.
UBS indicated that smaller, local banks, particularly in emerging markets and countries with high economic turmoil faced the biggest threat from bitcoin the currency, but that economic turmoil is already a threat to traditional banking services, even without bitcoin.
Said UBS:
“Without these stress factors, we see little threat from bitcoin.”
UBS noted that even those who used bitcoin the currency for transactions would likely require banking services such as deposits and lending from traditional outlets. It predicted that in the face of this pressure, either bitcoin would fail, or a bitcoin bank would emerge, which it suggested may be counterintuitive to its goal.
Still, the report noted that among certain groups, such as China (with its strict capital controls) and among libertarian thinkers, the bitcoin’s pros could outweigh the cons. Such examples were noted as part of a larger, three-part section that analyzed bitcoin as a store of value, means of exchange and unit of account.
New Active Trading Bitcoin Fund Seeks UK Investors
Kadhim Shubber (@kadhimshubber) | Published on March 28, 2014 at 12:23 GMT | Companies, Europe, Investors, News, Regulation
A new bitcoin investment fund, which will actively trade the bitcoin markets, will soon launch in London.
The Bitcoin Superfund will to use a combination of algorithmic and human trading to achieve a higher rate of return than a simple ‘buy and hold’ strategy, its founders claim.
There is no specific launch date at present, but the Superfund is in the process of identifying institutional and high-net-worth investors to reach a target of £5m ($8.3m) under management at launch.
Don’t just hold, trade
Rival bitcoin investment funds already exist, notably the Exante Bitcoin Fund and SecondMarket, but Bitcoin Superfund CEO Greg Jarrett is dismissive of the challenge that they pose, saying, “I don’t really think either of them are competitive.”
Over the past year the value of bitcoin has skyrocketed, even taking into account its relative decline since last December. Many people have bought into bitcoin in the hope that another similar rise will come in future. But if the price remains relatively flat, active trading is needed, says Jarrett:
“If bitcoin becomes a sideways market, which it seems to have done, something that we’re doing becomes very attractive, trading the volatility.”
The Superfund’s figures suggest that their trading strategies would result in a 70% higher rate of return than simply relying on bitcoin appreciation.
However, their figures are drawn from applying their trading strategies retroactively for the period December 2012 to February 2014 (4,068% vs. 6,818% for BTC appreciation vs. Superfund appreciation + alpha, respectively).
Jarrett says they are now trading live with a test fund, into which he has invested $30,000 of his own money.
The Superfund team
Unlike the Winklevoss twins, whose announcement of their as-yet unlaunched bitcoin fund was just another quirky twist in their very public lives, Jarrett and his co-founder are relative unknowns.
Jarrett’s background is in mobile product design, and the slick Bitcoin Superfund website is evidence of that.
His co-founder is hedge fund manager at a firm that currently manages over £1.3bn ($2.16bn). For now he wished to remain anonymous, however, as he is yet to leave the firm.
The Superfund intends to be based offshore, says Jarrett:
“We’ve been looking at places like Malta. It’s unlikely to be specifically a UK-regulated fund.”
However, the fund is seeking Financial Conduct Authority (FCA) approval to operate in the UK, but with the FCA yet to issue any definitive statement on bitcoin, it is unclear how long this will take or if it will be possible.
Jarrett is optimistic that the FCA will engage positively with bitcoin when it does finally make a public statement:
“I think it will be unlikely that a massively negative view is taken on [bitcoin]. I’d be surprised if they came out with regulation that would shut down a massive potential industry that’s steaming ahead very quickly.”
The Bitcoin Superfund also says it has “fully insured cold-wallet storage”, but Jarrett declined to name the insurer and said “our compliance advisors are assisting us with the set-up of this agreement”, suggesting that the insurance may not be currently be in place.
UK-based Elliptic Vault is currently the only confirmed insured business providing cold storage.
Big ambitions
The Superfund is aiming to have £5m under management when it launches. Within three years, it’s aiming to increase that ten-fold to £50m, says Jarrett:
“We want to go big, pretty fast.”
His vision of a bitcoin investment fund is one where investors can move money in and out in any currency they like; where any exchanges used by the fund are fully audited; and where special agreements with exchanges ring-fence the fund’s money in case an exchange experiences problems.
Whether all of this is achievable remains to be seen, but Bitcoin Superfund’s ambitions reflect not only the growing institutional interest in bitcoin, but also the recognition of the need for better exchange security.
Kadhim Shubber (@kadhimshubber) | Published on March 28, 2014 at 12:23 GMT | Companies, Europe, Investors, News, Regulation
A new bitcoin investment fund, which will actively trade the bitcoin markets, will soon launch in London.
The Bitcoin Superfund will to use a combination of algorithmic and human trading to achieve a higher rate of return than a simple ‘buy and hold’ strategy, its founders claim.
There is no specific launch date at present, but the Superfund is in the process of identifying institutional and high-net-worth investors to reach a target of £5m ($8.3m) under management at launch.
Don’t just hold, trade
Rival bitcoin investment funds already exist, notably the Exante Bitcoin Fund and SecondMarket, but Bitcoin Superfund CEO Greg Jarrett is dismissive of the challenge that they pose, saying, “I don’t really think either of them are competitive.”
Over the past year the value of bitcoin has skyrocketed, even taking into account its relative decline since last December. Many people have bought into bitcoin in the hope that another similar rise will come in future. But if the price remains relatively flat, active trading is needed, says Jarrett:
“If bitcoin becomes a sideways market, which it seems to have done, something that we’re doing becomes very attractive, trading the volatility.”
The Superfund’s figures suggest that their trading strategies would result in a 70% higher rate of return than simply relying on bitcoin appreciation.
However, their figures are drawn from applying their trading strategies retroactively for the period December 2012 to February 2014 (4,068% vs. 6,818% for BTC appreciation vs. Superfund appreciation + alpha, respectively).
Jarrett says they are now trading live with a test fund, into which he has invested $30,000 of his own money.
The Superfund team
Unlike the Winklevoss twins, whose announcement of their as-yet unlaunched bitcoin fund was just another quirky twist in their very public lives, Jarrett and his co-founder are relative unknowns.
Jarrett’s background is in mobile product design, and the slick Bitcoin Superfund website is evidence of that.
His co-founder is hedge fund manager at a firm that currently manages over £1.3bn ($2.16bn). For now he wished to remain anonymous, however, as he is yet to leave the firm.
The Superfund intends to be based offshore, says Jarrett:
“We’ve been looking at places like Malta. It’s unlikely to be specifically a UK-regulated fund.”
However, the fund is seeking Financial Conduct Authority (FCA) approval to operate in the UK, but with the FCA yet to issue any definitive statement on bitcoin, it is unclear how long this will take or if it will be possible.
Jarrett is optimistic that the FCA will engage positively with bitcoin when it does finally make a public statement:
“I think it will be unlikely that a massively negative view is taken on [bitcoin]. I’d be surprised if they came out with regulation that would shut down a massive potential industry that’s steaming ahead very quickly.”
The Bitcoin Superfund also says it has “fully insured cold-wallet storage”, but Jarrett declined to name the insurer and said “our compliance advisors are assisting us with the set-up of this agreement”, suggesting that the insurance may not be currently be in place.
UK-based Elliptic Vault is currently the only confirmed insured business providing cold storage.
Big ambitions
The Superfund is aiming to have £5m under management when it launches. Within three years, it’s aiming to increase that ten-fold to £50m, says Jarrett:
“We want to go big, pretty fast.”
His vision of a bitcoin investment fund is one where investors can move money in and out in any currency they like; where any exchanges used by the fund are fully audited; and where special agreements with exchanges ring-fence the fund’s money in case an exchange experiences problems.
Whether all of this is achievable remains to be seen, but Bitcoin Superfund’s ambitions reflect not only the growing institutional interest in bitcoin, but also the recognition of the need for better exchange security.
PocketPOS Launches to Remove Bitcoin Pain Points for Canadian Merchants
Stan Higgins | Published on March 28, 2014 at 03:45 GMT | Merchants, Startups, US & Canada
Merchants in Canada can now tap into a newly launched tool that allows them to accept payments in bitcoin at the point of sale – a browser app called PocketPOS.
Businesses can use PocketPOS to conduct transactions through a streamlined point-of-sale interface that does not require hardware installation or management.
PocketPOS developer Mitchell Callahan told CoinDesk that the tool is designed to appeal to merchants who aren’t tech-savvy, and that it serves as a means for them to not only accept bitcoin, but manage their accounts and interact with an exchange.
Callahan framed PocketPOS as a low-cost point-of-sale solution that would lead to wider bitcoin adoption by Canadian merchants, who he believes want to accept bitcoin but have been discouraged by existing methods.
Explained Callahan:
“I wanted an easy way to sign up merchants [to accept bitcoin], and I found most people were using kind of a mish-mash of software, and it wasn’t as simple as it could be.”
PocketPOS officially launched on 26th March.
How PocketPOS works
PocketPOS is free, but interested merchants need to first sign up for a merchant account with Calgary-based bitcoin exchange provider VirtEx.
From there, using PocketPOS only requires an Internet connection, according to Callahan:
“We wanted to get away from the traditional model of, you know, having to buy hardware [or] having any high set-up costs. It’s all browser-based so you only need an internet-connected device.”
He added: “So, if you have an old iPhone kicking around, tablet or an even a desktop computer with a screen – that’s all you need.”
Once enrolled, merchants receive a special URL that allows them to conduct transactions. Merchants then enter the transaction amount (including tip if applicable) and, once configured, the tool creates a QR code.
PocketPOS can also be used to generate and send receipts to customers.
Unlike its competitors, Callahan says PocketPOS boasts a device-agnostic platform that doesn’t require users to be logged into any service, which in turn bolsters security.
Available alternatives
Currently, Callahan indicated that most stores that accept bitcoin, do so using a combination of Blockchain.info and a desktop wallet. Alternatively, merchants can use BitPay or VirtEx’s merchant tools.
PocketPOS adds additional top layer functionality to this latter option. The company uses VirtEx as a processor, harnessing the power of the same API it uses to allow online merchants to accept BTC.
The difference, Callahan notes, is that with PocketPOS, merchants can manage security and fiat conversions.
Said Callahan:
“Currently, without PocketPOS, if you’re a VirtEx merchant, all you can do is email invoices. This isn’t a great solution for a retail location.”
Room for growth
Looking to the future, Callahan said that the PocketPOS team is considering several different funding models as they expand the scope of project. Callahan also indicated he is open to adding support for additional digital currencies.
However, he said that for now the focus will remain on offering merchants the ability to accept bitcoin without having to pay high processing fees.
He pointed to broad support among merchants in Canada, as well as existing demand for software that they can easily integrate.
“Being a business owner, I know that transactions are big, [as are] bookkeeping and reporting, so we might just have an option to pay five bucks a month and [and allow users to] export to Quickbooks or another system.”
Bitcoin in Canada
Earlier this year, recently resigned Canadian Finance Minister Jim Flaherty said that he would move to regulate bitcoin and other digital currencies, an announcement that many believed indicated harsh measures might soon be imposed on the technology.
However, more recently, that narrative seems to have changed.
This week, Canada-based bitcoin exchange Vault of Satoshi announced that it had been granted a full Money Services Business license from the Canadian government, and revealed plans to obtain further licensure in its bid for legal legitimacy.
Stan Higgins | Published on March 28, 2014 at 03:45 GMT | Merchants, Startups, US & Canada
Merchants in Canada can now tap into a newly launched tool that allows them to accept payments in bitcoin at the point of sale – a browser app called PocketPOS.
Businesses can use PocketPOS to conduct transactions through a streamlined point-of-sale interface that does not require hardware installation or management.
PocketPOS developer Mitchell Callahan told CoinDesk that the tool is designed to appeal to merchants who aren’t tech-savvy, and that it serves as a means for them to not only accept bitcoin, but manage their accounts and interact with an exchange.
Callahan framed PocketPOS as a low-cost point-of-sale solution that would lead to wider bitcoin adoption by Canadian merchants, who he believes want to accept bitcoin but have been discouraged by existing methods.
Explained Callahan:
“I wanted an easy way to sign up merchants [to accept bitcoin], and I found most people were using kind of a mish-mash of software, and it wasn’t as simple as it could be.”
PocketPOS officially launched on 26th March.
How PocketPOS works
PocketPOS is free, but interested merchants need to first sign up for a merchant account with Calgary-based bitcoin exchange provider VirtEx.
From there, using PocketPOS only requires an Internet connection, according to Callahan:
“We wanted to get away from the traditional model of, you know, having to buy hardware [or] having any high set-up costs. It’s all browser-based so you only need an internet-connected device.”
He added: “So, if you have an old iPhone kicking around, tablet or an even a desktop computer with a screen – that’s all you need.”
Once enrolled, merchants receive a special URL that allows them to conduct transactions. Merchants then enter the transaction amount (including tip if applicable) and, once configured, the tool creates a QR code.
PocketPOS can also be used to generate and send receipts to customers.
Unlike its competitors, Callahan says PocketPOS boasts a device-agnostic platform that doesn’t require users to be logged into any service, which in turn bolsters security.
Available alternatives
Currently, Callahan indicated that most stores that accept bitcoin, do so using a combination of Blockchain.info and a desktop wallet. Alternatively, merchants can use BitPay or VirtEx’s merchant tools.
PocketPOS adds additional top layer functionality to this latter option. The company uses VirtEx as a processor, harnessing the power of the same API it uses to allow online merchants to accept BTC.
The difference, Callahan notes, is that with PocketPOS, merchants can manage security and fiat conversions.
Said Callahan:
“Currently, without PocketPOS, if you’re a VirtEx merchant, all you can do is email invoices. This isn’t a great solution for a retail location.”
Room for growth
Looking to the future, Callahan said that the PocketPOS team is considering several different funding models as they expand the scope of project. Callahan also indicated he is open to adding support for additional digital currencies.
However, he said that for now the focus will remain on offering merchants the ability to accept bitcoin without having to pay high processing fees.
He pointed to broad support among merchants in Canada, as well as existing demand for software that they can easily integrate.
“Being a business owner, I know that transactions are big, [as are] bookkeeping and reporting, so we might just have an option to pay five bucks a month and [and allow users to] export to Quickbooks or another system.”
Bitcoin in Canada
Earlier this year, recently resigned Canadian Finance Minister Jim Flaherty said that he would move to regulate bitcoin and other digital currencies, an announcement that many believed indicated harsh measures might soon be imposed on the technology.
However, more recently, that narrative seems to have changed.
This week, Canada-based bitcoin exchange Vault of Satoshi announced that it had been granted a full Money Services Business license from the Canadian government, and revealed plans to obtain further licensure in its bid for legal legitimacy.
‘Stripe’ Lead Engineer: Bitcoin is a Long-Term Investment
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 21:10 GMT | Analysis, Companies, Merchants, News
Earlier today (27th March), San Francisco-based online payments provider Stripe made a game-changing announcement, revealing that it is now testing bitcoin support with online data backup service Tarsnap.
The big picture implication of the move – that online bitcoin merchants would have yet another potential processing partner to choose from – was clear. However, many questions about the specifics of exactly how Stripe – which has traditionally focused on making online credit card acceptance easier – would adapt its service remained unanswered.
Now, Stripe has provided new details.
In a Q&A with CoinDesk, Christian Anderson, Stripe’s lead bitcoin engineer, provided more information about the program, which he said will find Stripe taking bitcoin on behalf of merchants, then exchanging the digital currency for whatever fiat currency customers prefer.
Most notably, Anderson indicated that Stripe’s beta test has a long-term focus.
“This is a long-term investment for us. People selling online aren’t going to shift all their sales to bitcoin overnight, or even in the next few months. There’s some education needed on what accepting bitcoin means and what the advantages are.
We also need to make the consumer buying experience better. That’ll take time.”
Speaking to CoinDesk, Anderson addressed a number of subjects, including the most recent IRS ruling that bitcoin would be treated as property, how Apple might react to the mobile payments implications of its decision and whether Stripe sees itself as a competitor of companies like Coinbase.
Said Andreson on the latter subject:
“We would like interoperability to be the winning path, and we want to support the ecosystem. Think about a South African consumer using their Coinbase wallet to buy services from a German Stripe merchant. That’s a very cool world to live in.”
Read excerpts from our Q&A with Andreson below:
_________________________________________________________________
CoinDesk: How will Stripe set the exchange rate on bitcoin transactions?
Christian Anderson: We peer directly with several existing companies, and they in turn peer with many markets. The exchange rate for a given transaction is set by one [of] the partners who exchanges that transaction. In the implementation, Stripe does not make money off of spread. Our goal is to find the best exchange rate for our merchants.
How will Stripe hedge its risk to cope with bitcoin’s volatility?
Anderson: Stripe users will not handle Bitcoin directly and Stripe will not hold Bitcoin on behalf of its merchants.
We have partnerships with multiple entities that convert Bitcoin to currencies immediately. This mitigates volatility for Stripe and its merchants.
Will you be building bitcoin support into the mobile app, and if so for which platforms?
Anderson: Stripe has SDKs for web, mobile web, iOS and Android. These SDKs give merchants a range of flexibility over how they take payments: they can drop in Stripe Checkout, or they can build their own payment form from scratch. Bitcoin will be available across all these SDKs.
Do you anticipate any pushback from Apple, which has been traditionally censorious when it comes to bitcoin apps?
Anderson: Fundamentally, we have to wait and see what rules shake out in iOS
apps. Plenty of Stripe merchants – like Lyft, Postmates and Grindr – accept credit card payments from within mobile apps, so we hope that bitcoin won’t be treated too much differently.
Much of the furor has been over *wallet* apps rather than apps that accept Bitcoin payments.
Will Stripe’s app support the new payment mechanism released in Bitcoin Core 0.9.0?
Anderson: If this refers to the Payment Protocol (BIP 70) [then] yes. Stripe is very enthusiastic about the Payment Protocol and will support it and encourage its adoption.
How will you cope with the inability to revoke (charge back) transactions with bitcoin? Will this be a problem for merchants or customers?
Anderson: As we do today, Stripe will monitor all of its merchants for fraud and other malicious behavior.
Have you any reaction to this week’s IRS announcement regarding bitcoin? Does it change your operations materially?
Anderson: First off, the ruling doesn’t affect merchants using Stripe to accept BTC. Merchants never take possession of any Bitcoin and are paid out in dollars, so they should not be affected by the IRS’s decision to treat Bitcoin as property.
It’s too early to say how the ruling will affect Bitcoin adoption overall, but our general feeling is that it contributes to its legitimacy.
Will there be an option to deliver bitcoin directly into a merchant’s account, rather than handling the conversion immediately and sending them fiat?
Anderson: We haven’t seen as much demand for this, so it’s not on our roadmap yet. That said, our mission is to build better payment infrastructure for the Internet, so we would find Bitcoin payouts exciting inasmuch as they help us achieve that.
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 21:10 GMT | Analysis, Companies, Merchants, News
Earlier today (27th March), San Francisco-based online payments provider Stripe made a game-changing announcement, revealing that it is now testing bitcoin support with online data backup service Tarsnap.
The big picture implication of the move – that online bitcoin merchants would have yet another potential processing partner to choose from – was clear. However, many questions about the specifics of exactly how Stripe – which has traditionally focused on making online credit card acceptance easier – would adapt its service remained unanswered.
Now, Stripe has provided new details.
In a Q&A with CoinDesk, Christian Anderson, Stripe’s lead bitcoin engineer, provided more information about the program, which he said will find Stripe taking bitcoin on behalf of merchants, then exchanging the digital currency for whatever fiat currency customers prefer.
Most notably, Anderson indicated that Stripe’s beta test has a long-term focus.
“This is a long-term investment for us. People selling online aren’t going to shift all their sales to bitcoin overnight, or even in the next few months. There’s some education needed on what accepting bitcoin means and what the advantages are.
We also need to make the consumer buying experience better. That’ll take time.”
Speaking to CoinDesk, Anderson addressed a number of subjects, including the most recent IRS ruling that bitcoin would be treated as property, how Apple might react to the mobile payments implications of its decision and whether Stripe sees itself as a competitor of companies like Coinbase.
Said Andreson on the latter subject:
“We would like interoperability to be the winning path, and we want to support the ecosystem. Think about a South African consumer using their Coinbase wallet to buy services from a German Stripe merchant. That’s a very cool world to live in.”
Read excerpts from our Q&A with Andreson below:
_________________________________________________________________
CoinDesk: How will Stripe set the exchange rate on bitcoin transactions?
Christian Anderson: We peer directly with several existing companies, and they in turn peer with many markets. The exchange rate for a given transaction is set by one [of] the partners who exchanges that transaction. In the implementation, Stripe does not make money off of spread. Our goal is to find the best exchange rate for our merchants.
How will Stripe hedge its risk to cope with bitcoin’s volatility?
Anderson: Stripe users will not handle Bitcoin directly and Stripe will not hold Bitcoin on behalf of its merchants.
We have partnerships with multiple entities that convert Bitcoin to currencies immediately. This mitigates volatility for Stripe and its merchants.
Will you be building bitcoin support into the mobile app, and if so for which platforms?
Anderson: Stripe has SDKs for web, mobile web, iOS and Android. These SDKs give merchants a range of flexibility over how they take payments: they can drop in Stripe Checkout, or they can build their own payment form from scratch. Bitcoin will be available across all these SDKs.
Do you anticipate any pushback from Apple, which has been traditionally censorious when it comes to bitcoin apps?
Anderson: Fundamentally, we have to wait and see what rules shake out in iOS
apps. Plenty of Stripe merchants – like Lyft, Postmates and Grindr – accept credit card payments from within mobile apps, so we hope that bitcoin won’t be treated too much differently.
Much of the furor has been over *wallet* apps rather than apps that accept Bitcoin payments.
Will Stripe’s app support the new payment mechanism released in Bitcoin Core 0.9.0?
Anderson: If this refers to the Payment Protocol (BIP 70) [then] yes. Stripe is very enthusiastic about the Payment Protocol and will support it and encourage its adoption.
How will you cope with the inability to revoke (charge back) transactions with bitcoin? Will this be a problem for merchants or customers?
Anderson: As we do today, Stripe will monitor all of its merchants for fraud and other malicious behavior.
Have you any reaction to this week’s IRS announcement regarding bitcoin? Does it change your operations materially?
Anderson: First off, the ruling doesn’t affect merchants using Stripe to accept BTC. Merchants never take possession of any Bitcoin and are paid out in dollars, so they should not be affected by the IRS’s decision to treat Bitcoin as property.
It’s too early to say how the ruling will affect Bitcoin adoption overall, but our general feeling is that it contributes to its legitimacy.
Will there be an option to deliver bitcoin directly into a merchant’s account, rather than handling the conversion immediately and sending them fiat?
Anderson: We haven’t seen as much demand for this, so it’s not on our roadmap yet. That said, our mission is to build better payment infrastructure for the Internet, so we would find Bitcoin payouts exciting inasmuch as they help us achieve that.
How OneName Makes Bitcoin Payments as Simple as Facebook Sharing
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 13:30 GMT | Companies, News, Technology
Though the Bitcoin protocol has been described as an elegant solution to problems that have long plagued both digital currencies and the traditional monetary system, aspects of its construction violate one of the central tenets of tech design: ‘keep it simple, stupid’ (often abbreviated to KISS).
Arguably, nowhere is this more apparent than in the design of bitcoin addresses, strings of 27 to 34 alphanumeric characters that, while providing privacy and security, don’t easily allow users to exchange payment information, except via sometimes cumbersome QR code technology.
However, OneName is looking to remove this pain point, replacing lengthy bitcoin payment addresses with sleek, social handles. Once registered with OneName, asking for payment becomes as easy as adding a plus sign to your username (+pete_rizzo_, for example).
All users need to do is enter their email on the OneName website, and “claim their name”. Many already have. The OneName website boasts that notable digital currency figures, such as Coinbase co-founder Fred Ehrsam and Dogecoin Foundation shibe Ben Doernberg, are already registered too.
However, while OneName’s pitch is simple, it’s more sophisticated than it may seem at first glance. OneName is not a bitcoin application or company, but rather an open-source protocol built on top of the Namecoin protocol that seeks to enable new, innovative applications of its own.
According to core developers Muneeb Ali and Ryan Shea, OneName’s goal is to allow the Internet community to take back control of its data from centralised institutions, like Facebook, LinkedIn and Twitter, which right now have a monopoly that they say is stifling innovation.
Explained Ali:
“If you’re using the bitcoin analogy, right now people keep their money in banks. With data, these banks or third parties are companies like Facebook and LinkedIn. App developers that want to use this data now have to deal with [these companies].”
OneName, it seems, does have one thing in common with most bitcoin startups: it’s looking to replace powerful and entrenched middlemen.
The big picture
With OneName, Shea indicates that users will be able to regain control of their personal information, sharing it with any app developers that they wish, without the approval of a third party.
Shea says OneName has already been contacted by developers that want to use the its technology to build open-source alternatives to payment solutions like Venmo and instant messaging services.
Added Ali:
“Any application that can built on an application like Facebook can be built on top of OneName, but it would be decentralized in nature. There really is no limit, it’s up to the imagination of the developers.”
Today, developers are restricted from easily building these apps, Shea said, as big conglomerates monopolize user data. Companies like Whatsapp and Snapchat, he argues, were able to grow more quickly by having unrestricted access to cellphone technology and its ability to generate picture data.
Shea indicates that this use case is the best example of what allowing unfettered access to user data can allow entrepreneurs to achieve. Whatsapp, it should be noted, was recently sold to Facebook for $19bn.
How OneName works
Unlike with centralized applications, where data is stored by a single entity, Muneeb says that OneName profile data goes directly into the namecoin block chain, meaning OneName does not directly store any data.
Usernames are sent to account holders on the blockchain, and they can in turn put their private keys in cold storage or share them as desired. In this way, profiles are like coins on the system, allowing users to transfer them from one account to another.
Screen Shot 2014-03-25 at 1.54.06 PM
Since OneName is using the Namecoin protocol, it also fronts a cost to register users (about 7 US cents for the purchase of the namecoin). Users must then issue a name update within 250 days.
Said Ali:
“We do the first update and transfer the profile to the user. This expires in approximately eight months. The user would then have to fire up the Namecoin client and issue a name update, the cost could be zero or just a transaction fee.”
To avoid this potentially cumbersome task, OneName has since added a feature that allows users to update their accounts on its site, as it was heavily requested in initial feedback.
Further, OneName keeps a backup system that uses Shamir’s secret sharing. The developers explained via reddit that this means OneName keeps no information about users’ private keys, but should users lose this information, it can be recovered.
For now, the emphasis is on showing how this innovation can be applied to a simple use case: payments. However, in the long term, Muneeb said OneName will emphasize the non-financial implications of its protocol.
Said Shea:
“Right now, our goal is to help people. If you’ve ever seen people put bitcoin addresses on their website or twitter profiles, it’s kind of cumbersome, and we want to make this easier.”
Results so far
The initial launch was not without challenges. Interest was high on reddit, as were critiques of the OneName service, which the developers stressed was still a work in progress.
For example, one user quickly took the username +gavin, which prompted a question about verification from bitcoin core developer Gavin Andresen himself. The team later reserved +gavinandresen for Andresen’s use.
OneName notes it is working on a system that would seek to confirm whether OneName users are who they claim to be using Twitter accounts, Github accounts and more, thereby reducing username squatting.
Ali said:
“Basically, users would tweet out a message that links back to their profile to verify that they are the same person.”
Profile updating was also limited at the time of launch, though there is a workaround for tech-savvy people who are able to download the Namecoin-Qt to perform a name update.
Despite all this, the future is looking bright for OneName, given its easy-to-understand value proposition.
The developers revealed via reddit that a few wallets are working on implementing OneName features. Details, they say, are still forthcoming.
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 13:30 GMT | Companies, News, Technology
Though the Bitcoin protocol has been described as an elegant solution to problems that have long plagued both digital currencies and the traditional monetary system, aspects of its construction violate one of the central tenets of tech design: ‘keep it simple, stupid’ (often abbreviated to KISS).
Arguably, nowhere is this more apparent than in the design of bitcoin addresses, strings of 27 to 34 alphanumeric characters that, while providing privacy and security, don’t easily allow users to exchange payment information, except via sometimes cumbersome QR code technology.
However, OneName is looking to remove this pain point, replacing lengthy bitcoin payment addresses with sleek, social handles. Once registered with OneName, asking for payment becomes as easy as adding a plus sign to your username (+pete_rizzo_, for example).
All users need to do is enter their email on the OneName website, and “claim their name”. Many already have. The OneName website boasts that notable digital currency figures, such as Coinbase co-founder Fred Ehrsam and Dogecoin Foundation shibe Ben Doernberg, are already registered too.
However, while OneName’s pitch is simple, it’s more sophisticated than it may seem at first glance. OneName is not a bitcoin application or company, but rather an open-source protocol built on top of the Namecoin protocol that seeks to enable new, innovative applications of its own.
According to core developers Muneeb Ali and Ryan Shea, OneName’s goal is to allow the Internet community to take back control of its data from centralised institutions, like Facebook, LinkedIn and Twitter, which right now have a monopoly that they say is stifling innovation.
Explained Ali:
“If you’re using the bitcoin analogy, right now people keep their money in banks. With data, these banks or third parties are companies like Facebook and LinkedIn. App developers that want to use this data now have to deal with [these companies].”
OneName, it seems, does have one thing in common with most bitcoin startups: it’s looking to replace powerful and entrenched middlemen.
The big picture
With OneName, Shea indicates that users will be able to regain control of their personal information, sharing it with any app developers that they wish, without the approval of a third party.
Shea says OneName has already been contacted by developers that want to use the its technology to build open-source alternatives to payment solutions like Venmo and instant messaging services.
Added Ali:
“Any application that can built on an application like Facebook can be built on top of OneName, but it would be decentralized in nature. There really is no limit, it’s up to the imagination of the developers.”
Today, developers are restricted from easily building these apps, Shea said, as big conglomerates monopolize user data. Companies like Whatsapp and Snapchat, he argues, were able to grow more quickly by having unrestricted access to cellphone technology and its ability to generate picture data.
Shea indicates that this use case is the best example of what allowing unfettered access to user data can allow entrepreneurs to achieve. Whatsapp, it should be noted, was recently sold to Facebook for $19bn.
How OneName works
Unlike with centralized applications, where data is stored by a single entity, Muneeb says that OneName profile data goes directly into the namecoin block chain, meaning OneName does not directly store any data.
Usernames are sent to account holders on the blockchain, and they can in turn put their private keys in cold storage or share them as desired. In this way, profiles are like coins on the system, allowing users to transfer them from one account to another.
Screen Shot 2014-03-25 at 1.54.06 PM
Since OneName is using the Namecoin protocol, it also fronts a cost to register users (about 7 US cents for the purchase of the namecoin). Users must then issue a name update within 250 days.
Said Ali:
“We do the first update and transfer the profile to the user. This expires in approximately eight months. The user would then have to fire up the Namecoin client and issue a name update, the cost could be zero or just a transaction fee.”
To avoid this potentially cumbersome task, OneName has since added a feature that allows users to update their accounts on its site, as it was heavily requested in initial feedback.
Further, OneName keeps a backup system that uses Shamir’s secret sharing. The developers explained via reddit that this means OneName keeps no information about users’ private keys, but should users lose this information, it can be recovered.
For now, the emphasis is on showing how this innovation can be applied to a simple use case: payments. However, in the long term, Muneeb said OneName will emphasize the non-financial implications of its protocol.
Said Shea:
“Right now, our goal is to help people. If you’ve ever seen people put bitcoin addresses on their website or twitter profiles, it’s kind of cumbersome, and we want to make this easier.”
Results so far
The initial launch was not without challenges. Interest was high on reddit, as were critiques of the OneName service, which the developers stressed was still a work in progress.
For example, one user quickly took the username +gavin, which prompted a question about verification from bitcoin core developer Gavin Andresen himself. The team later reserved +gavinandresen for Andresen’s use.
OneName notes it is working on a system that would seek to confirm whether OneName users are who they claim to be using Twitter accounts, Github accounts and more, thereby reducing username squatting.
Ali said:
“Basically, users would tweet out a message that links back to their profile to verify that they are the same person.”
Profile updating was also limited at the time of launch, though there is a workaround for tech-savvy people who are able to download the Namecoin-Qt to perform a name update.
Despite all this, the future is looking bright for OneName, given its easy-to-understand value proposition.
The developers revealed via reddit that a few wallets are working on implementing OneName features. Details, they say, are still forthcoming.
Study: Mt. Gox May Have Lost Just 386 BTC Due to Transaction Malleability
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 14:55 GMT | Exchanges, Mt. Gox, News
A new report by researchers at ETH Zurich University in Switzerland has concluded that the now-bankrupt Japan-based bitcoin exchange Mt. Gox may have lost only 386 bitcoins ($203,000) due to issues stemming from transaction malleability.
The finding provides new evidence that Mt. Gox’s continued claims that issues with the Bitcoin protocol were the primary reason for its insolvency are perhaps misleading or untrue.
Released on 26th March, the report was authored by Christian Decker and Professor Roger Wattenhofer, both of the university’s Distributed Computing Group (DCG).
Overall, the authors found that only 302,000 bitcoins could have ever been involved in malleability-related attacks, and that of this figure, only 1,811 were likely to be part of attacks that could have prevented Mt. Gox users from making withdrawals.
Concluded the report:
“Even if all of these attacks were targeted against Mt. Gox, Mt. Gox needs to explain the whereabouts of 849,600 bitcoin.”
The news comes roughly one week after Mt. Gox confirmed that it had discovered 200,000 bitcoins in an old-format wallet in early March, a claim lawyers representing former Mt. Gox customers say they are currently working to investigate.
Conducting measurements
The researchers provided a detailed overview in their 13-page report of the steps they took to reach this conclusion, first noting how they identified potential double spending attacks and the limitations they faced in doing so.
To trace and dump all transactions from the Bitcoin network, the researchers created specialized nodes, allowing them to detect any double-spending attacks observed by peer nodes. The first, and most prominent limitation, for example, was that the researchers were only able to extend their research as far back as January 2013.
Explained the report:
“The following observations therefore do not consider attacks that may have happened before our collection started.”
The limitation is significant as evidence suggests that Mt. Gox lost its bitcoins over a period stemming multiple years. The researches estimate their nodes were connected to 992 peers, or approximately 20% of reachable nodes.
The next task was identifying double-spend attacks.
While double spending attacks could be determined by associating transactions with the outputs they claim, researchers chose to remove signature script from the transactions, and looked instead at the unique keys produced by the malleability attacks.
Read the report: “The unique key is then used to group transactions together into conflict sets.”
Notable findings
The report indicates that approximately 29,139 conflict sets were identified over the course of the research and later confirmed by the block chain. More than 6,000 transactions were labeled as invalid due to incorrect signatures or because they were part of further double spending.
Researchers then detailed how they were able to reach the 302,700 BTC estimate.
“The conflict set value is defined as the number of bitcoins transferred by any one transaction in the conflict set. The outputs of the transactions in a conflict set are identical, since any change to them would require a new signature.
In particular, the value of outputs may not be changed. Each transaction in a conflict set therefore transfers an identical amount of bitcoins. Summing the value of all conflict sets results in a total of 302,700 bitcoins that were involved in malleability attacks.”
The most prominent type of malleability occurred when attackers replaced a single byte OP_0 with OP_PUSHDATA2, resulting in signature script that was 4 bytes longer. Roughly 28,500 of the 29,139 confirmed attacks had this type of modification.
The effectiveness of malleability attacks
The report also took a look at whether the transaction malleability attacks launched against the exchange were successful, meaning that they resulted in a modified transaction later confirmed.
Overall, the report estimates that of the 28,595 malleability attacks it detected, only 19.46%, or 5,670, were confirmed. It estimated that the total profit from successful attacks was 64,564 BTC (roughly $33.7m at press time).
However, the researchers noted that this conclusion was based on the assumption that conflict sets were the results of attacks directed at Mt. Gox. In order to find this correlation, the researchers set out to verify the claim by finding the transactions used for the attacks.
“The above mentioned total amount of 302,700 bitcoins involved in malleability attacks already disproves the existence of such a large-scale attack. However, it could well be that malleability attacks contributed considerably in the declared losses.”
Mt. Gox’s role in encouraging attacks
The report further analyzed the timeline of the attacks, using as a basis three periods in the exchange’s lifecycle.
Period 1, which stretched from January 2013 to February 2014, was the period before Mt. Gox halted withdrawals
Period 2 included 8th to 9th February, when withdrawals stopped but no attack details were public
Period 3, lasting from 10th to 28th February, included the time after Mt. Gox had blamed issues with the Bitcoin protocol for its substantial loss of customer funds.
During Period 1, the report found 421 conflict sets, equating to roughly 1,800 BTC. During Period 2, the number of conflict sets spiked to 1,062, affecting 5,470 BTC, with the number of attacks increasing from 0.15 per hour to 132 per hour.
The report, therefore, concluded that Mt. Gox’s announcements relating to the attack dramatically increased the frequency of attacks. Attack activity was also high on 10th and 11th February, when the researchers detected 25,732 individual attacks, totaling 286,000 bitcoins.
“The strong correlation between the press releases and the ensuing attacks attempting to exploit the same weakness is a strong indicator that the attacks were indeed triggered by the press releases.”
Though, the report notes that Mt. Gox had disabled withdrawals at this time, and as such, the attacks could not have been aimed at the exchange.
Report reception
At press time, discussion of the paper was limited to Bitcoin Talk forum, where the bitcoin community mostly greeted the research as a validation of previous assumptions.
Still, there were some critics who pointed to the limited period of study, the limited reach of the information the study collected and the inability of researchers to observe how Mt. Gox may have modified transactions.
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 14:55 GMT | Exchanges, Mt. Gox, News
A new report by researchers at ETH Zurich University in Switzerland has concluded that the now-bankrupt Japan-based bitcoin exchange Mt. Gox may have lost only 386 bitcoins ($203,000) due to issues stemming from transaction malleability.
The finding provides new evidence that Mt. Gox’s continued claims that issues with the Bitcoin protocol were the primary reason for its insolvency are perhaps misleading or untrue.
Released on 26th March, the report was authored by Christian Decker and Professor Roger Wattenhofer, both of the university’s Distributed Computing Group (DCG).
Overall, the authors found that only 302,000 bitcoins could have ever been involved in malleability-related attacks, and that of this figure, only 1,811 were likely to be part of attacks that could have prevented Mt. Gox users from making withdrawals.
Concluded the report:
“Even if all of these attacks were targeted against Mt. Gox, Mt. Gox needs to explain the whereabouts of 849,600 bitcoin.”
The news comes roughly one week after Mt. Gox confirmed that it had discovered 200,000 bitcoins in an old-format wallet in early March, a claim lawyers representing former Mt. Gox customers say they are currently working to investigate.
Conducting measurements
The researchers provided a detailed overview in their 13-page report of the steps they took to reach this conclusion, first noting how they identified potential double spending attacks and the limitations they faced in doing so.
To trace and dump all transactions from the Bitcoin network, the researchers created specialized nodes, allowing them to detect any double-spending attacks observed by peer nodes. The first, and most prominent limitation, for example, was that the researchers were only able to extend their research as far back as January 2013.
Explained the report:
“The following observations therefore do not consider attacks that may have happened before our collection started.”
The limitation is significant as evidence suggests that Mt. Gox lost its bitcoins over a period stemming multiple years. The researches estimate their nodes were connected to 992 peers, or approximately 20% of reachable nodes.
The next task was identifying double-spend attacks.
While double spending attacks could be determined by associating transactions with the outputs they claim, researchers chose to remove signature script from the transactions, and looked instead at the unique keys produced by the malleability attacks.
Read the report: “The unique key is then used to group transactions together into conflict sets.”
Notable findings
The report indicates that approximately 29,139 conflict sets were identified over the course of the research and later confirmed by the block chain. More than 6,000 transactions were labeled as invalid due to incorrect signatures or because they were part of further double spending.
Researchers then detailed how they were able to reach the 302,700 BTC estimate.
“The conflict set value is defined as the number of bitcoins transferred by any one transaction in the conflict set. The outputs of the transactions in a conflict set are identical, since any change to them would require a new signature.
In particular, the value of outputs may not be changed. Each transaction in a conflict set therefore transfers an identical amount of bitcoins. Summing the value of all conflict sets results in a total of 302,700 bitcoins that were involved in malleability attacks.”
The most prominent type of malleability occurred when attackers replaced a single byte OP_0 with OP_PUSHDATA2, resulting in signature script that was 4 bytes longer. Roughly 28,500 of the 29,139 confirmed attacks had this type of modification.
The effectiveness of malleability attacks
The report also took a look at whether the transaction malleability attacks launched against the exchange were successful, meaning that they resulted in a modified transaction later confirmed.
Overall, the report estimates that of the 28,595 malleability attacks it detected, only 19.46%, or 5,670, were confirmed. It estimated that the total profit from successful attacks was 64,564 BTC (roughly $33.7m at press time).
However, the researchers noted that this conclusion was based on the assumption that conflict sets were the results of attacks directed at Mt. Gox. In order to find this correlation, the researchers set out to verify the claim by finding the transactions used for the attacks.
“The above mentioned total amount of 302,700 bitcoins involved in malleability attacks already disproves the existence of such a large-scale attack. However, it could well be that malleability attacks contributed considerably in the declared losses.”
Mt. Gox’s role in encouraging attacks
The report further analyzed the timeline of the attacks, using as a basis three periods in the exchange’s lifecycle.
Period 1, which stretched from January 2013 to February 2014, was the period before Mt. Gox halted withdrawals
Period 2 included 8th to 9th February, when withdrawals stopped but no attack details were public
Period 3, lasting from 10th to 28th February, included the time after Mt. Gox had blamed issues with the Bitcoin protocol for its substantial loss of customer funds.
During Period 1, the report found 421 conflict sets, equating to roughly 1,800 BTC. During Period 2, the number of conflict sets spiked to 1,062, affecting 5,470 BTC, with the number of attacks increasing from 0.15 per hour to 132 per hour.
The report, therefore, concluded that Mt. Gox’s announcements relating to the attack dramatically increased the frequency of attacks. Attack activity was also high on 10th and 11th February, when the researchers detected 25,732 individual attacks, totaling 286,000 bitcoins.
“The strong correlation between the press releases and the ensuing attacks attempting to exploit the same weakness is a strong indicator that the attacks were indeed triggered by the press releases.”
Though, the report notes that Mt. Gox had disabled withdrawals at this time, and as such, the attacks could not have been aimed at the exchange.
Report reception
At press time, discussion of the paper was limited to Bitcoin Talk forum, where the bitcoin community mostly greeted the research as a validation of previous assumptions.
Still, there were some critics who pointed to the limited period of study, the limited reach of the information the study collected and the inability of researchers to observe how Mt. Gox may have modified transactions.
Bitcoin Price Drops After New Chinese Bank Rumours
Jon Southurst (@southtopia) | Published on March 27, 2014 at 11:16 GMT | Asia, Companies, Exchanges, Regulation
Less than a week after a fake Chinese news report sent bitcoin and litecoin prices plummeting on some exchanges, another similar rumour hit the Internet today.
News that the Chinese government would penalize any bank transacting with bitcoin exchanges after 15th April started to break around mid-morning China time on Thursday 27th March. This time, it was reported as fact by a number of news services.
The bitcoin price, already on a downward trend, dropped to a low of $561.61 on CoinDesk’s BPI and below the $550 mark on Chinese exchanges.
The latest report gave all the usual reasons a government might want to restrict digital currencies: money laundering, crime, price volatility and investor risk. Given that the People’s Bank of China had previously warned banks to stay away from bitcoin transactions, the fake news seemed plausible, but this was the first report of an outright prohibition.
Unfounded rumours
Cracks started to appear in the story when China’s exchanges claimed they hadn’t heard the news and tried to verify it with the PBOC itself, finding no information.
“We didn’t get any official announcement,” said Star Xu, CEO of major exchange OKCoin.
“We haven’t seen any concrete evidence of any of this yet,” said Bobby Lee, CEO of BTCChina, saying the story seemed to be just a rumour, but that he’d stay tuned for any updates.
OKCoin later posted on its Weibo account (a ‘human’ translation via Reddit):
“In order to prevent panic (and large volume of trading) like the last time false news came out on 21 March, we have already set up enough resources to deal with situations like this when they arise. There is no related press release on the website of People’s Bank of China. We condemn the use of false news news used to cause panic. OKcoin will pay close attention to news about regulation.”
The leaders of Huobi and BTCTrade also both reportedly denied receiving any official announcement from the People’s Bank.
Could it be true?
There is a twist in the tale, though: the reporter who wrote the story for Caixin, generally regarded as a reputable news magazine, said he is sticking by his story, and has posted on various social media sites about its verity.
Last week’s hoax not only saw bitcoin prices fall, it caused a ‘flash crash‘ that dropped the litecoin price to 1 RMB on Huobi, which had only begun trading the currency two days earlier.
Prices recovered soon after and Huobi compensated those who lost money, but the exchange was then hit by a day-long DDoS attack just two days later.
The poster of last week’s hoax remains unknown, and there was no named source in today’s news reports.
Jon Southurst (@southtopia) | Published on March 27, 2014 at 11:16 GMT | Asia, Companies, Exchanges, Regulation
Less than a week after a fake Chinese news report sent bitcoin and litecoin prices plummeting on some exchanges, another similar rumour hit the Internet today.
News that the Chinese government would penalize any bank transacting with bitcoin exchanges after 15th April started to break around mid-morning China time on Thursday 27th March. This time, it was reported as fact by a number of news services.
The bitcoin price, already on a downward trend, dropped to a low of $561.61 on CoinDesk’s BPI and below the $550 mark on Chinese exchanges.
The latest report gave all the usual reasons a government might want to restrict digital currencies: money laundering, crime, price volatility and investor risk. Given that the People’s Bank of China had previously warned banks to stay away from bitcoin transactions, the fake news seemed plausible, but this was the first report of an outright prohibition.
Unfounded rumours
Cracks started to appear in the story when China’s exchanges claimed they hadn’t heard the news and tried to verify it with the PBOC itself, finding no information.
“We didn’t get any official announcement,” said Star Xu, CEO of major exchange OKCoin.
“We haven’t seen any concrete evidence of any of this yet,” said Bobby Lee, CEO of BTCChina, saying the story seemed to be just a rumour, but that he’d stay tuned for any updates.
OKCoin later posted on its Weibo account (a ‘human’ translation via Reddit):
“In order to prevent panic (and large volume of trading) like the last time false news came out on 21 March, we have already set up enough resources to deal with situations like this when they arise. There is no related press release on the website of People’s Bank of China. We condemn the use of false news news used to cause panic. OKcoin will pay close attention to news about regulation.”
The leaders of Huobi and BTCTrade also both reportedly denied receiving any official announcement from the People’s Bank.
Could it be true?
There is a twist in the tale, though: the reporter who wrote the story for Caixin, generally regarded as a reputable news magazine, said he is sticking by his story, and has posted on various social media sites about its verity.
Last week’s hoax not only saw bitcoin prices fall, it caused a ‘flash crash‘ that dropped the litecoin price to 1 RMB on Huobi, which had only begun trading the currency two days earlier.
Prices recovered soon after and Huobi compensated those who lost money, but the exchange was then hit by a day-long DDoS attack just two days later.
The poster of last week’s hoax remains unknown, and there was no named source in today’s news reports.
Bitcoin ID Verification Streamlined With Jumio’s BISON
Jon Southurst (@southtopia) | Published on March 27, 2014 at 12:00 GMT | Companies, Exchanges, News, Technology
Credentials management company Jumio Inc. announced it has formed a network of bitcoin exchanges, wallets and ATM providers worldwide to smooth ID verification procedures and open easy transactions to a greater range of connected devices.
Its new Bitcoin Identity Security Open Network (BISON) includes BitAccess ATMs, SnapSwap, CoinMkt, Digital Currency Exchange of Texas, CoinRnr, Hashop.io, NoveltyLab and Bitnet Technologies as initial members.
Using Jumio’s ‘Netverify‘ technology, users in the BISON ecosystem can simply hold their ID in front of a camera on any connected device to get verified and validated at the point of transaction. It also extracts the personal information on the ID and auto-populates the transaction form, doing all this in real-time.
The system can verify driver licences, passports and some other documents issued by over 100 countries using a bundle of automated techniques to detect manipulation. Suspect IDs are then referred to human experts for further examination.
Netverify Jumio
Security for bitcoin businesses
Right now the buyer’s identify is used only in the relationship with the bitcoin business they’re using. Next summer, however, they will have the option to join a wider network whereby their ID details can be shared between different companies, obviating the need to complete separate identification and verification processes. Jumio gave bitcoin exchanges, with their often lengthy verification times, as the best example where this would be an advantage.
BISON client businesses will also have access to regularly updated data regarding success rates, failure rates, account openings, transaction failures and fraud attempts within the network, giving them a better idea who and what to watch out for. Jumio’s founder and CEO Daniel Mattes said:
“The vast majority of bitcoin users are honest and engaging in a range of legal transactions, but a small minority are not and that threatens the entire ecosystem especially during this formative period.”
“BISON is designed to minimize the problem by weeding out those who use false or manipulated IDs which is a strong indicator of intended fraud or other illegal activity.”
New world
Jumio is not a ‘bitcoin business’ per se, concerning itself mainly with verification procedures at all types of clients, including many in the online retail, government and traditional financial spheres. However it is also backed by venture capitalist firm Andreesen Horowitz, and many of Marc Andreesen’s recent bitcoin pronouncements have begun to catch on.
“There’s a bias against the new – we think nothing of handing over credit cards to a restaurant waiter, just because it’s established behaviour.”
It has also been working with a number of bitcoin businesses recently, and realized the need for an efficient and accurate way to verify identity in transactions using connected devices, like smartphones.
The new concept of ‘keystroke-free transactions’ seeks new ways that respect the form factor of mobile devices, Jumio says. Everything now is based on the desktop model, with keyboards and browser auto-fill.
Chief Marketing Officer Marc Barach echoed many of Andreesen’s bitcoin beliefs: that in its current form, bitcoin is like the internet in 1994.
That is, it’s still a mix of fringe players and experimental technology, which doesn’t always work nicely. The next phase, both have said, will demand new standards of professionalism and trust to reach the mainstream.
Barach added: ”We didn’t actually pursue this sector, it sort of came to us. We saw a need to establish trust between bitcoin customers, and the wallets and exchanges they work with.”
By weeding out fraud in the form of fake or manipulated IDs, Barach said, the network strengthens the entire ecosystem. The main use case for BISON is obviously KYC (know your customer) rules that protect businesses from fraud as much as identify wrongdoers to the authorities.
“If you set up a process that makes it difficult for criminals to do business, they’ll go elsewhere and leave the space to legitimate activities. Criminals will go to that second tier of company, that doesn’t care about that stuff,” he continued.
He said Jumio had learned a few things working with bitcoin businesses, which involved improving security without compromising digital currency’s advantages.
“We discovered a couple of things: (1) Self-regulation is the way to go; (2) These companies have developed good processes to eliminate criminal activity; (3) Bitcoin is a hyper-efficient way to transact, and it’s all about keeping that efficiency.”
Privacy issues
Barach says he understands the concerns of users who might at first be reluctant to hand over their personal information to another company to share. But on the whole, trusting it to a secure system like BISON is still preferably to leaving your personal details spread over different businesses of varying sizes and security standards around the internet.
“If you want to sign up anywhere, say Coinbase or itBit etc, you have to give ID. What’s new is you now have the option to keep that info on a central place.”
“You’re leaving your personal information everywhere around the internet anyway. it’s something we’ve become used to, and Jumio doesn’t think merchants should be in the storage of payment and personal info business.”
“A lot of people go back to a small store they’d forgotten about and are surprised to discover they’re already logged in and payment details are on file. They think it’s convenient. In many ways, there’s a bias against the new – we think nothing of handing over our credit cards to a waiter in a restaurant, just because it’s established behaviour.”
Jumio now has offices and clients across the US and Europe, with Europe representing 40% of its business. It hopes to expand into Latin American and Asian markets over the next few years.
Founded in 2010 by Daniel Mattes, the Palo Alto company is backed by investors including Andreessen Horowitz and Citi Ventures. Facebook co-founder Eduardo Saverin has also been an investor since the early days and remains an active board member.
Jon Southurst (@southtopia) | Published on March 27, 2014 at 12:00 GMT | Companies, Exchanges, News, Technology
Credentials management company Jumio Inc. announced it has formed a network of bitcoin exchanges, wallets and ATM providers worldwide to smooth ID verification procedures and open easy transactions to a greater range of connected devices.
Its new Bitcoin Identity Security Open Network (BISON) includes BitAccess ATMs, SnapSwap, CoinMkt, Digital Currency Exchange of Texas, CoinRnr, Hashop.io, NoveltyLab and Bitnet Technologies as initial members.
Using Jumio’s ‘Netverify‘ technology, users in the BISON ecosystem can simply hold their ID in front of a camera on any connected device to get verified and validated at the point of transaction. It also extracts the personal information on the ID and auto-populates the transaction form, doing all this in real-time.
The system can verify driver licences, passports and some other documents issued by over 100 countries using a bundle of automated techniques to detect manipulation. Suspect IDs are then referred to human experts for further examination.
Netverify Jumio
Security for bitcoin businesses
Right now the buyer’s identify is used only in the relationship with the bitcoin business they’re using. Next summer, however, they will have the option to join a wider network whereby their ID details can be shared between different companies, obviating the need to complete separate identification and verification processes. Jumio gave bitcoin exchanges, with their often lengthy verification times, as the best example where this would be an advantage.
BISON client businesses will also have access to regularly updated data regarding success rates, failure rates, account openings, transaction failures and fraud attempts within the network, giving them a better idea who and what to watch out for. Jumio’s founder and CEO Daniel Mattes said:
“The vast majority of bitcoin users are honest and engaging in a range of legal transactions, but a small minority are not and that threatens the entire ecosystem especially during this formative period.”
“BISON is designed to minimize the problem by weeding out those who use false or manipulated IDs which is a strong indicator of intended fraud or other illegal activity.”
New world
Jumio is not a ‘bitcoin business’ per se, concerning itself mainly with verification procedures at all types of clients, including many in the online retail, government and traditional financial spheres. However it is also backed by venture capitalist firm Andreesen Horowitz, and many of Marc Andreesen’s recent bitcoin pronouncements have begun to catch on.
“There’s a bias against the new – we think nothing of handing over credit cards to a restaurant waiter, just because it’s established behaviour.”
It has also been working with a number of bitcoin businesses recently, and realized the need for an efficient and accurate way to verify identity in transactions using connected devices, like smartphones.
The new concept of ‘keystroke-free transactions’ seeks new ways that respect the form factor of mobile devices, Jumio says. Everything now is based on the desktop model, with keyboards and browser auto-fill.
Chief Marketing Officer Marc Barach echoed many of Andreesen’s bitcoin beliefs: that in its current form, bitcoin is like the internet in 1994.
That is, it’s still a mix of fringe players and experimental technology, which doesn’t always work nicely. The next phase, both have said, will demand new standards of professionalism and trust to reach the mainstream.
Barach added: ”We didn’t actually pursue this sector, it sort of came to us. We saw a need to establish trust between bitcoin customers, and the wallets and exchanges they work with.”
By weeding out fraud in the form of fake or manipulated IDs, Barach said, the network strengthens the entire ecosystem. The main use case for BISON is obviously KYC (know your customer) rules that protect businesses from fraud as much as identify wrongdoers to the authorities.
“If you set up a process that makes it difficult for criminals to do business, they’ll go elsewhere and leave the space to legitimate activities. Criminals will go to that second tier of company, that doesn’t care about that stuff,” he continued.
He said Jumio had learned a few things working with bitcoin businesses, which involved improving security without compromising digital currency’s advantages.
“We discovered a couple of things: (1) Self-regulation is the way to go; (2) These companies have developed good processes to eliminate criminal activity; (3) Bitcoin is a hyper-efficient way to transact, and it’s all about keeping that efficiency.”
Privacy issues
Barach says he understands the concerns of users who might at first be reluctant to hand over their personal information to another company to share. But on the whole, trusting it to a secure system like BISON is still preferably to leaving your personal details spread over different businesses of varying sizes and security standards around the internet.
“If you want to sign up anywhere, say Coinbase or itBit etc, you have to give ID. What’s new is you now have the option to keep that info on a central place.”
“You’re leaving your personal information everywhere around the internet anyway. it’s something we’ve become used to, and Jumio doesn’t think merchants should be in the storage of payment and personal info business.”
“A lot of people go back to a small store they’d forgotten about and are surprised to discover they’re already logged in and payment details are on file. They think it’s convenient. In many ways, there’s a bias against the new – we think nothing of handing over our credit cards to a waiter in a restaurant, just because it’s established behaviour.”
Jumio now has offices and clients across the US and Europe, with Europe representing 40% of its business. It hopes to expand into Latin American and Asian markets over the next few years.
Founded in 2010 by Daniel Mattes, the Palo Alto company is backed by investors including Andreessen Horowitz and Citi Ventures. Facebook co-founder Eduardo Saverin has also been an investor since the early days and remains an active board member.
Robocoin Offers Bitcoin ATM Operators 0% Fees for Life
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 01:30 GMT | Bitcoin ATM, News
Las Vegas-based bitcoin ATM manufacturer Robocoin has announced it is lowering its operator fees to 0% as part of a new offer aimed at making its machine owners more competitive on the global marketplace.
Robocoin had previously taken 34% of the transaction fees set by its operators on its bitcoin ATMs, meaning if an operator set fees at 3%, Robocoin would net 1% of those earnings.
As part of the new offering, operators can pay $10,000 for a lifetime license that allows them to bypass fees for life. The $10,000 cost is an introductory price that will run through 30th April.
Alternatively, operators can forego the added $10,000 cost and pay $20,000 for the BTC ATM and 1% of its fees going forward to the company.
Robocoin CEO Jordan Kelley spoke to CoinDesk about the announcement, saying that the measure is proof of its commitment to its customers and to the bitcoin ecosystem at large.
“Our goal of the company is to ensure that our operators are profitable, that they’re operating at the best prices and that we’re building our network around the world.”
Kelley indicated that in today’s fast-moving digital currency ecosystem, the fees being imposed on new consumers are proving to be an obstacle to adoption, one that his company is committed to doing its part to reduce.
The CEO added: “We’re just guys that like to push the envelope.”
Improving overall service
Kelley sees the new, lower fees as yet another reason operators should choose Robocoin over the available alternatives, saying that individual value propositions don’t matter when you consider the overall service a company provides.
Said Kelley:
“You want a machine that has longevity, a machine that doesn’t require you to stand next to it, a machine that can auto-enroll customers with full know your customer (KYC) and anti-money laundering (AML) compliance so that you’re protecting yourself from any regulatory scrutiny.”
Further, Kelley indicated that the move will also open up a new customer base for operators, hopefully enticing the large number of early bitcoin adopters who aren’t keen to pay 7% on a transaction.
Demonstrating commitment
Of course, Kelley also indicated that lowering fees is just another way Robocoin is demonstrating its desire to improve the overall ecosystem.
Said Kelley:
“I think our company takes a serious responsibility when it comes to bringing bitcoin to the world, and that this makes a big statement to anyone who wants to operate a Robocoin that our goal is to offer the best hardware and to ensure that our guys are the most profitable.”
Though operators could choose not to pass along reduced fees to their customers, Kelley suggested that this outcome is unlikely.
“You’re going to be getting a ton of pressure. [...] We’ve done the numbers, the numbers look wonderful when you drop fees low.”
Kelley indicated that Robocoin’s data shows a clear connection between lower fees and higher volume.
More in store
Kelley did not elaborate, but hinted that the new pricing model is part of a larger plan that the company plans to unveil later this year, hence the limited run.
Notably, he did return to the subject of remittances, noting that for Robocoin to truly compete in the global remittance market, the 5% to 7% fees imposed by operators on transactions needed to decline.
Further, he added that consumers who remit money through traditional means will typically pay just 3% to 5% on transactions of $400 to $500, potentially indicating that Robocoin has bigger plans beyond simply providing buying and selling services.
Pete Rizzo (@pete_rizzo_) | Published on March 27, 2014 at 01:30 GMT | Bitcoin ATM, News
Las Vegas-based bitcoin ATM manufacturer Robocoin has announced it is lowering its operator fees to 0% as part of a new offer aimed at making its machine owners more competitive on the global marketplace.
Robocoin had previously taken 34% of the transaction fees set by its operators on its bitcoin ATMs, meaning if an operator set fees at 3%, Robocoin would net 1% of those earnings.
As part of the new offering, operators can pay $10,000 for a lifetime license that allows them to bypass fees for life. The $10,000 cost is an introductory price that will run through 30th April.
Alternatively, operators can forego the added $10,000 cost and pay $20,000 for the BTC ATM and 1% of its fees going forward to the company.
Robocoin CEO Jordan Kelley spoke to CoinDesk about the announcement, saying that the measure is proof of its commitment to its customers and to the bitcoin ecosystem at large.
“Our goal of the company is to ensure that our operators are profitable, that they’re operating at the best prices and that we’re building our network around the world.”
Kelley indicated that in today’s fast-moving digital currency ecosystem, the fees being imposed on new consumers are proving to be an obstacle to adoption, one that his company is committed to doing its part to reduce.
The CEO added: “We’re just guys that like to push the envelope.”
Improving overall service
Kelley sees the new, lower fees as yet another reason operators should choose Robocoin over the available alternatives, saying that individual value propositions don’t matter when you consider the overall service a company provides.
Said Kelley:
“You want a machine that has longevity, a machine that doesn’t require you to stand next to it, a machine that can auto-enroll customers with full know your customer (KYC) and anti-money laundering (AML) compliance so that you’re protecting yourself from any regulatory scrutiny.”
Further, Kelley indicated that the move will also open up a new customer base for operators, hopefully enticing the large number of early bitcoin adopters who aren’t keen to pay 7% on a transaction.
Demonstrating commitment
Of course, Kelley also indicated that lowering fees is just another way Robocoin is demonstrating its desire to improve the overall ecosystem.
Said Kelley:
“I think our company takes a serious responsibility when it comes to bringing bitcoin to the world, and that this makes a big statement to anyone who wants to operate a Robocoin that our goal is to offer the best hardware and to ensure that our guys are the most profitable.”
Though operators could choose not to pass along reduced fees to their customers, Kelley suggested that this outcome is unlikely.
“You’re going to be getting a ton of pressure. [...] We’ve done the numbers, the numbers look wonderful when you drop fees low.”
Kelley indicated that Robocoin’s data shows a clear connection between lower fees and higher volume.
More in store
Kelley did not elaborate, but hinted that the new pricing model is part of a larger plan that the company plans to unveil later this year, hence the limited run.
Notably, he did return to the subject of remittances, noting that for Robocoin to truly compete in the global remittance market, the 5% to 7% fees imposed by operators on transactions needed to decline.
Further, he added that consumers who remit money through traditional means will typically pay just 3% to 5% on transactions of $400 to $500, potentially indicating that Robocoin has bigger plans beyond simply providing buying and selling services.
Mining Malware Infects Mobile Market via Google Play Apps
Nermin Hajdarbegovic | Published on March 27, 2014 at 10:31 GMT | Crime, Mining, News, Technology
Cryptocurrency mining malware for PC platforms has been around for a while, but now it has gone mobile, specifically via the Android OS.
A team of security researchers from Trend Micro has managed to identify two apps that can use your Android device to mine litecoin and dogecoin.
The apps in question are called Songs and Prized, and both are available from the Google Play Store. Songs has between one and five million downloads so far, while Prized has 10,000 to 50,000 downloads.
This is not the first case of mining malware targeting new and unusual platforms. Linux recently got what was likely its first taste of mining malware with the Darlloz worm.
The Android ecosystem is quite a bit bigger, but targeting it is rather pointless from a mining point of view because the hardware simply isn’t up to the job.
Malware to the moon
The researchers identified the malware as ANDROIDOS_KAGECOIN.HBT, which has previously been found in repackaged copies of several popular apps, including Football Manager Handheld and TuneIn Radio.
The apps were injected with CPU mining code from a legitimate Android mining app, based on cpuminer. This time around the malware was found on Google Play apps, rather than repackaged apps from third-party app stores.
Google’s hands-off approach to app vetting (or lack thereof) will probably be blamed for the mess, but in all fairness this would not be the first time a big tech firm was used to spread cryptocurrency malware.
On New Year’s Eve, Yahoo’s European servers were piggybacked to spread mining malware to a large number of PCs, but the attack appears to have been limited and relatively unsuccessful.
Once installed, this strain launched CPUminer and connected to a dynamic domain, where it was redirected to an anonymous dogecoin mining pool.
Trend Micro said:
“By February 17, his network of mobile miners has earned him thousands of dogecoins. After February 17, the cybercriminal changed mining pools. The malware is configured to download a file, which contains the information necessary to update the configuration of the miner. This configuration file was updated, and it now connects to the well-known WafflePool mining pool.”
The researchers now say they have identified exactly the same behaviour in apps downloaded from Google Play. At press time, both apps were still available on Google’s app store.
This time around, the miner has been configured to mine litecoins rather than dogecoins. However, the focus was initially on dogecoins and researchers believe that the cybercriminal behind the malware “accumulated a great deal” of dogecoins.
Clever but pointless
Although this attack has infected many thousands of devices, researchers seem baffled by the fact that someone chose to attempt it in the first place. Smartphones simply don’t have enough processing power to mine cryptocurrencies effectively, and battery life is a further problem.
Trend Micro points out:
“Clever as the attack is, whoever carried it out may not have thought things through. Phones do not have sufficient performance to serve as effective miners. Users will also quickly notice the odd behavior of the miners – slow charging and excessively hot phones will all be seen, making the miner’s presence not particularly stealthy. Yes, they can gain money this way, but at a glacial pace.”
Trend Micro points out that there are plenty of telltale signs that point to an infection. CPUs in mobile devices spent much of their time idling, so it is relatively easy to notice that something is wrong.
The battery drains quickly and recharges slowly, but heat is an even bigger giveaway. As anyone who was ever hooked on mobile games knows, phones and tablets heat up quickly even after a few minutes of gameplay, as the System-on-Chip (SoC) processor kicks into high gear and starts operating at the highest possible clocks when faced with a lot of load.
It should be relatively easy to figure out if any app is mining in the background. Users who happen to notice unusual behaviour on their devices, such as a hot phone and low battery life, can easily identify the app responsible (go to: Settings > Battery), and remove it.
It goes without saying that the two apps mentioned above should be removed from your phone immediately, if you have them installed.
The ARM-based SoCs used in the vast majority of Android devices today simply don’t have the muscle to mine cryptocurrencies. They are designed to be efficient and operate within strict thermal and power envelopes, necessitated by the size of the device and, of course, the capacity of the on-board battery.
Even the latest and most powerful ARM-based application processors used in high-end Android smartphones and tablets, such as the Snapdragon 800, Tegra 4 or Exynos 5, don’t have a fraction of the computing power needed to mine digital currencies in any sensible amount of time.
In other words, there probably aren’t that many malware developers who are willing to waste time on Android mining. The fact that someone has tried it does not mean that others will follow suit, as the returns are simply too low.
Nermin Hajdarbegovic | Published on March 27, 2014 at 10:31 GMT | Crime, Mining, News, Technology
Cryptocurrency mining malware for PC platforms has been around for a while, but now it has gone mobile, specifically via the Android OS.
A team of security researchers from Trend Micro has managed to identify two apps that can use your Android device to mine litecoin and dogecoin.
The apps in question are called Songs and Prized, and both are available from the Google Play Store. Songs has between one and five million downloads so far, while Prized has 10,000 to 50,000 downloads.
This is not the first case of mining malware targeting new and unusual platforms. Linux recently got what was likely its first taste of mining malware with the Darlloz worm.
The Android ecosystem is quite a bit bigger, but targeting it is rather pointless from a mining point of view because the hardware simply isn’t up to the job.
Malware to the moon
The researchers identified the malware as ANDROIDOS_KAGECOIN.HBT, which has previously been found in repackaged copies of several popular apps, including Football Manager Handheld and TuneIn Radio.
The apps were injected with CPU mining code from a legitimate Android mining app, based on cpuminer. This time around the malware was found on Google Play apps, rather than repackaged apps from third-party app stores.
Google’s hands-off approach to app vetting (or lack thereof) will probably be blamed for the mess, but in all fairness this would not be the first time a big tech firm was used to spread cryptocurrency malware.
On New Year’s Eve, Yahoo’s European servers were piggybacked to spread mining malware to a large number of PCs, but the attack appears to have been limited and relatively unsuccessful.
Once installed, this strain launched CPUminer and connected to a dynamic domain, where it was redirected to an anonymous dogecoin mining pool.
Trend Micro said:
“By February 17, his network of mobile miners has earned him thousands of dogecoins. After February 17, the cybercriminal changed mining pools. The malware is configured to download a file, which contains the information necessary to update the configuration of the miner. This configuration file was updated, and it now connects to the well-known WafflePool mining pool.”
The researchers now say they have identified exactly the same behaviour in apps downloaded from Google Play. At press time, both apps were still available on Google’s app store.
This time around, the miner has been configured to mine litecoins rather than dogecoins. However, the focus was initially on dogecoins and researchers believe that the cybercriminal behind the malware “accumulated a great deal” of dogecoins.
Clever but pointless
Although this attack has infected many thousands of devices, researchers seem baffled by the fact that someone chose to attempt it in the first place. Smartphones simply don’t have enough processing power to mine cryptocurrencies effectively, and battery life is a further problem.
Trend Micro points out:
“Clever as the attack is, whoever carried it out may not have thought things through. Phones do not have sufficient performance to serve as effective miners. Users will also quickly notice the odd behavior of the miners – slow charging and excessively hot phones will all be seen, making the miner’s presence not particularly stealthy. Yes, they can gain money this way, but at a glacial pace.”
Trend Micro points out that there are plenty of telltale signs that point to an infection. CPUs in mobile devices spent much of their time idling, so it is relatively easy to notice that something is wrong.
The battery drains quickly and recharges slowly, but heat is an even bigger giveaway. As anyone who was ever hooked on mobile games knows, phones and tablets heat up quickly even after a few minutes of gameplay, as the System-on-Chip (SoC) processor kicks into high gear and starts operating at the highest possible clocks when faced with a lot of load.
It should be relatively easy to figure out if any app is mining in the background. Users who happen to notice unusual behaviour on their devices, such as a hot phone and low battery life, can easily identify the app responsible (go to: Settings > Battery), and remove it.
It goes without saying that the two apps mentioned above should be removed from your phone immediately, if you have them installed.
The ARM-based SoCs used in the vast majority of Android devices today simply don’t have the muscle to mine cryptocurrencies. They are designed to be efficient and operate within strict thermal and power envelopes, necessitated by the size of the device and, of course, the capacity of the on-board battery.
Even the latest and most powerful ARM-based application processors used in high-end Android smartphones and tablets, such as the Snapdragon 800, Tegra 4 or Exynos 5, don’t have a fraction of the computing power needed to mine digital currencies in any sensible amount of time.
In other words, there probably aren’t that many malware developers who are willing to waste time on Android mining. The fact that someone has tried it does not mean that others will follow suit, as the returns are simply too low.
New Binary Options Trading Service Takes Bitcoin-Only Payments
Jon Matonis (@jonmatonis) | Published on March 26, 2014 at 14:15 GMT | Bitcoin protocol, Investors, News, Prices
A new service for financial options has launched a beta website for nine different binary options, including gold, silver and crude oil, plus six foreign exchange pairs.
The offered currencies – euros, Australian dollars, New Zealand dollars, British pounds, yen, and Swiss francs – are all paired with the US dollar.
Different than previous binary option offerings, the new service – which is called UpDown – processes payments and payouts in bitcoin only.
With binary options, the trader selects the direction that the price of the underlying asset will move – either up (‘call option’) or down (‘put option’) – and purchases an option contract. This contract gives the buyer the right to exercise the option at the end of the specified time period, at which point the trader makes a return or loses the initial investment.
Binary options are sometimes referred to as ‘all-or-nothing options’, ‘digital options’, or ‘fixed return options’ (FROs), which are traded on the American Stock Exchange.
More popular outside the US, foreign binary options are offered by individual brokers, rather than through an exchange, and they typically have a fixed payout and risk. The brokers earn their revenue from the percentage discrepancy between what they pay out on winning trades and what they collect from losing trades.
Most foreign binary options brokers are not legally allowed to solicit US residents unless that broker is registered with a US regulatory body, such as the Securities and Exchange Commission or the Commodities Futures Trading Commission.
First-generation brokers
First-generation binary options for bitcoin simply offer the BTC/USD currency pair as a trading vehicle, whereas second-generation operators also allow deposits and payouts in bitcoin. Coindesk first covered first-generation bitcoin binary options in June 2013.
Now, binary option brokers that trade bitcoin as an option instrument include anyoption, SetOption, TradeRush, and Bloombex-Options.
Fast and simple, the tradeable asset lists are extensive with durations of 60 seconds to one week. Payouts range between 60% to 85%, depending on the asset and option type. Top brokers will also provide news resources and trading tools.
Second-generation brokers
Second-generation brokers offering both bitcoin funding and bitcoin trading include UpDown, BTCOracle, and BeastOptions.
The first such trading service operating on the bitcoin block chain, Satoshi Option, debuted in March 2013.
Similar to the SatoshiDice betting game, Satoshi Option requires no account registration and no personal details. Payouts are near instantaneous and the service is accessible from anywhere in the world because it relies on the bitcoin block chain as the platform.
Maximum trade size per bitcoin address is currently set at 0.25 BTC. Since the available commodities are traded with publicly available pricing, the binary option outcomes are verifiable.
Unlike the other bitcoin-funded brokers that rely on proprietary platforms, BeastOptions operates on the third-party TRADOLOGIC trading platform, which provides a customizable front end that is a lightweight, high-performance solution for web-based or mobile platform trading.
Several binary option trading platforms exist and SpotOption, TRADOLOGIC’s biggest competitor, has been offering bitcoin binary options since mid-2013. Leverate‘s new platform also includes support for bitcoin binary options and CFDs, which is utilized by Plus500 and TopOption.
Contracts for difference, or CFDs, differ from binary options in that they allow the use of leverage and the contract can be closed at any time, whereas binary options have a fixed expiry. Counterparty risk is a concern for both instruments, which is what the very short-term binary options utilizing the bitcoin block chain seek to alleviate.
UpDown will soon be adding a BTC/USD trading pair to its binary option asset list after it negotiates an exchange partnership. UpDown refers to itself as a community-regulated project and is registered in the British Virgin Islands.
Jon Matonis (@jonmatonis) | Published on March 26, 2014 at 14:15 GMT | Bitcoin protocol, Investors, News, Prices
A new service for financial options has launched a beta website for nine different binary options, including gold, silver and crude oil, plus six foreign exchange pairs.
The offered currencies – euros, Australian dollars, New Zealand dollars, British pounds, yen, and Swiss francs – are all paired with the US dollar.
Different than previous binary option offerings, the new service – which is called UpDown – processes payments and payouts in bitcoin only.
With binary options, the trader selects the direction that the price of the underlying asset will move – either up (‘call option’) or down (‘put option’) – and purchases an option contract. This contract gives the buyer the right to exercise the option at the end of the specified time period, at which point the trader makes a return or loses the initial investment.
Binary options are sometimes referred to as ‘all-or-nothing options’, ‘digital options’, or ‘fixed return options’ (FROs), which are traded on the American Stock Exchange.
More popular outside the US, foreign binary options are offered by individual brokers, rather than through an exchange, and they typically have a fixed payout and risk. The brokers earn their revenue from the percentage discrepancy between what they pay out on winning trades and what they collect from losing trades.
Most foreign binary options brokers are not legally allowed to solicit US residents unless that broker is registered with a US regulatory body, such as the Securities and Exchange Commission or the Commodities Futures Trading Commission.
First-generation brokers
First-generation binary options for bitcoin simply offer the BTC/USD currency pair as a trading vehicle, whereas second-generation operators also allow deposits and payouts in bitcoin. Coindesk first covered first-generation bitcoin binary options in June 2013.
Now, binary option brokers that trade bitcoin as an option instrument include anyoption, SetOption, TradeRush, and Bloombex-Options.
Fast and simple, the tradeable asset lists are extensive with durations of 60 seconds to one week. Payouts range between 60% to 85%, depending on the asset and option type. Top brokers will also provide news resources and trading tools.
Second-generation brokers
Second-generation brokers offering both bitcoin funding and bitcoin trading include UpDown, BTCOracle, and BeastOptions.
The first such trading service operating on the bitcoin block chain, Satoshi Option, debuted in March 2013.
Similar to the SatoshiDice betting game, Satoshi Option requires no account registration and no personal details. Payouts are near instantaneous and the service is accessible from anywhere in the world because it relies on the bitcoin block chain as the platform.
Maximum trade size per bitcoin address is currently set at 0.25 BTC. Since the available commodities are traded with publicly available pricing, the binary option outcomes are verifiable.
Unlike the other bitcoin-funded brokers that rely on proprietary platforms, BeastOptions operates on the third-party TRADOLOGIC trading platform, which provides a customizable front end that is a lightweight, high-performance solution for web-based or mobile platform trading.
Several binary option trading platforms exist and SpotOption, TRADOLOGIC’s biggest competitor, has been offering bitcoin binary options since mid-2013. Leverate‘s new platform also includes support for bitcoin binary options and CFDs, which is utilized by Plus500 and TopOption.
Contracts for difference, or CFDs, differ from binary options in that they allow the use of leverage and the contract can be closed at any time, whereas binary options have a fixed expiry. Counterparty risk is a concern for both instruments, which is what the very short-term binary options utilizing the bitcoin block chain seek to alleviate.
UpDown will soon be adding a BTC/USD trading pair to its binary option asset list after it negotiates an exchange partnership. UpDown refers to itself as a community-regulated project and is registered in the British Virgin Islands.
Circle Receives $17m Funding, Unveils Exchange and Wallet Service
Emily Spaven (@emilyspaven) | Published on March 26, 2014 at 13:00 GMT | Circle, Companies, Exchanges, Wallets
Circle Internet Financial has closed a $17m Series B funding round and announced the launch of its first consumer product.
The bitcoin company raised the $17m from various investors, including Breyer Capital, Accel Partners and General Catalyst Partners, bringing its total funding to date to $26m.
Investment was also received from Oak Investment Partners, Pantera Capital and the Bitcoin Opportunity Fund, which is run by Barry Silbert, founder and chief executive officer of SecondMarket and founder of the Bitcoin Investment Trust.
Leonard H. Schrank, the former chief executive officer of SWIFT (Society for Worldwide Interbank Financial Telecommunication) also invested, as did Circle board member M. Michele Burns and Fenway Summer, a consumer finance advisory and venture firm led by Circle board member Raj Date.
Jeremy Allaire, Circle founder, Chairman and CEO, said:
“We are thrilled to have such a strong showing of support and vote of confidence from world-class investors and strategic individuals as we move into the commercial phase of Circle.”
He explained the funding will allow Circle to build its team, increasing roles across product, operations, legal, compliance, security and customer support. Allaire also has plans to open offices in a number of locations outside the US.
On top of this, the funds will be used to invest in the infrastructure required to provide a secure platform for the company’s customers.
Product debut
Up until now, Circle has been very secretive about what it has been working on and the products it aims to offer. Today, the company has launched its first consumer product, but only a limited number of people will be able to test it out at this stage.
Allaire revealed his company is offering something akin to a bitcoin exchange and wallet service, although he is loath to use those terms.
Jeremy Allaire, Circle
Jeremy Allaire, founder, chairman and chief executive officer at Circle
He said users will be able to use the service to convert their fiat currency into bitcoins, then take advantage of tools that make it easy to send, receive and spend funds.
The company’s main aim is to open bitcoin up to a broader market and make it easier for the masses to get involved in digital currency. Circle wants to make sure the service it offers is perfect, though, before making it available to all.
“We are being very careful and deliberate in how we add users to our system, ensuring that it is a product that users value and recommend to their friends and family, and that, from an operational perspective, we are able to deliver an exceptional experience,” said Allaire.
He explained that his company is building a global consumer financial service and institution that it wants consumers to trust with protecting and securing their digital assets. This is something Allaire claims the vast majority of bitcoin companies have failed to do:
“They’ve failed to meet consumer support expectations, they’ve failed to meet even rudimentary security and audit obligations, and so we believe that the bar needs to be high in terms of offering a consumer service around bringing bitcoin mainstream.”
For this reason, Circle is being patient and is launching an invitation-only limited release this week.
Working with regulators
Allaire, who has founded two previous startups that both saw successful IPOs, said Circle hasn’t so far faced any problems with regulators or banking partners. He puts this down to Circle’s upfront approach.
“Unlike many first-generation bitcoin companies, we’ve been extremely engaged and transparent with regulators about our commercial and product plans,” he explained.
He believes it is important for companies in the space to educate government and commercial banking partners about what they are doing, and also integrate any feedback and suggestions.
“We’re all in this and learning together, and it’s critical that industry participants look at government and the banking industry as partners in building the ecosystem for digital currency,” Allaire added.
Investment
Circle isn’t the only bitcoin company to announce investment this week. Yesterday, Kraken announced it had received $5m in Series-A funding, led by Hummingbird Ventures.
Kraken, which allows users to buy and sell bitcoin, namecoin, dogecoin and Ripple, among other digital currencies, is owned by Payward, Inc.
Other companies in the space are expected to make funding announcements this week, too.
Emily Spaven (@emilyspaven) | Published on March 26, 2014 at 13:00 GMT | Circle, Companies, Exchanges, Wallets
Circle Internet Financial has closed a $17m Series B funding round and announced the launch of its first consumer product.
The bitcoin company raised the $17m from various investors, including Breyer Capital, Accel Partners and General Catalyst Partners, bringing its total funding to date to $26m.
Investment was also received from Oak Investment Partners, Pantera Capital and the Bitcoin Opportunity Fund, which is run by Barry Silbert, founder and chief executive officer of SecondMarket and founder of the Bitcoin Investment Trust.
Leonard H. Schrank, the former chief executive officer of SWIFT (Society for Worldwide Interbank Financial Telecommunication) also invested, as did Circle board member M. Michele Burns and Fenway Summer, a consumer finance advisory and venture firm led by Circle board member Raj Date.
Jeremy Allaire, Circle founder, Chairman and CEO, said:
“We are thrilled to have such a strong showing of support and vote of confidence from world-class investors and strategic individuals as we move into the commercial phase of Circle.”
He explained the funding will allow Circle to build its team, increasing roles across product, operations, legal, compliance, security and customer support. Allaire also has plans to open offices in a number of locations outside the US.
On top of this, the funds will be used to invest in the infrastructure required to provide a secure platform for the company’s customers.
Product debut
Up until now, Circle has been very secretive about what it has been working on and the products it aims to offer. Today, the company has launched its first consumer product, but only a limited number of people will be able to test it out at this stage.
Allaire revealed his company is offering something akin to a bitcoin exchange and wallet service, although he is loath to use those terms.
Jeremy Allaire, Circle
Jeremy Allaire, founder, chairman and chief executive officer at Circle
He said users will be able to use the service to convert their fiat currency into bitcoins, then take advantage of tools that make it easy to send, receive and spend funds.
The company’s main aim is to open bitcoin up to a broader market and make it easier for the masses to get involved in digital currency. Circle wants to make sure the service it offers is perfect, though, before making it available to all.
“We are being very careful and deliberate in how we add users to our system, ensuring that it is a product that users value and recommend to their friends and family, and that, from an operational perspective, we are able to deliver an exceptional experience,” said Allaire.
He explained that his company is building a global consumer financial service and institution that it wants consumers to trust with protecting and securing their digital assets. This is something Allaire claims the vast majority of bitcoin companies have failed to do:
“They’ve failed to meet consumer support expectations, they’ve failed to meet even rudimentary security and audit obligations, and so we believe that the bar needs to be high in terms of offering a consumer service around bringing bitcoin mainstream.”
For this reason, Circle is being patient and is launching an invitation-only limited release this week.
Working with regulators
Allaire, who has founded two previous startups that both saw successful IPOs, said Circle hasn’t so far faced any problems with regulators or banking partners. He puts this down to Circle’s upfront approach.
“Unlike many first-generation bitcoin companies, we’ve been extremely engaged and transparent with regulators about our commercial and product plans,” he explained.
He believes it is important for companies in the space to educate government and commercial banking partners about what they are doing, and also integrate any feedback and suggestions.
“We’re all in this and learning together, and it’s critical that industry participants look at government and the banking industry as partners in building the ecosystem for digital currency,” Allaire added.
Investment
Circle isn’t the only bitcoin company to announce investment this week. Yesterday, Kraken announced it had received $5m in Series-A funding, led by Hummingbird Ventures.
Kraken, which allows users to buy and sell bitcoin, namecoin, dogecoin and Ripple, among other digital currencies, is owned by Payward, Inc.
Other companies in the space are expected to make funding announcements this week, too.
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