Litecoin Tops $20 As Traders Await Addition to China’s Huobi Exchange
Pete Rizzo (@pete_rizzo_) | Published on March 19, 2014 at 07:43 GMT | Altcoins, Litecoin, News, Prices
The price of litecoin surged across major exchanges in anticipation of Huobi, one of the largest China-based digital currency exchanges, officially adding support for litecoin trading today.
The exchange added to the anticipation after announcing the news last week and adding a ‘moon landing’ countdown clock to its site:
Huobi_moon
As of press time, the price of litecoin on exchanges BTC-e and Bitfinex had hit a high of $20.25 and $20.33, respectively, before dropping to $19.35 and $19.39. These figures were up from opening prices of $17.49 and $17.50, according to data from BitcoinWisdom. Against bitcoin, the litecoin price also hit highs of 0.033 BTC earlier in the day before falling back to 0.030 BTC, still far higher than recent prices and yesterday’s 0.028 BTC.
The news is particularly welcome for the litecoin community, as litecoin prices had remained down substantially from a peak of $48 observed last November, the time when many traders began to turn to litecoin as a long-term investment option that could one day pay bitcoin-sized dividends.
News spread quickly about litecoin’s potential beginning in early November, and its market cap quickly passed the $100m and $200m milestones within days amid a swift boom in the currency’s popularity.
However, litecoin has more recently seen a decline in value to the low teens following a string of bad bitcoin news.
Litecoin’s long stagnation
The day’s excitement was particular welcome for the community given that it has watched as litecoin, once the assumed frontrunner for the title of number two digital currency, has faced threats from ascendant competitors dogecoin and auroracoin, the latter which recently passed litecoin in market cap before retreating to fourth place.
Litecoin’s decline in value also coincided with continued setbacks regarding its addition to Mt. Gox. Given the exchange’s then top-tier status, this was long viewed as a potential benchmark for litecoin, though plans have been shelved indefinitely in the wake of the Japan-based exchange’s bankruptcy.
Further, in recent months, critics of community began to question whether litecoin provided any new innovations to digital currency, even while supporters maintained that litecoin could persist simply as a reliable, lower-cost alternative to bitcoin.
New momentum
Due in part to this long lull, launch expectations were high on the litecoin thread throughout the day, with one user even creating a dedicated countdown clock for interested litecoin fans and traders.
Litecoin has gained new movement in recent weeks as China-based exchanges have moved quickly to add the currency. Though Huobi was rumored to be working on adding litecoin since February, it was not the exchange that triggered the recent rise. Rather, it was BTC China that added the digital currency first on 4th March, introducing 0% commission on trading.
By 9 pm GMT, the price of litecoin on BTC-e and Bitfinex rose to $19.70 and $19.80, respectively, in anticipation.
Still, even with the additions, a portion of investors may simply be using the price increase to cut losses and break with the digital currency.
As such, the true test of whether it retains momentum will likely be seen in the coming days and weeks.
Topic: BITCOIN NEWS EVRYDAY! From multiple sources. - page 9. (Read 51272 times)
CoinEX.pw: We Were Hacked, But Will Cover All Losses
Emily Spaven (@emilyspaven) | Published on March 19, 2014 at 11:36 GMT | Companies, Crime, Exchanges, News
CoinEX.pw has confirmed it recently suffered a hack resulting in the theft of all the bitcoins in its possession.
The digital currency exchange has assured customers that it is going to cover the losses out of its own pocket.
In a post on the Bitcoin Talk forum, a CoinEX.pw representative under the username ‘erundook’ said:
“Long story short: yes, our wallet server got hacked and all funds were withdrawn.”
He also asked users to keep calm and asserted the company’s operators are not “doing a runner”.
Erundook (real name Vitaly A. Sorokin) mentioned that the company has suffered similar problems in the past and, in those instances, it covered the losses.
Of the recent hack, the company spokesperson said: “The only way I can see to restore this is to sell more shares at cryptostocks to cover the losses *and to hire a professional security audit team to prevent this from happening again*. Long story short, we’re covering this from our own pockets again.”
On 16th March, CoinEX.pw indicated on Twitter that it was facing problems.
However, the company did not issue any further updates until yesterday evening.
Concerned customers noted that the exchange’s co-founder (erundook) had deleted his personal Twitter profile and his Gist page on Github, which detailed CoinEX.pw’s API documentation.
Erundook suggested he did so because he was scared of the response he would get from users. The response from those on Bitcoin Talk has been largely positive, thanking erundook for the update, but criticising him for taking so long to deliver it.
Some have not been so understanding, though. Forum member Albinito said:
“I really wonder whats wrong with some people. Imagine running a jewelry store or money exchange without insurance, beeing robbed several times, waiting for the final blow before thinking about security. There are no words to describe this way of working.
It is quite obvious that you are not capable of running a business like this. No one should support this and give the owner new confidence over and over. This wont work.”
Emily Spaven (@emilyspaven) | Published on March 19, 2014 at 11:36 GMT | Companies, Crime, Exchanges, News
CoinEX.pw has confirmed it recently suffered a hack resulting in the theft of all the bitcoins in its possession.
The digital currency exchange has assured customers that it is going to cover the losses out of its own pocket.
In a post on the Bitcoin Talk forum, a CoinEX.pw representative under the username ‘erundook’ said:
“Long story short: yes, our wallet server got hacked and all funds were withdrawn.”
He also asked users to keep calm and asserted the company’s operators are not “doing a runner”.
Erundook (real name Vitaly A. Sorokin) mentioned that the company has suffered similar problems in the past and, in those instances, it covered the losses.
Of the recent hack, the company spokesperson said: “The only way I can see to restore this is to sell more shares at cryptostocks to cover the losses *and to hire a professional security audit team to prevent this from happening again*. Long story short, we’re covering this from our own pockets again.”
On 16th March, CoinEX.pw indicated on Twitter that it was facing problems.
However, the company did not issue any further updates until yesterday evening.
Concerned customers noted that the exchange’s co-founder (erundook) had deleted his personal Twitter profile and his Gist page on Github, which detailed CoinEX.pw’s API documentation.
Erundook suggested he did so because he was scared of the response he would get from users. The response from those on Bitcoin Talk has been largely positive, thanking erundook for the update, but criticising him for taking so long to deliver it.
Some have not been so understanding, though. Forum member Albinito said:
“I really wonder whats wrong with some people. Imagine running a jewelry store or money exchange without insurance, beeing robbed several times, waiting for the final blow before thinking about security. There are no words to describe this way of working.
It is quite obvious that you are not capable of running a business like this. No one should support this and give the owner new confidence over and over. This wont work.”
Is Bitcoin a Digital Currency or a Virtual One?
Danny Bradbury (@dannybradbury) | Published on March 19, 2014 at 06:02 GMT | Analysis
Is bitcoin a virtual currency, a digital currency, or both? And why does it matter?
In press reports, it’s often referred to as both. The Bangkok Post today refers to “virtual currencies including the bitcoin”, while the Toronto Star describes the collapse of a bitcoin exchange after hackers stole its “digital currency”. But digital and virtual currencies are two different things, with different behaviours.
It’s more than a semantic distinction. It’s a discussion of how a form of money functions.
If we replace the word ‘currency’ with ‘economy’, then the distinction may be clearer. When we hear ‘digital economy’, then we generally think of money whizzing its way electronically around the world, and being used in real life interactions. If we say ‘virtual economy’, then the first thing that many of us will think of is Second Life, EVE Online, or World of Warcraft.
Perhaps that’s why Peter Earle divides it into cryptocurrencies vs. ‘simulated’ or ‘game’ currencies. Earle is the chief economist at Humint, a marketing agency that is planning to launch altcoin services for brands, and also handles economies for multiplayer online games.
“The main difference is that the latter are typically limited to use within a bounded, specified economic system,” he says.
Virtual currencies may have value against real-world currency, but that doesn’t necessarily make them easily exchangeable.
“They tend to be subject to one-way flows: real-world money is converted into simulated/game currencies, but not back out,” says Earle. “This is because game/simulated currencies are essentially goods, and not an actual medium of exchange.”
Gold in World of Warcraft is generally exchanged mostly within the game.That isn’t to say that it doesn’t get traded with other currencies through third-party exchanges, but that isn’t its purpose. Instead, oils the wheels for everything else that happens in the game, and that is its sole purpose. The same goes for Eve Online, which uses the ISK as its unit of exchange, or Second Life, which uses the Linden.
What currency is used for matters
There’s another key difference between in-game virtual currency, and a digital currency used extensively outside the boundaries of a virtual world: their usage. In online game worlds, the issuers of the currency are created for a specific purpose.
Charles Hoskinson, cryptographer and co-founder of the Ethereum cryptocurrency framework, describes virtual currencies like these as “tokens”.
“A central entity issues the tokens and then they’re used for specific contexts. They can appreciate real-world value though. So WoW and Eve Online ISK do have a market price,” he says. “This is why people in China spend days earning them.”
They do this via a process known as gold farming, where banks of player-workers manually play games to accrue gold or other in-game currencies. This can then be exchanged for fiat currency: if people don’t want to spend time in the game earning their fortune, then they can buy their way in. But that’s a long way from making the currency properly and systematicallly exchangeable.
“Real-world money is converted into simulated/game currencies, but not back out.”
These behaviours extend beyond mere in-game currencies, though, argues Wences Caseres, who founded mobile payments network Lemon, and who just launched a mobile wallet called Xapo. There is another type of asset with those characteristics, that is used in the real world: loyalty points. Like in-game currencies, these are issued by a central body.
“Virtual currencies are owned and controlled by a counterparty (Facebook credits, American Airlines miles, American Express Points, etc) and you have to trust that counterparty since it is up to them to set the value and redemption rules,” Casares says. “Digital currencies on the other hand are designed in a way in which, just like with gold, you do not need to trust anyone.”
What we’ve been describing here are what Hoskinson refers to as three core characteristics of money. The first, exchangeability, involves the ability to switch something for a different currency. The second is the ability to act as a store of value, meaning that an asset will more or less hold its value over time without suffering from massive fluctuations. The third is to be a unit of account (usable widely, rather than to buy virtually-drafted broadswords and breastplates).
Virtual currencies, as used in games, exhibit few of these characteristics, except maybe the ability to hold value. But what about bitcoin?
So what should we call bitcoin?
Bitcoin is exchangeable, and it isn’t used just to keep a game or a loyalty points system running. So does that make it a digital currency, rather than a virtual one? CoinDesk generally describes it as such, but Hoskinson doesn’t agree. In fact, he doesn’t think it’s a currency at all.
It is also working its way towards becoming a unit of account, in which it is used to price goods and services, and doesn’t need to be referenced against anything else for its value.
This is the holy grail for a currency: if you can live your life using it, without worrying about having to transfer it to any other form of exchange, then you know it’s arrived. “Bitcoin is getting there, with about 15,000 products and services available, maybe more,” Hoskinson says.
It also needs to be a store of value. so that value can be deposited in it, and then retrieved at a later date, while still having held that value, or at least decayed in value at a predictable rate. Bitcoin’s suitability here is open for debate.
Although many advocates talk up its long-term value, bitcoin has jumped and plunged in value at various points over the last year. You wouldn’t want to store your life savings in it today, and even unit trust and ETF managers are saying that it isn’t yet a vehicle for retail investment.
“We want it to be predictable, because that gives you the ability to issue credit. Which is one of the most important things in an economy,” says Hoskinson. “It behaves much more like a digital commodity, or a tech stock.”
That’s certainly how some are classifying it. Finland recently decided that it was a commodity, and the Bank of England thinks that it looks rather similar to one, too. And Goldman Sachs doesn’t think it’s a currency either.
This makes the case – at least for the time being – for cryptocurrencies to be in a class of their own – neither digital currencies, nor virtual. Once they strongly satisfy those three underlying standards for money, they could be technically considered currencies. The ‘crypto’ would simply be a subcategory.
So, technically speaking, bitcoin could be described as a cryptocurrency. Or a digital currency in waiting. But for now, we’ll use ‘cryptocurrency’ and ‘digital currency’ interchangeably at CoinDesk. That’s easier to type than ‘crypto-proto-digital currency/commodity’.
Danny Bradbury (@dannybradbury) | Published on March 19, 2014 at 06:02 GMT | Analysis
Is bitcoin a virtual currency, a digital currency, or both? And why does it matter?
In press reports, it’s often referred to as both. The Bangkok Post today refers to “virtual currencies including the bitcoin”, while the Toronto Star describes the collapse of a bitcoin exchange after hackers stole its “digital currency”. But digital and virtual currencies are two different things, with different behaviours.
It’s more than a semantic distinction. It’s a discussion of how a form of money functions.
If we replace the word ‘currency’ with ‘economy’, then the distinction may be clearer. When we hear ‘digital economy’, then we generally think of money whizzing its way electronically around the world, and being used in real life interactions. If we say ‘virtual economy’, then the first thing that many of us will think of is Second Life, EVE Online, or World of Warcraft.
Perhaps that’s why Peter Earle divides it into cryptocurrencies vs. ‘simulated’ or ‘game’ currencies. Earle is the chief economist at Humint, a marketing agency that is planning to launch altcoin services for brands, and also handles economies for multiplayer online games.
“The main difference is that the latter are typically limited to use within a bounded, specified economic system,” he says.
Virtual currencies may have value against real-world currency, but that doesn’t necessarily make them easily exchangeable.
“They tend to be subject to one-way flows: real-world money is converted into simulated/game currencies, but not back out,” says Earle. “This is because game/simulated currencies are essentially goods, and not an actual medium of exchange.”
Gold in World of Warcraft is generally exchanged mostly within the game.That isn’t to say that it doesn’t get traded with other currencies through third-party exchanges, but that isn’t its purpose. Instead, oils the wheels for everything else that happens in the game, and that is its sole purpose. The same goes for Eve Online, which uses the ISK as its unit of exchange, or Second Life, which uses the Linden.
What currency is used for matters
There’s another key difference between in-game virtual currency, and a digital currency used extensively outside the boundaries of a virtual world: their usage. In online game worlds, the issuers of the currency are created for a specific purpose.
Charles Hoskinson, cryptographer and co-founder of the Ethereum cryptocurrency framework, describes virtual currencies like these as “tokens”.
“A central entity issues the tokens and then they’re used for specific contexts. They can appreciate real-world value though. So WoW and Eve Online ISK do have a market price,” he says. “This is why people in China spend days earning them.”
They do this via a process known as gold farming, where banks of player-workers manually play games to accrue gold or other in-game currencies. This can then be exchanged for fiat currency: if people don’t want to spend time in the game earning their fortune, then they can buy their way in. But that’s a long way from making the currency properly and systematicallly exchangeable.
“Real-world money is converted into simulated/game currencies, but not back out.”
These behaviours extend beyond mere in-game currencies, though, argues Wences Caseres, who founded mobile payments network Lemon, and who just launched a mobile wallet called Xapo. There is another type of asset with those characteristics, that is used in the real world: loyalty points. Like in-game currencies, these are issued by a central body.
“Virtual currencies are owned and controlled by a counterparty (Facebook credits, American Airlines miles, American Express Points, etc) and you have to trust that counterparty since it is up to them to set the value and redemption rules,” Casares says. “Digital currencies on the other hand are designed in a way in which, just like with gold, you do not need to trust anyone.”
What we’ve been describing here are what Hoskinson refers to as three core characteristics of money. The first, exchangeability, involves the ability to switch something for a different currency. The second is the ability to act as a store of value, meaning that an asset will more or less hold its value over time without suffering from massive fluctuations. The third is to be a unit of account (usable widely, rather than to buy virtually-drafted broadswords and breastplates).
Virtual currencies, as used in games, exhibit few of these characteristics, except maybe the ability to hold value. But what about bitcoin?
So what should we call bitcoin?
Bitcoin is exchangeable, and it isn’t used just to keep a game or a loyalty points system running. So does that make it a digital currency, rather than a virtual one? CoinDesk generally describes it as such, but Hoskinson doesn’t agree. In fact, he doesn’t think it’s a currency at all.
It is also working its way towards becoming a unit of account, in which it is used to price goods and services, and doesn’t need to be referenced against anything else for its value.
This is the holy grail for a currency: if you can live your life using it, without worrying about having to transfer it to any other form of exchange, then you know it’s arrived. “Bitcoin is getting there, with about 15,000 products and services available, maybe more,” Hoskinson says.
It also needs to be a store of value. so that value can be deposited in it, and then retrieved at a later date, while still having held that value, or at least decayed in value at a predictable rate. Bitcoin’s suitability here is open for debate.
Although many advocates talk up its long-term value, bitcoin has jumped and plunged in value at various points over the last year. You wouldn’t want to store your life savings in it today, and even unit trust and ETF managers are saying that it isn’t yet a vehicle for retail investment.
“We want it to be predictable, because that gives you the ability to issue credit. Which is one of the most important things in an economy,” says Hoskinson. “It behaves much more like a digital commodity, or a tech stock.”
That’s certainly how some are classifying it. Finland recently decided that it was a commodity, and the Bank of England thinks that it looks rather similar to one, too. And Goldman Sachs doesn’t think it’s a currency either.
This makes the case – at least for the time being – for cryptocurrencies to be in a class of their own – neither digital currencies, nor virtual. Once they strongly satisfy those three underlying standards for money, they could be technically considered currencies. The ‘crypto’ would simply be a subcategory.
So, technically speaking, bitcoin could be described as a cryptocurrency. Or a digital currency in waiting. But for now, we’ll use ‘cryptocurrency’ and ‘digital currency’ interchangeably at CoinDesk. That’s easier to type than ‘crypto-proto-digital currency/commodity’.
Western Union CEO: ‘First-World’ Bitcoin Not Ready for Global Use
Pete Rizzo (@pete_rizzo_) | Published on March 18, 2014 at 19:54 GMT | Analysis, News
Western Union CEO Hikmet Ersek offered a strong criticism of bitcoin and other virtual currencies today, calling the payment methods “first-world in nature” and suggesting they do not currently have practical uses for consumers in underdeveloped nations.
The statements echo previous concerns from the Colorado-based global remittance giant issued last year, in which it first stated digital currencies were not yet ready for cross-border, international money transfer.
In the post, the first of what will be a three-part series for Fortune, Ersek offered his take on why bitcoin and other digital currencies may struggle to take hold in the remittance market, choosing to focus on the issue of whether recipients would be able to use the funds.
Said Ersek:
“Up to this point, the digital currency conversation has not addressed the practicalities on the receive-side.”
Ersek indicated that while bitcoin has made a more practical use case as a payments vehicle in the developed world, adoption will need to become more widespread there before nations with less tech-savvy consumers are encouraged to develop an infrastructure.
Unanswered questions
Ersek also listed three major questions he believes the digital currency community has yet to answer when it comes to the technology’s use in cross-border payments.
These included such concerns as whether persons receiving digital currency outside first-world countries would be able to use it, whether small or medium-sized enterprise recipients in these areas would be equipped to spend or transfer it and whether these consumers and businesses would not prefer another option even if bitcoin was usable for this purpose.
Ultimately, Ersek indicated that the industry’s ability to enact and follow consumer protection best practices will be the deciding factor.
“Without continued enhancements to ensure consumer protection, which ultimately translates to increased reliability, I believe consumers and businesses will continue to gravitate to cash, bank accounts and cards.”
Untapped potential
Despite these issues, Ersek suggested that he is watching virtual currency developments with “great interest”, a fact that is evidenced by his analysis of the topic as part of a larger work.
The benefits of digital currencies clearing these hurdles, Ersek suggests, make them worthy of consideration. In particular, he noted their ability to potentially transform business models and promote financial inclusion
Still, even with consumer adoption questions resolved, Ersek suggested regulation and compliance would likely remain significant hurdles, even to their use in first-world nations, potentially hinting at topics for future articles to come.
Pete Rizzo (@pete_rizzo_) | Published on March 18, 2014 at 19:54 GMT | Analysis, News
Western Union CEO Hikmet Ersek offered a strong criticism of bitcoin and other virtual currencies today, calling the payment methods “first-world in nature” and suggesting they do not currently have practical uses for consumers in underdeveloped nations.
The statements echo previous concerns from the Colorado-based global remittance giant issued last year, in which it first stated digital currencies were not yet ready for cross-border, international money transfer.
In the post, the first of what will be a three-part series for Fortune, Ersek offered his take on why bitcoin and other digital currencies may struggle to take hold in the remittance market, choosing to focus on the issue of whether recipients would be able to use the funds.
Said Ersek:
“Up to this point, the digital currency conversation has not addressed the practicalities on the receive-side.”
Ersek indicated that while bitcoin has made a more practical use case as a payments vehicle in the developed world, adoption will need to become more widespread there before nations with less tech-savvy consumers are encouraged to develop an infrastructure.
Unanswered questions
Ersek also listed three major questions he believes the digital currency community has yet to answer when it comes to the technology’s use in cross-border payments.
These included such concerns as whether persons receiving digital currency outside first-world countries would be able to use it, whether small or medium-sized enterprise recipients in these areas would be equipped to spend or transfer it and whether these consumers and businesses would not prefer another option even if bitcoin was usable for this purpose.
Ultimately, Ersek indicated that the industry’s ability to enact and follow consumer protection best practices will be the deciding factor.
“Without continued enhancements to ensure consumer protection, which ultimately translates to increased reliability, I believe consumers and businesses will continue to gravitate to cash, bank accounts and cards.”
Untapped potential
Despite these issues, Ersek suggested that he is watching virtual currency developments with “great interest”, a fact that is evidenced by his analysis of the topic as part of a larger work.
The benefits of digital currencies clearing these hurdles, Ersek suggests, make them worthy of consideration. In particular, he noted their ability to potentially transform business models and promote financial inclusion
Still, even with consumer adoption questions resolved, Ersek suggested regulation and compliance would likely remain significant hurdles, even to their use in first-world nations, potentially hinting at topics for future articles to come.
Polish Bitcoin Exchange Bitcurex Relaunches Following Hacking Attack
Jaroslaw Adamowski | Published on March 18, 2014 at 18:56 GMT | Europe, Exchanges, News
After last week’s hacking attack forced the site to temporarily shut down, Polish bitcoin exchange Bitcurex resumed service on 18th March.
The platform said the perpetrators did not manage to break its security measures and gain full access to its operational hot wallet.
“Today, we launch trade in Polish zlotys, and on Thursday at 12:00 local time in euros to ensure our support team has sufficient capacity of handling bids in this important period,” Filip Godecki, a representative of Bitcurex, told CoinDesk.
As earlier reported, the exchange decided to temporarily close its site on 14th of March at 09:37 am local time as a result of a hack that targeted funds in user wallets.
Company representatives told CoinDesk that shutting down the site would allow its IT team to “perform a necessary verification”.
Bolstered security measures
Bitcurex said in a statement on its website that its safety procedures prevented the hackers from further actions after the initial theft.
Explained a representative:
“The service was shut down to carry out repair works and implement the necessary improvements to our system. Our internal procedures prevented any further losses which were limited to between 10 and 20 percent of our operational Hot Wallet Bitcurex.”
In addition to the installed IT security measures, the site was able to combat last week’s hacking attack thanks to its team of staff who monitor all the transactions and flag suspicious trading activity, according to Godecki.
The Polish exchange said that all the incurred losses were covered from its own funds.
“Our fees will not be raised, nor will we introduce any other restrictions,” Bitcurex stated, adding that it has submitted a formal notification to relevant authorities regarding last week’s attack.
“Due to this, we cannot disclose any further details on the attack which could hinder the activities of law enforcement authorities,” Godecki said.
The exchange also cautioned its users not to use a recently established site with a domain name similar to Bitcurex’s.
Development plans
The company representative also said that, independently of the latest attack, the site is working on implementing additional security measures that will create additional layers of security and enhance user experience.
“Over the following weeks, Bitcurex will enter a phase of rapid development,” Godecki said.
Several hours after the site resumed its operations on 18th of March, bitcoin was trading at a low of 1835.90 PLN ($607.80) and a high of 1969.00 PLN ($651.90) on Bitcurex. The exchange had a total volume of 238.2 BTC, according to the latest available data.
Established in July 2012, Bitcurex is based in Łódź, Poland, and is operated by local company Digital Future Ltd.
Jaroslaw Adamowski | Published on March 18, 2014 at 18:56 GMT | Europe, Exchanges, News
After last week’s hacking attack forced the site to temporarily shut down, Polish bitcoin exchange Bitcurex resumed service on 18th March.
The platform said the perpetrators did not manage to break its security measures and gain full access to its operational hot wallet.
“Today, we launch trade in Polish zlotys, and on Thursday at 12:00 local time in euros to ensure our support team has sufficient capacity of handling bids in this important period,” Filip Godecki, a representative of Bitcurex, told CoinDesk.
As earlier reported, the exchange decided to temporarily close its site on 14th of March at 09:37 am local time as a result of a hack that targeted funds in user wallets.
Company representatives told CoinDesk that shutting down the site would allow its IT team to “perform a necessary verification”.
Bolstered security measures
Bitcurex said in a statement on its website that its safety procedures prevented the hackers from further actions after the initial theft.
Explained a representative:
“The service was shut down to carry out repair works and implement the necessary improvements to our system. Our internal procedures prevented any further losses which were limited to between 10 and 20 percent of our operational Hot Wallet Bitcurex.”
In addition to the installed IT security measures, the site was able to combat last week’s hacking attack thanks to its team of staff who monitor all the transactions and flag suspicious trading activity, according to Godecki.
The Polish exchange said that all the incurred losses were covered from its own funds.
“Our fees will not be raised, nor will we introduce any other restrictions,” Bitcurex stated, adding that it has submitted a formal notification to relevant authorities regarding last week’s attack.
“Due to this, we cannot disclose any further details on the attack which could hinder the activities of law enforcement authorities,” Godecki said.
The exchange also cautioned its users not to use a recently established site with a domain name similar to Bitcurex’s.
Development plans
The company representative also said that, independently of the latest attack, the site is working on implementing additional security measures that will create additional layers of security and enhance user experience.
“Over the following weeks, Bitcurex will enter a phase of rapid development,” Godecki said.
Several hours after the site resumed its operations on 18th of March, bitcoin was trading at a low of 1835.90 PLN ($607.80) and a high of 1969.00 PLN ($651.90) on Bitcurex. The exchange had a total volume of 238.2 BTC, according to the latest available data.
Established in July 2012, Bitcurex is based in Łódź, Poland, and is operated by local company Digital Future Ltd.
BTC China to Drop Trading Fees to 0%
Emily Spaven (@emilyspaven) | Published on March 18, 2014 at 18:01 GMT | BTC China, Companies, Exchanges, News
BTC China is set to reduce the trading fees across its digital currency exchange to 0% and it has today added the option for users to trade bitcoin for litecoin and vice versa.
At the beginning of the month, BTC China added litecoin support, enabling users to buy the popular altcoin using local currency CNY with 0% trading fees.
CNY-BTC trades on the site currently come with a 0.1% fee, but from 21st March, this will be removed.
A statement from the company reads:
“In order to standardize the three trading methods, we have decided to waive the BTC/CNY trading commission fee from March 21, 11:00am (GMT +8)!”
Those who want to withdraw their litecoins from the site will have to pay a fee, though, of 0.001 litecoins (under $0.01). The current CNY withdrawal fee is 0.5%.
The company has also added a collection of new features to its service, including the option for users to add and manage multiple bank accounts.
Other new features include:
New Voice SMS Verification Code
If you are unable to receive SMS, you can opt for Voice SMS Verification Code.
New Confirmation Dialogue Box
A confirmation dialog box will pop-up when you place an order to minimize error occurrences.
No minimum CNY withdrawal limit
Even if your account balance is under 200CNY, you are able to withdraw all the remaining balance.
Litecoin API trading is now available
More Markets added to the Homepage
Back in November, BTC China beat Bitstamp and the now-defunct Mt. Gox to become the world’s number one bitcoin exchange. Its daily trading volumes regularly exceeded 14,200 BTC.
At the time, Bobby Lee, CEO of BTC China, said: “It’s an honor to see that BTC China has been propelled ahead to number one in the worldwide rankings. The real credit goes to the people in China, for having recognized the importance and value of bitcoin.”
However, this has since changed dramatically, with Bitcoin Charts showing the exchange’s current daily volume at around 3,370 BTC. Bitstamp is currently at the top of Bitcoin Charts’ table, with a daily volume of around 15,625 BTC.
Bitcoin exchange data site BTCKan shows Chinese exchange Huobi as having a volume of 86,871 BTC over the past 24 hours, with OkCoin’s volume reaching 79,691 BTC in the same period. There have been suggestions that both these exchanges are faking volume data, but Huobi’s CEO recently emphatically denied doing so.
Lee told CoinDesk the motive behind dropping trading fees was to create consistency across the platform, having the same 0% rate for litecoin and bitcoin. However, it could be an attempt to gain back some of the customers it lost to its competitors when it imposed fees late last year.
Emily Spaven (@emilyspaven) | Published on March 18, 2014 at 18:01 GMT | BTC China, Companies, Exchanges, News
BTC China is set to reduce the trading fees across its digital currency exchange to 0% and it has today added the option for users to trade bitcoin for litecoin and vice versa.
At the beginning of the month, BTC China added litecoin support, enabling users to buy the popular altcoin using local currency CNY with 0% trading fees.
CNY-BTC trades on the site currently come with a 0.1% fee, but from 21st March, this will be removed.
A statement from the company reads:
“In order to standardize the three trading methods, we have decided to waive the BTC/CNY trading commission fee from March 21, 11:00am (GMT +8)!”
Those who want to withdraw their litecoins from the site will have to pay a fee, though, of 0.001 litecoins (under $0.01). The current CNY withdrawal fee is 0.5%.
The company has also added a collection of new features to its service, including the option for users to add and manage multiple bank accounts.
Other new features include:
New Voice SMS Verification Code
If you are unable to receive SMS, you can opt for Voice SMS Verification Code.
New Confirmation Dialogue Box
A confirmation dialog box will pop-up when you place an order to minimize error occurrences.
No minimum CNY withdrawal limit
Even if your account balance is under 200CNY, you are able to withdraw all the remaining balance.
Litecoin API trading is now available
More Markets added to the Homepage
Back in November, BTC China beat Bitstamp and the now-defunct Mt. Gox to become the world’s number one bitcoin exchange. Its daily trading volumes regularly exceeded 14,200 BTC.
At the time, Bobby Lee, CEO of BTC China, said: “It’s an honor to see that BTC China has been propelled ahead to number one in the worldwide rankings. The real credit goes to the people in China, for having recognized the importance and value of bitcoin.”
However, this has since changed dramatically, with Bitcoin Charts showing the exchange’s current daily volume at around 3,370 BTC. Bitstamp is currently at the top of Bitcoin Charts’ table, with a daily volume of around 15,625 BTC.
Bitcoin exchange data site BTCKan shows Chinese exchange Huobi as having a volume of 86,871 BTC over the past 24 hours, with OkCoin’s volume reaching 79,691 BTC in the same period. There have been suggestions that both these exchanges are faking volume data, but Huobi’s CEO recently emphatically denied doing so.
Lee told CoinDesk the motive behind dropping trading fees was to create consistency across the platform, having the same 0% rate for litecoin and bitcoin. However, it could be an attempt to gain back some of the customers it lost to its competitors when it imposed fees late last year.
Mt. Gox Allowing Users to Login, Check Balances
Jon Southurst (@southtopia) | Published on March 18, 2014 at 03:08 GMT | Companies, Exchanges, Mt. Gox, News
Updated (18th March, 5:43 GMT)
Mt. Gox has apparently updated its website, now allowing users to log in and confirm exactly how much money they have locked away.
The otherwise plain page shows balances both in unobtainable BTC and fiat currency, with no explanation given for the change. It also does not list the exchange’s current bitcoin value.
Mt. Gox’s customer call center confirmed the login page is genuine. A post earlier in the day on Reddit had claimed the site was compromised and someone was collecting login credentials, but this now appears to be a hoax. The call center representative did, however, mention that balances users see after logging in may not be 100% accurate.
Before anyone has their hopes raised too much, a legal announcement underneath each balance reminds users the feature is effectively, for now, of novelty value only:
This balance confirmation service is provided on this site only for the convenience of all users.
Please be aware that confirming the balance on this site does not constitute a filing of rehabilitation claims under the civil rehabilitation procedure and note that the balance amounts shown on this site should also not be considered an acknowledgment by MtGox Co., Ltd. of the amount of any rehabilitation claims of users.
Rehabilitation claims under a civil rehabilitation procedure become confirmed from a filing which is followed by an investigation procedure. The method for filing claims will be published on this site as soon as we will be in situation to announce it.
Aaron G, who joined the recent doorstop protest at Mt. Gox’s Shibuya office for its duration, said:
“Hackers already liberated the MtGox database, and I was able to confirm my balance there. I’d be much more interested in having MtGox release the wallet addresses so the supposedly stolen coins can be traced.”
He added that he too suspected the ‘compromised page’ warning on Reddit was a hoax, but said if Mt. Gox’s homepage joined its account databases and customer information by falling into hackers’ hands, it would be good reason to petition the court to end the company’s current bankruptcy protection.
Everything still unknown
Users are still in the dark as to whether the balances they see upon logging in actually exist or will ever be made available, in full or even in part. For a few it may be comforting to know that at least a record exists.
Since its site went blank just under a month ago, the only additions posted to Mt. Gox’s home page have been public notices that no further information is available, and more recently legal notices regarding implications of bankruptcy proceedings in Japan and the US.
There was also a warning about customers being targeted by phishing emails asking for login credentials and bank account details.
Jon Southurst (@southtopia) | Published on March 18, 2014 at 03:08 GMT | Companies, Exchanges, Mt. Gox, News
Updated (18th March, 5:43 GMT)
Mt. Gox has apparently updated its website, now allowing users to log in and confirm exactly how much money they have locked away.
The otherwise plain page shows balances both in unobtainable BTC and fiat currency, with no explanation given for the change. It also does not list the exchange’s current bitcoin value.
Mt. Gox’s customer call center confirmed the login page is genuine. A post earlier in the day on Reddit had claimed the site was compromised and someone was collecting login credentials, but this now appears to be a hoax. The call center representative did, however, mention that balances users see after logging in may not be 100% accurate.
Before anyone has their hopes raised too much, a legal announcement underneath each balance reminds users the feature is effectively, for now, of novelty value only:
This balance confirmation service is provided on this site only for the convenience of all users.
Please be aware that confirming the balance on this site does not constitute a filing of rehabilitation claims under the civil rehabilitation procedure and note that the balance amounts shown on this site should also not be considered an acknowledgment by MtGox Co., Ltd. of the amount of any rehabilitation claims of users.
Rehabilitation claims under a civil rehabilitation procedure become confirmed from a filing which is followed by an investigation procedure. The method for filing claims will be published on this site as soon as we will be in situation to announce it.
Aaron G, who joined the recent doorstop protest at Mt. Gox’s Shibuya office for its duration, said:
“Hackers already liberated the MtGox database, and I was able to confirm my balance there. I’d be much more interested in having MtGox release the wallet addresses so the supposedly stolen coins can be traced.”
He added that he too suspected the ‘compromised page’ warning on Reddit was a hoax, but said if Mt. Gox’s homepage joined its account databases and customer information by falling into hackers’ hands, it would be good reason to petition the court to end the company’s current bankruptcy protection.
Everything still unknown
Users are still in the dark as to whether the balances they see upon logging in actually exist or will ever be made available, in full or even in part. For a few it may be comforting to know that at least a record exists.
Since its site went blank just under a month ago, the only additions posted to Mt. Gox’s home page have been public notices that no further information is available, and more recently legal notices regarding implications of bankruptcy proceedings in Japan and the US.
There was also a warning about customers being targeted by phishing emails asking for login credentials and bank account details.
With Bifubao’s Wallet, Users Can Prove Funds via Cryptography
Jon Southurst (@southtopia) | Published on March 18, 2014 at 10:45 GMT | Companies, News, Wallets
Can bitcoin exchanges and online wallets can be trusted to hold all the bitcoins they claim to? Well, it’s a contentious issue.
However, Chinese startup Bifubao claims it has solved this conundrum with its new user-verifiable wallet service.
Many bitcoiners will have faced the question: “If bitcoin transactions are public and secure, why didn’t anyone know Mt. Gox wasn’t really holding their funds?” The answer here is that Mt. Gox and many other online coin-keepers, including wallets and gambling sites, keep their transactions ‘off-chain’.
Once the money is sent to the company, it leaves the public bitcoin block chain and goes into that company’s proprietary transaction system, re-entering the full public chain when it is withdrawn – if it is still there to be withdrawn, that is.
Following Mt. Gox and other high-profile disappearing acts in bitcoin’s short history, users are demanding more accountability from their online services. Anyone holding any amount of your bitcoin in future will need to prove the funds are there.
Proof of reserves
Bifubao has implemented what it claims is a world-first ‘proof of reserves’ trust system – a verifiable guarantee that most or all bitcoins it holds are actually held in reserve. Bifubao’s system uses the ‘Merkle Tree’ technique originally proposed by bitcoin developer Greg Maxwell.
Bifubao users can also send and receive bitcoins with email addresses and mobile phone numbers. The system also includes support for merchant payment buttons and an API for application integration.
Bifubao’s CEO is Jack Wang, who referred to the importance of openness in regaining user trust in bitcoin services. He said:
“Even though this approach reveals some of our data, we think it is worth the trade-off for the additional transparency. We have also open-sourced our code so that the community can see our implementation.”
‘Merkle Tree’ approach
It does this by deploying a cryptographic technique named the Merkle Tree, or hash tree. Similar to bitcoin’s own block chain with some extra values, it is a method of quickly proving whether data or files in certain places are true. Hash trees have been used by various P2P networks over the years to verify file segments, including Gnutella and LimeWire.
Any bitcoin-keeping company could simply publish a flat, public list of all balances for users to check, but the Merkle Tree approach allows the company to obscure most of that information while allowing users to verify their funds have been counted as part of the company’s reserves.
hashtree
The Merkle Tree approach allows users to verify that their exchange has enough funds to cover their balance, without actually knowing the total or amounts held by other users. Unlike the block chain, a tree structure means not every new addition needs to be connected to every other.
An exchange would publish a hash of the ‘root node’, or base of the tree, publicly. Upon logging in, a user would see their own account ‘node’ containing their balance, and encrypted hashes of everything between their balance and the tree’s base, proving that a user’s account is included in that original value.
Wang explained it further:
“The second half of the equation is proving assets equivalent to the amount shown at the root node of the tree. To that end, we provide links to two cold storage addresses. We’ve signed a message using the private key of each of those addresses to prove ownership.”
“Since these cold storage addresses won’t contain 100% of the bitcoins we hold, the number of bitcoins stored at these addresses will differ from the bitcoins shown at the root node. However, this should reassure users that we control at least the vast majority of those funds.”
Still relies on user checks
For the system to be effective, however, users (or enough of them) must actually check their information against the company’s from time to time.
Bifubao’s code can be found on GitHub. A full technical explanation of the system with code examples is on the company’s blog.
“Trust in bitcoin is directly related to trust in bitcoin companies. We hope this encourages other companies to follow suit,” added Kevin Pan, Bifubao’s CTO.
Fractional reserves
For those new to the ‘traditional’ banking system we have today, the term ‘fractional reserve’ means banks hold only a small (as low as 10%) amount of the total currency units their customers have entrusted to them. The rest is put to use elsewhere, usually in the form of investments or loans.
Should all customers decide to withdraw their funds at the same time, the bank has a problem. Or rather, you the customer have a problem. These ‘bank runs’ are not so rare, and have often happened in times of national emergency or even economic uncertainty, as was the case with the UK’s Northern Rock in 2007.
It’s fair to say those who believe in bitcoin due to ‘sound money’ principles have a problem with the current fractional-reserve banking system for this very reason. This makes claims of bitcoin storers running fractional reserve systems, without their customers’ knowledge, all the more outrageous.
While a tree technique like Bifubao’s does not prevent a fractional reserve system, it does force a company to be honest about exactly how much of a reserve it keeps.
Just as bitcoin itself uses cryptography to enforce transparency and honesty (at least as far as transactions are concerned) so too will cryptography build other structures to return user trust in the networked services they need to function in the modern world.
Jon Southurst (@southtopia) | Published on March 18, 2014 at 10:45 GMT | Companies, News, Wallets
Can bitcoin exchanges and online wallets can be trusted to hold all the bitcoins they claim to? Well, it’s a contentious issue.
However, Chinese startup Bifubao claims it has solved this conundrum with its new user-verifiable wallet service.
Many bitcoiners will have faced the question: “If bitcoin transactions are public and secure, why didn’t anyone know Mt. Gox wasn’t really holding their funds?” The answer here is that Mt. Gox and many other online coin-keepers, including wallets and gambling sites, keep their transactions ‘off-chain’.
Once the money is sent to the company, it leaves the public bitcoin block chain and goes into that company’s proprietary transaction system, re-entering the full public chain when it is withdrawn – if it is still there to be withdrawn, that is.
Following Mt. Gox and other high-profile disappearing acts in bitcoin’s short history, users are demanding more accountability from their online services. Anyone holding any amount of your bitcoin in future will need to prove the funds are there.
Proof of reserves
Bifubao has implemented what it claims is a world-first ‘proof of reserves’ trust system – a verifiable guarantee that most or all bitcoins it holds are actually held in reserve. Bifubao’s system uses the ‘Merkle Tree’ technique originally proposed by bitcoin developer Greg Maxwell.
Bifubao users can also send and receive bitcoins with email addresses and mobile phone numbers. The system also includes support for merchant payment buttons and an API for application integration.
Bifubao’s CEO is Jack Wang, who referred to the importance of openness in regaining user trust in bitcoin services. He said:
“Even though this approach reveals some of our data, we think it is worth the trade-off for the additional transparency. We have also open-sourced our code so that the community can see our implementation.”
‘Merkle Tree’ approach
It does this by deploying a cryptographic technique named the Merkle Tree, or hash tree. Similar to bitcoin’s own block chain with some extra values, it is a method of quickly proving whether data or files in certain places are true. Hash trees have been used by various P2P networks over the years to verify file segments, including Gnutella and LimeWire.
Any bitcoin-keeping company could simply publish a flat, public list of all balances for users to check, but the Merkle Tree approach allows the company to obscure most of that information while allowing users to verify their funds have been counted as part of the company’s reserves.
hashtree
The Merkle Tree approach allows users to verify that their exchange has enough funds to cover their balance, without actually knowing the total or amounts held by other users. Unlike the block chain, a tree structure means not every new addition needs to be connected to every other.
An exchange would publish a hash of the ‘root node’, or base of the tree, publicly. Upon logging in, a user would see their own account ‘node’ containing their balance, and encrypted hashes of everything between their balance and the tree’s base, proving that a user’s account is included in that original value.
Wang explained it further:
“The second half of the equation is proving assets equivalent to the amount shown at the root node of the tree. To that end, we provide links to two cold storage addresses. We’ve signed a message using the private key of each of those addresses to prove ownership.”
“Since these cold storage addresses won’t contain 100% of the bitcoins we hold, the number of bitcoins stored at these addresses will differ from the bitcoins shown at the root node. However, this should reassure users that we control at least the vast majority of those funds.”
Still relies on user checks
For the system to be effective, however, users (or enough of them) must actually check their information against the company’s from time to time.
Bifubao’s code can be found on GitHub. A full technical explanation of the system with code examples is on the company’s blog.
“Trust in bitcoin is directly related to trust in bitcoin companies. We hope this encourages other companies to follow suit,” added Kevin Pan, Bifubao’s CTO.
Fractional reserves
For those new to the ‘traditional’ banking system we have today, the term ‘fractional reserve’ means banks hold only a small (as low as 10%) amount of the total currency units their customers have entrusted to them. The rest is put to use elsewhere, usually in the form of investments or loans.
Should all customers decide to withdraw their funds at the same time, the bank has a problem. Or rather, you the customer have a problem. These ‘bank runs’ are not so rare, and have often happened in times of national emergency or even economic uncertainty, as was the case with the UK’s Northern Rock in 2007.
It’s fair to say those who believe in bitcoin due to ‘sound money’ principles have a problem with the current fractional-reserve banking system for this very reason. This makes claims of bitcoin storers running fractional reserve systems, without their customers’ knowledge, all the more outrageous.
While a tree technique like Bifubao’s does not prevent a fractional reserve system, it does force a company to be honest about exactly how much of a reserve it keeps.
Just as bitcoin itself uses cryptography to enforce transparency and honesty (at least as far as transactions are concerned) so too will cryptography build other structures to return user trust in the networked services they need to function in the modern world.
Bank of Thailand Says Bitcoin ‘Not Illegal’ But Warns Against its Use
Dan Palmer | Published on March 18, 2014 at 16:44 GMT | Asia, Exchanges, News, Regulation
The Bank of Thailand (BOT) has issued a statement on bitcoin, warning consumers that it is not a currency and that its use comes with inherent risks, reports say.
The statement bears similarities to others issued from central banks around the world, most recently Mexico and Germany, but could be considered an improvement in the legal status of bitcoin users, as Thailand was widely considered to have implemented a bitcoin ban in the summer of 2013.
The bank stated, according to a partial translation published online:
“Bitcoin is electronic data. Thus, it’s not considered a currency and can’t be used for payments, and [is] not considered legal tender like money. With no self worth, the value of such data varies based on the needs of the market. Bitcoin changes in value very quickly and it could became something of no value if none desired it.”
Effectively, bitcoin is just electronic data with no intrinsic value, and its value rises or falls depending upon the whims of the market.
The BOT also said that the illegal theft of data and the closing of online businesses such as Mt. Gox pose a threat to consumers.
Furthermore, consumers’ legal recourse will be severely limited in the case of any claims over coins stolen or sent to the wrong wallet, or over goods purchased with bitcoin but not received.
Welcome news?
While hardly a ringing endorsement of digital currencies, the bank’s words may come as good news for bitcoin users and businesses in Thailand. The key point being that they have not banned the cryptocurrency.
Over the past nine months, the legal status of cryptocurrencies in Thailand has been an issue of great confusion.
Back in July 2013, Thai-based exchange Bitcoin Co Ltd suspended trading after a meeting with the Bank of Thailand in which the bank allegedly declared trading in the cryptocurrency illegal. A post on the company’s website said at the time:
“At the conclusion of the meeting, senior members of the Foreign Exchange Administration and Policy Department advised that due to lack of existing applicable laws, capital controls and the fact that Bitcoin straddles multiple financial facets the following Bitcoin activities are illegal in Thailand.”
Then in February of this year the exchange reopened after receiving a letter from the bank seeming to indicate that it could trade after all. However, the legal status of bitcoin trading in the South-East Asian country was still unclear.
Adding to the confusion, the exchange received another letter days later, indicating that “interpreted the letter to serve its own interests”, and that it perhaps acted improperly by reinstating its services. At this stage, Bitcoin Co Ltd decided to remain trading until a clear statement was made.
Licensing issues
One issue with exchanges is not so much the legality of owning bitcoin, but whether they qualify for a licence to trade in cryptocurrencies, which could be considered a foreign exchange activity and therefore illegal.
Thailand’s Foreign Exchange Administration and Policy Department had also previously told Bitcoin Co Ltd that it was illegal to buy or sell bitcoins, exchange bitcoins for goods or services, or send and receive bitcoins outside of Thailand in an early hearing on the matter.
Hopefully, the legal status of exchanges in the light of the new statement will become clear in coming days.
Dan Palmer | Published on March 18, 2014 at 16:44 GMT | Asia, Exchanges, News, Regulation
The Bank of Thailand (BOT) has issued a statement on bitcoin, warning consumers that it is not a currency and that its use comes with inherent risks, reports say.
The statement bears similarities to others issued from central banks around the world, most recently Mexico and Germany, but could be considered an improvement in the legal status of bitcoin users, as Thailand was widely considered to have implemented a bitcoin ban in the summer of 2013.
The bank stated, according to a partial translation published online:
“Bitcoin is electronic data. Thus, it’s not considered a currency and can’t be used for payments, and [is] not considered legal tender like money. With no self worth, the value of such data varies based on the needs of the market. Bitcoin changes in value very quickly and it could became something of no value if none desired it.”
Effectively, bitcoin is just electronic data with no intrinsic value, and its value rises or falls depending upon the whims of the market.
The BOT also said that the illegal theft of data and the closing of online businesses such as Mt. Gox pose a threat to consumers.
Furthermore, consumers’ legal recourse will be severely limited in the case of any claims over coins stolen or sent to the wrong wallet, or over goods purchased with bitcoin but not received.
Welcome news?
While hardly a ringing endorsement of digital currencies, the bank’s words may come as good news for bitcoin users and businesses in Thailand. The key point being that they have not banned the cryptocurrency.
Over the past nine months, the legal status of cryptocurrencies in Thailand has been an issue of great confusion.
Back in July 2013, Thai-based exchange Bitcoin Co Ltd suspended trading after a meeting with the Bank of Thailand in which the bank allegedly declared trading in the cryptocurrency illegal. A post on the company’s website said at the time:
“At the conclusion of the meeting, senior members of the Foreign Exchange Administration and Policy Department advised that due to lack of existing applicable laws, capital controls and the fact that Bitcoin straddles multiple financial facets the following Bitcoin activities are illegal in Thailand.”
Then in February of this year the exchange reopened after receiving a letter from the bank seeming to indicate that it could trade after all. However, the legal status of bitcoin trading in the South-East Asian country was still unclear.
Adding to the confusion, the exchange received another letter days later, indicating that “interpreted the letter to serve its own interests”, and that it perhaps acted improperly by reinstating its services. At this stage, Bitcoin Co Ltd decided to remain trading until a clear statement was made.
Licensing issues
One issue with exchanges is not so much the legality of owning bitcoin, but whether they qualify for a licence to trade in cryptocurrencies, which could be considered a foreign exchange activity and therefore illegal.
Thailand’s Foreign Exchange Administration and Policy Department had also previously told Bitcoin Co Ltd that it was illegal to buy or sell bitcoins, exchange bitcoins for goods or services, or send and receive bitcoins outside of Thailand in an early hearing on the matter.
Hopefully, the legal status of exchanges in the light of the new statement will become clear in coming days.
DigitalBTC to Enter Strategic Partnership With CloudHashing.com
Nermin Hajdarbegovic | Published on March 18, 2014 at 17:30 GMT | Investors, Mining, News
Australian investment firm Macro Energy Limited, which recently acquired digitalBTC, has announced a strategic agreement with CloudHashing.com – a company that lets customers pay to use its servers to mine bitcoin, rather than invest in their own rigs.
Macro is planning to raise AU$9.1m as part of the digitalBTC deal and last week it said it will invest the money in mining operations and the expansion of other digitalBTC operations.
It now appears that a sizable chunk of the investment will go toward the newly announced strategic deal with CloudHashing.com.
‘Win-win’ situation
Under the agreement, CloudHashing.com’s software will be deployed on digitalBTC’s bitcoin hardware, located in data centres in Iceland and Texas. The hardware will be managed by CloudHashing.com, and the companies will have an opportunity engage in reciprocal arrangements for the supply of mining hardware.
This synergic relationship extends to trading too, as digitalBTC – a bitcoin investment and management company – will handle bitcoin trading activities for CloudHashing.com through its trade desk. Since CloudHashing.com is the largest bitcoin cloud mining provider on the planet, this sounds like a coup for digitalBTC.
“The provision of digitalBTC trading services to CloudHashing.com will create a win-win outcome for both digitalBTC and CloudHashing.com,” said digitalBTC’s Executive Chairman Zhenya Tsvetnenko.
Expansion opportunities
Tsvetnenko said digitalBTC is poised and ready to expand in all facets of bitcoin operations, but it will start off by focusing on bitcoin mining:
“This agreement with CloudHashing.com will lead to the deployment of their best-in-class proprietary bitcoin mining management system to our state of the art hardware, allowing us to concentrate our software development resources on our integrated suite of retail-focused mobile applications for bitcoin and other digital currencies.”
Tsvetnenko and Macro Energy are clearly taking their bitcoin push seriously. They plan to raise a significant amount of money, but, more importantly, digitalBTC will be the first bitcoin company to be listed on the Australian Stock Exchange, allowing public market investors to get on board.
The market liked that idea and Macro Energy shares gained 42% following the announcement of the digitalBTC acquisition.
Nermin Hajdarbegovic | Published on March 18, 2014 at 17:30 GMT | Investors, Mining, News
Australian investment firm Macro Energy Limited, which recently acquired digitalBTC, has announced a strategic agreement with CloudHashing.com – a company that lets customers pay to use its servers to mine bitcoin, rather than invest in their own rigs.
Macro is planning to raise AU$9.1m as part of the digitalBTC deal and last week it said it will invest the money in mining operations and the expansion of other digitalBTC operations.
It now appears that a sizable chunk of the investment will go toward the newly announced strategic deal with CloudHashing.com.
‘Win-win’ situation
Under the agreement, CloudHashing.com’s software will be deployed on digitalBTC’s bitcoin hardware, located in data centres in Iceland and Texas. The hardware will be managed by CloudHashing.com, and the companies will have an opportunity engage in reciprocal arrangements for the supply of mining hardware.
This synergic relationship extends to trading too, as digitalBTC – a bitcoin investment and management company – will handle bitcoin trading activities for CloudHashing.com through its trade desk. Since CloudHashing.com is the largest bitcoin cloud mining provider on the planet, this sounds like a coup for digitalBTC.
“The provision of digitalBTC trading services to CloudHashing.com will create a win-win outcome for both digitalBTC and CloudHashing.com,” said digitalBTC’s Executive Chairman Zhenya Tsvetnenko.
Expansion opportunities
Tsvetnenko said digitalBTC is poised and ready to expand in all facets of bitcoin operations, but it will start off by focusing on bitcoin mining:
“This agreement with CloudHashing.com will lead to the deployment of their best-in-class proprietary bitcoin mining management system to our state of the art hardware, allowing us to concentrate our software development resources on our integrated suite of retail-focused mobile applications for bitcoin and other digital currencies.”
Tsvetnenko and Macro Energy are clearly taking their bitcoin push seriously. They plan to raise a significant amount of money, but, more importantly, digitalBTC will be the first bitcoin company to be listed on the Australian Stock Exchange, allowing public market investors to get on board.
The market liked that idea and Macro Energy shares gained 42% following the announcement of the digitalBTC acquisition.
Database Glitch Causes Blockchain.info Outage
Nermin Hajdarbegovic | Published on March 18, 2014 at 12:58 GMT | Blockchain, News, Wallets
The bitcoin wallet and block explorer service Blockchain.info has been down since late last night (17th March) and it seems the issue is bigger than originally anticipated.
A problem first came to light when a reddit user started a thread about a failed ‘shared coin’ transaction. Blockchain.info responded to his post and quickly moved to disable shared coin functionality.
The move was followed with a tweet letting users know that shared coin transactions had been suspended pending the outcome of an investigation:
“We have temporarily suspended shared coin transactions while investigating some transactions that are ‘stuck’. The particular transaction in question is https://blockchain.info/tx-index/115315411/10. Rebroadcasting this transaction in bitcoind results in Error code -22.”
Shared coin transactions were re-enabled four hours later, but further issues came to light and blockchain.info was taken down soon after.
User funds ‘safe’
The Blockchain.info team traced the problem back to a database issue and it promptly tweeted that it would take “several hours” to resolve.
Blockchain.info was quick to point out that it was not hacked and that all funds were safe throughout the outage, which was the result of a database bug. Since Blockchain.info does not hold any keys, there was no risk to users’ coins.
Wallet function was not affected by the issue and user wallets could be restored even during the outage. A guide was published on the Blockchain.info blog, but it seems that many users did not get the message.
Once again the issue has proved that many bitcoin users aren’t very informed about wallet technology, and even about some relatively basic principles.
Blockchain.info was quick to reassure the public that there was no danger to funds, but the sudden influx of users looking for information quickly brought down the company blog and allowed misinformation to propagate through social networks.
In a statement Blockchain.info apologized for the extended outage and said it is working hard to restore services.
“As we mentioned previously, the outage was caused by a bug in some database handling code. Please rest assured that your wallets are safe and this outage does not affect the security of funds or the completion of executed transactions.”
Blockchain.info also published instructions on how to import wallet backups via MultiBit.
Limited damage
Despite the outage continuing for some hours, the issue has not been far reaching. A few services like ATM provider BitVendo have been affected, but the damage appears to be limited.
@blockchain is down, please avoid using the bitcoin ATM until they’re back online – https://t.co/6CIVTHvETa
— BitVendo (@BitVendo) March 18, 2014
Blockchain.info informed CoinDesk that its team has been working around the clock and that progress is being made. All relevant updates will be posted on its blog.
“Once we’re there, we will publish a full post-mortem of this unusual database issue,” Blockchain said.
“Because of how Blockchain was designed, all of our users who linked an email address with their account, or manually made a backup, still have complete access and control of their bitcoins, even during the outage.”
In light of recent security breaches and the Mt. Gox disaster, it is understandable that much of the bitcoin community is edgy. At least in this case the issue seems benign, even if annoying and disruptive.
It should be noted that Blockchain.info has been on a roll in recent months. In December it acquired bitcoin price app ZeroBlock, in January it announced the creation of its one-millionth wallet, and earlier this month it rolled out a new bitcoin app for merchants.
Nermin Hajdarbegovic | Published on March 18, 2014 at 12:58 GMT | Blockchain, News, Wallets
The bitcoin wallet and block explorer service Blockchain.info has been down since late last night (17th March) and it seems the issue is bigger than originally anticipated.
A problem first came to light when a reddit user started a thread about a failed ‘shared coin’ transaction. Blockchain.info responded to his post and quickly moved to disable shared coin functionality.
The move was followed with a tweet letting users know that shared coin transactions had been suspended pending the outcome of an investigation:
“We have temporarily suspended shared coin transactions while investigating some transactions that are ‘stuck’. The particular transaction in question is https://blockchain.info/tx-index/115315411/10. Rebroadcasting this transaction in bitcoind results in Error code -22.”
Shared coin transactions were re-enabled four hours later, but further issues came to light and blockchain.info was taken down soon after.
User funds ‘safe’
The Blockchain.info team traced the problem back to a database issue and it promptly tweeted that it would take “several hours” to resolve.
Blockchain.info was quick to point out that it was not hacked and that all funds were safe throughout the outage, which was the result of a database bug. Since Blockchain.info does not hold any keys, there was no risk to users’ coins.
Wallet function was not affected by the issue and user wallets could be restored even during the outage. A guide was published on the Blockchain.info blog, but it seems that many users did not get the message.
Once again the issue has proved that many bitcoin users aren’t very informed about wallet technology, and even about some relatively basic principles.
Blockchain.info was quick to reassure the public that there was no danger to funds, but the sudden influx of users looking for information quickly brought down the company blog and allowed misinformation to propagate through social networks.
In a statement Blockchain.info apologized for the extended outage and said it is working hard to restore services.
“As we mentioned previously, the outage was caused by a bug in some database handling code. Please rest assured that your wallets are safe and this outage does not affect the security of funds or the completion of executed transactions.”
Blockchain.info also published instructions on how to import wallet backups via MultiBit.
Limited damage
Despite the outage continuing for some hours, the issue has not been far reaching. A few services like ATM provider BitVendo have been affected, but the damage appears to be limited.
@blockchain is down, please avoid using the bitcoin ATM until they’re back online – https://t.co/6CIVTHvETa
— BitVendo (@BitVendo) March 18, 2014
Blockchain.info informed CoinDesk that its team has been working around the clock and that progress is being made. All relevant updates will be posted on its blog.
“Once we’re there, we will publish a full post-mortem of this unusual database issue,” Blockchain said.
“Because of how Blockchain was designed, all of our users who linked an email address with their account, or manually made a backup, still have complete access and control of their bitcoins, even during the outage.”
In light of recent security breaches and the Mt. Gox disaster, it is understandable that much of the bitcoin community is edgy. At least in this case the issue seems benign, even if annoying and disruptive.
It should be noted that Blockchain.info has been on a roll in recent months. In December it acquired bitcoin price app ZeroBlock, in January it announced the creation of its one-millionth wallet, and earlier this month it rolled out a new bitcoin app for merchants.
US Treasury Adds Digital Currency Representative to Advisory Group
Pete Rizzo (@pete_rizzo_) | Published on March 18, 2014 at 15:08 GMT | Events, Law, News, US & Canada
At the latest Bloomberg Breakfast event held in New York on 18th March, David S Cohen, Under Secretary of the US Department of the Treasury, discussed the challenges of digital currencies as part of a broader conversation with the media outlet’s Matt Miller to air on Bloomberg TV.
In the hour-long talk, Cohen spoke about the organisation’s role as a global leader in educating consumers and governments on the evolving issue, paying a particular interest to the potential illicit uses of digital currencies, as well as the measures it is willing to take to ensure their proper use.
Most notably, however, Cohen revealed that the Treasury is taking an interest in ensuring that the digital currency industry evolves in a regulated manner despite these concerns.
For the first time, Cohen said, his group will be including an unnamed member of the digital currency community as part of the Treasury’s Bank Secrecy Act Advisory Group (BSAAG) in an effort to work toward this goal.
Chaired by the Financial Crimes Enforcement Network (FinCEN) director, the body makes recommendations to the Treasury on issues regarding the Bank Secrecy Act, the US law that requires financial institutions to help detect and prevent money laundering.
Said Cohen regarding the decision:
“We are hopeful that formally including the virtual currency community’s voice in the BSAAG will mean that our regulatory approach as a whole, including our approach to virtual currency regulation, is better informed and more effective.”
Cohen indicated that there had already been “ad-hoc” meetings with members of the community, though this move is intended to ensure such conversation is more consistent.
Accounting for illicit use
Cohen began his prepared remarks by denoting the dangers of digital currencies in an effort to show his organization would not hesitate to take tough measures against those who abuse the technology.
For example, Cohen evoked the now-defunct digital currency Liberty Reserve, a site shut down through measures made possible by the controversial USA Patriot Act; and Silk Road, the online black market seized by law enforcement officials in late 2013, calling the negative attention paid to digital currencies in respect to these organisations “well-deserved”.
Such high-profile arrests, he said more positively, were also indicative that current regulations are working to contain the illegal use of digital currencies.
The under secretary indicated that the Treasury would take a approach that looks to encourage lawful practices, while understanding that not every entity will comply with rules. Cohen did, however, firmly warn organisations that are not in compliance with FinCEN, suggesting these entities could face consequences for this decision.
Cohen also addressed the innovative aspects of the technology, but suggested the full power of the illicit use of digital currency remains something it needs to consider:
“For terrorist financiers virtual currencies are understandably appealing: if funds could be swiftly sent across borders in a secure, cheap and highly secretive manner, it would suit their needs well. Moreover, access to a fully anonymous – or even pseudonymous – currency would allow terrorists to better cover their tracks.”
Fostering innovation
IMG_2738Despite these risks, however, Cohen indicated that his agency’s approach to digital currency would be rooted in two guiding principles – fostering innovation and ensuring transparency.
For the moment, at least, he indicated that the focus of the organisation is on the former.
“We do not currently see widespread use of virtual currencies as a means of terrorist financing or sanctions evasion. The volatility associated with virtual currency, combined with its low capitaliziation and liquidity has limited its appeal to these illicit actors.”
Further, he noted that digital currency companies regulated under FinCEN are now filing more suspicious activity reports, a fact that shows evidence the industry is willing to assist law enforcement.
Cash-like restrictions
Cohen also suggested that it will seek to regulate digital currencies only at the points where digital currency is exchange for ‘real’ money.
“At the current adoption levels, we think that this type of oversight is sufficient to guard against money laundering and other illicit finance threats.”
However, he indicated that long-term, the Treasury may move to apply cash-like restrictions to the use of virtual currencies. Though, this he said, would come with wider adoption.
For now, Cohen said he remains focused on working with international partners, including the European Commission, to increase global understanding of the illicit finance threats associated with virtual currencies and regulatory approaches to confront them.
Pete Rizzo (@pete_rizzo_) | Published on March 18, 2014 at 15:08 GMT | Events, Law, News, US & Canada
At the latest Bloomberg Breakfast event held in New York on 18th March, David S Cohen, Under Secretary of the US Department of the Treasury, discussed the challenges of digital currencies as part of a broader conversation with the media outlet’s Matt Miller to air on Bloomberg TV.
In the hour-long talk, Cohen spoke about the organisation’s role as a global leader in educating consumers and governments on the evolving issue, paying a particular interest to the potential illicit uses of digital currencies, as well as the measures it is willing to take to ensure their proper use.
Most notably, however, Cohen revealed that the Treasury is taking an interest in ensuring that the digital currency industry evolves in a regulated manner despite these concerns.
For the first time, Cohen said, his group will be including an unnamed member of the digital currency community as part of the Treasury’s Bank Secrecy Act Advisory Group (BSAAG) in an effort to work toward this goal.
Chaired by the Financial Crimes Enforcement Network (FinCEN) director, the body makes recommendations to the Treasury on issues regarding the Bank Secrecy Act, the US law that requires financial institutions to help detect and prevent money laundering.
Said Cohen regarding the decision:
“We are hopeful that formally including the virtual currency community’s voice in the BSAAG will mean that our regulatory approach as a whole, including our approach to virtual currency regulation, is better informed and more effective.”
Cohen indicated that there had already been “ad-hoc” meetings with members of the community, though this move is intended to ensure such conversation is more consistent.
Accounting for illicit use
Cohen began his prepared remarks by denoting the dangers of digital currencies in an effort to show his organization would not hesitate to take tough measures against those who abuse the technology.
For example, Cohen evoked the now-defunct digital currency Liberty Reserve, a site shut down through measures made possible by the controversial USA Patriot Act; and Silk Road, the online black market seized by law enforcement officials in late 2013, calling the negative attention paid to digital currencies in respect to these organisations “well-deserved”.
Such high-profile arrests, he said more positively, were also indicative that current regulations are working to contain the illegal use of digital currencies.
The under secretary indicated that the Treasury would take a approach that looks to encourage lawful practices, while understanding that not every entity will comply with rules. Cohen did, however, firmly warn organisations that are not in compliance with FinCEN, suggesting these entities could face consequences for this decision.
Cohen also addressed the innovative aspects of the technology, but suggested the full power of the illicit use of digital currency remains something it needs to consider:
“For terrorist financiers virtual currencies are understandably appealing: if funds could be swiftly sent across borders in a secure, cheap and highly secretive manner, it would suit their needs well. Moreover, access to a fully anonymous – or even pseudonymous – currency would allow terrorists to better cover their tracks.”
Fostering innovation
IMG_2738Despite these risks, however, Cohen indicated that his agency’s approach to digital currency would be rooted in two guiding principles – fostering innovation and ensuring transparency.
For the moment, at least, he indicated that the focus of the organisation is on the former.
“We do not currently see widespread use of virtual currencies as a means of terrorist financing or sanctions evasion. The volatility associated with virtual currency, combined with its low capitaliziation and liquidity has limited its appeal to these illicit actors.”
Further, he noted that digital currency companies regulated under FinCEN are now filing more suspicious activity reports, a fact that shows evidence the industry is willing to assist law enforcement.
Cash-like restrictions
Cohen also suggested that it will seek to regulate digital currencies only at the points where digital currency is exchange for ‘real’ money.
“At the current adoption levels, we think that this type of oversight is sufficient to guard against money laundering and other illicit finance threats.”
However, he indicated that long-term, the Treasury may move to apply cash-like restrictions to the use of virtual currencies. Though, this he said, would come with wider adoption.
For now, Cohen said he remains focused on working with international partners, including the European Commission, to increase global understanding of the illicit finance threats associated with virtual currencies and regulatory approaches to confront them.
Mexico’s First Bitcoin ATMs Will Also Deal in Altcoins
Nermin Hajdarbegovic | Published on March 17, 2014 at 16:26 GMT | Altcoins, Bitcoin ATM, Dogecoin, Litecoin, Technology
The Mexican border town of Tijuana is to see the launch of two digital currency-toting ATMs today, and with an interesting twist – in addition to the expected provision of bitcoin, the ATMs will support litecoin and dogecoin too.
Tijuana is a popular spot for US tourists, including many geeky and potentially bitcoin-friendly college kids who venture south of the border to let their hair down. What happens in Tijuana stays in Tijuana, they say, apart from some less than legal ‘souvenirs’ that sometimes find their way back to the US.
The company launching the ATMs is called Bitcoin42, and it says that one of the units will accept US dollars and the other Mexican pesos, so it is clear much of the target audience is expected to show up with greenbacks.
Bitcoin42 says these aren’t just the first bitcoin ATMs in Mexico, they are the first units in the whole of Latin America. However, there is still no word on the actual ATM hardware they are planning to employ.
Social contribution
“Our main objective is a positive contribution to the potential of all living beings to develop, today and in the future. Our business model focuses on cultural, social, ecological, and economical projects that aim to tackle challenges in our society by developing creative solutions,” the company said. It added:
“Ethical and social responsibility is important to us. We are inspired by the Institute for Social Banking and the Economy for the Common Good, which received larger popularity since the banking crisis.”
Bitcoin42 is putting its money where its mouth is: the company will be giving 10% of all profits generated by the ATMs to non-profit associations in Tijuana. Customers will even be able to choose the cause they wish to donate to.
Bitcoin42 is also advocating the use of cyprocurrencies by non-profit organisations, as it believes cryptocurrencies can help non-profits reduce their administration costs and move funds in faster, with more transparency:
“Through this, anybody can become a [truly] independent auditor, since one can provide information to verify balances and transactions, and also allow the public to see how much in donations has been received and where it went.”
Dog lovers
The company did not say why it chose to add dogecoin and litecoin to the list of supported currencies, but in a forum post one of the team members said dogecoin was proposed by the developer of the ATM – and that Bitcoin42 also “really likes dogs”.
Dogecoin was never envisioned as a serious digital currency and as a result it doesn’t get much attention from cryptocurrency businesses or investors, although there is a large and vibrant community behind it.
Last month a team of dogecoin lovers set up a DIY dogecoin ATM at the CoinFest digital currency festival in Vancouver, Canada.
Nermin Hajdarbegovic | Published on March 17, 2014 at 16:26 GMT | Altcoins, Bitcoin ATM, Dogecoin, Litecoin, Technology
The Mexican border town of Tijuana is to see the launch of two digital currency-toting ATMs today, and with an interesting twist – in addition to the expected provision of bitcoin, the ATMs will support litecoin and dogecoin too.
Tijuana is a popular spot for US tourists, including many geeky and potentially bitcoin-friendly college kids who venture south of the border to let their hair down. What happens in Tijuana stays in Tijuana, they say, apart from some less than legal ‘souvenirs’ that sometimes find their way back to the US.
The company launching the ATMs is called Bitcoin42, and it says that one of the units will accept US dollars and the other Mexican pesos, so it is clear much of the target audience is expected to show up with greenbacks.
Bitcoin42 says these aren’t just the first bitcoin ATMs in Mexico, they are the first units in the whole of Latin America. However, there is still no word on the actual ATM hardware they are planning to employ.
Social contribution
“Our main objective is a positive contribution to the potential of all living beings to develop, today and in the future. Our business model focuses on cultural, social, ecological, and economical projects that aim to tackle challenges in our society by developing creative solutions,” the company said. It added:
“Ethical and social responsibility is important to us. We are inspired by the Institute for Social Banking and the Economy for the Common Good, which received larger popularity since the banking crisis.”
Bitcoin42 is putting its money where its mouth is: the company will be giving 10% of all profits generated by the ATMs to non-profit associations in Tijuana. Customers will even be able to choose the cause they wish to donate to.
Bitcoin42 is also advocating the use of cyprocurrencies by non-profit organisations, as it believes cryptocurrencies can help non-profits reduce their administration costs and move funds in faster, with more transparency:
“Through this, anybody can become a [truly] independent auditor, since one can provide information to verify balances and transactions, and also allow the public to see how much in donations has been received and where it went.”
Dog lovers
The company did not say why it chose to add dogecoin and litecoin to the list of supported currencies, but in a forum post one of the team members said dogecoin was proposed by the developer of the ATM – and that Bitcoin42 also “really likes dogs”.
Dogecoin was never envisioned as a serious digital currency and as a result it doesn’t get much attention from cryptocurrency businesses or investors, although there is a large and vibrant community behind it.
Last month a team of dogecoin lovers set up a DIY dogecoin ATM at the CoinFest digital currency festival in Vancouver, Canada.
MetroDeal, the Philippines’ Top Daily Deals Site, Now Accepts Bitcoin
Pete Rizzo (@pete_rizzo_) | Published on March 17, 2014 at 15:11 GMT | Asia, Merchants, News
Asia-based daily deals giant MetroDeal, the number two e-commerce website in the Philippines according to Alexa rankings, is now accepting bitcoin for its discount vouchers and coupons.
Founded in early 2011, MetroDeal has seen a meteoric rise in popularity among the Philippines’ 33 million active Internet users. It achieved annual revenue of $18m in 2012, and was projected to top $20m in revenue in 2013.
MetroDeal follows a template similar to US-based daily deal giants such as Groupon and LivingSocial. Deals run for a limited time and offer consumers deep discounts from a wide range of merchants.
The company trails only Rocket Internet-funded startup Lazada, which recently raised $250m in its Series E round, in overall site visitation among commerce websites.
MetroDeal is accepting bitcoin through a partnership with Coins.ph, a bitcoin exchange and bitcoin merchant directory provider serving the Philippines.
Founded by Ralph Wunsch, a former marketing manager at Austria-based discounts site Daily Deal, MetroDeal was reportedly designed from a public computer at a local McDonald’s franchise before quickly taking off.
Checkout process
To purchase with bitcoin on MetroDeal, buyers first choose their desired deal and select “Buy Now!”
Screen Shot 2014-03-17 at 10.12.13 AM
Buyers must then log in with Facebook or with an email account before picking a payment method. Available options include credit and debit cards, bank deposits and bitcoin.
After selecting the bitcoin option, buyers simply scan the QR code and send payment to complete their purchase.
Screen Shot 2014-03-17 at 10.19.35 AM
Bitcoin in Philippines
The news of MetroDeal’s acceptance comes in the wake of a warning from Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, to its consumers about the use of digital currencies.
BSP listed a number of concerns about the use of digital currencies, including their high volatility and lack of consumer protections, as well as the absence of regulation imposed on businesses servicing the emerging sector, in its statements.
Though the local community is small, the Philippines holds substantial untapped potential for bitcoin.
One of the largest potential use cases for bitcoin in the Philippines remains in the remittance market. In 2013, the country’s international workers sent nearly $14bn to family members back home, often paying a substantial price through the traditional financial system for doing so.
Given MetroDeal’s size, it could prove effective at raising awareness for bitcoin and its potential in the country.
Pete Rizzo (@pete_rizzo_) | Published on March 17, 2014 at 15:11 GMT | Asia, Merchants, News
Asia-based daily deals giant MetroDeal, the number two e-commerce website in the Philippines according to Alexa rankings, is now accepting bitcoin for its discount vouchers and coupons.
Founded in early 2011, MetroDeal has seen a meteoric rise in popularity among the Philippines’ 33 million active Internet users. It achieved annual revenue of $18m in 2012, and was projected to top $20m in revenue in 2013.
MetroDeal follows a template similar to US-based daily deal giants such as Groupon and LivingSocial. Deals run for a limited time and offer consumers deep discounts from a wide range of merchants.
The company trails only Rocket Internet-funded startup Lazada, which recently raised $250m in its Series E round, in overall site visitation among commerce websites.
MetroDeal is accepting bitcoin through a partnership with Coins.ph, a bitcoin exchange and bitcoin merchant directory provider serving the Philippines.
Founded by Ralph Wunsch, a former marketing manager at Austria-based discounts site Daily Deal, MetroDeal was reportedly designed from a public computer at a local McDonald’s franchise before quickly taking off.
Checkout process
To purchase with bitcoin on MetroDeal, buyers first choose their desired deal and select “Buy Now!”
Screen Shot 2014-03-17 at 10.12.13 AM
Buyers must then log in with Facebook or with an email account before picking a payment method. Available options include credit and debit cards, bank deposits and bitcoin.
After selecting the bitcoin option, buyers simply scan the QR code and send payment to complete their purchase.
Screen Shot 2014-03-17 at 10.19.35 AM
Bitcoin in Philippines
The news of MetroDeal’s acceptance comes in the wake of a warning from Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, to its consumers about the use of digital currencies.
BSP listed a number of concerns about the use of digital currencies, including their high volatility and lack of consumer protections, as well as the absence of regulation imposed on businesses servicing the emerging sector, in its statements.
Though the local community is small, the Philippines holds substantial untapped potential for bitcoin.
One of the largest potential use cases for bitcoin in the Philippines remains in the remittance market. In 2013, the country’s international workers sent nearly $14bn to family members back home, often paying a substantial price through the traditional financial system for doing so.
Given MetroDeal’s size, it could prove effective at raising awareness for bitcoin and its potential in the country.
Dorian Nakamoto Hires Lawyer, Denies Knowledge of Bitcoin
Dan Palmer | Published on March 17, 2014 at 11:24 GMT | Bitcoin protocol, News
Dorian Satoshi Nakamoto
It’s hard not to feel sorry for Dorian Satoshi Nakamoto, recently ‘exposed’ by Newsweek as the creator of bitcoin.
Whether or nor he is the genius behind the ubiquitous cryptocurrency, it is obvious that he is a private man who shies away from the intrusion of the public eye.
In the latest chapter of the saga, Nakamoto has said in a statement issued through his recently hired lawyer, LA-based Ethan Kirschner, that he “did not create, invent or otherwise work on bitcoin”.
‘Unfamiliar’ with bitcoin
“I unconditionally deny the Newsweek report,” Nakamoto said, adding that:
“I am writing this statement to clear my name.”
The statement was initially published by Reuters blogger, Felix Salmon on his Twitter feed, and Kirschner has confirmed to TechCrunch that it is genuine. Nakamoto stated that, until February, he had not heard of bitcoin, and it was his son who first told him about the cryptocurrency.
In an interview with Associated Press soon after the Newsweek article, he claimed he “called the technology ‘bitcom’ [as he was] still unfamiliar with the term”.
Hard times
According to the statement, life has not been easy for Nakamoto – an American citizen living in Temple City, California.
Nakamoto has a background in engineering and does “have the ability to program”, he said, but he has not been able to find steady work in the field for over 10 years – instead taking assignments as a “labourer, polltaker and substitute teacher”.
Apparently, he discontinued his internet service in 2013, “due to severe financial stress”. This is all at odds with what you would expect from a man who is said to hold $400m in bitcoins from his early mining efforts.
Furthermore, Nakamoto is trying to recover from prostate surgery undertaken in October 2012 and a stroke he suffered in October 2013, he stated.
Closing the statement, Nakamoto thanked people around the world “who have offered me their support” and asks for his privacy to be respected. “This will be our last public statement on this matter,” he says.
What we know about bitcoin’s creator
The Bitcoin protocol was published in a paper via the Cryptography Mailing List in November 2008 – with the author named as Satoshi Nakamoto.
The same person then released the first version of the bitcoin software client in 2009, and participated with others on the project via mailing lists, until he finally began to fade from the community toward the end of 2010.
The last anyone heard from him was in the spring of 2011, when he said that he had “moved on to other things”.
Since the Newsweek article, an account supposedly linked to the inventor of bitcoin was used to post to the P2P Foundation’s Ning page, stating: “I am not Dorian Nakamoto”.
If indeed this anonymous individual is the real creator of bitcoin, the publication of irrefutable evidence to the fact would quickly put the issue to rest, and allow the beleaguered Californian some peace and quiet.
Dan Palmer | Published on March 17, 2014 at 11:24 GMT | Bitcoin protocol, News
Dorian Satoshi Nakamoto
It’s hard not to feel sorry for Dorian Satoshi Nakamoto, recently ‘exposed’ by Newsweek as the creator of bitcoin.
Whether or nor he is the genius behind the ubiquitous cryptocurrency, it is obvious that he is a private man who shies away from the intrusion of the public eye.
In the latest chapter of the saga, Nakamoto has said in a statement issued through his recently hired lawyer, LA-based Ethan Kirschner, that he “did not create, invent or otherwise work on bitcoin”.
‘Unfamiliar’ with bitcoin
“I unconditionally deny the Newsweek report,” Nakamoto said, adding that:
“I am writing this statement to clear my name.”
The statement was initially published by Reuters blogger, Felix Salmon on his Twitter feed, and Kirschner has confirmed to TechCrunch that it is genuine. Nakamoto stated that, until February, he had not heard of bitcoin, and it was his son who first told him about the cryptocurrency.
In an interview with Associated Press soon after the Newsweek article, he claimed he “called the technology ‘bitcom’ [as he was] still unfamiliar with the term”.
Hard times
According to the statement, life has not been easy for Nakamoto – an American citizen living in Temple City, California.
Nakamoto has a background in engineering and does “have the ability to program”, he said, but he has not been able to find steady work in the field for over 10 years – instead taking assignments as a “labourer, polltaker and substitute teacher”.
Apparently, he discontinued his internet service in 2013, “due to severe financial stress”. This is all at odds with what you would expect from a man who is said to hold $400m in bitcoins from his early mining efforts.
Furthermore, Nakamoto is trying to recover from prostate surgery undertaken in October 2012 and a stroke he suffered in October 2013, he stated.
Closing the statement, Nakamoto thanked people around the world “who have offered me their support” and asks for his privacy to be respected. “This will be our last public statement on this matter,” he says.
What we know about bitcoin’s creator
The Bitcoin protocol was published in a paper via the Cryptography Mailing List in November 2008 – with the author named as Satoshi Nakamoto.
The same person then released the first version of the bitcoin software client in 2009, and participated with others on the project via mailing lists, until he finally began to fade from the community toward the end of 2010.
The last anyone heard from him was in the spring of 2011, when he said that he had “moved on to other things”.
Since the Newsweek article, an account supposedly linked to the inventor of bitcoin was used to post to the P2P Foundation’s Ning page, stating: “I am not Dorian Nakamoto”.
If indeed this anonymous individual is the real creator of bitcoin, the publication of irrefutable evidence to the fact would quickly put the issue to rest, and allow the beleaguered Californian some peace and quiet.
Bitstamp Got $10m From Fortress-Linked Hedge Fund Last Year: Bloomberg
Jon Southurst (@southtopia) | Published on March 17, 2014 at 10:56 GMT | Bitstamp, Companies, Exchanges, News
Bitcoin exchange Bitstamp received $10m in hedge fund investment last year, according to a new Bloomberg report.
The money came from Pantera Capital Management LP, “the hedge fund that manages money for Fortress Investment Group LLC (FIG) executives”, Bloomberg said. If true, it would be one of the largest single investments in a bitcoin-related business to date.
Bitstamp has been a huge beneficiary of the collapse of Mt. Gox, multiplying its share of dollar trades by up to 50% since February. It now has at least 35% of the total bitcoin trade market share, according to bitcoincharts.
Tahoe gathering
Pantera’s path to investment was led by founder Dan Morehead, who took about 30 bitcoin entrepreneurs to Lake Tahoe in October last year to discuss his vision, among them Bitstamp CEO Nejc Kodric. Soon after that, Pantera formed a $147m fund called Pantera Bitcoin Advisors and a principal at Fortress, Michael Novogratz, called Morehead “our man when it comes to bitcoin”.
When CoinDesk asked Kodric whether Bloomberg’s report was accurate, he merely said: “No comment”.
Bloomberg’s story highlighted the incredible potential of this and future link-ups between Wall Street and Silicon Valley, as expertise in finance met technological excellence. Funds like Pantera’s had the power to lift bitcoin businesses from startup obscurity into the big time.
“Finance people are now recognizing the force multiplier of combining their deep knowledge of finance with new, possibly game-changing technologies,” said Chris Larsen, CEO of Ripple Labs.
Pantera also contributed a portion of Ripple Labs’ recent $9m funding round, along with Google and Lightspeed Ventures.
Pantera hasn’t commented on this week’s revelations, made by three people who knew of the deal, and the new fund has stayed quiet about other intentions and big deals.
New attraction
Bitcoin startups, taking a lead from Silicon Valley startups, have appealed more to tech venture capitalists and corporations for their big break. They will probably in future pay extra attention to very deep-pocketed Wall Street players. Wall Street, in turn, will demand a new breed of financially-focused and compliance-willing management teams to match its own involvement.
“A group like that should be able to deliver the kinds of relationships that startups need. I’d take Pantera over a lot of other firms,” said Brock Pierce, a California VC.
Bitstamp is UK-registered but reportedly has most operations in Slovenia. It was founded in 2011 by Kodric and Damijan Merlak. Since then it has established a reputation for stability and good management, and has an advantage in its location in the European Union with its integrated money transfer system.
It has always been compliant with financial regulations and users must have verified identification, something that has become more or less standard at bitcoin exchanges around the world, especially the current crop of new startups in Asia.
Jon Southurst (@southtopia) | Published on March 17, 2014 at 10:56 GMT | Bitstamp, Companies, Exchanges, News
Bitcoin exchange Bitstamp received $10m in hedge fund investment last year, according to a new Bloomberg report.
The money came from Pantera Capital Management LP, “the hedge fund that manages money for Fortress Investment Group LLC (FIG) executives”, Bloomberg said. If true, it would be one of the largest single investments in a bitcoin-related business to date.
Bitstamp has been a huge beneficiary of the collapse of Mt. Gox, multiplying its share of dollar trades by up to 50% since February. It now has at least 35% of the total bitcoin trade market share, according to bitcoincharts.
Tahoe gathering
Pantera’s path to investment was led by founder Dan Morehead, who took about 30 bitcoin entrepreneurs to Lake Tahoe in October last year to discuss his vision, among them Bitstamp CEO Nejc Kodric. Soon after that, Pantera formed a $147m fund called Pantera Bitcoin Advisors and a principal at Fortress, Michael Novogratz, called Morehead “our man when it comes to bitcoin”.
When CoinDesk asked Kodric whether Bloomberg’s report was accurate, he merely said: “No comment”.
Bloomberg’s story highlighted the incredible potential of this and future link-ups between Wall Street and Silicon Valley, as expertise in finance met technological excellence. Funds like Pantera’s had the power to lift bitcoin businesses from startup obscurity into the big time.
“Finance people are now recognizing the force multiplier of combining their deep knowledge of finance with new, possibly game-changing technologies,” said Chris Larsen, CEO of Ripple Labs.
Pantera also contributed a portion of Ripple Labs’ recent $9m funding round, along with Google and Lightspeed Ventures.
Pantera hasn’t commented on this week’s revelations, made by three people who knew of the deal, and the new fund has stayed quiet about other intentions and big deals.
New attraction
Bitcoin startups, taking a lead from Silicon Valley startups, have appealed more to tech venture capitalists and corporations for their big break. They will probably in future pay extra attention to very deep-pocketed Wall Street players. Wall Street, in turn, will demand a new breed of financially-focused and compliance-willing management teams to match its own involvement.
“A group like that should be able to deliver the kinds of relationships that startups need. I’d take Pantera over a lot of other firms,” said Brock Pierce, a California VC.
Bitstamp is UK-registered but reportedly has most operations in Slovenia. It was founded in 2011 by Kodric and Damijan Merlak. Since then it has established a reputation for stability and good management, and has an advantage in its location in the European Union with its integrated money transfer system.
It has always been compliant with financial regulations and users must have verified identification, something that has become more or less standard at bitcoin exchanges around the world, especially the current crop of new startups in Asia.
Texas Regulators Warn About Risks of ‘Trendy’ Digital Currencies
Jon Southurst (@southtopia) | Published on March 17, 2014 at 10:03 GMT | News, Regulation, US & Canada
Regulators in Texas have warned digital currencies like bitcoin are volatile and probably more suited to young people than retirees, the Dallas Morning News has reported.
Describing digital currencies as “very, very trendy” right now, Joseph Rotunda, director of enforcement at the Texas State Securities Board, said that all the “buzz” around digital currencies had led people to look only at the positives and not the risks.
Rotunda said it wasn’t just about bitcoin, but the myriad other digital currencies popping up every week that presented a risk to investors.
“There’s more of them in production right now, in development. It’s a real fertile ground,” he said. He admitted such investments could prove useful, but only for younger people and not those looking for future security.
“An investment tied to digital currencies may be suitable for someone in their 20s, in their 30s. When you’re talking about a retiree’s nest egg, that may not be something they’d want to subject to this type of a risk.”
Risks for unaware investors
Such warnings from government regulators have become fairly commonplace in recent months.
“In many ways, digital currencies operate as ‘online cash,’ only this type of currency is extremely volatile and can disappear the same way your money disappears when you lose your wallet,” said John Morgan, Texas securities commissioner.
Rotunda also pointed out that trust remains a huge issue in the unregulated space, in the security systems and infrastructure, accounting practices and overall business models of those providing digital currency services.
The level of anonymity digital currencies provide users also created risks, he said, adding:
“That makes it hard from a regulatory standpoint to regulate those transactions, but it also fosters an environment that caters to money laundering to conceal transactions to all sorts of situations where a promoter could be playing with investors’ money without their knowledge.”
Late last week, the Texas State Securities Board also warned energy firm Balanced Energy LLC with a cease and desist letter against getting involved in bitcoin, saying the company had not fully disclosed the risks of bitcoin to its investors, especially those associated with wild value swings.
Shavers ‘Ponzi’ case update
Yip also referred to Texas’ own Trendon T Shavers, who gained notoriety last July when he managed to raise 700,000 BTC at his company Bitcoin Savings and Trust (BTCST). The US Securities and Exchange Commission (SEC) described the operation as a bitcoin Ponzi scheme.
Shavers, incidentally, denied his was a Ponzi scheme and was actually never charged with any criminal offence. He did not accept any currency other than bitcoin, he said, and appeared not to keep any useful records of his transactions.
The SEC filed a civil complaint against him at the beginning of this month, posting a transcript of Shavers’ interview online, in which he referred to his scheme as merely one of lending and bitcoin value speculation based on the fluctuating price at Mt. Gox in early 2013.
Jon Southurst (@southtopia) | Published on March 17, 2014 at 10:03 GMT | News, Regulation, US & Canada
Regulators in Texas have warned digital currencies like bitcoin are volatile and probably more suited to young people than retirees, the Dallas Morning News has reported.
Describing digital currencies as “very, very trendy” right now, Joseph Rotunda, director of enforcement at the Texas State Securities Board, said that all the “buzz” around digital currencies had led people to look only at the positives and not the risks.
Rotunda said it wasn’t just about bitcoin, but the myriad other digital currencies popping up every week that presented a risk to investors.
“There’s more of them in production right now, in development. It’s a real fertile ground,” he said. He admitted such investments could prove useful, but only for younger people and not those looking for future security.
“An investment tied to digital currencies may be suitable for someone in their 20s, in their 30s. When you’re talking about a retiree’s nest egg, that may not be something they’d want to subject to this type of a risk.”
Risks for unaware investors
Such warnings from government regulators have become fairly commonplace in recent months.
“In many ways, digital currencies operate as ‘online cash,’ only this type of currency is extremely volatile and can disappear the same way your money disappears when you lose your wallet,” said John Morgan, Texas securities commissioner.
Rotunda also pointed out that trust remains a huge issue in the unregulated space, in the security systems and infrastructure, accounting practices and overall business models of those providing digital currency services.
The level of anonymity digital currencies provide users also created risks, he said, adding:
“That makes it hard from a regulatory standpoint to regulate those transactions, but it also fosters an environment that caters to money laundering to conceal transactions to all sorts of situations where a promoter could be playing with investors’ money without their knowledge.”
Late last week, the Texas State Securities Board also warned energy firm Balanced Energy LLC with a cease and desist letter against getting involved in bitcoin, saying the company had not fully disclosed the risks of bitcoin to its investors, especially those associated with wild value swings.
Shavers ‘Ponzi’ case update
Yip also referred to Texas’ own Trendon T Shavers, who gained notoriety last July when he managed to raise 700,000 BTC at his company Bitcoin Savings and Trust (BTCST). The US Securities and Exchange Commission (SEC) described the operation as a bitcoin Ponzi scheme.
Shavers, incidentally, denied his was a Ponzi scheme and was actually never charged with any criminal offence. He did not accept any currency other than bitcoin, he said, and appeared not to keep any useful records of his transactions.
The SEC filed a civil complaint against him at the beginning of this month, posting a transcript of Shavers’ interview online, in which he referred to his scheme as merely one of lending and bitcoin value speculation based on the fluctuating price at Mt. Gox in early 2013.
OKCoin Raises $10 Million to Become China’s ‘Largest Exchange’
Marc van der Chijs (@chijs) | Published on March 16, 2014 at 16:34 GMT | Asia, Exchanges, Investors, News
OKCoin, the exchange claiming to be China’s largest by trading volume, has announced a $10m Series A funding round.
The investment round was led by Ceyuan, one of China’s earliest venture capital firms, followed by Mandra Capital, VenturesLab and numerous high-profile angel investors.
Despite the nation’s recent crackdown on cryptocurrencies, it seems Chinese venture capitalists are still bullish on bitcoin exchanges and the currency itself.
Bitcoin in China
Back in November 2013, the focus of the bitcoin community was on China – the world’s hub for bitcoin trading. At that time, BTC China was the biggest exchange in the world, having managed to raise a $5m Series A funding round from Lightspeed Venture Partners (Snapchat, Nest). There were even rumours that a bigger round was in the works for the young company.
However, things change quickly. After the Chinese government began regulating bitcoin in December, trade volume plummeted and the world’s top exchange was no longer Chinese.
Local exchanges came up with creative solutions for customers to continue to buy and sell bitcoin, and players like Huobi and OKCoin claimed to pass BTC China in their daily trade volume, although these figures have been the subject of much dispute.
OKCoin has grown rapidly over the past few weeks and is now the biggest Chinese exchange, according to its CEO Star Xu. He claims the exchange’s current daily trade volume is approximately 50,000 bitcoins per day.
Interestingly, on top of that, the exchange allegedly trades 5 million litecoins per day. The company claims that at its peak it reached over 300,000 bitcoin and 13 million litecoin trades.
Future growth
Mr Feng Bo, founder and partner at Ceyuan, commented that he has a tremendous amount of confidence in the future of bitcoin and the continued growth of OKCoin:
“We are delighted to invest in the pioneer of China’s bitcoin exchanges; given the company’s leadership under Star Xu and his team, we know there is much more good news ahead.”
Ceyuan is a well-known fund with investments in successful Chinese companies like Qihoo 360 (NASDAQ: QIHU), Light in the Box (NASDAQ: LITB), UC Web and VANCL – among others.
Interestingly, Silicon Valley investor Tim Draper was involved in the round, as a partner of VenturesLab. He and his son Adam remain active in bitcoin-related investments, mainly via Adam’s Boost.vc incubator where Tim is a mentor. Tim also invested in OKCoin’s angel round.
OKCoin overseas
The investment in OKCoin will be used to expand the team, fund product research and development, further security enhancements, but also to expand OKCoin’s operations beyond China.
This a different strategy from the other Chinese exchanges and it may prove to be a smart move, given the current regulations in the state.
Mark Mai, VentureLab’s China partner, stated that as the regulatory environment in regions such as Singapore, the US and Hong Kong becomes clearer, it will open up opportunities for OKCoin to operate in geographies where it can offer maximized safety and protection for OKCoin clients.
Mai said that the growth of virtual currency is inevitable, and that many countries are coming to terms with the fact that they have to regulate these currencies, because their citizens are using them regardless.
He added that OKCoin welcomes oversight because he believes it will help the company to serve its customers better, allowing them to open up regulated bank and trading accounts so it can engage in third-party clearance and settlement.
All eyes will be on OKCoin’s global expansion in these uncertain times. Will the exchange make it as a large player outside China? Only time will tell.
Marc van der Chijs (@chijs) | Published on March 16, 2014 at 16:34 GMT | Asia, Exchanges, Investors, News
OKCoin, the exchange claiming to be China’s largest by trading volume, has announced a $10m Series A funding round.
The investment round was led by Ceyuan, one of China’s earliest venture capital firms, followed by Mandra Capital, VenturesLab and numerous high-profile angel investors.
Despite the nation’s recent crackdown on cryptocurrencies, it seems Chinese venture capitalists are still bullish on bitcoin exchanges and the currency itself.
Bitcoin in China
Back in November 2013, the focus of the bitcoin community was on China – the world’s hub for bitcoin trading. At that time, BTC China was the biggest exchange in the world, having managed to raise a $5m Series A funding round from Lightspeed Venture Partners (Snapchat, Nest). There were even rumours that a bigger round was in the works for the young company.
However, things change quickly. After the Chinese government began regulating bitcoin in December, trade volume plummeted and the world’s top exchange was no longer Chinese.
Local exchanges came up with creative solutions for customers to continue to buy and sell bitcoin, and players like Huobi and OKCoin claimed to pass BTC China in their daily trade volume, although these figures have been the subject of much dispute.
OKCoin has grown rapidly over the past few weeks and is now the biggest Chinese exchange, according to its CEO Star Xu. He claims the exchange’s current daily trade volume is approximately 50,000 bitcoins per day.
Interestingly, on top of that, the exchange allegedly trades 5 million litecoins per day. The company claims that at its peak it reached over 300,000 bitcoin and 13 million litecoin trades.
Future growth
Mr Feng Bo, founder and partner at Ceyuan, commented that he has a tremendous amount of confidence in the future of bitcoin and the continued growth of OKCoin:
“We are delighted to invest in the pioneer of China’s bitcoin exchanges; given the company’s leadership under Star Xu and his team, we know there is much more good news ahead.”
Ceyuan is a well-known fund with investments in successful Chinese companies like Qihoo 360 (NASDAQ: QIHU), Light in the Box (NASDAQ: LITB), UC Web and VANCL – among others.
Interestingly, Silicon Valley investor Tim Draper was involved in the round, as a partner of VenturesLab. He and his son Adam remain active in bitcoin-related investments, mainly via Adam’s Boost.vc incubator where Tim is a mentor. Tim also invested in OKCoin’s angel round.
OKCoin overseas
The investment in OKCoin will be used to expand the team, fund product research and development, further security enhancements, but also to expand OKCoin’s operations beyond China.
This a different strategy from the other Chinese exchanges and it may prove to be a smart move, given the current regulations in the state.
Mark Mai, VentureLab’s China partner, stated that as the regulatory environment in regions such as Singapore, the US and Hong Kong becomes clearer, it will open up opportunities for OKCoin to operate in geographies where it can offer maximized safety and protection for OKCoin clients.
Mai said that the growth of virtual currency is inevitable, and that many countries are coming to terms with the fact that they have to regulate these currencies, because their citizens are using them regardless.
He added that OKCoin welcomes oversight because he believes it will help the company to serve its customers better, allowing them to open up regulated bank and trading accounts so it can engage in third-party clearance and settlement.
All eyes will be on OKCoin’s global expansion in these uncertain times. Will the exchange make it as a large player outside China? Only time will tell.
Japanese Megabank Mizuho Now an Official Defendant in Mt. Gox Lawsuits
Jon Southurst (@southtopia) | Published on March 16, 2014 at 14:43 GMT | Companies, Exchanges, Law, Mt. Gox, News
Mizuho, one of Japan’s three largest banks and the banking partner of now-bankrupt bitcoin exchange Mt. Gox, has been named as a defendant in two class action lawsuits stemming from the exchange’s insolvency.
Reuters reported that the megabank was named as a defendant in the existing US lawsuit in which Mt. Gox is accused of defrauding customers, and a Canadian class action lawsuit blaming Gox for a security breach that allowed hackers to steal an alarming 800,000+ bitcoins.
It is still not known for sure what happened to Mt. Gox’s bitcoins, whether they have been lost, stolen or remain “temporarily unavailable“.
Speculation continued over the weekend as observers noted the exchange’s API was still being used to move bitcoins around, sometimes in very similar amounts.
The amended US suit also added Mark Karpeles’ second-in-command Gonzague Gay-Bouchery and Mt. Gox’s original founder and shareholder Jed McCaleb as defendants.
Providing services
In both legal cases, it was Mizuho’s position as Mt. Gox’s banker that prompted the actions. The bank held large amounts of fiat currency for the exchange and its customers, and the US complaint made by Illinois resident Gregory Greene said “Mizuho profited from the fraud” by doing so.
The suit says Mizuho should have segregated Mt. Gox’s funds from those of the exchange’s customers, and that by continuing to provide banking services it actually inflated consumer losses.
A leaked recording, released to the Internet, reportedly shows a Mizuho manager asking Karpeles to close Gox’s account with the bank due to compliance and other concerns. Despite the manager warning the bank would close the account forcibly if necessary, Karpeles did not cooperate.
Problems for other bitcoin businesses
Holding banks so liable could cause companies in other countries to become even more reluctant to become involved with bitcoin businesses, something that’s presented a problem for startups over the past year or so.
Some, including ordinary customers, have found their business denied and others their accounts shut down without much explanation, apparently for being involved with bitcoin-related business.
Despite CEO Karpeles’ Japanese language press conference, public apology and the company’s Japanese legal statements posted since to its website, 99% of Mt. Gox’s customers are not Japanese and those involved in lawsuits overseas could see Mizuho as a potentially lucrative avenue for reimbursement.
Bankruptcy proceedings in the US are preventing further action against Mt. Gox in Japan, but do not protect Japanese parent company Tibanne, its CEO Karpeles or its Gox’s US-based subsidiary Mt. Gox, Inc.
Jon Southurst (@southtopia) | Published on March 16, 2014 at 14:43 GMT | Companies, Exchanges, Law, Mt. Gox, News
Mizuho, one of Japan’s three largest banks and the banking partner of now-bankrupt bitcoin exchange Mt. Gox, has been named as a defendant in two class action lawsuits stemming from the exchange’s insolvency.
Reuters reported that the megabank was named as a defendant in the existing US lawsuit in which Mt. Gox is accused of defrauding customers, and a Canadian class action lawsuit blaming Gox for a security breach that allowed hackers to steal an alarming 800,000+ bitcoins.
It is still not known for sure what happened to Mt. Gox’s bitcoins, whether they have been lost, stolen or remain “temporarily unavailable“.
Speculation continued over the weekend as observers noted the exchange’s API was still being used to move bitcoins around, sometimes in very similar amounts.
The amended US suit also added Mark Karpeles’ second-in-command Gonzague Gay-Bouchery and Mt. Gox’s original founder and shareholder Jed McCaleb as defendants.
Providing services
In both legal cases, it was Mizuho’s position as Mt. Gox’s banker that prompted the actions. The bank held large amounts of fiat currency for the exchange and its customers, and the US complaint made by Illinois resident Gregory Greene said “Mizuho profited from the fraud” by doing so.
The suit says Mizuho should have segregated Mt. Gox’s funds from those of the exchange’s customers, and that by continuing to provide banking services it actually inflated consumer losses.
A leaked recording, released to the Internet, reportedly shows a Mizuho manager asking Karpeles to close Gox’s account with the bank due to compliance and other concerns. Despite the manager warning the bank would close the account forcibly if necessary, Karpeles did not cooperate.
Problems for other bitcoin businesses
Holding banks so liable could cause companies in other countries to become even more reluctant to become involved with bitcoin businesses, something that’s presented a problem for startups over the past year or so.
Some, including ordinary customers, have found their business denied and others their accounts shut down without much explanation, apparently for being involved with bitcoin-related business.
Despite CEO Karpeles’ Japanese language press conference, public apology and the company’s Japanese legal statements posted since to its website, 99% of Mt. Gox’s customers are not Japanese and those involved in lawsuits overseas could see Mizuho as a potentially lucrative avenue for reimbursement.
Bankruptcy proceedings in the US are preventing further action against Mt. Gox in Japan, but do not protect Japanese parent company Tibanne, its CEO Karpeles or its Gox’s US-based subsidiary Mt. Gox, Inc.
Seeing Through Regulation, Banking on Bitcoin, and a Sheer Art Attack
John Law (@scotonomist) | Published on March 16, 2014 at 12:05 GMT | Analysis, News
Welcome to the CoinDesk Weekly Review 16th 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.
Regulation issues
money-bags
Mysteries in bitcoinland don’t stay mysteries for long.
Take the world record transaction, which was noted in the block chain last November, when nearly 200,000 bitcoins hit a single wallet. Who was behind it? Turns out it was Bitstamp, which has just released details of an audit that confirms the transaction.
Why publish an audit when you don’t have to? It’s time for more transparency, says Bitstamp, and an industry that takes responsibility for itself.
Meanwhile, the extent of the transparency inherent in the system is becoming clearer. At the first academic conference dedicated to cryptocurrency analysis – held in Bermuda, unlike every academic conference John Law has been to – a fascinating paper was published that attempted to show how much digital dosh the Dread Pirate Roberts had garnered during his stint at the helm of Silk Road (squillions) and how many the FBI seized (about a fifth of that). Which is a fairly detailed audit of the affairs of an outfit running in total secrecy – Silk Road, silly, not the FBI.
John Law is not on the libertarian arm of the bitcoin booster brigade, and thinks that decent regulation worldwide will be essential to help the cybercurrency reach its potential to really shake things up.
Like cash, this won’t preclude unregulated activity, but while the Wild West is all very well in the movies it’s not a patch on living in the actual 21st century. But, as Google’s director of ideas Jared Cohen pointed out this week, while regulation’s been talked about for years there’s a real lack of new ideas.
More transparency is certainly one way to build confidence in the bitcoin ecosystem. But as the protocol is inherently transparent, regulation could largely consist of mandating access methods to information that identified company transactions.
If you want to have the protection of the regulator, then sign up to its disclosure regulations. Bitcoin, being a brand-new industry and one with everything to prove, is at a phase where the players should eagerly accept this.
It’s paradoxical but true that openness is often more secure than secrecy. If you don’t rely on people not finding things out, you’ve got nothing to lose if they do.
By adopting a radical approach to regulation based on what may seem an unhealthy degree of disclosure about their systems and activities, bitcoin companies could well end up more trustworthy than existing financial institutions – after all, how well has all that traditional corporate secrecy worked of late, and for whose benefit?
John Law has long been a fan of compulsory systems audits for companies, where their software gets a thorough going-over by independent analysts; not a problem for companies starting with that in mind, but how many banks would pass?
Regulators and industry members alike should recognise there’s a one-off chance here to create a truly innovative and effective environment, suited to the realities of the digital millennium. It could drag the rest of the financial industry along with it.
Taking it personally
banker
The aftershocks of the failure of Mt. Gox continue to exercise the commentators, but the real world has moved on. In particular, the continuing problems in Ukraine, where the Russians seem to have forgotten that invading neighbouring countries stopped ending well some time ago, have led to a run on the banks in Crimea. The banks have responded by putting limits in cash withdrawals, which has increased customer confidence about as much as you’d expect.
“Wouldn’t happen with bitcoin,” one tweeter suggested. That’s true enough: in fact, would you even need a bank account?
The personal current account – PCA, in banking parlance – is a cornerstone of retail banking, In the UK, banks make about 30% of their revenue from PCAs more than from credit cards and savings combined, but in a 2008 report, the Office of Fair Trading noted that the PCA market wasn’t being run in the consumers’ best interest. Not much has changed since.
Charges and fees weren’t transparent, and customers had little idea how their accounts actually worked. Without that sort of knowledge, nobody was changing accounts, and thus with no competition the banks were and are free to do what they liked. Which, mostly, is help themselves. According to the OFT, banks made around £160 a year per current account – a nice trick with other people’s money.
Which is money you rarely actually see. Come payday, your employer asks the bank which has all of its money to send some of it to the bank that has all yours. Much the same sort of thing happens when you pay a bill. Unless you go to a cashpoint and withdraw a fistful of twenties, the banks have all the money all the time.
Bitcoin wallets could change that. The reason PCAs are such a good idea is that they’re gateways to all sorts of financial services such as bill paying, mortgages, insurance, credit cards and so on. Without a bank account, it’s very difficult to get at these. But – in that fabulous fantasy future where bitcoin is as ubiquitous as the Internet – bitcoin and software can do all that just as securely and reliably as a PCA.
Like real wallets, you can’t run a bitcoin wallet in overdraft. And it won’t pay you interest when you’re in credit, but then, overdrafts are terrible forms of credit and you won’t get much by way of interest from your PCA. So, why go to a bank for your daily financials?
In fact, there’s a more interesting question: why doesn’t the bank come to you? PCAs provide the banking system with a huge cash float that is an intimate part of its capitalisation, which is why you can’t get your cash out quickly from a Crimean cashpoint at the moment. But if bitcoin triggers a much slower but harder to control run on the banks, it need not be a disaster for them, yet it could be very good for us.
Your current account is worth £160 a year to them. Very well, let them pay for the privilege. They can run your bitcoin wallet for you, letting it count towards their liquidity much as PCAs do now, but on the understanding that you can click your fingers and get it back whenever you like – with all the direct debits, etc, intact.
That would put competition back into the system, much as number portability has kept the mobile phone companies … well, honest is clearly the wrong word, so let’s say nervous. Banks could offer services such as credit, or even actual cash, but would have to be a lot more transparent about how it all works. They might not like that, but it would make them better companies to deal with.
It would also finally put the old anecdote to bed – the letter from a bank manager to a perennially overdrawn customer that starts: “Dear Sir. It may have escaped your attention that the nature of our relationship is that you bank with us, not vice-versa.”
Art for art’s sake, bitcoin for God’s sake
Florence, Italy Mona Lisa mime
It’s not just academics who are getting it together on bitcoin – the first art exhibition on a bitcoin theme took place this week in San Francisco. The pieces were, as so often at such events, good solid contemporary stuff that manage a degree of wit, but doesn’t tent the boxers. John Law, who has been known to wave his walking-stick in disgust at modern artists for not being nearly adventurous enough, has some suggestions for future projects.
1. The Angels Of The West: A pair of statues, some 500 metres tall, of the Winklevoss Twins, in a heroic Soviet style, one pointing to the sky, the other gazing firmly upwards with hands on hips. Entirely hollow and coated in iron pyrites, this work will symbolise the power of bitcoin to create image unrelated to actual gravity. The inside can be divided into floors and used for affordable housing in the Bay Area, while the twins’ substantial self-esteem should provide funding for the construction.
2. Satoshis I – CXI: A room filled with a large bush, in which are hidden 111 teddy bears. Each of them has a tiny name badge pinned to their furry chests saying: “Hi! I’m Satoshi”. None of them invented bitcoin.
3. The Miner Lisa: A mysterious smile adorns the face of this chunky little robot, which seeks out the nearest power socket, plugs in and then just sits there. Over the next few weeks, the smile is slowly replaced by a frown, as of one straining at stool, while the robot gets hotter and hotter. Very occasionally, a bright copper ha’penny rolls down its trouser leg.
4. Fleur De Lie: A painting of Rene Magritte holding a tulip. Under it, in pink Comic Sans, is the phrase: “This is not a tulip.” The painting has a Raspberry Pi embedded in it, connected to the Internet via 3G and with its own bitcoin wallet and GPS receiver. If the painting isn’t constantly moved between cities and the bitcoin wallet increased in value, the Raspberry Pi ignites a set of explosives in the picture frame. Don’t get left holding the baby when the music stops!
Move over Banksy, Clear your schedule, Turner Prize committee. This isn’t just good art, it’s the Law.
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 16, 2014 at 12:05 GMT | Analysis, News
Welcome to the CoinDesk Weekly Review 16th 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.
Regulation issues
money-bags
Mysteries in bitcoinland don’t stay mysteries for long.
Take the world record transaction, which was noted in the block chain last November, when nearly 200,000 bitcoins hit a single wallet. Who was behind it? Turns out it was Bitstamp, which has just released details of an audit that confirms the transaction.
Why publish an audit when you don’t have to? It’s time for more transparency, says Bitstamp, and an industry that takes responsibility for itself.
Meanwhile, the extent of the transparency inherent in the system is becoming clearer. At the first academic conference dedicated to cryptocurrency analysis – held in Bermuda, unlike every academic conference John Law has been to – a fascinating paper was published that attempted to show how much digital dosh the Dread Pirate Roberts had garnered during his stint at the helm of Silk Road (squillions) and how many the FBI seized (about a fifth of that). Which is a fairly detailed audit of the affairs of an outfit running in total secrecy – Silk Road, silly, not the FBI.
John Law is not on the libertarian arm of the bitcoin booster brigade, and thinks that decent regulation worldwide will be essential to help the cybercurrency reach its potential to really shake things up.
Like cash, this won’t preclude unregulated activity, but while the Wild West is all very well in the movies it’s not a patch on living in the actual 21st century. But, as Google’s director of ideas Jared Cohen pointed out this week, while regulation’s been talked about for years there’s a real lack of new ideas.
More transparency is certainly one way to build confidence in the bitcoin ecosystem. But as the protocol is inherently transparent, regulation could largely consist of mandating access methods to information that identified company transactions.
If you want to have the protection of the regulator, then sign up to its disclosure regulations. Bitcoin, being a brand-new industry and one with everything to prove, is at a phase where the players should eagerly accept this.
It’s paradoxical but true that openness is often more secure than secrecy. If you don’t rely on people not finding things out, you’ve got nothing to lose if they do.
By adopting a radical approach to regulation based on what may seem an unhealthy degree of disclosure about their systems and activities, bitcoin companies could well end up more trustworthy than existing financial institutions – after all, how well has all that traditional corporate secrecy worked of late, and for whose benefit?
John Law has long been a fan of compulsory systems audits for companies, where their software gets a thorough going-over by independent analysts; not a problem for companies starting with that in mind, but how many banks would pass?
Regulators and industry members alike should recognise there’s a one-off chance here to create a truly innovative and effective environment, suited to the realities of the digital millennium. It could drag the rest of the financial industry along with it.
Taking it personally
banker
The aftershocks of the failure of Mt. Gox continue to exercise the commentators, but the real world has moved on. In particular, the continuing problems in Ukraine, where the Russians seem to have forgotten that invading neighbouring countries stopped ending well some time ago, have led to a run on the banks in Crimea. The banks have responded by putting limits in cash withdrawals, which has increased customer confidence about as much as you’d expect.
“Wouldn’t happen with bitcoin,” one tweeter suggested. That’s true enough: in fact, would you even need a bank account?
The personal current account – PCA, in banking parlance – is a cornerstone of retail banking, In the UK, banks make about 30% of their revenue from PCAs more than from credit cards and savings combined, but in a 2008 report, the Office of Fair Trading noted that the PCA market wasn’t being run in the consumers’ best interest. Not much has changed since.
Charges and fees weren’t transparent, and customers had little idea how their accounts actually worked. Without that sort of knowledge, nobody was changing accounts, and thus with no competition the banks were and are free to do what they liked. Which, mostly, is help themselves. According to the OFT, banks made around £160 a year per current account – a nice trick with other people’s money.
Which is money you rarely actually see. Come payday, your employer asks the bank which has all of its money to send some of it to the bank that has all yours. Much the same sort of thing happens when you pay a bill. Unless you go to a cashpoint and withdraw a fistful of twenties, the banks have all the money all the time.
Bitcoin wallets could change that. The reason PCAs are such a good idea is that they’re gateways to all sorts of financial services such as bill paying, mortgages, insurance, credit cards and so on. Without a bank account, it’s very difficult to get at these. But – in that fabulous fantasy future where bitcoin is as ubiquitous as the Internet – bitcoin and software can do all that just as securely and reliably as a PCA.
Like real wallets, you can’t run a bitcoin wallet in overdraft. And it won’t pay you interest when you’re in credit, but then, overdrafts are terrible forms of credit and you won’t get much by way of interest from your PCA. So, why go to a bank for your daily financials?
In fact, there’s a more interesting question: why doesn’t the bank come to you? PCAs provide the banking system with a huge cash float that is an intimate part of its capitalisation, which is why you can’t get your cash out quickly from a Crimean cashpoint at the moment. But if bitcoin triggers a much slower but harder to control run on the banks, it need not be a disaster for them, yet it could be very good for us.
Your current account is worth £160 a year to them. Very well, let them pay for the privilege. They can run your bitcoin wallet for you, letting it count towards their liquidity much as PCAs do now, but on the understanding that you can click your fingers and get it back whenever you like – with all the direct debits, etc, intact.
That would put competition back into the system, much as number portability has kept the mobile phone companies … well, honest is clearly the wrong word, so let’s say nervous. Banks could offer services such as credit, or even actual cash, but would have to be a lot more transparent about how it all works. They might not like that, but it would make them better companies to deal with.
It would also finally put the old anecdote to bed – the letter from a bank manager to a perennially overdrawn customer that starts: “Dear Sir. It may have escaped your attention that the nature of our relationship is that you bank with us, not vice-versa.”
Art for art’s sake, bitcoin for God’s sake
Florence, Italy Mona Lisa mime
It’s not just academics who are getting it together on bitcoin – the first art exhibition on a bitcoin theme took place this week in San Francisco. The pieces were, as so often at such events, good solid contemporary stuff that manage a degree of wit, but doesn’t tent the boxers. John Law, who has been known to wave his walking-stick in disgust at modern artists for not being nearly adventurous enough, has some suggestions for future projects.
1. The Angels Of The West: A pair of statues, some 500 metres tall, of the Winklevoss Twins, in a heroic Soviet style, one pointing to the sky, the other gazing firmly upwards with hands on hips. Entirely hollow and coated in iron pyrites, this work will symbolise the power of bitcoin to create image unrelated to actual gravity. The inside can be divided into floors and used for affordable housing in the Bay Area, while the twins’ substantial self-esteem should provide funding for the construction.
2. Satoshis I – CXI: A room filled with a large bush, in which are hidden 111 teddy bears. Each of them has a tiny name badge pinned to their furry chests saying: “Hi! I’m Satoshi”. None of them invented bitcoin.
3. The Miner Lisa: A mysterious smile adorns the face of this chunky little robot, which seeks out the nearest power socket, plugs in and then just sits there. Over the next few weeks, the smile is slowly replaced by a frown, as of one straining at stool, while the robot gets hotter and hotter. Very occasionally, a bright copper ha’penny rolls down its trouser leg.
4. Fleur De Lie: A painting of Rene Magritte holding a tulip. Under it, in pink Comic Sans, is the phrase: “This is not a tulip.” The painting has a Raspberry Pi embedded in it, connected to the Internet via 3G and with its own bitcoin wallet and GPS receiver. If the painting isn’t constantly moved between cities and the bitcoin wallet increased in value, the Raspberry Pi ignites a set of explosives in the picture frame. Don’t get left holding the baby when the music stops!
Move over Banksy, Clear your schedule, Turner Prize committee. This isn’t just good art, it’s the Law.
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.
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