Europol Seeks New Powers to Clamp Down on Digital Money Laundering
Nermin Hajdarbegovic | Published on March 24, 2014 at 19:44 GMT | Crime, Europe, News, Regulation
Europol, the European Union’s top law enforcement agency in charge of criminal intelligence, is urging legislators to provide law enforcement with greater powers to identify criminal activities online, including digital money laundering.
Europol is not a law enforcement agency in the traditional sense, but rather furnishes EU law enforcement agencies with support, including intelligence, information exchange, expertise and training.
The organisation launched the European Cybercrime Centre last year, and one of its goals is to target organised groups that make their money online.
Digital currencies as an instrument to facilitate crime
Speaking at a security conference on 24th March, Europol head Rob Wainwright issued statements that suggest he believes law enforcement agencies are ill-equipped to crack down on those who use digital currencies for illicit means, Reuters reports.
Said Wainwright:
“We’re seeing that virtual currencies are being used as an instrument to facilitate crime, particularly in regard to the laundering of illicit profits.”
Wainwright went on to argue that police should be given new powers that enable them to identify criminals online. He warned that police simply do not have the capabilities to operate online and identify criminals operating in “dark areas” of the internet, or the deep web.
The deep web is of course the vice-ridden part of the World Wide Web, used also by many privacy lovers, but its relative anonymity has also attracted a sizable cybercrime community. Pseudo-anonymous digital currencies like bitcoin remain one of few viable payment systems on the deep web.
The case for greater enforcement
Wainwright warned that criminals are “abusing freedoms” made possible by technology to damage society and potentially threaten the security of millions.
His sentiment is shared by a growing number of digital currency advocates, who have grown tired of people associating bitcoin with black hat hackers, Silk Road and ransomware.
Earlier this year, Irish lawmaker Patrick O’Donovan called for a parliamentary probe into digital currencies and their effect on illicit financial transactions. He warned that digital currencies and the deep web have effectively created an online supermarket for illegal goods and services, and called for an EU-wide response to the problem.
Although the risk of digital currencies being used for money laundering and crime is often overstated, many can agree that when it comes to organised criminal syndicates, the threat of abuse is real.
Topic: BITCOIN NEWS EVRYDAY! From multiple sources. - page 7. (Read 51244 times)
Forget the Moon, Bitcoin Can Now Take You to the Summit of Mt Everest
Dan Palmer | Published on March 24, 2014 at 17:00 GMT | Exchanges, Lifestyle, Merchants, News
If the recent negative press concerning bitcoin has been getting you down, here is a bit of news that should put you on top of the world – quite literally.
Trek and expedition organiser Mt Everest Adventures has now started accepting bitcoin for its adventure packages – which include summiting Mount Everest itself.
The company, which is run from Australia by CEO Aseem Jha, offers a variety of excursions and treks in Nepal – from sightseeing trips around Kathmandu and its locale, to light tramps in the forested Himalayan foothills and tougher treks through stunning scenery to the Annapurna and Everest base camps.
However, the king of them all has to be the expedition to the very peak of the tallest mountain in the world – a trip that takes intrepid visitors up through the high grasslands on the Chinese side of the border, past yaks and their herders, to the Chinese Base Camp.
This is where the serious climbing starts towards a (hopefully) successful summit of the mountain at 8,848 metres above sea level.
Uphill climb
For companies such as Mt Everest Adventures, which rely on foreign customers for their survival, accepting payments from outside the country is both complex and expensive.
mt everest
One of the problems is that Nepali currency, the rupee, is tightly controlled. The company says:
“Even in [these] modern times e-commerce is not practised due to financial restrictions. For that reason, any kind of business has to be dependent on foreign e-commerce support [which entails] paying a lot on commissions just for running e-commerce on our behalf.”
Bitcoin offers a way to make international payments a lot easier for the company, and importantly, a lot cheaper, with fees far below those of traditional payments providers.
Ideal solution
Jha said that after talking to a friend about the expense of getting paid in fiat currencies, he realised that bitcoin could offer a solution.
After some investigation, he decided to team up with Australia-based exchange and payment solution provider CoinJar to start accepting the digital currency.
mt everest
“Nepali currency has no value when it leaves the country and is tightly controlled. We believe that bitcoin, a new decentralized cryptocurrency is the solution for a small, dominated country like Nepal,” the company said.
“We have a hope that we won’t have to depend on any restrictions imposed by foreign countries.”
CoinJar allows Mt Everest Adventures to place a bitcoin payments widget on the website and charges only a 1% fee to its merchants.
Said Jha:
“With bitcoin we only pay almost nothing. With the banks [...] first there is the 2 to 3% that your payment gateway charges, then they charge on forex exchange, and we also need to have a merchant account to accept payments which costs monthly fees. More than saving, though, it is about easiness.”
The service launched today and unfortunately there is a technical hitch with the bitcoin widget, so Jha says has not taken any bitcoin as yet. However, he has had positive feedback from potential customers about the new service:
“When i was building the site I shared this idea with bitcoin communities and they were quiet excited to trek in Nepal.”
So, if you have bitcoin to burn on the climb of a lifetime, Jha said that to summit Mt Everest will cost about $30,000 per person – which equates to about 53.3 BTC at today’s prices.
However, if that’s too steep a proposition, either fiscally or physically, there are plenty of cheaper and easier treks on the company’s website.
Dan Palmer | Published on March 24, 2014 at 17:00 GMT | Exchanges, Lifestyle, Merchants, News
If the recent negative press concerning bitcoin has been getting you down, here is a bit of news that should put you on top of the world – quite literally.
Trek and expedition organiser Mt Everest Adventures has now started accepting bitcoin for its adventure packages – which include summiting Mount Everest itself.
The company, which is run from Australia by CEO Aseem Jha, offers a variety of excursions and treks in Nepal – from sightseeing trips around Kathmandu and its locale, to light tramps in the forested Himalayan foothills and tougher treks through stunning scenery to the Annapurna and Everest base camps.
However, the king of them all has to be the expedition to the very peak of the tallest mountain in the world – a trip that takes intrepid visitors up through the high grasslands on the Chinese side of the border, past yaks and their herders, to the Chinese Base Camp.
This is where the serious climbing starts towards a (hopefully) successful summit of the mountain at 8,848 metres above sea level.
Uphill climb
For companies such as Mt Everest Adventures, which rely on foreign customers for their survival, accepting payments from outside the country is both complex and expensive.
mt everest
One of the problems is that Nepali currency, the rupee, is tightly controlled. The company says:
“Even in [these] modern times e-commerce is not practised due to financial restrictions. For that reason, any kind of business has to be dependent on foreign e-commerce support [which entails] paying a lot on commissions just for running e-commerce on our behalf.”
Bitcoin offers a way to make international payments a lot easier for the company, and importantly, a lot cheaper, with fees far below those of traditional payments providers.
Ideal solution
Jha said that after talking to a friend about the expense of getting paid in fiat currencies, he realised that bitcoin could offer a solution.
After some investigation, he decided to team up with Australia-based exchange and payment solution provider CoinJar to start accepting the digital currency.
mt everest
“Nepali currency has no value when it leaves the country and is tightly controlled. We believe that bitcoin, a new decentralized cryptocurrency is the solution for a small, dominated country like Nepal,” the company said.
“We have a hope that we won’t have to depend on any restrictions imposed by foreign countries.”
CoinJar allows Mt Everest Adventures to place a bitcoin payments widget on the website and charges only a 1% fee to its merchants.
Said Jha:
“With bitcoin we only pay almost nothing. With the banks [...] first there is the 2 to 3% that your payment gateway charges, then they charge on forex exchange, and we also need to have a merchant account to accept payments which costs monthly fees. More than saving, though, it is about easiness.”
The service launched today and unfortunately there is a technical hitch with the bitcoin widget, so Jha says has not taken any bitcoin as yet. However, he has had positive feedback from potential customers about the new service:
“When i was building the site I shared this idea with bitcoin communities and they were quiet excited to trek in Nepal.”
So, if you have bitcoin to burn on the climb of a lifetime, Jha said that to summit Mt Everest will cost about $30,000 per person – which equates to about 53.3 BTC at today’s prices.
However, if that’s too steep a proposition, either fiscally or physically, there are plenty of cheaper and easier treks on the company’s website.
UK Digital Currency Association Launches as Local Community Voice
Pete Rizzo (@pete_rizzo_) | Published on March 24, 2014 at 18:31 GMT | Europe, News
After a few months of behind-the-scenes work, the UK Digital Currency Association (UKDCA) announced its official launch on 24th March, a declaration that signifies it now has an incorporated entity, an operational website and established working groups.
The UKDCA is most notable for its work consulting with the UK’s tax body, Her Majesty’s Revenue and Customs (HMRC), on its decision to eliminate added costs imposed on bitcoin trades earlier this March. The decision was championed by the international community as a progressive move by the HMRC.
UKDCA member and Bullion Bitcoin owner Adam Clary spoke to CoinDesk about the launch, indicating that this will be just the beginning of the organisation’s work.
Clary said that the UKDCA will serve as a trade association that benefits both the domestic bitcoin community, as well as the wider UK population.
Bitcoin community members can join the public group, free of charge, though paid memberships come with more substantial perks. Likewise, Clary indicated that the public will gain a trusted informational resource.
Explained Clary:
“Governments, regulators, businesses, the media, [they] like to have these focal points they can deal with in old-fashioned, legacy terms. A trade association provides this focal point for the wider community.”
The organisation is being run by an interim board. An election will then be held to determine a full board of directors.
Interim board members include Clary, Elliptic CEO Tom Robinson and BankToTheFuture.com co-founder Simon Dixon, among others.
Membership tiers
Clary explained that the UKDCA plans to introduce three tiers of membership, using a model similar to the one the Bitcoin Foundation has parlayed to international success. The group had previously been operated as a part of the London meetup group.
The UKDCA’s three membership tiers will include:
Industry members – pay the highest membership fee in exchange for the ability to display the UKDCA logo on their websites
Individual members – pay a small subscription fee to have their name listed on the UKDCA website and for board member voting privileges
Supporters – do not pay a membership fee, but are able to signal their support.
Working groups will be focused on four topic areas – exchanges, regulation and accounting; business and financing; media, education and charity; technology and mining.
International collaboration
Clary indicated that the UKDCA has been in touch with the Bitcoin Foundation, and that the two groups are currently discussion how they can best work together.
The UKDCA, Clary noted, will be looking to support the foundation in the UK:
“We are absolutely 100-percent non conflictive. We are here to do our stuff in the UK, and to be a UK-centered organization, whereas the Bitcoin Foundation is global.”
Clary likened the organisation to successful groups formed in the Netherlands, Canada and Australia that operate as national trade organisations.
First public event
The UKDCA will hold a panel discussion on 31st March during FinTech Week to mark its launch.
Clary, who is moderating the talk, indicated that it will primarily highlight the technology of the blockchain. Panelists include Ethereum’s Stephan Tual; Netagio’s Simon Hamblin; and more.
Following the introduction, the event will feature a regulatory update, a startup stories exchange and an open networking period.
Those who wish to attended can visit Rain Making Loft, International House 1 St Katharine’s Way, London, E1W 1TW.
Pete Rizzo (@pete_rizzo_) | Published on March 24, 2014 at 18:31 GMT | Europe, News
After a few months of behind-the-scenes work, the UK Digital Currency Association (UKDCA) announced its official launch on 24th March, a declaration that signifies it now has an incorporated entity, an operational website and established working groups.
The UKDCA is most notable for its work consulting with the UK’s tax body, Her Majesty’s Revenue and Customs (HMRC), on its decision to eliminate added costs imposed on bitcoin trades earlier this March. The decision was championed by the international community as a progressive move by the HMRC.
UKDCA member and Bullion Bitcoin owner Adam Clary spoke to CoinDesk about the launch, indicating that this will be just the beginning of the organisation’s work.
Clary said that the UKDCA will serve as a trade association that benefits both the domestic bitcoin community, as well as the wider UK population.
Bitcoin community members can join the public group, free of charge, though paid memberships come with more substantial perks. Likewise, Clary indicated that the public will gain a trusted informational resource.
Explained Clary:
“Governments, regulators, businesses, the media, [they] like to have these focal points they can deal with in old-fashioned, legacy terms. A trade association provides this focal point for the wider community.”
The organisation is being run by an interim board. An election will then be held to determine a full board of directors.
Interim board members include Clary, Elliptic CEO Tom Robinson and BankToTheFuture.com co-founder Simon Dixon, among others.
Membership tiers
Clary explained that the UKDCA plans to introduce three tiers of membership, using a model similar to the one the Bitcoin Foundation has parlayed to international success. The group had previously been operated as a part of the London meetup group.
The UKDCA’s three membership tiers will include:
Industry members – pay the highest membership fee in exchange for the ability to display the UKDCA logo on their websites
Individual members – pay a small subscription fee to have their name listed on the UKDCA website and for board member voting privileges
Supporters – do not pay a membership fee, but are able to signal their support.
Working groups will be focused on four topic areas – exchanges, regulation and accounting; business and financing; media, education and charity; technology and mining.
International collaboration
Clary indicated that the UKDCA has been in touch with the Bitcoin Foundation, and that the two groups are currently discussion how they can best work together.
The UKDCA, Clary noted, will be looking to support the foundation in the UK:
“We are absolutely 100-percent non conflictive. We are here to do our stuff in the UK, and to be a UK-centered organization, whereas the Bitcoin Foundation is global.”
Clary likened the organisation to successful groups formed in the Netherlands, Canada and Australia that operate as national trade organisations.
First public event
The UKDCA will hold a panel discussion on 31st March during FinTech Week to mark its launch.
Clary, who is moderating the talk, indicated that it will primarily highlight the technology of the blockchain. Panelists include Ethereum’s Stephan Tual; Netagio’s Simon Hamblin; and more.
Following the introduction, the event will feature a regulatory update, a startup stories exchange and an open networking period.
Those who wish to attended can visit Rain Making Loft, International House 1 St Katharine’s Way, London, E1W 1TW.
Kraken’s Audit Proves it Holds 100% of All Bitcoins in Reserve
Nermin Hajdarbegovic | Published on March 24, 2014 at 10:45 GMT | Exchanges, News
Bitcoin exchange Kraken has passed a cryptographically verifiable proof of reserves audit with flying colours.
The audit, which was carried out by Stefan Thomas on 11th and 22nd of March, proved that more than 100% of Kraken’s bitcoins are held in reserve.
The process was designed to allow the auditor to verify that the total amount of bitcoins held by Kraken matches the amount required to cover an anonymized set of customer balances.
Covering all balances
Thomas said the audit was very strict, but at the same time it maintained “absolute privacy” for customers. He also added that Kraken have expressed interest in conducting regular audits in the future, with different auditors each time. Thomas said:
“I am attesting to is the root hash of a merkle tree containing all balances that were considered in the audit. If you are a customer of Kraken, you’ll be able to verify using open-source tools that your balance at the time of the audit is part of this root hash. If it is and if you believe that I am trustworthy, then you can be confident that your balance was covered by 100% reserves at the time of the audit.”
Using the ‘Merkle Tree’ technique originally proposed by bitcoin developer Greg Maxwell, the auditor went on to explain the gritty technical details. He was provided with a JSON file from Kraken, which contained the list of the exchange’s addresses and balances. The file was then compared against a copy of the block chain.
The results were in order, Thomas concluded: ”The actual holdings were very slightly (< 0.5%) above the required holdings, meaning Kraken had greater than 100% reserves at the audit block height.”
A competitive edge
Following the Mt. Gox crisis, many exchanges are keen to distance themselves from the troubled exchange and other bitcoin outfits with a chequered track record. Security and transparency have become selling points, hence exchanges appear to be doing their best to reassure investors on a regular basis.
Earlier this month UK-registered bitcoin exchange Bitstamp released the results of its own financial audit, which found that it held 100% of its validated BTC balance and USD funds. No issues were raised by the auditors.
Bitstamp CEO Nejc Kodrič told CoinDesk that his company plans to perform regular audits, with quarterly results posted on the Bitstamp website.
As investors demand more security and transparency, exchanges have to oblige or suffer the consequences and lose their competitive edge. Low fees are just one way of remaining competitive, but transparency and sound reporting practices might prove more important in the long run.
Nermin Hajdarbegovic | Published on March 24, 2014 at 10:45 GMT | Exchanges, News
Bitcoin exchange Kraken has passed a cryptographically verifiable proof of reserves audit with flying colours.
The audit, which was carried out by Stefan Thomas on 11th and 22nd of March, proved that more than 100% of Kraken’s bitcoins are held in reserve.
The process was designed to allow the auditor to verify that the total amount of bitcoins held by Kraken matches the amount required to cover an anonymized set of customer balances.
Covering all balances
Thomas said the audit was very strict, but at the same time it maintained “absolute privacy” for customers. He also added that Kraken have expressed interest in conducting regular audits in the future, with different auditors each time. Thomas said:
“I am attesting to is the root hash of a merkle tree containing all balances that were considered in the audit. If you are a customer of Kraken, you’ll be able to verify using open-source tools that your balance at the time of the audit is part of this root hash. If it is and if you believe that I am trustworthy, then you can be confident that your balance was covered by 100% reserves at the time of the audit.”
Using the ‘Merkle Tree’ technique originally proposed by bitcoin developer Greg Maxwell, the auditor went on to explain the gritty technical details. He was provided with a JSON file from Kraken, which contained the list of the exchange’s addresses and balances. The file was then compared against a copy of the block chain.
The results were in order, Thomas concluded: ”The actual holdings were very slightly (< 0.5%) above the required holdings, meaning Kraken had greater than 100% reserves at the audit block height.”
A competitive edge
Following the Mt. Gox crisis, many exchanges are keen to distance themselves from the troubled exchange and other bitcoin outfits with a chequered track record. Security and transparency have become selling points, hence exchanges appear to be doing their best to reassure investors on a regular basis.
Earlier this month UK-registered bitcoin exchange Bitstamp released the results of its own financial audit, which found that it held 100% of its validated BTC balance and USD funds. No issues were raised by the auditors.
Bitstamp CEO Nejc Kodrič told CoinDesk that his company plans to perform regular audits, with quarterly results posted on the Bitstamp website.
As investors demand more security and transparency, exchanges have to oblige or suffer the consequences and lose their competitive edge. Low fees are just one way of remaining competitive, but transparency and sound reporting practices might prove more important in the long run.
New York Gears Up for Inside Bitcoins Event
Pete Rizzo (@pete_rizzo_) | Published on March 24, 2014 at 15:03 GMT | Events, News
With Inside Bitcoins NYC 2014 fast approaching, event organisers continue to roll out more information about what its thousands of anticipated visitors can expect during the two-day conference on 7th April and 8th April.
Inside Bitcoins, to be held at the Javits Convention Center, most recently revealed via its website that American Banker executive director Marc Hochstein, with support from Wedbush Securities’ Gil Luria, will be giving the keynote for day two’s events.
The announcement finds Hochstein and Luria joining Circle CEO Jeremy Allaire and Blockchain CEO Nicolas Cary on the list of the event’s keynote speakers, though their presence is no doubt a signal of the increasing appeal of bitcoin outside the industry.
However, good news for Inside Bitcoins NYC isn’t limited to bolstering the event itself. As BitcoinNYC founder Jonathan Mohan can attest, Inside Bitcoins has a big impact on his weekly meetup group serving New York.
For Mohan, the conference is an opportunity to capitalize on increased local awareness of bitcoin. Explained Mohan:
“The conference is great as an onboarding progress, because it gives people who aren’t in the community an easy roadmap into the community.”
It’s also popular with his existing members. Mohan indicates that since informing his community about the event to his group, more than 100 of its members have expressed that they’ll be in attendance to access the show’s free vendor booths.
Added Mohan with an air of understatement: “There’s a lot of interest.”
Inside Bitcoins 2013
Bitcoin NYC hasn’t always been able to rely on strong strong support, however.
Mohan indicated that his group formed in March of 2013, a few months before the inaugural Inside Bitcoins NYC, held last July. Since then, he indicates he has noticed a key change at his meetup groups: attendees are more open about revealing their backgrounds in discussions, a sign he suggests that bitcoin’s credibility is increasing, thanks in no small part to events like Inside Bitcoins.
Said Mohan:
“Initially in early last, we’d have people say ‘I work in finance’ or ‘Oh, I work on Wall Street’. Now we have people who say [they] work at Morgan Stanley or Goldman Sachs or Bloomberg.”
Preparing for the event
Of course, Mohan will have a bit more responsibility at this year’s event than his fellow meetup attendees. That’s because Mohan will be moderating the “New Ideas in Bitcoin” discussion, one of two panels that will directly follow the event’s opening keynote speech.
That panel will include Peter Earle, chief economist at Huminit; Chris Odom, co-founder of Monetas; Ryan Charleston, CEO of Bitcorati; James Gatto, a partner at Pillsbury Law; and Bitcoin Center NYC deputy director Austin Alexander.
Still, Mohan isn’t phased at the prospect of leading one of the day’s first events.
“I see it as no different than a meetup, which is to say, I don’t see it as the Jonathan Mohan show, I see it as facilitating a discussion between the people in the group. It’s a logical extension of something I’ve been doing for a few hours a week for the last year.”
Event preview
Mohan was able to share some of the topics that he is excited to speak about with his panel at the event. These included distributed corporations (Ethereum, MasterCoin, BitShares) and branded coins, among other topics.
Mohan also suggested that his personality would be onhand to help energize event attendees for all that day one has in store.
“I’m a high energy guy. I’ll try to keep them awake.”
Though, if the event’s full speaker lineup is any indication, he likely will have plenty of support in this goal.
Pete Rizzo (@pete_rizzo_) | Published on March 24, 2014 at 15:03 GMT | Events, News
With Inside Bitcoins NYC 2014 fast approaching, event organisers continue to roll out more information about what its thousands of anticipated visitors can expect during the two-day conference on 7th April and 8th April.
Inside Bitcoins, to be held at the Javits Convention Center, most recently revealed via its website that American Banker executive director Marc Hochstein, with support from Wedbush Securities’ Gil Luria, will be giving the keynote for day two’s events.
The announcement finds Hochstein and Luria joining Circle CEO Jeremy Allaire and Blockchain CEO Nicolas Cary on the list of the event’s keynote speakers, though their presence is no doubt a signal of the increasing appeal of bitcoin outside the industry.
However, good news for Inside Bitcoins NYC isn’t limited to bolstering the event itself. As BitcoinNYC founder Jonathan Mohan can attest, Inside Bitcoins has a big impact on his weekly meetup group serving New York.
For Mohan, the conference is an opportunity to capitalize on increased local awareness of bitcoin. Explained Mohan:
“The conference is great as an onboarding progress, because it gives people who aren’t in the community an easy roadmap into the community.”
It’s also popular with his existing members. Mohan indicates that since informing his community about the event to his group, more than 100 of its members have expressed that they’ll be in attendance to access the show’s free vendor booths.
Added Mohan with an air of understatement: “There’s a lot of interest.”
Inside Bitcoins 2013
Bitcoin NYC hasn’t always been able to rely on strong strong support, however.
Mohan indicated that his group formed in March of 2013, a few months before the inaugural Inside Bitcoins NYC, held last July. Since then, he indicates he has noticed a key change at his meetup groups: attendees are more open about revealing their backgrounds in discussions, a sign he suggests that bitcoin’s credibility is increasing, thanks in no small part to events like Inside Bitcoins.
Said Mohan:
“Initially in early last, we’d have people say ‘I work in finance’ or ‘Oh, I work on Wall Street’. Now we have people who say [they] work at Morgan Stanley or Goldman Sachs or Bloomberg.”
Preparing for the event
Of course, Mohan will have a bit more responsibility at this year’s event than his fellow meetup attendees. That’s because Mohan will be moderating the “New Ideas in Bitcoin” discussion, one of two panels that will directly follow the event’s opening keynote speech.
That panel will include Peter Earle, chief economist at Huminit; Chris Odom, co-founder of Monetas; Ryan Charleston, CEO of Bitcorati; James Gatto, a partner at Pillsbury Law; and Bitcoin Center NYC deputy director Austin Alexander.
Still, Mohan isn’t phased at the prospect of leading one of the day’s first events.
“I see it as no different than a meetup, which is to say, I don’t see it as the Jonathan Mohan show, I see it as facilitating a discussion between the people in the group. It’s a logical extension of something I’ve been doing for a few hours a week for the last year.”
Event preview
Mohan was able to share some of the topics that he is excited to speak about with his panel at the event. These included distributed corporations (Ethereum, MasterCoin, BitShares) and branded coins, among other topics.
Mohan also suggested that his personality would be onhand to help energize event attendees for all that day one has in store.
“I’m a high energy guy. I’ll try to keep them awake.”
Though, if the event’s full speaker lineup is any indication, he likely will have plenty of support in this goal.
Australian Manufacturer Debuts First Cashless Bitcoin ATM
Jon Southurst (@southtopia) | Published on March 24, 2014 at 11:53 GMT | Bitcoin ATM, Companies, News, Startups
An Australian company says it has produced one of bitcoin’s holy grails: a cashless ATM that allows users to buy bitcoins using a credit card, and sell bitcoins via a direct deposit to their bank account.
The first fully functional Diamond Circle ATM arrived from its manufacturer in Brisbane this week. Unlike competing ATMs and vending machines that rely on QR codes and cash, Diamond Circle’s solution is based on near-field communication (NFC) technology with paper receipt backups.
This unique approach is the brainchild of CEO Stephen Rowlison, a seasoned FinTech (financial technology) entrepreneur with 30 years of IT experience in Australia, Asia and the US. Before founding Diamond Circle, Rowlison was working on various projects developing NFC payment and loyalty card systems for retailers. He said:
“I was interested in NFC technology and payments, but just needed a unit of transfer. After learning about bitcoin, I figured I could combine the NFC chip with the ATM idea.”
He added: “What I’ve really done is just brought together two existing technologies: contactless NFC and BTC. QR code payments have been outlawed in China and have no inbuilt card security, which is why using contactless technology makes so much sense.”
Wallet tags
Although Rowlison is exploring other NFC devices for his ATMs, he has decided to focus on a ‘wallet tag’ for now, which is a small disc that can be used as a pendant or keychain.
“It’s got the same smarts as banking technology except we mandated a Personal Identification Number for all tags that are registered online.”
It’s the same contactless technology being deployed in some countries by Visa’s PayWave and Mastercard’s PayPass. Australia’s point-of-sale debit card network EFTPOS, which uses PC compatible devices, has also begun using NFC chips.
diamond circle btm
This all means Diamond Circle will be in a dominant position to launch its second phase: POS integration that will enable retail merchants to accept payment in bitcoin using devices they already have.
The ‘wallet tag’ devices function as cold storage wallets that communicate with the cashless ATMs. Customers also have the option to print out paper receipts and use them with more traditional smartphone or desktop wallet clients. The paper receipt can also be used as a backup for wallet tag users.
Diamond Circle customers can use the NFC ‘wallet tag’ device with a number of smartphones to check bitcoin balances and broadcast their public address.
More secure storage
Diamond Circle provides customers a secure way to store and use bitcoins. The company does not provide online bitcoin wallets that are often susceptible to theft. Diamond Circle wallets and private keys are stored only on the wallet tag devices and paper receipt backups.
“Even if we get hacked, there’s nothing to take,” Rowlison said.
Diamond Circle will save a fortune by not handling physical cash. Once a machine needs to handle paper (or in Australia’s case, polymer) dollar bills it reduces the value proposition by increasing the costs of its production, materials and maintenance.
He insisted the technology itself was a lesser challenge, since it uses mostly off the shelf components that have already been tested in other payment systems.
“Once we ironed out the problems of bitcoin, the value proposition for consumers and the entire supply chain becomes obvious. instant cheap international money transfer and payments.”
Working with the current financial system
Often the bigger test faced by Diamond Circle and other bitcoin startups is learning to function within the regulatory environment. Rowlison said his focus has been on developing a compliant product with all KYC/AML regulations built in, meaning Diamond Circle ATMs are fully compliant.
This focus has helped the company form the necessary partnerships with banks and other financial institutions, though there has still been some resistance.
“It hasn’t been easy, we’ve had two rejections from major banks,” Rowlison continued.
“They just need to understand risks can be managed, it’s just a matter of getting that through to them. I don’t see it as an ‘Us vs Them’ situation, bitcoin is just another currency, we can coexist. We need to figure out how we can cooperate.”
He said there had also been “a bit of pushback on locations” from larger shopping malls worried about the product being delivered. The company may need to prove its technology first in a smaller location, like the coffee shops and cafes that house bitcoin ATMs elsewhere, then move to larger centers.
International interest
The company is an ‘Enrolled Money Transmitter Business’ and is run by a team with extensive C-Level experience in various fields of compliance in Australia and in the US.
Diamond Circle has received international interest in their ATMs already with queries from customers in in the UK, Canada, USA, Asia and the Middle East, and says it has already sold two of its ATMs within Australia and one to the UK.
The company is listed on cryptostocks.com under the ticker XDC, a direct pass through to their underlying shares, which helped them raise initial seed capital.
Jon Southurst (@southtopia) | Published on March 24, 2014 at 11:53 GMT | Bitcoin ATM, Companies, News, Startups
An Australian company says it has produced one of bitcoin’s holy grails: a cashless ATM that allows users to buy bitcoins using a credit card, and sell bitcoins via a direct deposit to their bank account.
The first fully functional Diamond Circle ATM arrived from its manufacturer in Brisbane this week. Unlike competing ATMs and vending machines that rely on QR codes and cash, Diamond Circle’s solution is based on near-field communication (NFC) technology with paper receipt backups.
This unique approach is the brainchild of CEO Stephen Rowlison, a seasoned FinTech (financial technology) entrepreneur with 30 years of IT experience in Australia, Asia and the US. Before founding Diamond Circle, Rowlison was working on various projects developing NFC payment and loyalty card systems for retailers. He said:
“I was interested in NFC technology and payments, but just needed a unit of transfer. After learning about bitcoin, I figured I could combine the NFC chip with the ATM idea.”
He added: “What I’ve really done is just brought together two existing technologies: contactless NFC and BTC. QR code payments have been outlawed in China and have no inbuilt card security, which is why using contactless technology makes so much sense.”
Wallet tags
Although Rowlison is exploring other NFC devices for his ATMs, he has decided to focus on a ‘wallet tag’ for now, which is a small disc that can be used as a pendant or keychain.
“It’s got the same smarts as banking technology except we mandated a Personal Identification Number for all tags that are registered online.”
It’s the same contactless technology being deployed in some countries by Visa’s PayWave and Mastercard’s PayPass. Australia’s point-of-sale debit card network EFTPOS, which uses PC compatible devices, has also begun using NFC chips.
diamond circle btm
This all means Diamond Circle will be in a dominant position to launch its second phase: POS integration that will enable retail merchants to accept payment in bitcoin using devices they already have.
The ‘wallet tag’ devices function as cold storage wallets that communicate with the cashless ATMs. Customers also have the option to print out paper receipts and use them with more traditional smartphone or desktop wallet clients. The paper receipt can also be used as a backup for wallet tag users.
Diamond Circle customers can use the NFC ‘wallet tag’ device with a number of smartphones to check bitcoin balances and broadcast their public address.
More secure storage
Diamond Circle provides customers a secure way to store and use bitcoins. The company does not provide online bitcoin wallets that are often susceptible to theft. Diamond Circle wallets and private keys are stored only on the wallet tag devices and paper receipt backups.
“Even if we get hacked, there’s nothing to take,” Rowlison said.
Diamond Circle will save a fortune by not handling physical cash. Once a machine needs to handle paper (or in Australia’s case, polymer) dollar bills it reduces the value proposition by increasing the costs of its production, materials and maintenance.
He insisted the technology itself was a lesser challenge, since it uses mostly off the shelf components that have already been tested in other payment systems.
“Once we ironed out the problems of bitcoin, the value proposition for consumers and the entire supply chain becomes obvious. instant cheap international money transfer and payments.”
Working with the current financial system
Often the bigger test faced by Diamond Circle and other bitcoin startups is learning to function within the regulatory environment. Rowlison said his focus has been on developing a compliant product with all KYC/AML regulations built in, meaning Diamond Circle ATMs are fully compliant.
This focus has helped the company form the necessary partnerships with banks and other financial institutions, though there has still been some resistance.
“It hasn’t been easy, we’ve had two rejections from major banks,” Rowlison continued.
“They just need to understand risks can be managed, it’s just a matter of getting that through to them. I don’t see it as an ‘Us vs Them’ situation, bitcoin is just another currency, we can coexist. We need to figure out how we can cooperate.”
He said there had also been “a bit of pushback on locations” from larger shopping malls worried about the product being delivered. The company may need to prove its technology first in a smaller location, like the coffee shops and cafes that house bitcoin ATMs elsewhere, then move to larger centers.
International interest
The company is an ‘Enrolled Money Transmitter Business’ and is run by a team with extensive C-Level experience in various fields of compliance in Australia and in the US.
Diamond Circle has received international interest in their ATMs already with queries from customers in in the UK, Canada, USA, Asia and the Middle East, and says it has already sold two of its ATMs within Australia and one to the UK.
The company is listed on cryptostocks.com under the ticker XDC, a direct pass through to their underlying shares, which helped them raise initial seed capital.
Exchange Vircurex Freezes Withdrawals, Claims Lack of Reserves
Jon Southurst (@southtopia) | Published on March 24, 2014 at 00:01 GMT | Companies, Exchanges, News
Beijing-based virtual currency exchange Vircurex has frozen most of its digital currency withdrawals effective immediately, claiming it no longer has the reserves to cover customer requests.
The freeze will affect all bitcoin, litecoin, feathercoin and terracoin withdrawals. A message on Vircurex’s site says it will create a new balance type called ‘Frozen Funds’ covering all balances in the aforementioned currencies. The company maintains it won’t be shutting down, saying it intends to “gradually pay back the losses”.
That Vircurex had a reserve shortfall had been known for some time, though not the exact amount. It froze BTC/LTC withdrawals in January 2013 after reporting that wallets had been compromised, but still allowed deposits in those currencies to continue. The attacker had apparently exploited a vulnerability in Ruby on Rails posted online just the day before.
The company pledged to cover the losses from its own income and had been doing so until yesterday, when “large fund withdrawals in the last weeks” completely depleted its cold wallet reserves.
Similarities
While Vircurex’s volumes and deposits were nowhere near Mt. Gox’s levels, the story is significant thanks to the similarities: hackers supposedly lift thousands of bitcoins from an exchange, the exchange desperately tries to cover the loss before users sense something more serious is up and start a run, leading to a withdrawal freeze.
It has raised questions about exchanges operating fractional reserve systems, either openly (as in Vircurex’s case) or covertly, in both cases due to a theft.
Proof of reserves
There are now calls for online exchanges and wallets to prove their reserves somehow, possibly using a cryptographically secure proof of inclusion and proof of reserves system such as a Merkle Tree, or hash tree.
South Korean exchange Korbit announced recently it would be the first major exchange to offer such a service with its opt-in ‘BitTrust’ system. Since 21st March, 57 of Korbit’s users have signed up to participate, covering a total balance of over 580 BTC. It has kept BitTrust opt-in only for now due to trade-off in transparency vs. 100% balance privacy.
Long standing exchange
Vircurex opened for business in October 2011, and traded between BTC, USD or EUR, plus up to 18 other cryptocurrencies against each other, eliminating some less popular coins over time.
Users on bitcointalk first started noticing bugs interfering with trading and withdrawals around late February and early March, which grew in number until this week’s problems. The site then apparently stopped any-to-any currency trades late last week before announcing the freeze.
Losses will be paid back according to a ‘top-down/bottom-up’ distribution logic, according to the site announcement. That means 50% of available funds will be used to pay the largest balance holders and the other 50% the smallest, meeting somewhere in between.
“All users will eventually receive their funds, though the timeframe depends on the monthly volume available,” the announcement continued, saying the logic guaranteed new users would not be penalized and thus supporting the platform’s operations until all amounts have been returned.
Jon Southurst (@southtopia) | Published on March 24, 2014 at 00:01 GMT | Companies, Exchanges, News
Beijing-based virtual currency exchange Vircurex has frozen most of its digital currency withdrawals effective immediately, claiming it no longer has the reserves to cover customer requests.
The freeze will affect all bitcoin, litecoin, feathercoin and terracoin withdrawals. A message on Vircurex’s site says it will create a new balance type called ‘Frozen Funds’ covering all balances in the aforementioned currencies. The company maintains it won’t be shutting down, saying it intends to “gradually pay back the losses”.
That Vircurex had a reserve shortfall had been known for some time, though not the exact amount. It froze BTC/LTC withdrawals in January 2013 after reporting that wallets had been compromised, but still allowed deposits in those currencies to continue. The attacker had apparently exploited a vulnerability in Ruby on Rails posted online just the day before.
The company pledged to cover the losses from its own income and had been doing so until yesterday, when “large fund withdrawals in the last weeks” completely depleted its cold wallet reserves.
Similarities
While Vircurex’s volumes and deposits were nowhere near Mt. Gox’s levels, the story is significant thanks to the similarities: hackers supposedly lift thousands of bitcoins from an exchange, the exchange desperately tries to cover the loss before users sense something more serious is up and start a run, leading to a withdrawal freeze.
It has raised questions about exchanges operating fractional reserve systems, either openly (as in Vircurex’s case) or covertly, in both cases due to a theft.
Proof of reserves
There are now calls for online exchanges and wallets to prove their reserves somehow, possibly using a cryptographically secure proof of inclusion and proof of reserves system such as a Merkle Tree, or hash tree.
South Korean exchange Korbit announced recently it would be the first major exchange to offer such a service with its opt-in ‘BitTrust’ system. Since 21st March, 57 of Korbit’s users have signed up to participate, covering a total balance of over 580 BTC. It has kept BitTrust opt-in only for now due to trade-off in transparency vs. 100% balance privacy.
Long standing exchange
Vircurex opened for business in October 2011, and traded between BTC, USD or EUR, plus up to 18 other cryptocurrencies against each other, eliminating some less popular coins over time.
Users on bitcointalk first started noticing bugs interfering with trading and withdrawals around late February and early March, which grew in number until this week’s problems. The site then apparently stopped any-to-any currency trades late last week before announcing the freeze.
Losses will be paid back according to a ‘top-down/bottom-up’ distribution logic, according to the site announcement. That means 50% of available funds will be used to pay the largest balance holders and the other 50% the smallest, meeting somewhere in between.
“All users will eventually receive their funds, though the timeframe depends on the monthly volume available,” the announcement continued, saying the logic guaranteed new users would not be penalized and thus supporting the platform’s operations until all amounts have been returned.
International Effort Brings Boost for Bitcoin in Vietnam
Jon Southurst (@southtopia) | Published on March 23, 2014 at 14:18 GMT | Asia, Companies, Exchanges, Regulation, Startups
Despite recent negative noises from the authorities, bitcoin in Vietnam is still making gains in both in daily use and public awareness – largely thanks to the efforts of an international group to promote the digital currency.
Vietnam will even host its first bitcoin conference on 23rd May, deliberately scheduled immediately after a ‘traditional’ bankers’ conference in Hanoi that closes on the 22nd.
While there are probably still less than a dozen businesses accepting bitcoin in Vietnam, one of them is Hanoi’s popular Yolo Cafe, which serves as the city’s ‘Bitcoin Central’.
It was only recently that Vietnam appeared to be sliding in the opposite direction, with a state bank edict that the country’s financial institutions could not participate in the digital currency economy.
However, as bitcoin users in other countries around the region have found, the situation is not always as simple as it appears on the surface.
International venture
A multinational project involving participants from Vietnam, Germany and Israel is setting up Vietnam’s first live and registered bitcoin and litecoin exchange and payment processor, called Bitcoin Vietnam, to accept local currency.
Working as a ‘bitcoin broker’ it is cooperating with an Israeli startup called Bits of Gold. Bitcoin Vietnam will be 100% Vietnamese-owned to avoid extra red tape, but the project’s underlying technology was developed in Tel Aviv.
“Tel Aviv is, from my point of view, the No. 1 place in the world regarding bitcoin – a high density of people with the right entrepreneurial spirit and engineering skills,” said Frankfurt-based Dominik Weil, a coordinator with the project.
“I was really quite amazed, when I visited Tel Aviv and its Bitcoin Embassy back in November last year.”
Bitcoin Vietnam will also work in partnership with another Israeli counterpart, Bit2C, which has operated a successful live exchange for over a year.
Family connections
Yolo Cafe, Hanoi
Despite being German, Weil considers Vietnam a kind of second home, thanks to his Vietnam-born wife, who is actively involved in the startup’s operations. He already has several years’ experience in Vietnam and, as well as having a strong appreciation for the local culture, is also impressed by what he sees happening economically.
“Vietnam is an emerging market with very high dynamics in its economic growth – at nearly every corner in Saigon or Hanoi, they are going to build new skyscrapers, the living standard is rising continuously, and in the bigger cities you will find an expanding middle class.”
This presents wonderful opportunities for bitcoin businesses. That’s unlike Western countries, he said, where the focus is often more on defending past prosperity as the economic base declines.
Said Weil:
“The ill-fated belief that you have the right to get paid nice benefit payments by the government, just because you exist and breathe does not exist in Vietnam. The people there know they have to work hard, if they want to have a better life.”
To educate customers and hopefully other stakeholders including regulators, Bitcoin Vietnam will maintain a blog in which it will translate popular bitcoin news from around the world into Vietnamese.
Vietnam also has the world’s 13th-largest population and is one of the top 10 destinations for remittances – a market that is still expected to expand by a further 20% this year, thanks to large numbers of family members living abroad, and that could benefit from the low fees associated with bitcoin.
Self regulation
The new Bitcoin Vietnam entity will follow strict KYC (know your customer) and AML (anti-money laundering) rules, said Weil, but will be largely self-regulated, thanks to the authorities’ reluctance to enter the space.
He said:
“We dont want to become a tool for illicit activity and give reasons to the authorities to shut us down. It is without doubt, that you have to choose your steps in this market very carefully. The whole environment regarding bitcoin is very close to the approach in China, and I think there are still a lot of misunderstandings of bitcoin around, like it’s just a currency for criminals, terrorists, paedophiles, drug-addicts, gamblers, etc.”
The Vietnamese Ministry of Public Security even recently invited the Vietnamese Bitcoin Foundation’s current chairman to visit and explain bitcoin in the hope of developing a better approach, hinting the government’s attitude is certainly not set in concrete.
The team currently consists of five people, including three Vietnamese located in Vietnam, US and Singapore, and two Germans in Frankfurt (including Weil himself).
Other activities
Digital currency mining remains a popular activity in Vietnam, Weil said, although locals had switched mostly to altcoins, thanks to lack of access to the modern ASIC rigs now required to mine bitcoin.
As well as the Yolo Cafe, some other Vietnamese businesses and organisations also accept digital currencies, such as parenting forum lamchame.com and The Go Vap orphanage, a charity that focuses on litecoin for its donations.
Weil said:
“In general the community is reaching out – and vice versa – for the government to get things sorted out and try to achieve an more-or-less open-minded stance regarding bitcoin.”
“We don’t know how it will play out in the end, but so far the signs make us kind of optimistic that bitcoin may become a big thing in Vietnam too,” he concluded.
Jon Southurst (@southtopia) | Published on March 23, 2014 at 14:18 GMT | Asia, Companies, Exchanges, Regulation, Startups
Despite recent negative noises from the authorities, bitcoin in Vietnam is still making gains in both in daily use and public awareness – largely thanks to the efforts of an international group to promote the digital currency.
Vietnam will even host its first bitcoin conference on 23rd May, deliberately scheduled immediately after a ‘traditional’ bankers’ conference in Hanoi that closes on the 22nd.
While there are probably still less than a dozen businesses accepting bitcoin in Vietnam, one of them is Hanoi’s popular Yolo Cafe, which serves as the city’s ‘Bitcoin Central’.
It was only recently that Vietnam appeared to be sliding in the opposite direction, with a state bank edict that the country’s financial institutions could not participate in the digital currency economy.
However, as bitcoin users in other countries around the region have found, the situation is not always as simple as it appears on the surface.
International venture
A multinational project involving participants from Vietnam, Germany and Israel is setting up Vietnam’s first live and registered bitcoin and litecoin exchange and payment processor, called Bitcoin Vietnam, to accept local currency.
Working as a ‘bitcoin broker’ it is cooperating with an Israeli startup called Bits of Gold. Bitcoin Vietnam will be 100% Vietnamese-owned to avoid extra red tape, but the project’s underlying technology was developed in Tel Aviv.
“Tel Aviv is, from my point of view, the No. 1 place in the world regarding bitcoin – a high density of people with the right entrepreneurial spirit and engineering skills,” said Frankfurt-based Dominik Weil, a coordinator with the project.
“I was really quite amazed, when I visited Tel Aviv and its Bitcoin Embassy back in November last year.”
Bitcoin Vietnam will also work in partnership with another Israeli counterpart, Bit2C, which has operated a successful live exchange for over a year.
Family connections
Yolo Cafe, Hanoi
Despite being German, Weil considers Vietnam a kind of second home, thanks to his Vietnam-born wife, who is actively involved in the startup’s operations. He already has several years’ experience in Vietnam and, as well as having a strong appreciation for the local culture, is also impressed by what he sees happening economically.
“Vietnam is an emerging market with very high dynamics in its economic growth – at nearly every corner in Saigon or Hanoi, they are going to build new skyscrapers, the living standard is rising continuously, and in the bigger cities you will find an expanding middle class.”
This presents wonderful opportunities for bitcoin businesses. That’s unlike Western countries, he said, where the focus is often more on defending past prosperity as the economic base declines.
Said Weil:
“The ill-fated belief that you have the right to get paid nice benefit payments by the government, just because you exist and breathe does not exist in Vietnam. The people there know they have to work hard, if they want to have a better life.”
To educate customers and hopefully other stakeholders including regulators, Bitcoin Vietnam will maintain a blog in which it will translate popular bitcoin news from around the world into Vietnamese.
Vietnam also has the world’s 13th-largest population and is one of the top 10 destinations for remittances – a market that is still expected to expand by a further 20% this year, thanks to large numbers of family members living abroad, and that could benefit from the low fees associated with bitcoin.
Self regulation
The new Bitcoin Vietnam entity will follow strict KYC (know your customer) and AML (anti-money laundering) rules, said Weil, but will be largely self-regulated, thanks to the authorities’ reluctance to enter the space.
He said:
“We dont want to become a tool for illicit activity and give reasons to the authorities to shut us down. It is without doubt, that you have to choose your steps in this market very carefully. The whole environment regarding bitcoin is very close to the approach in China, and I think there are still a lot of misunderstandings of bitcoin around, like it’s just a currency for criminals, terrorists, paedophiles, drug-addicts, gamblers, etc.”
The Vietnamese Ministry of Public Security even recently invited the Vietnamese Bitcoin Foundation’s current chairman to visit and explain bitcoin in the hope of developing a better approach, hinting the government’s attitude is certainly not set in concrete.
The team currently consists of five people, including three Vietnamese located in Vietnam, US and Singapore, and two Germans in Frankfurt (including Weil himself).
Other activities
Digital currency mining remains a popular activity in Vietnam, Weil said, although locals had switched mostly to altcoins, thanks to lack of access to the modern ASIC rigs now required to mine bitcoin.
As well as the Yolo Cafe, some other Vietnamese businesses and organisations also accept digital currencies, such as parenting forum lamchame.com and The Go Vap orphanage, a charity that focuses on litecoin for its donations.
Weil said:
“In general the community is reaching out – and vice versa – for the government to get things sorted out and try to achieve an more-or-less open-minded stance regarding bitcoin.”
“We don’t know how it will play out in the end, but so far the signs make us kind of optimistic that bitcoin may become a big thing in Vietnam too,” he concluded.
Bitcoin Banking, Solving ID Theft, and Why Regulators Should Love Pasties
John Law (@scotonomist) | Published on March 23, 2014 at 09:44 GMT | Analysis, Crime, Lifestyle
Welcome to the CoinDesk Weekly Review 21st March 2014 – a regular look at the hottest, most thought-provoking and most controversial events in the world of digital currency through the eyes of scepticism and wonder.
Your host … John Law.
No accounting for the taxman
coins
UK readers may have been too busy drinking beer and playing bingo with their pensions to notice, but this week’s Budget statement had one little snippet tucked away that may do more to promote bitcoin than if Newsweek revealed Satoshi Nakamoto was really Stephen Fry in a kimono.
In the future, muttered Chancellor George Osborne out of the corner of his mouth, the taxman will get the right to empty your bank account directly. No court order, no appeal process.
Oh, it’s not like that, the Treasury said. We’ll leave you with £5,000, and it’s only if you don’t answer our letters. And anyway, we won’t do it just yet. It’s all very reasonable, really.
It might be, if the taxman was always right. But now and again – whisper it – mistakes are made. Ask your friends. That’s why, in general, you get your day in court before the knife comes swishing down.
But if you don’t trust Her Majesty’s Revenue and Customs’ Papal infallibility, what can you do? Traditionally, keeping your assets out of the banks is a good way to add a certain level of security, but unless you’re in a line of work where vast amounts of actual cash is de rigeur, this is not very convenient. Alternatively, if you’re very rich, you can hire people to keep your money offshore. The rest of us? Hmm.
So, one more positive vibe for the bitcoin concept of being your own bank. Your wallet sits on your computer or mobile phone, and if you’re half-way careful about computer security, there it stays. With as much of your money in it as you like, an asset that can only be legally removed from your grasp if the courts say so.
It might seem a bit previous, given all the recent publicity for bitcoin heists and exchange implosion, but the techniques exist for perfectly secure online walletry. It doesn’t need much of a leap of faith to see that the bitcoin ecosystem will evolve to be more generally secure than the current mash-up of financial services, banks and other electronic money handlers.
This won’t happen overnight, and bitcoin is a long way from being stable enough in value to be a secure repository of too much of your personal wealth. The right magic for security, both cyber and value, may not even happen with bitcoin itself: the key lies in the underlying technology, not this year’s implementation.
Yet with the general trend away from bank account sanctity, the pressure on cybercurrency to provide truly personal bank accounts can only grow. That’s something the Chancellor probably didn’t budget for.
You can’t steal IDs if there’s no ID to steal
kid coder
Nothing warms John Law’s black, wizened, pickled walnut of a heart than when the Economist nicks one of his themes rather than, as far more often, the other way around. But here the august bible of global capitalism is, saying that we shouldn’t worry about bitcoin’s growing pains, the basic concepts are truly revolutionary, truly useful, and here to stay.
Moreover, it’s keen on the idea of linking bitcoin-like tokens (John Law will not rest until BLT becomes an official industry abbreviation) to actual stuff, which is an intriguing development.
What if, the Economist asks, your car key has a BLT in it and your car will only run if that’s present? That makes buying and selling cars potentially as simple as any online transaction, but without the need to provide the whole supporting legal framework of title. That is, after all, the analogue equivalent of actionably linking ownership to owner. Bitcoin provides just this, by merely existing in a certain place.
This meshes really well with the whole ‘Internet of Things’ concept, where just about everything we build or use sprouts brains and connectivity. Not only will everything exist with a digital identity in a block chain, unfakeable and unstealable, but your ownership of it will be similarly guaranteed – and transferable – in a way that the thing itself can check.
You won’t need to prove identity to prove ownership. Or partnership, or membership – both of which are different versions of the same idea. Your possession of the right token will do.
Think how much time you spend protecting stuff, or proving who you are to get use of something, or checking that someone else really is who they say they are so they can use something of yours.
This is the sort of thing that government or corporate IDs claim to ensure, but so often don’t – not because of bad faith, but because of overly-complex process, or human error, or an excess of caution. And they all have the real danger of leaking your ID to people who shouldn’t know it.
It is genuinely hard to imagine where removing ID from everyday life will lead. Obviously, things that transfer their allegiance along with purchase will make a lot of stuff effectively unpinchable – if the owner isn’t there, they refuse to work (“Is this your car, sir?” “Why don’t you ask it, officer?”). But how about legal documents? Medical records? You can’t steal someone’s ID if it’s not actually there and the data refuses to reveal itself to people who aren’t members of the “people you’ve given permission to read me” group.
Again,the important thing about BLTs is that there is no need for independent verification, or trust. The system itself enshrines those things.
A workable world with little need for independent ID seems almost beyond imagining. This time last century, the world of 2013 was beyond even the most visionary of pipe-smoking brow-furrowers. They should have eaten more BLTs.
What’s in a name?
hello my name is
Such Utopian fantasies necessarily ignore real problems in 2013. One that’s yet to be solved is – what, exactly, is bitcoin? Glass beads, say the Danes. Not a currency, say the Thais. A numerical amount, say the Australians.
A lot of the current regulatory indigestion is because bitcoin is called bitcoin and cybercurrencies are called cybercurrencies. In fact, the Australians are closest to the truth – bitcoin is number – but that’s about as useful as saying gold is a metal.
It’s a problem modern scientists have had in spades. They at least had the sense, when they started to discover that the seemingly normal world was built out of very weird things, to give a lot of those very weird things very weird names. Quarks. Leptons. Bosons. You knew where you were – in new and unexplored lands.
In general, though, they had to re-use old words – particle, spin, colour, wave – that still give fledgling physicists mammoth headaches in having to unlearn what those words mean in the normal world. Is a photon of light a wave or a particle? Yes. And no. Does an electron actually spin? No. But the maths is a bit like that of spinny things.
Bitcoin is like that. It was named after coins, because in many ways it is like coins, and that meant ordinary people could get most of what it’s about very quickly. But in key ways it isn’t like coins – no country is behind it, there’s no central bank – which means it can’t be regulated like physical money. It’s a unit of value, but unlike any other in that it needs nobody to say that it is one.
So, regulators have the same problem as any bright young schoolkid starting to learn physics for real – those words do not mean what you think they mean. They’re just dangerously close.
Bitcoin – and many of the concepts with it – is a new quantum physics of money, and you shouldn’t be surprised that the old words from which its name is built are in themselves part of the problem in understanding what it is and how to use it.
John Law proposes that, for those who have to deal with the technicalities, a decent, new and suitably weird set of names should be decided upon.
In the same way that quark was taken from one of James Joyce’s literary inventions – a poem starting “Three quarks for Muster Mark!” in Finnegan’s Wake – a basic token, be it BLT or bitcoin, could be a ‘jurtle’. That’s a word coined by Douglas Adams in the Vogon poetry of Hitchhiker’s Guide To The Galaxy, one of the holy scriptures of cybergeekdom. Units of work – those slippery things that heat up miners – could be ‘oggies’, the Cornish tin-digger’s word for pasties.
Doubtless you can think of more. Or better. But until everyone with skin in this game – regulators, designers, inventors and economists – are happy with their own quantum theory of oggies-per-jurtle, then nothing will really make sense.
John Law is an 18th Century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took 300 years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.
John Law (@scotonomist) | Published on March 23, 2014 at 09:44 GMT | Analysis, Crime, Lifestyle
Welcome to the CoinDesk Weekly Review 21st March 2014 – a regular look at the hottest, most thought-provoking and most controversial events in the world of digital currency through the eyes of scepticism and wonder.
Your host … John Law.
No accounting for the taxman
coins
UK readers may have been too busy drinking beer and playing bingo with their pensions to notice, but this week’s Budget statement had one little snippet tucked away that may do more to promote bitcoin than if Newsweek revealed Satoshi Nakamoto was really Stephen Fry in a kimono.
In the future, muttered Chancellor George Osborne out of the corner of his mouth, the taxman will get the right to empty your bank account directly. No court order, no appeal process.
Oh, it’s not like that, the Treasury said. We’ll leave you with £5,000, and it’s only if you don’t answer our letters. And anyway, we won’t do it just yet. It’s all very reasonable, really.
It might be, if the taxman was always right. But now and again – whisper it – mistakes are made. Ask your friends. That’s why, in general, you get your day in court before the knife comes swishing down.
But if you don’t trust Her Majesty’s Revenue and Customs’ Papal infallibility, what can you do? Traditionally, keeping your assets out of the banks is a good way to add a certain level of security, but unless you’re in a line of work where vast amounts of actual cash is de rigeur, this is not very convenient. Alternatively, if you’re very rich, you can hire people to keep your money offshore. The rest of us? Hmm.
So, one more positive vibe for the bitcoin concept of being your own bank. Your wallet sits on your computer or mobile phone, and if you’re half-way careful about computer security, there it stays. With as much of your money in it as you like, an asset that can only be legally removed from your grasp if the courts say so.
It might seem a bit previous, given all the recent publicity for bitcoin heists and exchange implosion, but the techniques exist for perfectly secure online walletry. It doesn’t need much of a leap of faith to see that the bitcoin ecosystem will evolve to be more generally secure than the current mash-up of financial services, banks and other electronic money handlers.
This won’t happen overnight, and bitcoin is a long way from being stable enough in value to be a secure repository of too much of your personal wealth. The right magic for security, both cyber and value, may not even happen with bitcoin itself: the key lies in the underlying technology, not this year’s implementation.
Yet with the general trend away from bank account sanctity, the pressure on cybercurrency to provide truly personal bank accounts can only grow. That’s something the Chancellor probably didn’t budget for.
You can’t steal IDs if there’s no ID to steal
kid coder
Nothing warms John Law’s black, wizened, pickled walnut of a heart than when the Economist nicks one of his themes rather than, as far more often, the other way around. But here the august bible of global capitalism is, saying that we shouldn’t worry about bitcoin’s growing pains, the basic concepts are truly revolutionary, truly useful, and here to stay.
Moreover, it’s keen on the idea of linking bitcoin-like tokens (John Law will not rest until BLT becomes an official industry abbreviation) to actual stuff, which is an intriguing development.
What if, the Economist asks, your car key has a BLT in it and your car will only run if that’s present? That makes buying and selling cars potentially as simple as any online transaction, but without the need to provide the whole supporting legal framework of title. That is, after all, the analogue equivalent of actionably linking ownership to owner. Bitcoin provides just this, by merely existing in a certain place.
This meshes really well with the whole ‘Internet of Things’ concept, where just about everything we build or use sprouts brains and connectivity. Not only will everything exist with a digital identity in a block chain, unfakeable and unstealable, but your ownership of it will be similarly guaranteed – and transferable – in a way that the thing itself can check.
You won’t need to prove identity to prove ownership. Or partnership, or membership – both of which are different versions of the same idea. Your possession of the right token will do.
Think how much time you spend protecting stuff, or proving who you are to get use of something, or checking that someone else really is who they say they are so they can use something of yours.
This is the sort of thing that government or corporate IDs claim to ensure, but so often don’t – not because of bad faith, but because of overly-complex process, or human error, or an excess of caution. And they all have the real danger of leaking your ID to people who shouldn’t know it.
It is genuinely hard to imagine where removing ID from everyday life will lead. Obviously, things that transfer their allegiance along with purchase will make a lot of stuff effectively unpinchable – if the owner isn’t there, they refuse to work (“Is this your car, sir?” “Why don’t you ask it, officer?”). But how about legal documents? Medical records? You can’t steal someone’s ID if it’s not actually there and the data refuses to reveal itself to people who aren’t members of the “people you’ve given permission to read me” group.
Again,the important thing about BLTs is that there is no need for independent verification, or trust. The system itself enshrines those things.
A workable world with little need for independent ID seems almost beyond imagining. This time last century, the world of 2013 was beyond even the most visionary of pipe-smoking brow-furrowers. They should have eaten more BLTs.
What’s in a name?
hello my name is
Such Utopian fantasies necessarily ignore real problems in 2013. One that’s yet to be solved is – what, exactly, is bitcoin? Glass beads, say the Danes. Not a currency, say the Thais. A numerical amount, say the Australians.
A lot of the current regulatory indigestion is because bitcoin is called bitcoin and cybercurrencies are called cybercurrencies. In fact, the Australians are closest to the truth – bitcoin is number – but that’s about as useful as saying gold is a metal.
It’s a problem modern scientists have had in spades. They at least had the sense, when they started to discover that the seemingly normal world was built out of very weird things, to give a lot of those very weird things very weird names. Quarks. Leptons. Bosons. You knew where you were – in new and unexplored lands.
In general, though, they had to re-use old words – particle, spin, colour, wave – that still give fledgling physicists mammoth headaches in having to unlearn what those words mean in the normal world. Is a photon of light a wave or a particle? Yes. And no. Does an electron actually spin? No. But the maths is a bit like that of spinny things.
Bitcoin is like that. It was named after coins, because in many ways it is like coins, and that meant ordinary people could get most of what it’s about very quickly. But in key ways it isn’t like coins – no country is behind it, there’s no central bank – which means it can’t be regulated like physical money. It’s a unit of value, but unlike any other in that it needs nobody to say that it is one.
So, regulators have the same problem as any bright young schoolkid starting to learn physics for real – those words do not mean what you think they mean. They’re just dangerously close.
Bitcoin – and many of the concepts with it – is a new quantum physics of money, and you shouldn’t be surprised that the old words from which its name is built are in themselves part of the problem in understanding what it is and how to use it.
John Law proposes that, for those who have to deal with the technicalities, a decent, new and suitably weird set of names should be decided upon.
In the same way that quark was taken from one of James Joyce’s literary inventions – a poem starting “Three quarks for Muster Mark!” in Finnegan’s Wake – a basic token, be it BLT or bitcoin, could be a ‘jurtle’. That’s a word coined by Douglas Adams in the Vogon poetry of Hitchhiker’s Guide To The Galaxy, one of the holy scriptures of cybergeekdom. Units of work – those slippery things that heat up miners – could be ‘oggies’, the Cornish tin-digger’s word for pasties.
Doubtless you can think of more. Or better. But until everyone with skin in this game – regulators, designers, inventors and economists – are happy with their own quantum theory of oggies-per-jurtle, then nothing will really make sense.
John Law is an 18th Century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took 300 years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.
Bitcoin Regulation Roundup: Bankruptcy, Derivatives and Consumer Protection
Jason Tyra (@tyracpa) | Published on March 22, 2014 at 09:47 GMT | Analysis, Asia, Bitcoin Gambling, Crime, Law, Mt. Gox, News,
Regulatory attitudes towards cryptocurrencies in countries around the world are shifting. Hardly a day goes by without a central bank issuing a statement on the digital currency, or a warning perhaps. But it’s not all bad news, some authorities are taking a much more positive approach. In CoinDesk’s regulation roundup, Certified Public Accountant and ACFE Certified Fraud Examiner Jason Tyra examines the most significant digital currency news from the world’s regulators and law courts over the past fortnight.
MT. Gox: Frozen assets
Mark KarpelesMt. Gox has now filed for bankruptcy protection both in the United States and in Japan. Additionally, both the company and Karpeles have had their US assets frozen in connection with numerous civil complaints and at least one criminal probe.
Karpeles testified in a Texas bankruptcy court on Monday, March 10th, that Mt. Gox was the target of a massive and lengthy attack by computer hackers, but admitted that the exchange continued to accept trading orders and collect fee income for weeks after management knew that Gox was technically insolvent.
Further, Mt. Gox has so far failed to explain the reason for the discrepancy between the amounts of cash liabilities on its balance sheet and the balance of cash held in banks accounts known to be owned by the company.
As the drama plays out in public on multiple continents, online forums have buzzed with theories about the source and extent of the collapse, rumors of wholesale theft by Mt. Gox management and voluminous amounts of data alleged to have been leaked (or stolen) from Gox’s servers.
Nevertheless, no allegation, including the official statements by Gox management, has yet been conclusively proven. Mt. Gox’s website restored partial functionality on March 17, allowing account holders to check their balances, but not make withdrawals.
The Mt. Gox affair has set the stage for a shift in the focus of bitcoin regulatory efforts in the United States from money laundering exclusively to also include consumer protection.
New York: Registered exchanges
Ben LawskyThe State of New York seems to taken the lead in its drive toward regulating bitcoin-related businesses operating there.
The State Department of Financial Services, headed by Ben Lawsky, recently announced that it will accept proposals to establish regulated exchanges in New York.
Lawsky cited “the urgent need for stronger oversight […] including robust standards for consumer protection, cyber security, and anti-money laundering compliance” in his solicitation for applications and proposals.
The standards of acceptance and process of application do not appear to be available through the Department of Financial Services website, suggesting that both will be handled in an ad-hoc manner, with extensive input and negotiation by applicants.
New York’s only bitcoin exchange, BitInstant, ceased operating after the arrest of its founder on money laundering charges in 2013. CoinMap.org currently lists more than 100 bitcoin businesses operating in New York State, but that number does not include businesses located outside New York with a regulatory nexus there.
The US Treasury may have concluded that bitcoin is unworthy of extra regulation for the time being. In a speech given on March 18th, US Treasury Undersecretary for Terrorism and Financial Intelligence said:
“Terrorists generally need ‘real’ currency, not virtual currency, to pay their expenses.”
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has cracked down over the past year on unregistered exchanges, resulting in disruptions to bitcoin businesses and users throughout the world.
While registration requirements are unlikely to be eased, a de facto moratorium on further regulation is likely to be a welcome development.
Texas: Bitcoin investment blocked
Oil wellConsumer protection seems to be on the minds of other regulators, as the commissioner of the Texas State Securities Board has issued an emergency order barring a private energy exploration company from accepting investments in bitcoin from non-accredited investors.
The company, Balanced Energy LLC, must also furnish potential investors with a disclosure informing them that bitcoin is volatile and that their investment may be subject to extraordinary risk as a result.
Both US federal and Texas state law require companies offering securities under one of the registration exceptions to take reasonable steps to verify that potential investors are qualified.
Offerings of unregistered securities by bitcoin-related businesses have become common over the last 18 months, with solicitations for everything from mining operations to exchanges and other tech startups being pushed online. Though failure to register is not generally a criminal matter, firms that violate the rules can face substantial civil penalties.
US: SatoshiDice in trouble
Also in securities registration, the SEC (Securities and Exchange Commission) is reportedly investigating whether bitcoin gambling site SatoshiDice violated registration rules by accepting funds from investors located in the US.
MPEx, the Romania-based exchange that hosts SatoshiDice shares, has so far declined to cooperate, citing lack of jurisdiction by the SEC.
US: Bitcoin derivatives?
BTC derivativesBitcoin derivatives may be coming to US financial markets. According to Bart Chilton, a member of the US Commodities Futures Trading Commission, the regulator already has statutory jurisdiction over a proposed derivatives market for bitcoin.
Chilton suggested that his agency had been in talks with several companies about bitcoin derivatives, but declined to name them, since no formal applications have been filed.
A derivatives market would allow traders to write calls, puts, swaps, options and other types of contracts on bitcoin in much the same way as other investments. However, while derivatives might result in more robust long-term growth of the bitcoin economy, they also bring a risk of greater volatility to bitcoin markets.
The enormous worldwide derivatives market played a substantial role in the 2008-2009 financial crisis in the US, as bets on the performance of certain classes of assets drove a large number of previously profitable companies into insolvency.
Singapore: Compulsory registration
singapore-masThe city-state of Singapore has announced that virtual currency related businesses, including bitcoin exchanges and other intermediaries, will be required to register with a unit of the police force that enforces anti-money laundering rules.
According to the Monetary Authority of Singapore, these regulations place the tiny nation at the forefront of virtual currency regulation among developed countries.
Singapore’s decision to impose anti-money laundering regulation on bitcoin businesses marks a reversal from its previous stance, announced just a few weeks ago, and coinciding with the installation of its first bitcoin ATMs.
Iran: Regulation talks
Iran has reportedly announced its own effort to regulate virtual currency trade within its borders. According to the Fars News Agency, the country’s National Center for Cyberspace is currently involved in talks with the Ministry of Economic Affairs and Iran’s Central Bank concerning what regulations might be needed in the Islamic state and how they might be implemented.
Iran has endured punishing economic sanctions at the hands of western countries in recent years, stemming from its alleged pursuit of a nuclear weapons program. The country has publicly claimed that the program is for civil purposes only.
The sanctions, which were partially lifted recently, have severely hampered Iran’s ability to trade abroad, drained its foreign exchange reserves and driven the country to resort to extraordinary measures, such as gold bullion smuggling, to conduct business abroad.
Bitcoin could be used to partially subvert economic sanctions in the future, stoking fears among western governments that it could also be used for money laundering.
US anti-money laundering rules require financial institutions, such as money service businesses, to “know their customers” – that is, collect ID data – and ensure that they do not appear on the Office of Foreign Asset Control’s Specially Designated Nationals list.
Jason Tyra (@tyracpa) | Published on March 22, 2014 at 09:47 GMT | Analysis, Asia, Bitcoin Gambling, Crime, Law, Mt. Gox, News,
Regulatory attitudes towards cryptocurrencies in countries around the world are shifting. Hardly a day goes by without a central bank issuing a statement on the digital currency, or a warning perhaps. But it’s not all bad news, some authorities are taking a much more positive approach. In CoinDesk’s regulation roundup, Certified Public Accountant and ACFE Certified Fraud Examiner Jason Tyra examines the most significant digital currency news from the world’s regulators and law courts over the past fortnight.
MT. Gox: Frozen assets
Mark KarpelesMt. Gox has now filed for bankruptcy protection both in the United States and in Japan. Additionally, both the company and Karpeles have had their US assets frozen in connection with numerous civil complaints and at least one criminal probe.
Karpeles testified in a Texas bankruptcy court on Monday, March 10th, that Mt. Gox was the target of a massive and lengthy attack by computer hackers, but admitted that the exchange continued to accept trading orders and collect fee income for weeks after management knew that Gox was technically insolvent.
Further, Mt. Gox has so far failed to explain the reason for the discrepancy between the amounts of cash liabilities on its balance sheet and the balance of cash held in banks accounts known to be owned by the company.
As the drama plays out in public on multiple continents, online forums have buzzed with theories about the source and extent of the collapse, rumors of wholesale theft by Mt. Gox management and voluminous amounts of data alleged to have been leaked (or stolen) from Gox’s servers.
Nevertheless, no allegation, including the official statements by Gox management, has yet been conclusively proven. Mt. Gox’s website restored partial functionality on March 17, allowing account holders to check their balances, but not make withdrawals.
The Mt. Gox affair has set the stage for a shift in the focus of bitcoin regulatory efforts in the United States from money laundering exclusively to also include consumer protection.
New York: Registered exchanges
Ben LawskyThe State of New York seems to taken the lead in its drive toward regulating bitcoin-related businesses operating there.
The State Department of Financial Services, headed by Ben Lawsky, recently announced that it will accept proposals to establish regulated exchanges in New York.
Lawsky cited “the urgent need for stronger oversight […] including robust standards for consumer protection, cyber security, and anti-money laundering compliance” in his solicitation for applications and proposals.
The standards of acceptance and process of application do not appear to be available through the Department of Financial Services website, suggesting that both will be handled in an ad-hoc manner, with extensive input and negotiation by applicants.
New York’s only bitcoin exchange, BitInstant, ceased operating after the arrest of its founder on money laundering charges in 2013. CoinMap.org currently lists more than 100 bitcoin businesses operating in New York State, but that number does not include businesses located outside New York with a regulatory nexus there.
The US Treasury may have concluded that bitcoin is unworthy of extra regulation for the time being. In a speech given on March 18th, US Treasury Undersecretary for Terrorism and Financial Intelligence said:
“Terrorists generally need ‘real’ currency, not virtual currency, to pay their expenses.”
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has cracked down over the past year on unregistered exchanges, resulting in disruptions to bitcoin businesses and users throughout the world.
While registration requirements are unlikely to be eased, a de facto moratorium on further regulation is likely to be a welcome development.
Texas: Bitcoin investment blocked
Oil wellConsumer protection seems to be on the minds of other regulators, as the commissioner of the Texas State Securities Board has issued an emergency order barring a private energy exploration company from accepting investments in bitcoin from non-accredited investors.
The company, Balanced Energy LLC, must also furnish potential investors with a disclosure informing them that bitcoin is volatile and that their investment may be subject to extraordinary risk as a result.
Both US federal and Texas state law require companies offering securities under one of the registration exceptions to take reasonable steps to verify that potential investors are qualified.
Offerings of unregistered securities by bitcoin-related businesses have become common over the last 18 months, with solicitations for everything from mining operations to exchanges and other tech startups being pushed online. Though failure to register is not generally a criminal matter, firms that violate the rules can face substantial civil penalties.
US: SatoshiDice in trouble
Also in securities registration, the SEC (Securities and Exchange Commission) is reportedly investigating whether bitcoin gambling site SatoshiDice violated registration rules by accepting funds from investors located in the US.
MPEx, the Romania-based exchange that hosts SatoshiDice shares, has so far declined to cooperate, citing lack of jurisdiction by the SEC.
US: Bitcoin derivatives?
BTC derivativesBitcoin derivatives may be coming to US financial markets. According to Bart Chilton, a member of the US Commodities Futures Trading Commission, the regulator already has statutory jurisdiction over a proposed derivatives market for bitcoin.
Chilton suggested that his agency had been in talks with several companies about bitcoin derivatives, but declined to name them, since no formal applications have been filed.
A derivatives market would allow traders to write calls, puts, swaps, options and other types of contracts on bitcoin in much the same way as other investments. However, while derivatives might result in more robust long-term growth of the bitcoin economy, they also bring a risk of greater volatility to bitcoin markets.
The enormous worldwide derivatives market played a substantial role in the 2008-2009 financial crisis in the US, as bets on the performance of certain classes of assets drove a large number of previously profitable companies into insolvency.
Singapore: Compulsory registration
singapore-masThe city-state of Singapore has announced that virtual currency related businesses, including bitcoin exchanges and other intermediaries, will be required to register with a unit of the police force that enforces anti-money laundering rules.
According to the Monetary Authority of Singapore, these regulations place the tiny nation at the forefront of virtual currency regulation among developed countries.
Singapore’s decision to impose anti-money laundering regulation on bitcoin businesses marks a reversal from its previous stance, announced just a few weeks ago, and coinciding with the installation of its first bitcoin ATMs.
Iran: Regulation talks
Iran has reportedly announced its own effort to regulate virtual currency trade within its borders. According to the Fars News Agency, the country’s National Center for Cyberspace is currently involved in talks with the Ministry of Economic Affairs and Iran’s Central Bank concerning what regulations might be needed in the Islamic state and how they might be implemented.
Iran has endured punishing economic sanctions at the hands of western countries in recent years, stemming from its alleged pursuit of a nuclear weapons program. The country has publicly claimed that the program is for civil purposes only.
The sanctions, which were partially lifted recently, have severely hampered Iran’s ability to trade abroad, drained its foreign exchange reserves and driven the country to resort to extraordinary measures, such as gold bullion smuggling, to conduct business abroad.
Bitcoin could be used to partially subvert economic sanctions in the future, stoking fears among western governments that it could also be used for money laundering.
US anti-money laundering rules require financial institutions, such as money service businesses, to “know their customers” – that is, collect ID data – and ensure that they do not appear on the Office of Foreign Asset Control’s Specially Designated Nationals list.
Payments Processor BitPay Joins the Bitcoin Foundation as Gold Member
Daniel Cawrey (@danielcawrey) | Published on March 21, 2014 at 22:48 GMT | News
The Bitcoin Foundation added a new member to its ranks on 21st March.
BitPay, a leading merchant processor that enables organizations to accept bitcoin, has become a Gold Member of the Bitcoin Foundation, an official blog post from the organisation revealed.
The Bitcoin Foundation’s goal is to advocate globally for the use of bitcoin as a new financial tool to enable monetary access, transparency and innovation.
Speaking about the news, Tony Gallippi, CEO and co-founder of BitPay, said:
“BitPay feels it is important to support the great work done by the Bitcoin Foundation, as they are leading the continued growth and success of the core protocol upon which we build our business.”
About BitPay
BitPay’s headquarters is in Atlanta, GA. It also has offices in New York, San Francisco and Buenos Aires. The company recently released Bitcore, an open source API that allows application developers to build bitcoin features into their products.
In 2013, BitPay processed more than $100m in BTC transactions for its customers. Some of the company’s notable clientele includes Tiger Direct, the NBA’s Sacramento Kings and Shopify.
BitPay has over 20,000 organizations as customers accepting bitcoin as a form of electronic payment, which costs less than the average fee for merchant credit card processing.
About the Bitcoin Foundation
The Bitcoin Foundation has three membership tiers for industry: silver, gold, and platinum. Industry membership benefits are outlined here.
BitPay, which has received over $2.5m in venture capital investment, is one of two Bitcoin Foundation Gold Members, the other one being Circle Internet Financial.
Individuals can also join the Bitcoin Foundation in one of two tiers: annual and lifetime. Individual membership benefits in the Bitcoin Foundation include a vote in the membership class and access to member forums to discuss initiatives and the organization’s overall direction.
Daniel Cawrey (@danielcawrey) | Published on March 21, 2014 at 22:48 GMT | News
The Bitcoin Foundation added a new member to its ranks on 21st March.
BitPay, a leading merchant processor that enables organizations to accept bitcoin, has become a Gold Member of the Bitcoin Foundation, an official blog post from the organisation revealed.
The Bitcoin Foundation’s goal is to advocate globally for the use of bitcoin as a new financial tool to enable monetary access, transparency and innovation.
Speaking about the news, Tony Gallippi, CEO and co-founder of BitPay, said:
“BitPay feels it is important to support the great work done by the Bitcoin Foundation, as they are leading the continued growth and success of the core protocol upon which we build our business.”
About BitPay
BitPay’s headquarters is in Atlanta, GA. It also has offices in New York, San Francisco and Buenos Aires. The company recently released Bitcore, an open source API that allows application developers to build bitcoin features into their products.
In 2013, BitPay processed more than $100m in BTC transactions for its customers. Some of the company’s notable clientele includes Tiger Direct, the NBA’s Sacramento Kings and Shopify.
BitPay has over 20,000 organizations as customers accepting bitcoin as a form of electronic payment, which costs less than the average fee for merchant credit card processing.
About the Bitcoin Foundation
The Bitcoin Foundation has three membership tiers for industry: silver, gold, and platinum. Industry membership benefits are outlined here.
BitPay, which has received over $2.5m in venture capital investment, is one of two Bitcoin Foundation Gold Members, the other one being Circle Internet Financial.
Individuals can also join the Bitcoin Foundation in one of two tiers: annual and lifetime. Individual membership benefits in the Bitcoin Foundation include a vote in the membership class and access to member forums to discuss initiatives and the organization’s overall direction.
US Class Action Lawyer: Mt. Gox Wallet Discovery “Highly Suspect”
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 21:54 GMT | News
Bankrupt Japan-based bitcoin exchange Mt. Gox released a new press statement earlier today (21st March) confirming 20th March reports that it had uncovered an ‘old-format’ bitcoin wallet containing some 200,000 bitcoins ($115.8m at press time) presumed lost in the run-up to its insolvency.
The statement indicated that the company discovered the funds on 7th March and promptly informed the necessary authorities of the recovery.
However, Chris Dore, a partner at Edelson law firm, isn’t exactly buying Mt. Gox’s version of the events.
Dore, whose firm represents the US class action against the insolvent exchange, suggested that the announcement is closely tied to matters it is currently investigating.
Dore summed up his opinion on the news, telling CoinDesk:
“Their statement that they found [these bitcoins] in a random wallet and failed to tell anyone for two weeks is highly suspect.”
Instead, Dore indicated he believes that the funds may be connected to his firm’s ongoing investigation of 180,000 bitcoins that were said to have been moving through the blockchain on or around 7th March.
“We believe we were on the right trail. It appeared that these 180,000, 200,000 bitcoins were being tumbled, that they were being broken down and reconstituted, so our goal was to find this out.”
Dore suggested that the announcement may have been a move by Mt. Gox to make it harder for information to be uncovered about the funds.
Added Dore: “If it’s a coincidence, it’s a $120m coincidence. We frankly just don’t buy it.”
Investigating the funds
In an interview, Dore elaborated on court proceedings held yesterday, noting that during the day’s events his legal team had asked for restrictions on Mt. Gox’s assets to be relaxed, a request the judge approved. Dore said that his team asked for certain third parties to be able to move the funds.
Explained Dore:
“We’re not fully disclosing what we know or why we were asking that, but essentially it was an effort to try and trace bitcoins that were being moved around and that we believe were associated with this initial group of 180,000 [bitcoins].”
The correlation between the events, Dore suggested, raises questions about Mt. Gox and its conduct.
“The idea that they found it in a wallet and they were breaking it down into hundreds of thousands of smaller wallets, it raises a lot of questions about their honesty and whether they’re being forthright about what they have.”
Dore was not able to fully elaborate on his suspicions regarding the movement of the funds.
Said Dore: “Our hope was, if they could continue to move, we could track where they would end up.”
What the finding means
Dore also addressed another lingering question, just what exactly does the discovery of the funds mean for former exchange users given that these parties are not creditors.
However, that may be up for dispute. Dore indicated that his firm could still make the case that his clients should be treated with this legal distinction.
“In our view, any assets are impactful on our settlement, because the assets, the fiat currency, the bitcoins of our class members. we will do everything in our power to get those returns.”
The next scheduled hearing is expected to take place on 1st April. Then, Mt. Gox will attempt to shield its US assets until the conclusion of its bankruptcy proceedings in Japan.
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 21:54 GMT | News
Bankrupt Japan-based bitcoin exchange Mt. Gox released a new press statement earlier today (21st March) confirming 20th March reports that it had uncovered an ‘old-format’ bitcoin wallet containing some 200,000 bitcoins ($115.8m at press time) presumed lost in the run-up to its insolvency.
The statement indicated that the company discovered the funds on 7th March and promptly informed the necessary authorities of the recovery.
However, Chris Dore, a partner at Edelson law firm, isn’t exactly buying Mt. Gox’s version of the events.
Dore, whose firm represents the US class action against the insolvent exchange, suggested that the announcement is closely tied to matters it is currently investigating.
Dore summed up his opinion on the news, telling CoinDesk:
“Their statement that they found [these bitcoins] in a random wallet and failed to tell anyone for two weeks is highly suspect.”
Instead, Dore indicated he believes that the funds may be connected to his firm’s ongoing investigation of 180,000 bitcoins that were said to have been moving through the blockchain on or around 7th March.
“We believe we were on the right trail. It appeared that these 180,000, 200,000 bitcoins were being tumbled, that they were being broken down and reconstituted, so our goal was to find this out.”
Dore suggested that the announcement may have been a move by Mt. Gox to make it harder for information to be uncovered about the funds.
Added Dore: “If it’s a coincidence, it’s a $120m coincidence. We frankly just don’t buy it.”
Investigating the funds
In an interview, Dore elaborated on court proceedings held yesterday, noting that during the day’s events his legal team had asked for restrictions on Mt. Gox’s assets to be relaxed, a request the judge approved. Dore said that his team asked for certain third parties to be able to move the funds.
Explained Dore:
“We’re not fully disclosing what we know or why we were asking that, but essentially it was an effort to try and trace bitcoins that were being moved around and that we believe were associated with this initial group of 180,000 [bitcoins].”
The correlation between the events, Dore suggested, raises questions about Mt. Gox and its conduct.
“The idea that they found it in a wallet and they were breaking it down into hundreds of thousands of smaller wallets, it raises a lot of questions about their honesty and whether they’re being forthright about what they have.”
Dore was not able to fully elaborate on his suspicions regarding the movement of the funds.
Said Dore: “Our hope was, if they could continue to move, we could track where they would end up.”
What the finding means
Dore also addressed another lingering question, just what exactly does the discovery of the funds mean for former exchange users given that these parties are not creditors.
However, that may be up for dispute. Dore indicated that his firm could still make the case that his clients should be treated with this legal distinction.
“In our view, any assets are impactful on our settlement, because the assets, the fiat currency, the bitcoins of our class members. we will do everything in our power to get those returns.”
The next scheduled hearing is expected to take place on 1st April. Then, Mt. Gox will attempt to shield its US assets until the conclusion of its bankruptcy proceedings in Japan.
Apple Approves bitWallet iOS App With BTC Sending Function Blocked
Daniel Cawrey (@danielcawrey) | Published on March 21, 2014 at 20:40 GMT | News, Technology, Wallets
Apple has approved a bitcoin wallet app for the iPhone and iPad, though not without a key restriction: App users will not be able to send BTC.
bitWallet, made by a company called Sollico, is now available in the Apple App Store. The listing is notable given the struggles of high-profile bitcoin wallet providers such as Coinbase and Blockchain to have their apps remain in the store. Both companies saw their apps removed in events that outraged the wider bitcoin community.
A company representative from Sollico says it submitted the wallet to Apple under the notion that it might be approved if sending capabilities were prohibited:
“We assumed Apple’s objection is primarily sending bitcoins directly from the app, so we decided to submit the full-featured wallet app, but disable sending bitcoins.”
The prescence of bitWallet’s app suggests that Apple may be willing to allow bitcoin apps that cannot send or receive bitcoins directly. The app focuses on mobile security as well as privacy protection for bitcoin storage.
As it stands, bitWallet is a lone App Store option available on iOS for wallets.
bitWallet Features
Although the lack of a send function is an inconvenience, users can transfer funds via other methods with a wallet’s private key.
According the Sollico:
“As long as you have the private key, you can use any client to send your bitcoins – using Blockchain.info is easiest.”
bitWalletwatchlistiphoneBitWallet goes to lengths to ensure bitcoin wallet privacy on the iPhone. The app guards against the threat of memory scraping by clearing all sensitive information when the app is running in the background. Private keys remain encrypted.
bitWallet’s Watchlist feature allows users to track blockchain address transactions. The wallet uses Blockchain.info to retrieve data, and the company says it plans to bring on other sources of ledger information in the future for redundancy purposes.
Another company called Pheeva is planning to distribute a fully functional as a workaround to Apple’s bitcoin ban. A members-only private distribution method, cooperatives are commonly used in organizations to distribute internal company-only iOS app.
The bitWallet developers say that the approval process took Apple about three weeks, which is longer than usual.
Apple’s stance on bitcoin
Apple has taken a harsh stance against bitcoin apps since last December. That’s when when the company required messaging app Gliph to remove its bitcoin “attachment” sending feature. The Cupertino company most recently asked e-commerce app Fancy to remove bitcoin payments from its iOS app.
Popular wallet Coinbase had its iOS app pulled last November.
Likewise, in February, Apple removed the Blockchain.info iOS wallet from the App Store. This caused consternation among some users, with one particularly angry Blockchain.info mobile wallet user shooting his iPhone, destroying it.
bitWallet’s next steps
Despite Apple’s behavior towards bitcoin, bitWallet’s developers remain optimistic. They say that the plan is to submit another version of the app with sending functionality soon.
Sollico says that it plans to be very clear about the functions of its wallet when it submits future versions of bitWallet to Apple.
“Once again, we will be totally upfront with Apple about what the app can and cannot do,” the company added.
It remains unclear when or if Apple will ever allow bitcoin transfers to flow freely from within iOS apps.
Daniel Cawrey (@danielcawrey) | Published on March 21, 2014 at 20:40 GMT | News, Technology, Wallets
Apple has approved a bitcoin wallet app for the iPhone and iPad, though not without a key restriction: App users will not be able to send BTC.
bitWallet, made by a company called Sollico, is now available in the Apple App Store. The listing is notable given the struggles of high-profile bitcoin wallet providers such as Coinbase and Blockchain to have their apps remain in the store. Both companies saw their apps removed in events that outraged the wider bitcoin community.
A company representative from Sollico says it submitted the wallet to Apple under the notion that it might be approved if sending capabilities were prohibited:
“We assumed Apple’s objection is primarily sending bitcoins directly from the app, so we decided to submit the full-featured wallet app, but disable sending bitcoins.”
The prescence of bitWallet’s app suggests that Apple may be willing to allow bitcoin apps that cannot send or receive bitcoins directly. The app focuses on mobile security as well as privacy protection for bitcoin storage.
As it stands, bitWallet is a lone App Store option available on iOS for wallets.
bitWallet Features
Although the lack of a send function is an inconvenience, users can transfer funds via other methods with a wallet’s private key.
According the Sollico:
“As long as you have the private key, you can use any client to send your bitcoins – using Blockchain.info is easiest.”
bitWalletwatchlistiphoneBitWallet goes to lengths to ensure bitcoin wallet privacy on the iPhone. The app guards against the threat of memory scraping by clearing all sensitive information when the app is running in the background. Private keys remain encrypted.
bitWallet’s Watchlist feature allows users to track blockchain address transactions. The wallet uses Blockchain.info to retrieve data, and the company says it plans to bring on other sources of ledger information in the future for redundancy purposes.
Another company called Pheeva is planning to distribute a fully functional as a workaround to Apple’s bitcoin ban. A members-only private distribution method, cooperatives are commonly used in organizations to distribute internal company-only iOS app.
The bitWallet developers say that the approval process took Apple about three weeks, which is longer than usual.
Apple’s stance on bitcoin
Apple has taken a harsh stance against bitcoin apps since last December. That’s when when the company required messaging app Gliph to remove its bitcoin “attachment” sending feature. The Cupertino company most recently asked e-commerce app Fancy to remove bitcoin payments from its iOS app.
Popular wallet Coinbase had its iOS app pulled last November.
Likewise, in February, Apple removed the Blockchain.info iOS wallet from the App Store. This caused consternation among some users, with one particularly angry Blockchain.info mobile wallet user shooting his iPhone, destroying it.
bitWallet’s next steps
Despite Apple’s behavior towards bitcoin, bitWallet’s developers remain optimistic. They say that the plan is to submit another version of the app with sending functionality soon.
Sollico says that it plans to be very clear about the functions of its wallet when it submits future versions of bitWallet to Apple.
“Once again, we will be totally upfront with Apple about what the app can and cannot do,” the company added.
It remains unclear when or if Apple will ever allow bitcoin transfers to flow freely from within iOS apps.
Report Claims Colombia’s Central Bank May Enact Bitcoin Ban
Stan Higgins | Published on March 21, 2014 at 21:15 GMT | News, Regulation
The Superintendencia Financiera de Colombia (SFC) may be close to outlawing bitcoin transactions in the South American country, a report from a major nationally distributed newspaper claims.
El Tiempo reported on 20th March that the SFC, in conjunction with Banco central de Colombia, Colombia’s central bank, and the Ministerio de Hacienda y Crédito Público, the executive body responsible for budgetary concerns, is preparing to issue a document outlining the government’s stance on bitcoin and bitcoin-related activities.
According to El Tiempo, the SFC is set release the circular outlining the ban as soon as Tuesday of next week
The Colombian government is expected to cite a lack of effective market protections as one of the core reasons for the measures when it publishes the document, the report suggests. Additionally, the media outlet alleges that bitcoin is viewed by the Colombian government as a threat to the country’s financial system.
However, there remains disagreement among South American bitcoin community members as to whether the restrictions will go as far as the report suggests, with some optimistic that the measure will simply amount to a stern warning.
Government opposition to digital currencies
An informal translation of the report indicates that senior Colombian officials such as Finance Minister Mauricio Cardenas have been working in recent weeks and months on an overarching policy for bitcoin. Research from the US Law Library of Congress, corroborated by BitLegal, indicates this would be the first time the country has spoken publicly about digital currencies.
El Tiempo quoted Cardenas during a recent speech before the country’s national legislature in which he touted the strengths of the Colombian peso compared to digital currencies.
“Our currency is reliable, safe and generates no risk, while other forms of money [like Bitcoin] do not have the same level of support and guarantees,” he remarked.
A source connected to the Colombian Ministry of Finance told El Tiempo that the ban may very well focus on Bitcoin handling activities rather than outright purchase by consumers.
“With bitcoin no illegal recruitment, because ultimately what you are doing is buying a product. But when others are offered to collect money from others to invest in that currency, there is already an illegal recruitment, and this brings many risks.”
Colombia’s central bank has also reportedly weighed against bitcoin, saying that it is not a real currency and therefore receives no institutional backing.
The Colombian Ministry of Finance nor the Superintendency of Finance have responded to press inquiries.
Community reaction
Sebastian Serrano, CEO of Latin American-focused payment gateway BitPagos, suggested that the initial reports may not be as ominous as they sound.
Speaking to CoinDesk, he said:
“What we know so far is that the government is going to issue a warning similar to the one issued by the Central Bank of China. Most likely not making bitcoin illegal but just restricting financial institutions from trading Bitcoin in attempt to stop speculation over the currency and avoid the effects of a crash.”
Serrano added that while the news certainly isn’t encouraging for the local Colombian ecosystem, the extent of any damage won’t be known until the report is released on Tuesday.
Ulf Kuhn, founder of Chile-based telemarketing business Telemarketing Facil, indicated that he was unsure of what exactly to make of the report.
“First they say bitcoin and EVERY transaction is illegal. Then they say that offering investing services for bitcoins is illegal. Then they say they worked together with banks, but it’s just a financial department statement.”
Carlos Mesa, of local bitcoin advocacy group Bitcoin Colombia, took to reddit to discuss the news, suggesting more details would be forthcoming after he had an internal meeting with the SFC.
More central banks weigh in worldwide
While the Colombian government has not released its official document outlining the details of a ban, such a move would add to a growing chorus of governments and central banks worldwide that have moved against the Bitcoin.
Earlier this month, the Bank of Mexico banned domestic banks from handling bitcoin. The Mexican central bank cited its risks to the general public but did not directly outlaw consumer purchases of the cryptocurrency.
Other central banks, including those from Russia, Hungary, Cyprus and the Philippines, have issued warnings about bitcoin but have not moved to ban it, despite sometimes harsh rhetoric.
If as extensive as the report suggests, Colombia’s policies would be among the most restrictive enacted worldwide.
Stan Higgins | Published on March 21, 2014 at 21:15 GMT | News, Regulation
The Superintendencia Financiera de Colombia (SFC) may be close to outlawing bitcoin transactions in the South American country, a report from a major nationally distributed newspaper claims.
El Tiempo reported on 20th March that the SFC, in conjunction with Banco central de Colombia, Colombia’s central bank, and the Ministerio de Hacienda y Crédito Público, the executive body responsible for budgetary concerns, is preparing to issue a document outlining the government’s stance on bitcoin and bitcoin-related activities.
According to El Tiempo, the SFC is set release the circular outlining the ban as soon as Tuesday of next week
The Colombian government is expected to cite a lack of effective market protections as one of the core reasons for the measures when it publishes the document, the report suggests. Additionally, the media outlet alleges that bitcoin is viewed by the Colombian government as a threat to the country’s financial system.
However, there remains disagreement among South American bitcoin community members as to whether the restrictions will go as far as the report suggests, with some optimistic that the measure will simply amount to a stern warning.
Government opposition to digital currencies
An informal translation of the report indicates that senior Colombian officials such as Finance Minister Mauricio Cardenas have been working in recent weeks and months on an overarching policy for bitcoin. Research from the US Law Library of Congress, corroborated by BitLegal, indicates this would be the first time the country has spoken publicly about digital currencies.
El Tiempo quoted Cardenas during a recent speech before the country’s national legislature in which he touted the strengths of the Colombian peso compared to digital currencies.
“Our currency is reliable, safe and generates no risk, while other forms of money [like Bitcoin] do not have the same level of support and guarantees,” he remarked.
A source connected to the Colombian Ministry of Finance told El Tiempo that the ban may very well focus on Bitcoin handling activities rather than outright purchase by consumers.
“With bitcoin no illegal recruitment, because ultimately what you are doing is buying a product. But when others are offered to collect money from others to invest in that currency, there is already an illegal recruitment, and this brings many risks.”
Colombia’s central bank has also reportedly weighed against bitcoin, saying that it is not a real currency and therefore receives no institutional backing.
The Colombian Ministry of Finance nor the Superintendency of Finance have responded to press inquiries.
Community reaction
Sebastian Serrano, CEO of Latin American-focused payment gateway BitPagos, suggested that the initial reports may not be as ominous as they sound.
Speaking to CoinDesk, he said:
“What we know so far is that the government is going to issue a warning similar to the one issued by the Central Bank of China. Most likely not making bitcoin illegal but just restricting financial institutions from trading Bitcoin in attempt to stop speculation over the currency and avoid the effects of a crash.”
Serrano added that while the news certainly isn’t encouraging for the local Colombian ecosystem, the extent of any damage won’t be known until the report is released on Tuesday.
Ulf Kuhn, founder of Chile-based telemarketing business Telemarketing Facil, indicated that he was unsure of what exactly to make of the report.
“First they say bitcoin and EVERY transaction is illegal. Then they say that offering investing services for bitcoins is illegal. Then they say they worked together with banks, but it’s just a financial department statement.”
Carlos Mesa, of local bitcoin advocacy group Bitcoin Colombia, took to reddit to discuss the news, suggesting more details would be forthcoming after he had an internal meeting with the SFC.
More central banks weigh in worldwide
While the Colombian government has not released its official document outlining the details of a ban, such a move would add to a growing chorus of governments and central banks worldwide that have moved against the Bitcoin.
Earlier this month, the Bank of Mexico banned domestic banks from handling bitcoin. The Mexican central bank cited its risks to the general public but did not directly outlaw consumer purchases of the cryptocurrency.
Other central banks, including those from Russia, Hungary, Cyprus and the Philippines, have issued warnings about bitcoin but have not moved to ban it, despite sometimes harsh rhetoric.
If as extensive as the report suggests, Colombia’s policies would be among the most restrictive enacted worldwide.
DirectPool Aims To Prevent 51% Attack with Community-First Mining Pool Approach
Tom Sharkey | Published on March 21, 2014 at 19:52 GMT | Companies, Mining
There’s no shortage of mining pools in the digital currency community, but a new mining pool named DirectPool has just launched with a notable mission to give back to the bitcoin community and redistribute the network’s computing power.
DirectPool bills itself as being a “next-generation mining pool”, with its focus on preventing any one existing pool from gaining more than 50% of the network’s hashing power. DirectPool hopes to work with miners and industry leaders alike to actively contribute to the stable growth of the bitcoin community.
Josh Harris, DirectPool’s Media Director, spoke with CoinDesk about the motivations for starting DirectPool, and explained that the idea was conceived as a response to mining pools like Ghash.io, which recently gained nearly 50% of the network’s hashpower:
“When we saw pools getting closer to 51% of the network power, we were really surprised to see the community reaction, and how miners voluntarily distributed themselves to other pools.
The problem was, there weren’t many reliable and efficient alternatives to the larger mining pools.”
Harris explained that DirectPool’s team of developers have been working diligently to program a stable and user-friendly mining pool that is open to the public, and following its launch earlier this week, registration is now enabled on DirectPool’s website.
A “community mining pool”
DirectPool is working closely with industry organizations like the Bitcoin Business Alliance (BBA) to actively engage with the entire bitcoin community, and the mining pool plans to help fund bitcoin startups and offer donations to charities through the generosity of its miners.
Said Harris:
“We haven’t seen any other mining pool that is dedicated to helping the bitcoin community. We will be pooling donations from our miners to donate to charities and help offer funds to startups in the crypto community through our partnership with the BBA.”
In addition to engaging with the entire digital currency community, Harris explained that DirectPool also wants its miners to interact with each other and ultimately help decide which charities receive donations or which startups get funded from the community donations.
Preventing a 51% attack
DirectPool was initially founded with the hope to further redistribute the relative network hashing power that is shared amongst the large mining pools like Ghash.io and BTC Guild, Harris said. A “51% attack” could theoretically allow an entity that gained more than 50% of bitcoin’s total network hashpower to double-spend bitcoins, reverse transactions and prevent block confirmations.
Harris told CoinDesk that while nobody knows for certain what the implications of a 51% attack would be, DirectPool hopes to prevent the situation from ever unfolding:
“We haven’t seen what could really happen if one pool amassed more than 50% of the computing power. Although it’s hypothetical, it’s unsettling to think what would happen if one of the major pools somehow went down, and where all of its miners would move to.
We wanted to create a mining pool that matches the services of the larger pools while helping to distribute the hashing power even more.”
A warm response
In the few days that DirectPool has been open to the public, Harris says that a respectable amount of miners have already registered, and that there have already been donations coming in from generous miners.
DirectPool plans to offer Litecoin mining in the next couple of weeks, and is currently set up for merge mining of Namecoin so that miners have options when receiving their rewards.
Tom Sharkey | Published on March 21, 2014 at 19:52 GMT | Companies, Mining
There’s no shortage of mining pools in the digital currency community, but a new mining pool named DirectPool has just launched with a notable mission to give back to the bitcoin community and redistribute the network’s computing power.
DirectPool bills itself as being a “next-generation mining pool”, with its focus on preventing any one existing pool from gaining more than 50% of the network’s hashing power. DirectPool hopes to work with miners and industry leaders alike to actively contribute to the stable growth of the bitcoin community.
Josh Harris, DirectPool’s Media Director, spoke with CoinDesk about the motivations for starting DirectPool, and explained that the idea was conceived as a response to mining pools like Ghash.io, which recently gained nearly 50% of the network’s hashpower:
“When we saw pools getting closer to 51% of the network power, we were really surprised to see the community reaction, and how miners voluntarily distributed themselves to other pools.
The problem was, there weren’t many reliable and efficient alternatives to the larger mining pools.”
Harris explained that DirectPool’s team of developers have been working diligently to program a stable and user-friendly mining pool that is open to the public, and following its launch earlier this week, registration is now enabled on DirectPool’s website.
A “community mining pool”
DirectPool is working closely with industry organizations like the Bitcoin Business Alliance (BBA) to actively engage with the entire bitcoin community, and the mining pool plans to help fund bitcoin startups and offer donations to charities through the generosity of its miners.
Said Harris:
“We haven’t seen any other mining pool that is dedicated to helping the bitcoin community. We will be pooling donations from our miners to donate to charities and help offer funds to startups in the crypto community through our partnership with the BBA.”
In addition to engaging with the entire digital currency community, Harris explained that DirectPool also wants its miners to interact with each other and ultimately help decide which charities receive donations or which startups get funded from the community donations.
Preventing a 51% attack
DirectPool was initially founded with the hope to further redistribute the relative network hashing power that is shared amongst the large mining pools like Ghash.io and BTC Guild, Harris said. A “51% attack” could theoretically allow an entity that gained more than 50% of bitcoin’s total network hashpower to double-spend bitcoins, reverse transactions and prevent block confirmations.
Harris told CoinDesk that while nobody knows for certain what the implications of a 51% attack would be, DirectPool hopes to prevent the situation from ever unfolding:
“We haven’t seen what could really happen if one pool amassed more than 50% of the computing power. Although it’s hypothetical, it’s unsettling to think what would happen if one of the major pools somehow went down, and where all of its miners would move to.
We wanted to create a mining pool that matches the services of the larger pools while helping to distribute the hashing power even more.”
A warm response
In the few days that DirectPool has been open to the public, Harris says that a respectable amount of miners have already registered, and that there have already been donations coming in from generous miners.
DirectPool plans to offer Litecoin mining in the next couple of weeks, and is currently set up for merge mining of Namecoin so that miners have options when receiving their rewards.
Roger Ver, Bobby Lee Top Speaker List for China’s Global Bitcoin Summit
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 18:56 GMT | Asia, Events, News
Global Bitcoin Summit (GBS) 2014, an event billed as China’s first global bitcoin conference, will be held from 10th-11th May in Beijing at the China National Convention Center.
Speakers for the inaugural event include noted bitcoin investor Roger Ver; BTC China CEO Bobby Lee (billed as Nicholls Yuan); co-founder of Fire Coins Network Li Lin; Canadian Bitcoin Alliance director Anthony di Iorio; Ethereum founder Charles Hoskinson; and OKCoin founder Xu Star.
Event organisers say the goal of GBS is to shed light on bitcoin’s future in China and to promote digital currency innovation in the Asian market and abroad.
The official invitation letter from Li Xiaolai, founder of event organizer BitFund.PE, explains:
“The Summit will be a consortium of prominent Bitcoin leaders, scholars, startups and businesses around the globe, and will also serve a stage where the world comes to witness the progress that China has made.”
The event is being produced by bitcoin-related private equity fund BitFund.PE and China’s largest commercial exhibition organiser UBM China.
BitFund.PE has provided funding to such notable bitcoin projects as BitShares, a decentralized cryptocurrency and derivatives trading system.
Itinerary
Screen Shot 2014-03-07 at 9.53.32 AMThe initial event announcement indicates the first day will feature a keynote address, panel discussions, an investment and cooperation workshop and a VIP banquet.
Day two will host content related to bitcoin applications and digital currency mining.
The official website lists a number of topics that will be discussed further at the conference, including trading platforms, distributed autonomous systems, application development and more.
Event organiser Hitters Xu told CoinDesk the event will include both Chinese-language and English-language speakers:
“[GBS] will open a window for both Chinese bitcoin fans and world bitcoin fans, updating them on the newest ideas and technologies in bitcoin field, [while letting the world] know what is really happening in China.”
Further information about topics can be gleaned from viewing the full list of event speakers here.
More to come
BitFund.PE said that while the event is scheduled for May, there is more work it needs to complete before the May run date. In particular, a finalized agenda has yet to be released.
More speakers are also expected to be added to the current lineup, which organisers estimate is “90% complete”.
Event tickets are now on sale, and those who register before 25th March will receive discounted admission.
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 18:56 GMT | Asia, Events, News
Global Bitcoin Summit (GBS) 2014, an event billed as China’s first global bitcoin conference, will be held from 10th-11th May in Beijing at the China National Convention Center.
Speakers for the inaugural event include noted bitcoin investor Roger Ver; BTC China CEO Bobby Lee (billed as Nicholls Yuan); co-founder of Fire Coins Network Li Lin; Canadian Bitcoin Alliance director Anthony di Iorio; Ethereum founder Charles Hoskinson; and OKCoin founder Xu Star.
Event organisers say the goal of GBS is to shed light on bitcoin’s future in China and to promote digital currency innovation in the Asian market and abroad.
The official invitation letter from Li Xiaolai, founder of event organizer BitFund.PE, explains:
“The Summit will be a consortium of prominent Bitcoin leaders, scholars, startups and businesses around the globe, and will also serve a stage where the world comes to witness the progress that China has made.”
The event is being produced by bitcoin-related private equity fund BitFund.PE and China’s largest commercial exhibition organiser UBM China.
BitFund.PE has provided funding to such notable bitcoin projects as BitShares, a decentralized cryptocurrency and derivatives trading system.
Itinerary
Screen Shot 2014-03-07 at 9.53.32 AMThe initial event announcement indicates the first day will feature a keynote address, panel discussions, an investment and cooperation workshop and a VIP banquet.
Day two will host content related to bitcoin applications and digital currency mining.
The official website lists a number of topics that will be discussed further at the conference, including trading platforms, distributed autonomous systems, application development and more.
Event organiser Hitters Xu told CoinDesk the event will include both Chinese-language and English-language speakers:
“[GBS] will open a window for both Chinese bitcoin fans and world bitcoin fans, updating them on the newest ideas and technologies in bitcoin field, [while letting the world] know what is really happening in China.”
Further information about topics can be gleaned from viewing the full list of event speakers here.
More to come
BitFund.PE said that while the event is scheduled for May, there is more work it needs to complete before the May run date. In particular, a finalized agenda has yet to be released.
More speakers are also expected to be added to the current lineup, which organisers estimate is “90% complete”.
Event tickets are now on sale, and those who register before 25th March will receive discounted admission.
Financial Faux Pas Highlight the Need for Decentralised Currencies
Nermin Hajdarbegovic | Published on March 21, 2014 at 18:03 GMT | Analysis, Europe, Regulation
The failure of Mt. Gox attracted a lot of media attention on the world of digital currencies; it quickly became the most popular argument used and abused by bitcoin detractors. Though much of the criticism wasn’t misplaced, the “we told you so” gloating was.
First of all, Mt. Gox is not and was not the future of bitcoin. To the contrary, it will go down as a good example of what not to do.
piggy bank
Its failure does not have much to do with any inherent weaknesses attributed to digital currencies. The company was mismanaged and it was clearly in over its head. It would have been run into the ground even if it was a traditional financial institution and it would not be the first time.
Banks issue non-performing loans, credit card companies get scammed, insurers get defrauded – all this happens on a regular basis. When any of them happen to be run by incompetent people, they go under.
In case the ripple effect of their collapse is too big for the economy to take, governments get involved – usually with heaps of taxpayer money. So why all the focus on bitcoin?
Your money is safe, unless the government wants it
“Money invested in banks, stocks, bonds or commodities is safer than money invested in speculative assets.” This is another argument used by bitcoin critics, and it usually happens to be true. However, bank deposits aren’t entirely safe.
Chancellor of the Exchequer George Osborne recently gave the HMRC the power to access private bank accounts to look for money that might be owed in taxes. The rule will only apply to Britons who have been asked to pay their taxes multiple times and who owe more than £1,000.
Debt collectors can seize money straight from the accounts, but they have to leave at least £5,000 in the targeted account.
While the move may surprise some Brits, many countries (including France and the US) have similar laws on the books and they routinely enforce them.
Civil rights advocates don’t like the idea, as they believe it is an encroachment on liberties and privacy. They also question the legality of such plans, as they effectively allow the executive branch to “raid” accounts and seize people’s money. They believe this is something for the judiciary to decide, as some tax debt could be disputed.
Richard Murphy, director of Tax Research UK, told the Huffington Post that the two issues need to be separated:
“One is about people not paying tax debt. Measures to help recover this are reasonable, including the power to take assets. The other is taking payment when the debt is disputed. That is unacceptable.”
Acceptable or not, the HMRC now has the power to do so. If the debt is disputed, the taxpayer will be able to appeal, but by then the money will probably be seized. Once it is seized, the taxpayer will have 14 days to contact tax authorities and arrange a payment plan, or the taxman will keep the money.
Tax havens aren’t what they used to be
There is a bit of a problem though. Tax dodgers tend to be aware of what they are doing and they go to great lengths to hide their money. This includes stashing it somewhere warm, with plenty of sunshine, in an offshore account. However, this is no longer as safe as it used to be.
A year ago the IMF agreed to help out Cyprus with a €10bn package, but in return it asked the government to do something that did not go down well with thousands of depositors.
The government was strong armed into imposing a one-time levy of 6.7% on deposits up to €100,000 and 9.9% on larger deposits.
“Why would anyone use digital currencies to dodge taxes, when it can clearly be done without them?”
That wasn’t the end of it. The Central Bank of Cyprus then went to impose a levy of up to 47.5% on uninsured deposits. Account holders were supposed to compensated by bank stock equivalent to the levied amount, but in reality there was not much interest in holding stocks in a basket case banking sector.
Still, the big depositors in Cyprus (mostly Russian nouveau riche) should consider themselves lucky. In the early nineties many banks in Eastern Europe collapsed, leaving depositors to pursue compensation from the government. Some got bonds years after the fact, others got nothing. Depositors in Argentina, Yugoslavia, Zimbabwe and many other countries were exposed to hyperinflation, which ate up their life savings in no time.
However, the Cyprus levy did not do much to deter tax dodgers looking for untouchable offshore accounts. The Tax Justice Network estimates $21 – $32tn of hidden and stolen wealth stashed largely tax havens around the world. The bitcoin market cap stands at about $7.2bn.
So why exactly would anyone use digital currencies to dodge taxes, when it can clearly be done without them?
Digital currencies are not the answer
In some circles, digital currencies are viewed as a way of keeping the government out of the whole process, but this view is based on ideology rather than fact.
We would like to claim otherwise, but that would be disingenuous. Ideology and economics don’t tend to mix well, much to the detriment of many totalitarian regimes and advocates of various utopian ideas.
For example, gold bugs came out of the woodwork following the 2008 financial crisis, but most of them have been silenced over the past year or two. The reason is simple: their predictions didn’t pan out and people who invested in stocks over the last couple of years are now much better off than those who mixed ideology with economics and invested in gold.
gold
Besides, if fear of big government is driving people to invest in gold or digital currencies, they might want to take a history lesson and read Roosevelt’s Executive Order 6102, which criminalized the possession of monetary gold by citizens and non-governmental institutions.
The Roosevelt administration had good reason to do so and it acted in the interests of the people, during the worst economic crisis of the 20th century. If a totalitarian government turns against its people, strings of digits that rely on electricity the internet to make any sense won’t help. A few cans of beans or any item that can be bartered would be more helpful than all the bitcoins out there.
Digital currencies should not be viewed as a hedge, nor are they a viable alternative to traditional long-term investments or even national currencies backed by central banks.
They can, however, complement national currencies, reduce transaction fees, make microtransactions possible and change the way content is monetized. It is their efficiency makes them interesting and potentially very useful. They should derive their value from their efficiency and their ability to save value rather than store it.
As for bad apples, it’s the government’s job to weed them out whether they run dodgy bitcoin exchanges or dodgy investment firms.
Nermin Hajdarbegovic is a freelance opinion and news writer for CoinDesk: his opinions do not necessarily reflect those of CoinDesk.
Nermin Hajdarbegovic | Published on March 21, 2014 at 18:03 GMT | Analysis, Europe, Regulation
The failure of Mt. Gox attracted a lot of media attention on the world of digital currencies; it quickly became the most popular argument used and abused by bitcoin detractors. Though much of the criticism wasn’t misplaced, the “we told you so” gloating was.
First of all, Mt. Gox is not and was not the future of bitcoin. To the contrary, it will go down as a good example of what not to do.
piggy bank
Its failure does not have much to do with any inherent weaknesses attributed to digital currencies. The company was mismanaged and it was clearly in over its head. It would have been run into the ground even if it was a traditional financial institution and it would not be the first time.
Banks issue non-performing loans, credit card companies get scammed, insurers get defrauded – all this happens on a regular basis. When any of them happen to be run by incompetent people, they go under.
In case the ripple effect of their collapse is too big for the economy to take, governments get involved – usually with heaps of taxpayer money. So why all the focus on bitcoin?
Your money is safe, unless the government wants it
“Money invested in banks, stocks, bonds or commodities is safer than money invested in speculative assets.” This is another argument used by bitcoin critics, and it usually happens to be true. However, bank deposits aren’t entirely safe.
Chancellor of the Exchequer George Osborne recently gave the HMRC the power to access private bank accounts to look for money that might be owed in taxes. The rule will only apply to Britons who have been asked to pay their taxes multiple times and who owe more than £1,000.
Debt collectors can seize money straight from the accounts, but they have to leave at least £5,000 in the targeted account.
While the move may surprise some Brits, many countries (including France and the US) have similar laws on the books and they routinely enforce them.
Civil rights advocates don’t like the idea, as they believe it is an encroachment on liberties and privacy. They also question the legality of such plans, as they effectively allow the executive branch to “raid” accounts and seize people’s money. They believe this is something for the judiciary to decide, as some tax debt could be disputed.
Richard Murphy, director of Tax Research UK, told the Huffington Post that the two issues need to be separated:
“One is about people not paying tax debt. Measures to help recover this are reasonable, including the power to take assets. The other is taking payment when the debt is disputed. That is unacceptable.”
Acceptable or not, the HMRC now has the power to do so. If the debt is disputed, the taxpayer will be able to appeal, but by then the money will probably be seized. Once it is seized, the taxpayer will have 14 days to contact tax authorities and arrange a payment plan, or the taxman will keep the money.
Tax havens aren’t what they used to be
There is a bit of a problem though. Tax dodgers tend to be aware of what they are doing and they go to great lengths to hide their money. This includes stashing it somewhere warm, with plenty of sunshine, in an offshore account. However, this is no longer as safe as it used to be.
A year ago the IMF agreed to help out Cyprus with a €10bn package, but in return it asked the government to do something that did not go down well with thousands of depositors.
The government was strong armed into imposing a one-time levy of 6.7% on deposits up to €100,000 and 9.9% on larger deposits.
“Why would anyone use digital currencies to dodge taxes, when it can clearly be done without them?”
That wasn’t the end of it. The Central Bank of Cyprus then went to impose a levy of up to 47.5% on uninsured deposits. Account holders were supposed to compensated by bank stock equivalent to the levied amount, but in reality there was not much interest in holding stocks in a basket case banking sector.
Still, the big depositors in Cyprus (mostly Russian nouveau riche) should consider themselves lucky. In the early nineties many banks in Eastern Europe collapsed, leaving depositors to pursue compensation from the government. Some got bonds years after the fact, others got nothing. Depositors in Argentina, Yugoslavia, Zimbabwe and many other countries were exposed to hyperinflation, which ate up their life savings in no time.
However, the Cyprus levy did not do much to deter tax dodgers looking for untouchable offshore accounts. The Tax Justice Network estimates $21 – $32tn of hidden and stolen wealth stashed largely tax havens around the world. The bitcoin market cap stands at about $7.2bn.
So why exactly would anyone use digital currencies to dodge taxes, when it can clearly be done without them?
Digital currencies are not the answer
In some circles, digital currencies are viewed as a way of keeping the government out of the whole process, but this view is based on ideology rather than fact.
We would like to claim otherwise, but that would be disingenuous. Ideology and economics don’t tend to mix well, much to the detriment of many totalitarian regimes and advocates of various utopian ideas.
For example, gold bugs came out of the woodwork following the 2008 financial crisis, but most of them have been silenced over the past year or two. The reason is simple: their predictions didn’t pan out and people who invested in stocks over the last couple of years are now much better off than those who mixed ideology with economics and invested in gold.
gold
Besides, if fear of big government is driving people to invest in gold or digital currencies, they might want to take a history lesson and read Roosevelt’s Executive Order 6102, which criminalized the possession of monetary gold by citizens and non-governmental institutions.
The Roosevelt administration had good reason to do so and it acted in the interests of the people, during the worst economic crisis of the 20th century. If a totalitarian government turns against its people, strings of digits that rely on electricity the internet to make any sense won’t help. A few cans of beans or any item that can be bartered would be more helpful than all the bitcoins out there.
Digital currencies should not be viewed as a hedge, nor are they a viable alternative to traditional long-term investments or even national currencies backed by central banks.
They can, however, complement national currencies, reduce transaction fees, make microtransactions possible and change the way content is monetized. It is their efficiency makes them interesting and potentially very useful. They should derive their value from their efficiency and their ability to save value rather than store it.
As for bad apples, it’s the government’s job to weed them out whether they run dodgy bitcoin exchanges or dodgy investment firms.
Nermin Hajdarbegovic is a freelance opinion and news writer for CoinDesk: his opinions do not necessarily reflect those of CoinDesk.
BTC Price Declines Following False Report of Bitcoin Ban in China
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 15:50 GMT | Asia, News, Regulation
A false report published on a financial news feed run by Chinese microblogging site Sina Weibo was responsible for the sharp decline in bitcoin prices across China’s biggest exchanges today (21st March).
At 10:22 am GMT, Sina’s financial live feed issued a now-retracted news report indicating that China’s central bank, the People’s Bank of China (PBOC), would move to halt all bitcoin transactions in the country effective 15th April.
If true, the news would have interrupted a period of improved relations between the burgeoning bitcoin ecosystem and the nation’s lawmakers, but coincided with the PBOC’s temporary ban on QR codes issued last week.
Read the initial news statement from Sina:
“It is rumored that on March 18th the PBOC had issued a notice calling for all bitcoin transactions to be halted by April 15th. As of today the PBOC has not confirmed nor denied the statement.”
The story was later retracted by the news site following clarification from Chinese regulators, in a release issued more than an hour later at 11:48 GMT on 21st March.
Read a translation of the updated post:
“Regarding the PBOC statement issued on 3/18 requesting all bitcoin transactions to be halted before 4/15, those close to the regulatory body told Sina Finance on Friday, the PBOC did issue a document, but it was not to ban/halt bitcoin transactions, instead to strengthen regulatory oversight of bitcoin transactions, circulation and redemptions.”
The PBOC later took to the Weibo platform and Twitter to clarify the news.
“The report by certain media that ‘PBOC has issued a document as of 3/18, requesting all bitcoin transactions be halted by 4/15′ is in error. The attitude of the PBOC towards bitcoin has been clearly stated by the [5th December] document issued by the PBOC and five other agencies.”
The company acknowledged the damage its report caused, noting that it “quickly caused panic in the bitcoin community”, and that “bitcoin’s domestic prices [were] likely to fall significantly” as a result of its error.
CoinDesk’s Bitcoin Price Index indicates that the price of bitcoin was down 2%, or roughly $12 on the news, though prices were impacted more severely on China-based bitcoin exchanges.
Price decline
Sina indicated that its report caused the price of bitcoin to fall 5%, dropping from 3,691 yuan ($592.99) to 3,400 yuan ($546.24), though a closer look at bitcoin price data across the major China-based exchanges shows the damage was far worse for certain investors.
Data from Bitcoincharts suggests the price of bitcoin on BTC China hit a low of 3,301 yuan at 11:00am GMT, dropping from 3,568 in just 30 minutes.
Screen Shot 2014-03-21 at 10.33.50 AM
BitcoinWisdom shows that China-based exchange OKCoin experienced a more aggressive fall in price, crashing from around 3,600 yuan to 3,100 and below from 10:30am GMT to 11:00am GMT.
Screen Shot 2014-03-21 at 10.40.08 AM
BitcoinWisdom’s Huobi data shows a similar decline on this exchange, from roughly 3,600 yuan to a low of approximately 3,200 yuan within the same time window.
Screen Shot 2014-03-21 at 10.40.40 AM
Community reaction
Community members reactions ranged from begrudgingly bemused to irate, with some reddit users falling into the former camp given the fact that China’s stance on digital currencies has seemingly changed frequently over the last few months.
Others suggested that the digital currency’s susceptibility to such negative news is a weakness that will hinder adoption.
Screen Shot 2014-03-21 at 11.12.37 AM
Reaction in China’s bitcoin community leaned more toward outrage at the news organization’s seemingly negligent reporting.
VC investor and CoinDesk contributor Rui Ma took to Twitter to clarify the news, and voice her frustrations about the actions of the social media giant.
At press time, the price the price of bitcoin on BTC China had recovered to a low of 3,519 ($565.36 at press time), though this was down from an opening low of 3,654 yuan, suggesting that the damage from the report was still impacting the market.
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 15:50 GMT | Asia, News, Regulation
A false report published on a financial news feed run by Chinese microblogging site Sina Weibo was responsible for the sharp decline in bitcoin prices across China’s biggest exchanges today (21st March).
At 10:22 am GMT, Sina’s financial live feed issued a now-retracted news report indicating that China’s central bank, the People’s Bank of China (PBOC), would move to halt all bitcoin transactions in the country effective 15th April.
If true, the news would have interrupted a period of improved relations between the burgeoning bitcoin ecosystem and the nation’s lawmakers, but coincided with the PBOC’s temporary ban on QR codes issued last week.
Read the initial news statement from Sina:
“It is rumored that on March 18th the PBOC had issued a notice calling for all bitcoin transactions to be halted by April 15th. As of today the PBOC has not confirmed nor denied the statement.”
The story was later retracted by the news site following clarification from Chinese regulators, in a release issued more than an hour later at 11:48 GMT on 21st March.
Read a translation of the updated post:
“Regarding the PBOC statement issued on 3/18 requesting all bitcoin transactions to be halted before 4/15, those close to the regulatory body told Sina Finance on Friday, the PBOC did issue a document, but it was not to ban/halt bitcoin transactions, instead to strengthen regulatory oversight of bitcoin transactions, circulation and redemptions.”
The PBOC later took to the Weibo platform and Twitter to clarify the news.
“The report by certain media that ‘PBOC has issued a document as of 3/18, requesting all bitcoin transactions be halted by 4/15′ is in error. The attitude of the PBOC towards bitcoin has been clearly stated by the [5th December] document issued by the PBOC and five other agencies.”
The company acknowledged the damage its report caused, noting that it “quickly caused panic in the bitcoin community”, and that “bitcoin’s domestic prices [were] likely to fall significantly” as a result of its error.
CoinDesk’s Bitcoin Price Index indicates that the price of bitcoin was down 2%, or roughly $12 on the news, though prices were impacted more severely on China-based bitcoin exchanges.
Price decline
Sina indicated that its report caused the price of bitcoin to fall 5%, dropping from 3,691 yuan ($592.99) to 3,400 yuan ($546.24), though a closer look at bitcoin price data across the major China-based exchanges shows the damage was far worse for certain investors.
Data from Bitcoincharts suggests the price of bitcoin on BTC China hit a low of 3,301 yuan at 11:00am GMT, dropping from 3,568 in just 30 minutes.
Screen Shot 2014-03-21 at 10.33.50 AM
BitcoinWisdom shows that China-based exchange OKCoin experienced a more aggressive fall in price, crashing from around 3,600 yuan to 3,100 and below from 10:30am GMT to 11:00am GMT.
Screen Shot 2014-03-21 at 10.40.08 AM
BitcoinWisdom’s Huobi data shows a similar decline on this exchange, from roughly 3,600 yuan to a low of approximately 3,200 yuan within the same time window.
Screen Shot 2014-03-21 at 10.40.40 AM
Community reaction
Community members reactions ranged from begrudgingly bemused to irate, with some reddit users falling into the former camp given the fact that China’s stance on digital currencies has seemingly changed frequently over the last few months.
Others suggested that the digital currency’s susceptibility to such negative news is a weakness that will hinder adoption.
Screen Shot 2014-03-21 at 11.12.37 AM
Reaction in China’s bitcoin community leaned more toward outrage at the news organization’s seemingly negligent reporting.
VC investor and CoinDesk contributor Rui Ma took to Twitter to clarify the news, and voice her frustrations about the actions of the social media giant.
At press time, the price the price of bitcoin on BTC China had recovered to a low of 3,519 ($565.36 at press time), though this was down from an opening low of 3,654 yuan, suggesting that the damage from the report was still impacting the market.
Mt. Gox Confirms Discovery of 200,000 BTC in ‘Old-Format’ Wallet
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 13:49 GMT | Exchanges, Law, Mt. Gox, News
Embattled Japan-based bitcoin exchange Mt. Gox has released a new press release confirming that it found an old-format bitcoin wallet on 7th March containing 199,999.99 BTC ($113.9m at press time).
Mt. Gox further confirmed it reported the finding to its bankruptcy counsels as required by its civil rehabilitation proceedings.
The release states:
“A hearing took place on March 8 where a detailed explanation of the situation was made to counsels. Immediately on Monday (March 10), counsels reported the existence of the 200,000 BTC to the Court and the Supervisor.”
The exchange revealed it now has a total amount of 202,000 BTC, a figure which includes the 200,000 BTC recently found, as well as an additional 2,000 BTC ($1.1m) in funds.
Mt. Gox confirms money movement
The release, penned by CEO Mark Karpeles, indicated that the wallets were moved from online wallets to offline storage from 14th March to 15th March. Further, he confirmed that the courts were aware of this activity.
“These bitcoin movements (including the change in the manner in which these bitcoins were stored) has been reported to the Court and the Supervisor by counsels.”
The confirmation would suggest reports that Mt. Gox funds have been moving through the blockchain were valid, though the dates of the movement do not coincide.
Missing bitcoin figures revised
Mt. Gox indicated that with the finding, the amount of bitcoins it reported as lost or stolen needs to be revised, suggesting that this wallet, and the funds therein, were factored into the original estimate.
Said the statement:
“Taking into account the existence of the 200,000 BTC, the total number of bitcoins which have disappeared is therefore estimated to be approximately 650,000 BTC.”
Pete Rizzo (@pete_rizzo_) | Published on March 21, 2014 at 13:49 GMT | Exchanges, Law, Mt. Gox, News
Embattled Japan-based bitcoin exchange Mt. Gox has released a new press release confirming that it found an old-format bitcoin wallet on 7th March containing 199,999.99 BTC ($113.9m at press time).
Mt. Gox further confirmed it reported the finding to its bankruptcy counsels as required by its civil rehabilitation proceedings.
The release states:
“A hearing took place on March 8 where a detailed explanation of the situation was made to counsels. Immediately on Monday (March 10), counsels reported the existence of the 200,000 BTC to the Court and the Supervisor.”
The exchange revealed it now has a total amount of 202,000 BTC, a figure which includes the 200,000 BTC recently found, as well as an additional 2,000 BTC ($1.1m) in funds.
Mt. Gox confirms money movement
The release, penned by CEO Mark Karpeles, indicated that the wallets were moved from online wallets to offline storage from 14th March to 15th March. Further, he confirmed that the courts were aware of this activity.
“These bitcoin movements (including the change in the manner in which these bitcoins were stored) has been reported to the Court and the Supervisor by counsels.”
The confirmation would suggest reports that Mt. Gox funds have been moving through the blockchain were valid, though the dates of the movement do not coincide.
Missing bitcoin figures revised
Mt. Gox indicated that with the finding, the amount of bitcoins it reported as lost or stolen needs to be revised, suggesting that this wallet, and the funds therein, were factored into the original estimate.
Said the statement:
“Taking into account the existence of the 200,000 BTC, the total number of bitcoins which have disappeared is therefore estimated to be approximately 650,000 BTC.”
Well then this is a good idea I wish you good luck!
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