Bitcoin Book Seeks to Debunk Myth with Math

The latest book by financial crime journalist and fiction author Jeffrey Robinson is making its way around bitcoin missionaries, mercenaries and visionaries following its release last month.

BitCon: The Naked Truth About Bitcoin is a critical evaluation of the fantasy and fallacy of the dreamers and journalists that brought bitcoin to notoriety. Its reporting covers all manner of bitcoin debate – the currency, the commodity, the technology, the crime, the scandal, the business, the politics, the regulation, the economics – offering the bitcoin skeptics’ usual condemnations of the currency, but backed by numbers.

So when asked for whom the book was written, Robinson said: “I always write for me, and it’s the bitcoin book that I would want to read if I were thinking of spending my money on bitcoins or getting involved.”

He added that the bitcoin media and its darlings “don't justify any of the misinformation, spin or hype, can’t back it up with facts, and are doing it only to pump up the price of their own holdings. I think that needs somebody to scream, yell and kick and say ‘this is wrong, and don't believe it’.”

Robinson is bullish on the block chain, though – something he repeatedly emphasized, as he does in the book, is a distinct entity from the digital currency:

“It’s a tech buy, not a commodities buy, because the technology is very exciting and the technology is going to happen. The block chain is the future, but not necessarily with bitcoin.”

Though many believe bitcoin as a currency is essential to the viability of the block chain (without the incentive of a bitcoin reward, miners wouldn't work to maintain the block chain ledger), Robinson thinks the block chain can survive on its own, and claims to know of a number of Silicon Valley startups currently working to give the block chain independence from bitcoin as a currency.

Bragging rights

Robinson said that when bitcoin reached its highest-ever market cap, $1,147 last December, it was the direct result of a pump and dump scheme and a distant second to the Uzbekistani som.

“Nobody cares about this stuff, don’t tell me it’s changing the world,” he said. “The block chain technology may, and I believe will. The currency will not be part of it.”

That’s because bitcoin, “the pretend currency”, is illogical, he said, and despite a year of his research that included attending meetups, hearings and conversing with bitcoin’s supposed champions, he struggles to find a problem in the developed or developing worlds that it can solve.

He said:

“It solves no problem. It exists, but it’s a solution in search of a problem.”

When asked if he allows for the fact that he might be wrong about the digital currency bitcoin, he said: “I do not allow for the fact that the numbers are wrong. The numbers are right.”

For example, he pointed to ambiguous figures estimating 5.8 million wallets users as of this July. With just over 13 million bitcoins in circulation, each of these wallets should hold about 2.25 BTC on average, but this wouldn’t account for the unused, empty wallets holding not more than 1 satoshi.

Citing guesstimates of 3,000–20,000 bitcoin merchants worldwide in mid-2013, Robinson pointed out that if the 2014 figure of 63,000 merchants is true, that means that adoption has more than tripled in one year. Transaction volume, however, did not have the same spike.

“The transactions didn't triple, they remained the same,” he said. “The actual buying and selling of services with bitcoin has remained stagnant for 15 months. So now you’ve got 63,000 businesses chasing the same amount of money that the 3,000 were chasing.”

Transaction volume on the block chain, October 2013 – October 2014

Math and marketing

For merchants, bitcoin has been a valuable marketing tool more than anything else, Robinson said – though not by much.

Overstock sales hit $130,000 in bitcoin on its first day accepting the currency.

He said:

“$2m minus $130,000 divided by the number of days [it took him to get to $2m] – that’s $7,000 a day … hockey stick, boom, sales crash. And it’s the same story with every single business that’s said ‘we will allow you to pay in bitcoin’.”

He talked of the emotional, cultish aspect to the bitcoin “faithful” that so highly regard people like Patrick Byrne and other major executives making the bitcoin acceptance announcement.

“What happens is when you announce ‘we’ll accept bitcoin’ … is the faithful say ‘he’s supporting us, we’ll support him’,” he said. “And they love Patrick Byrne, they would deify him.”

Robinson spoke highly of Byrne, calling him a very brilliant man, but also a great marketer, maintaining that Byrne was not a “bitcoin fan” until he realized the way it could impact his business.

He added:

“Should every company on the planet have a system to accept payments through Coinbase or someplace in bitcoins as long as they don’t have to touch the bitcoins? Maybe. Is it good for bitcoin? No, because it’s not an endorsement of bitcoin it’s an endorsement of marketing.”

Money laundering

Robinson’s expertise in investigating financial crime and fraud leads him to believe that bitcoin is a bad way to launder money. He argued that because it doesn’t disguise the money as something else and instead just moves it, and the fact that it can be traced back to its criminal origins, bitcoin isn't the best laundering tool.

“It’s a great way to move capital flight money, it’s a great way to move tax evasion money, but it’s not a great way to launder money,” he said.

Robinson has authored more than 30 books including The Laundrymen: Inside Money Laundering, The World's Third Largest Business; The Merger: The Conglomeration of International Organized Crime; and The Sink: Crime, Terror, and Dirty Money in the Offshore World.

Block chain bull

BitCon: The Naked Truth About Bitcoin takes readers through the story of bitcoin, but perhaps the real conversation should be about the block chain. Robinson said that nearly all of the best journalistic pieces on bitcoin acknowledge that “the political, libertarian, wacko, delusional view should be completely disregarded and that the currency is a very secondary story”.

“All of these people that say that the dollar is trembling at the feet of bitcoin are getting in the way of the real story," he said. "The real story is the technology – the pretend currency traded as a pretend commodity is a side issue that will go away.”

He predicts that in an increasingly and soon to be completely digital world, no one will need bitcoin; that once all businesses come online and implement the block chain to allow easier payments in dollars, pounds, euros, yen and pesos, no one will need bitcoin.

He said:

“The odds of competition coming into the marketplace creating a course of least resistance that has nothing to do with bitcoin but does have to do with digital currencies means that in five years time no one’s going to need bitcoin the pretend currency. They’re going to love the block chain but they won’t need this pretend currency.”

He added that every company right now should be looking into the block chain technology exploring its potential benefits for their customers.

“A lot of people are going to make humongous fortunes with the block chain technology,” he concluded. “It’s been changed 70% in the last five years? It’ll be changed 170% in the next five years, and one of the changes will be the separation of the block chain from the pretend currency.”

Image via Amazon

BitConBooksJeffrey Robinson

October 25, 2014 at 07:01PM

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Digital Currency Summit Andorra: Bitcoin in the banking nation

Last September 17th to 19th, the Digital Currency Summit was celebrated in Andorra, the small country placed three hours away from Barcelona; it was a three day debate forum which treated topics like the use and importance of cryptocurrencies for banks, governments, investors and general public. In order to achieve that goal there were organised conferences and debates around four threads: “Introduction to Digital Currencies,” “Investment opportunities,” “Regulation: laws and taxes,” and “Financial and Banking,” in addition to a presentation of several startups and cryptocurrency-related projects.

Andorra is a micro-state composed of 85,000 people and characterized by a strong traditional banking system, and is usually considered as a tax haven —althought it is not— because of its bank secrecy and a quite flexible fiscal system. Historically it has been a major financial center and a reliable place to deposit money in.

Alex Puig, the event organizer, thought of Andorra as the idoneous place for this event to happen. As a software programmer, Bitcoin fanatic and expert in Andorra’s startup and banking environment, it was for him a great opportunity to bring together a revolutionary technology with bankers, politicians, startups, and investors. And it worked out! Networking thrived amazingly well between persons from different fields during the breaks, even though we all missed the attendance of Andorran political representatives, who didn’t appear.

The talks and debates were exceptional, fueled by speakers as important as Jon Matonis, Constance Choi, Marco Santori and Flavio Pripas, who talked about a wide range of topics from cryptocurrencies to DAOs, the financial potential of Bitcoin or the way banks and startups can implement Bitcoin to their business models.

These last talks were particularly interesting to the banking sector, well-represented by top Banks as “Banca Privada d’Andorra (BPA)” and “MoraBanc”, that are realizing that the world is changing around them while the banking sector is being left behind. There are currently many voices in the Bitcoin community that think that Bitcoin doesn’t add significant improvements as a currency compared to traditional currencies, and that see the true revolution of Blockchain and Bitcoin in their use as financial and services tools; that perspective might be more interesting to the banking system.

That is the view of MoraBanc’s delegate Juan Carlos Salinas, who thanks to the conferences has started to realize the huge potential about Bitcoin, even thought it is still too early for them to get involved in it as a business opportunity. Joan Manel Fernández, from BPA, admits that they can hardly imagine Bitcoin as being really important in the future since that would mean to place confidence in a new decentralized structure with no financial intermediaries, and that will not be easy, but nevertheless they are resolved to keep abreast of cryptocurrency’s development and to keep in touch with Bitcoin sector. On the other hand, both find regrettable the lack of institutional support to the Summit, given the suitability of Andorra for this kind of technological initiatives, in the same way that has been happening in other small scale and flexible States as Malta, Gibraltar and the Isle of Man. Jon Matonis, in his interview for El Diari Ara, said in similar terms that Andorran politicians should support banking efforts in implementing the new technologies providing security and predictability or, at least, not raise barriers against innovation. In his view, the banking sector should be less conservative if it wants to attract investment.

We talked about all these topics with event organizer Alex Puig.

Ferdinand Reyes: Good morning Alex, could you explain to us what is the approach of the meeting and what makes it different from other meetings?

Alex Puig: Our approach was formative: we didn’t want a conference focused on people who already knew about cryptocurrencies; we were rather interested in educating decision-makers and managers in the financial sector. We want to be the meeting point between the most disruptive entrepreneurs and the financial sector, maybe a bit more classic but yet willing to go forward to the XXIst century.

FR: What is your assessment of the Summit? Did it fill your expectations?

AP: Yes and no. It did in the qualitative side, the talks were high level and networking during the event has satisfied everyone beyond all the forecasts. In the two days of conferences I have seen the creation of many professional relationships and alliances that might end up in profitable businesses. On the other side, I expected this new technology to arouse peope’s curiosity, and that Andorra could have attracted much more attendance. In this aspect I would have liked to pack the conference center.

FR: What is the state of Bitcoin in Andorra? What does its future hold?

AP: Bitcoin is currently alegal: there is no official position on the issue. If the government reacts and sets out a stable regulatory framework, Andorra might have the potential to attract Bitcoin startaps since it is not a fiscal haven and has got a deeply entrenched strong banking sector.

FR: Andorra is a flexible country for business and investments. Has the summit had the impact you expected on financial and governmental circles?

AP: In the private sector, definitely. Local big business and specially some Banks have changed their minds about cryptocurrencies and have started talking about studying deeply how it works and how to use it. We will see what happens with the government; one of their first priorities is to find for a new, less dependent on tourism and sustainable economic model for the country. However, they didn’t show any interest in the Summit.

FR: Are you looking forward to the next step or planning another project?

AP: Yes, we are working to bring the Digital Currency Summit to Barcelona and Madrid in May 2015.

FR: Thank you very much for the interview and for this fantastic Summit, Alex.

The Summit left on me a very good impression due to its professional organization, the closeness of its organizers and the easiness with which I could talk with loads of people. I hope that the next events in Barcelona and Madrid will see a larger attendance; the high quality talks and the networking opportunities it brings are well worth taking a chance.

October 24, 2014 at 03:06PM

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An Interview with Roger Gabriel of bitINKA

Roger Gabriel has four years of experience working in a financial division of IBM in Argentina and 5 years working on e-commerce businesses. He is launching a Bitcoin trading platform that is easy enough for anyone in South America to use.

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Ruben Alexander: How did you get started with Bitcoin?

Roger Gabriel: On bitcoin itself around July of last year, I read a lot about the currency and it intrigued me. Made my first purchase of around 0.25 BTC and just held it on a wallet. On developing a platform around November of last year, I had purchased several coins and made some profit [and] I wanted to invest that on a bitcoin related business.

What would be your advice to other Bitcoin investors when searching for a company to support?

To investigate the product, if the company/product could make a difference and not just be another exchange. Mt. Gox went down and tons of companies are fighting to replace that hole, but no one is doing what we are trying to do [which] is make a difference with bitcoin on a daily basis.

We are trying to integrate bitcoin on the current financial world to make a difference.

Basically, how everyday users can benefit from bitcoin not just bitcoin followers.

Do you recommend that Bitcoin investors focus their efforts outside of the US? If so, why?

Yes as previously mentioned based on what we are doing, using bitcoin in countries like Argentina and Venezuela where there are currency exchange restrictions bitcoin falls right into place. On our product you will see how we employ bitcoin to satisfy this demand, created by local governments.

What has been your experience in getting Peruvians to use Bitcoin?

[The] Bitcoin movement here in Peru just started. We are trying to get the attention of the local community by showing how easy bitcoin can fit on local finance when we explain our product, and for example we tell a cab driver how easy it could be for him to charge customers when they don’t want to pay cash: they immediately ask when is the product coming out.

If a bitcoin owner wanted to travel to Peru, what is one thing they should do and see?

It depends on how he wants to use Bitcoin, if just for tourism. Unfortunately right now we haven’t launched yet, and actually tourism is one of the target areas for our platform, so if they come here before December I would guess try selling it online.

What is your advice to Spanish speaking Bitcoin users who want to get more involved in the community?

This is a tough question since there are very little newspapers that are just based on bitcoin in Spanish, but the good thing is that since there is a lot of interest in bitcoin from bilingual users, there are tons of Facebook pages and Facebook groups – even a couple of pages that go ahead and translate important articles. Also they can go ahead and follow us on Facebook and we will have news on not only our product but [also] the LaTam Bitcoin Community.

What specific problems will bitINKA solve for the Peruvian community?

Great question, but we don’t only target the Peruvian community but the community in South America. We will change the way micropayments are processed; I can even dare to say we will create a demand of our product in micropayments in Peru. We will show everyone a new method to send money to people in neighboring countries like Argentina and Venezuela and have both the sender and receiver benefit tremendously from using our product. We will educate the local community on how all of this is done using Bitcoin and make it simple.

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Click here to read this interview in Spanish.

October 22, 2014 at 09:12PM

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PeerTracks: Paradigm Shift In Music World

The time has come for starving artists to finally make real money from their music. As the Internet disrupted the way record labels make their money, the blockchain is taking this another step by threatening to render them useless. PeerTracks is matching the artist up with the audience and allowing them to both make money, all the while spreading knowledge of the blockchain to the mainstream.

I got a chance to speak with Cédric Cobban, the individual who, along with Eddie Corral, is orchestrating the unique Peertracks effort.

What is Peertracks?

PeerTracks is a music streaming/retail website that plugs into the BitShares Music blockchain. It’s a user friendly front end aimed at the masses, allowing them to benefit from all the advantages crypto brings without the need to understand or even know what a blockchain is.

What does PeerTracks do?

For an artist, it’s a platform to sell your music and engage your fans through the creation and sale of your own artistcoins, whose value is tied to the sale of your music. This incentivizes artistcoin holders to promote you, get you to stardom and increase your sales – all this without a middleman taking a cut.

For a fan/regular user, it’s a place to buy cheaper music and know all your funds are going to the artist. It’s a place to discover new music and benefit by buying the coins of artists you think will be big. Being avant-garde has never been so lucrative!

PeerTracks essentially ties price discovery with talent discovery since the value of an artist’s coin is tied to his music’s sales.

How does it work?

Everything PeerTracks allows is made possible by the BitShares Music blockchain. BitShares Music is essentially a spinoff of BitSharesX, only tweaked to make it better suited for the music economy.

PeerTracks users will spend and earn BitUSD, a crypto-currency market pegged to the US dollar. This shields our users (which are not day traders) from the volatility normally present with crypto-currencies while still benefiting from the many advantages like low fees.

This blockchain is a decentralized exchange; many things trade on it. First, there are Notes, the unit of the blockchain. Then there are artistcoins, which are user issued assets created by the artists to sell (or give away) to their fans. Think Snoopcoin, Biebercoin, etc.

Third and finally, there are BitAssets, like the BitUSD, which are market pegged to their real world counterparts and are collateralized by Notes, meaning all BitAssets are backed by units of the blockchain.

All trades are done ON blockchain. No centralized exchanges required in:

• the purchase of music (a fan sending BitUSD to the band)


• the trading of artistcoins (Snoopcoin for Rihannacoin, or Biebercoin for BitUSD)


• the trading of Notes for BitAssets or artistcoins

PeerTracks never holds any funds. All trades are done peer 2 peer, on blockchain, no trust required.

What is your vision for PeerTracks?

PeerTracks and BitShares Music are going to change the entire digital content economy.

Not only does Peertracks cut out extremely inefficient middlemen, but it also links the fans, the artists and the promoters’ incentives towards the same goal: getting songs and albums out to the world and generating as many sales as possible. Napster changed the world, yes, but it shortchanged the content creators. Incentives did not align… simple as that. This project will change the way small time artists are funded, how they are promoted and how they make a living from their music. The artist’s coin being tied to sales of music is one thing but combining this with “token controlled access” allows artists to bring value to their fans at relatively low cost. For example, an artist could grant backstage passes to anyone with over 100 of his artistcoin.

The model does not stop at music. This concept can be used for movies, ebooks, and even physical goods traded online (eBay could adopt this model for example)

What are you currently busy with?

We are getting BitShares Music and PeerTracks launched. We are presently focused on our pre-sale which started october 6th. Anyone can claim their stake in the future of music by going to http://ift.tt/1suC8nv

What is your professional background?

Eddie Corral’s background is 25 plus years working with the biggest names and companies in the music business. He brings years of copyright, publishing, marketing and promotions experience with independent and major label artists – from sheet music to download he has taken many artist from recording studio to radio.

For myself [Cédric Cobban]: I am a small time entrepreneur in a relatively small town called Sherbrooke, Québec, Canada. Co-owner of an MMA gym + real estate investments (not too relevant to technology!)

My interest in Austrian economics and investing led me to Bitcoin in 2011 which led me to BitShares… which consumed me!

What would you like to tell our readers?

We would like them to know that they have about 45 days left to participate in the NOTE pre-sale. If you see value in what we are doing and realize that this technology we can displace a multi billion dollar industry, check out the pre-sale at http://ift.tt/1suC8nv and be a part of it.

October 22, 2014 at 01:47PM

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Encrypted Chat Apps: Which is Best?

It’s been said that sending an email is like sending a postcard—you should assume that it’s viewable by many others. While this is true, it’s only true because trusted third parties—that is, the email providers—have been discovered to either be viewing message contents themselves, or revealing them to additional third parties (e.g. governments or advertisers). It’s a classic result of the “problem of trust.”

For those of us who value privacy (and privacy isn’t just for people with “something to hide”), it’s become necessary to go one step further in our communication: encryption.

Encryption is a mathematical process, and it’s one of the features that makes the Bitcoin blockchain secure against attackers. In addition to the blockchain, encryption can also be used to secure the contents of a simple message. If you know what a Bitcoin payment address looks like, then you know what an encrypted message looks like: gibberish (also called “cyphertext”).

The encryption of emails, however, is notoriously difficult. In fact, it’s been reported that when Edward Snowden was preparing to send his leaked NSA documents to The Guardian, he first had to make a 12-minute instructional video on email encryption for recipient Glenn Greenwald.

Private communication is beholden to the “network effect”—that is, the more people who use it, the more valuable it is (just like Bitcoin). When trying to communicate securely, you’re not likely to get many takers if you and everyone you know have to be confused by a 12-minute video first. That’s where far easier to use encrypted chat apps come in.

An explanation of my review criteria:

Open Source: Ideally, an encrypted chat app (or any software, for that matter) will be completely open source. This means that all the code used in the program is published and available for review and even improvement. This is also the only way to ensure that a given program really does what it claims to do and nothing more. It’s the only way to ensure that there are no “backdoors” in the software. Backdoors are pieces of code that would allow the developers to access your private information without your knowledge.

Information Required: You may know the feeling—you make it all the way through a website with a single goal, only to get “infowalled”: you’re required to create an account and give a bunch of personal information before proceeding. It’s annoying and decidedly non-private.

Peer-to-Peer: Part of the beauty and strength of peer-to-peer software is that it removes a central server as a single point of failure (or corruption). Bitcoin and all cryptocurrencies are peer-to-peer, and some encrypted chat apps are, as well.

Here are the (current) best and brightest in encrypted chat apps (click table to enlarge):

[Gliph, Telegram, Bitmessage, Tox, TorChat, TextSecure, surespot]

As a final note, it’s worth mentioning that there is also an encryption protocol called OTR (Off-The-Record), which can be applied to several popular instant messaging clients including Facebook and Google Talk. There are many providers of OTR.

So stop sending all your messages on the equivalent of postcards. Download an app or two listed above, tell all your associates about it, and take back the joy that is unobserved human communication.

Oh, and did I mention? All of these apps are free.

October 21, 2014 at 06:17PM

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Bitcoin is Not Backed by Anything (And That’s OK!)

Whenever you hear, “That currency is not backed by anything!,” it’s almost always meant as criticism. Hard-money enthusiasts are quick to point out the horrible track record of fiat currency. Nearly without fail, currencies “backed by nothing” get heavily devalued through inflation, and they often collapse within decades.

The best solution, so far, has been to tie currency to a commodity whose supply can not be arbitrarily inflated by governments or central banks, or to use that commodity directly as a currency. Gold and silver have served this purpose best, and they have been used successfully for millennia. Backing any currency in precious metals restrains the possibility for inflation.

But, when we look deeper, the connection between being “unbacked” and being at risk for inflation is not a necessary connection. It’s a reasonable connection to make, especially given the history of fiat currency, but it’s conceivable to think of a currency which is inflation-proof and not backed by anything. It might sound fanciful, but thanks to Satoshi Nakamoto, it’s not just possible – it currently exists, and it’s called “Bitcoin.”

Bitcoin is not backed by anything; you can’t “redeem” your Bitcoin for gold at a bank. And it’s not even “backed” by declaration of law. To hard-money folks like myself, that sounds like a recipe for inflationary disaster. But, as implausible as it sounds, Bitcoin is not susceptible to arbitrary inflation. It was intentionally designed this way.

Inflation ultimately happens for one reason: central control over the power to create new money – whether it’s a government trying to pay its debts, or a central bank trying to ease monetary policy. This is one reason why Bitcoin avoids arbitrary inflation: its supply is not controlled by any central authority. The supply is regulated by software and mathematics, not politics. Power in the Bitcoin world is decentralized over an enormous network of computers.

In fact, the software is so precise, we can predict a hundred years into the future almost exactly how many bitcoin will be in existence. You can’t say that about any other currency which is “not backed by anything.”

But it’s not only the production of Bitcoin which is decentralized; it’s also their record of ownership. Every single Bitcoin which has ever been created can be traced back to its inception – including every transaction and change of ownership. This ledger, called “the blockchain,” is publicly viewable, and it is practically set in stone. The ledger is not stored on a central server; it’s not controlled by a few gatekeepers. It is stored on every single computer serving as a node around the entire globe. I’d suggest there’s nothing else you can own which comes with such a clear proof of ownership.

All put together, this means you can’t forge Bitcoin records; you can’t fake ownership; and you can’t create new Bitcoin out of thin air. And it’s all possible through complex mathematics – no trust in a third party, government or corporation is required. In a sense, if Bitcoin is backed by anything, it’s backed by the strength of clever mathematics.

Bitcoin might represent the first currency which is not backed by a physical good and still prevents arbitrary inflation. It has expanded the limits on our traditional conception of money. So, next time you hear “Bitcoin is not backed by anything!” understand it as a deep compliment to the ingenuity of Satoshi Nakamoto.

October 21, 2014 at 02:53PM

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Press Release: Polish company first in the world to sell shares for Bitcoins

A Polish company, InPay S.A., is the first in the world whose shares are available for purchase in public offering using the digital currency Bitcoin. The sale has just launched on the equity crowdfunding site Beesfund.com.

Equity crowdfunding is simply raising capital thanks to the online community. Unlike the reward-based crowdfunding, made popular by sites such as Kickstarter, Indiegogo or RocketHub, in equity crowdfunding people who are involved in financing the company receive personal shares.

Examples of sites which enable this type of capital acquisition include the American websites EquityNet and Fundable or the British Crowdcube. Thanks to these services companies have raised over 300 million dollars in total. But up till now none of the leading platforms had enabled the purchase of shares through Bitcoin.

This solution, in cooperation with InPay S.A., is proposed as a first by the Polish equity crowdfunding site Beesfund.com. Thanks to the Bitcoin payment integration system developed by InPay S.A., Beesfund is able to offer the purchase of equity from companies looking to raise capital.

InPay is the first such payment system in Central Europe. Up till now similar solutions on the continent had only been created in the UK, Sweden, Holland and Denmark. The most well-known, thanks to the investment of billionaire Richard Branson, is an American company BitPay, which also has ambitious plans of conquering the European market by opening their Amsterdam branch.

Poland definitely stands out in comparison to the rest of Europe and the world in regards to the level of interest in Bitcoin and its practical applications.

1.) Poland is in the global TOP 10 in terms of regional interest of Google searches (last 30 days).

2.) We are one of ten countries in the world with the highest number of Bitcoin wallet downloads (last full month, September).

3.) Two out of the ten largest Bitcoin exchanges in Europe are Polish.

Krzysztof Piech, PhD, Warsaw School of Economics: “Indeed Poland has the opportunity to become a regional European leader in terms of solutions based on the Bitcoin protocol. We should be able to take advantage of this competitive edge.”

Michał Kisiel, PhD, Economic University in Wroclaw: “Up till now payment innovations have been met with much demand on the Polish market. This is also the case with Bitcoin, whose applications don’t need to be limited to e-commerce. Combining digital currency with the social model of raising funds is an interesting experiment and a step towards a “capital market 2.0″, which is decentralized and has low transaction costs.”

Arkadiusz Osiak, chairman of the board of InPay S.A.: “In the world as a whole, mainly in the US around 60 venture capital investments have been made in companies linked to Bitcoin. The most recent examples, in Blockchain or Bitfury, have reached 30-40 million dollars. The subject of Bitcoin in both the USA and UK is taken more seriously than in Poland.”

Lech Wilczyński, president of InPay S.A.: “Most people perceive Bitcoin only through the lens of its dynamically changing price, while what we see here is a specific need, not a problem. We are using the Bitcoin protocol to provide quick and free flow of payment funds for company owners from buyer to seller, regardless of their location.”

Arkadiusz Regiec, president of Beesfund S.A.: “For crowdfunding platforms like Beesfund, Bitcoin seems to be the ideal engine for growth. It doesn’t limit buyers to specific acceptance areas like VISA or PayPal, it makes the whole purchase procedure much quicker and it lowers transaction costs.”

We wish Polish companies the best of luck, as they are showing that they can compete on the global market of solutions for new technology.

Public offering: http://ift.tt/1oq2lUB

Media contact:

Lech Wilczyński, president of InPay S.A., tel. +48607674727, lech.wilczynski@inpay.pl

Arkadiusz Regiec, president of Beesfund S.A., tel. +48691145544,

arkadiusz.regiec@beesfund.com

October 21, 2014 at 02:52PM

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21 Top Bitcoin and Digital Currency Companies Endorse New Digital Framework for Digital Identity, Trust and Open Data

MIT Media Lab Spin-out ID3 Spearhead Group to Build an Open Source

Secure and Trusted Platform to Advance Global Digital Currency Transactions Group to Advance Global, Industry-wide Initiative Based on Windhover Principles

Media Contact:

Chris Carleton

CHEN PR for ID3

m: 857.891.2989

o: 781.672.3115

ccarleton@chenpr.com

Cambridge, MA (October 20, 2014) – ID3 (Institute for Data Driven Design), a research nonprofit founded out of the MIT Media Lab, today teamed with nearly two dozen leading digital currency firms to announce the Windhover Principles, a new principles-based framework collaboratively written with public and private stakeholders to ensure secure personal identity, trust and access to shared open data on the Internet. Key advocacy and support was generated by DATA (Digital Asset Transfer Authority), in building the coalition.

The Windhover Principles are being implemented on an open source platform, foundationally based on ID3’s contribution of its Open Mustard Seed (OMS) software platform. As the cornerstone of the new principles and framework, ID3 announced support from a wide range of digital currency and Bitcoin-related companies and individuals: BitPay, BitReserve, Bitstamp, BTC.sx, Coinsetter, DATA (Digital Asset Transfer Authority), Delta, Epiphyte, Erik Voorhees, Hub Culture Group/Ven Currency, LaunchKey, Personal, Personal Black Box, Ripple Labs, SnapSwap, Swarm, Trefoil Labs, Vaurum, Xapo, ZipZap and 37coins.

The Windhover Principles for Digital Identity and Trust are deeply rooted in the belief that individuals should have control of their digital personal identities and personal data. Underlying this core value is the principle of ensuring innovation in trust and privacy. Concurrently, the industry group’s support of transparent, proportionate and risk-based regulation will allow stakeholders to meaningfully leverage new technologies for enhanced governance, auditing and enforcement needs. Implementation of the core Windhover Principles on the inclusive OMS open-source platform as a sustainable industry step, paired with MIT-designed Living Labs, underscores a results-driven ethos supported by the group of companies and supporters.

Framing the issues, ID3 Chief Scientist and Co-founder Dr. Alex “Sandy” Pentland, Toshiba Chair Professor at the MIT Media Lab and co-lead of the Big Data and Personal Data & Privacy Initiatives at the World Economic Forum said, “The Windhover Principles support my view that it is time for us all to take charge of our personal data. Technologies such as OpenPDS and ID3’s Open Mustard Seed provide a new technical solution to a rapidly growing societal problem. Our work at MIT will continue to influence ID3 and the emerging industry-supported OMS open source project – not only in technology, but also in method, as we assist in architecting MIT Living Labs test beds to understand and optimize these new solutions.”

Open Mustard Seed is a trusted compute platform for developing and deploying secure cloud applications to collect, compute on and share personal data. It enables the development and deployment of web apps in a secure, user-centric personal cloud. Just as the original HTML code gave rise to the World Wide Web and new types of bottom-up social communication and collaboration, OMS can be understood as a new “social stack” of protocols. The framework provides a stack of core technologies that work together to provide a high level of authentication, security and ease of use when sharing and collecting personal and environmental data. This enables the control of web-enabled devices, and engagement with others to aggregate information and view the results of applied computations via protected services. The Windhover Principles serve as the cornerstone of this framework.

“The next phase of Internet growth requires a re-tooling, with identity and trust at the foundation, to bring the ownership and control of personal data back to the individual. Doing so will spawn a new stage of collaboration and open data exchange,” said ID3 Managing Director Dan Harple, Internet pioneer, serial entrepreneur and MIT Entrepreneur in Residence. “The Windhover Principles, coupled with an inclusive open sourced Open Mustard Seed project and MIT-influenced Living Labs, are tremendously positive steps toward an industry-wide solution. Our vision for OMS is as an inclusive platform to transform how we, as collective Internet users, can take back our personal data, and share it in a trusted and secure way – not only for Bitcoin and digital currency transactions, but for other data and media types as well.”

With the digital currency industry’s support, ID3 and participating firms plan to iteratively test, implement and deploy granular technical solutions to trust, privacy and governance on the OMS open source platform. Leading digital currency firms are committed to future, collaborative development of legal and technical frameworks – along with subject matter experts, government bodies and the private sector – to implement the core Windhover Principles through rigorous testing in MIT-type Living Labs.

Balancing regulatory requirements with the increasing need for privacy and secure identity is a core component of the Windhover Principles and OMS. “Illustrating how a new form of autonomous industry governance can emerge using open source methods to solve large systemic problems, this industrywide collective includes some of the world’s foremost thought leaders and innovators on today’s Internet and their companies,” said ID3 Co-founder and Executive Chairman Dr. John Clippinger, an internationally recognized research scientist at MIT Media Lab. “The increasing complexity of technical systems render effective and balanced regulation of identity and personal data – including KYC (Know Your Customer) and risks of AML (Anti-Money Laundering) – a deeply complex and rapidly changing global process that cannot be sustained by current governmental and private sector practices. New forms of engagement are needed by all stakeholders that combine innovative digital technologies with new regulatory practices and intensive testing to drive viable privacy- and security-preserving solutions for the 21st century.”

The Windhover Principles were collaboratively written by the industry group of companies, and their advisors, and had dialogs with Financial regulators. “In Europe as well, Anti-Money Laundering and Counter-Terrorist Financing requirements are getting stricter and stricter, and we will pretty soon run out of tools to deal with these requirements adequately and efficiently. The MIT/ID3 Platform together with the Windhover Principles constitute an excellent opportunity to build the AML/CTF tools we will need tomorrow whilst at the same time allowing individuals to have control over their personal data, a key privacy tenent” said Jean-Louis Schiltz, IT lawyer and Luxembourg’s former minister of Communications and Defense.

“The advent of digital ledger technologies, when coupled with digital identities, has the potential to extend financial access to everyone in the world, rather than just those lucky enough to be banked,” said Ripple Labs Chief Compliance Officer Karen Gifford. “For everyone, these new technologies better support security sought by law enforcement, trust sought by merchants and privacy rights of individual consumers. We’re excited to be a part of ID3’s initiative to build a global framework for identity as a value-added layer to the initial financial innovation started by virtual currencies.”

“The Blockchain and other distributed technologies call on us to reimagine our existing world in ways that carefully balance public policy goals in the 21st century world – the global impact of the Internet on shifting norms of interaction and transaction presents serious challenges to traditional paradigms of the governance process and geographically localized regulatory regimes,” said Constance Choi, founding board director of DATA and Seven Advisory, who advises a broad spectrum of entities and policymakers in the digital asset industry. “Policymakers and private industries are beginning to understand the challenges and opportunities in these complex dynamics and collaborative work is underway to ensure self-determination and inclusiveness, and increase trust and viability. This is at the heart of the Windhover Principles and the OMS reference platform.”

About ID3

ID3 is a research and educational nonprofit with a mission to develop a new social ecosystem of trusted, self-healing digital institutions. Addressing the severe structural limitations of existing institutions by empowering individuals to assert greater control over their data, online identities and authentication, the organization is committed to enabling the design and deployment of a new generation of trusted digital institutions and services globally. Additional information on ID3 is available at www.idcubed.org by sending email to info@idcubed.org.

The Windhover Principles and Open Mustard Seed are trademarks of ID3. All other product names are trademarks of their respective owners.

________________________________________

The Windhover Principles for Digital Identity, Trust and Data

1. Self-Sovereignty of Digital Identity and Personal Data:

Individuals and groups should have control of their digital personal identities and personal data.

Today we communicate, share and transact digitally over the Internet. Individuals who make use of the Internet for these purposes should have control over their digital identities, ensuring individual autonomy, trust in their communications and counter parties, as well as in the integrity of the data they share and transact with.

Individuals, not social networks, governments, or corporations, should control their identity credentials and personal data. Control of one’s identity and personal data means that people should have unfettered access to their personal data, the ability to verify attributes of their personal identity profiles, and the ability to prevent unauthorized public and private access.

We support the collaborative open source development of systems that embody these principles and recognize the need to address the requirements of legacy regulatory mechanisms, including by evolving innovative digital technologies to improve privacy, governance and enforcement.



2. Proportionate Enforcement and Risk-Based Regulation:

Enhancing / improving personal privacy while promoting effective governance and accommodating legitimate auditing and enforcement needs.

We encourage innovation in identity, trust, security, and data technologies and policies to provide effective methods to address governance and enforcement concerns. Governance includes the concepts of transparency and accountability necessary to protect digital transactions from abuse. We believe these technologies can address public policy interests by enabling appropriate access and verification of identity data. Entities and individuals, acting on the basis of verifiable approvals, including due process and appropriate warrants, should be able to access such data through specific and auditable means. New and evolving digital technologies make it possible to protect an individual’s privacy while providing authorized government access to customer identification, due diligence and transaction monitoring information for legally authorized needs.

3. Ensuring Innovation in Trust and Privacy:

An effective, autonomous identity system reiteratively furthers trust, security, governance, accountability and privacy.

Protecting privacy and fostering trust and governance are foundational Windhover Principles that support a fully functional identity system designed to collect and analyze data in a network in which identities are continuously and independently authenticated. These core principles are intended to foster development of more trustworthy, effective and resilient products and services to minimize the risks and costs of fraud, money laundering, terrorist financing and other criminal activity.

4. Open Source Collaboration and Continuous Innovation:



An inclusive, open source methodology to build systems that embody these principles.

Supporters of the Windhover Principles agree to cooperate to build systems that deliver these requirements and to participate in Living Labs to develop strong and innovative technical product solutions that interoperate to meet these challenges.

________________________________________

PARTNER QUOTES

“Hub Culture has been working with ID3 since 2013 to develop the first consumer application layer using Open Mustard Seed technology through the development of HubID, a unique identity product that enables members of the Hub Culture network to own and manage identity services. HubID represents a big step forward in new AML/KYC approaches, works globally with the Ven currency, and features characteristics built with the Windover Principles and other sustainable governance systems in mind.”

Stan Stalnaker, Founder and CEO, HubCulture/ Ven Currency and Impala

***

“I couldn’t be more excited to see the digital currency industry taking individual data rights, integrity, and collaboration seriously. This marks a giant step forward for all of us and a great improvement over anything that exists in the traditional finance world.”



Joel Dietz, Founder & CEO, Swarm Corp.

***

“Decentralized identity technology will allow the bitcoin industry to increase user privacy=cy and create new paths for cheaper and more effective compliance. We are solving global regulatory issues with an ethical solution that simply works better.”

Jaron Lukasiewicz, CEO, Coinsetter

***

“We are living in exciting times indeed. Technological innovations are enabling us to challenge and successfully redefine and reinvent old structures and paradigms. For the first time in history it is today possible to transfer value over the Internet instantaneously, inexpensively, globally and security, and to digitally and incorruptibly register assets and property titles around the globe. The ID3 project adds another fundamental component to our digital evolution as humans – an unprecedented way to protect the human right to our privacy and identity. It is certainly one of the most exciting projects I have ever been involved with.”

Juan Llanos, Chief Transparency Officer, BitReserve

***

As a company that works so strongly towards providing privacy and security, LaunchKey is excited to be a part of the collaborative effort promoting these values as they have been embodied by the Windhover Principles.

Yo Sub Kwon, Founder & CEO, LaunchKey

***

“We live in a time when the sophistication of international data thieves seems steps ahead of the best defenses of even our most well-resourced, rigorously audited, and locked-down organizations, both private sector and government. The PII of the majority of law-abiding Americans’ and many additional Internet users has been compromised and is now available on data black markets, while important classified military and national security data is in the hands of foreign powers. Our modern data security architecture is fundamentally flawed.

As a result, among our emerging fears is that criminals will begin perpetrating crime or terror activities under the cover of stolen identities, effectively framing law-abiding citizens as criminals and wrongfully distorting the application of the US justice system, as well as foreign powers using our own technologies against us in potential future conflicts. We applaud MIT’s ambitious ID3 effort to fundamentally rethink how PII and sensitive data is compartmentalized and secured, and look forward to doing what we can to support and advance the project.”

Byron, COO, Vaurum

***

“We at BTC.sx believe in the Windhover Principals as it outlines an approach to give full control of an individual’s personal data back to the person it belongs to. In a paradigm where personal data sharing is becoming a prominent part of our increasingly technology dependent culture; controlling the distribution of your most sensitive and secure data is becoming essential. We are seeing the growth of an industry that is being built on the intrinsically decentralised nature of Bitcoin’s design. As a result, the fiduciary responsibilities of businesses operating in this space have never been more important. What ID3 is working on is a framework for Bitcoin businesses that work tirelessly to comply with AML/KYC responsibilities globally to conform whilst maintaining the integrity of their customers’ user data.”

Joe Lee, Founder & CEO, BTC.sx

***

“Identity is a key concern for our bank customers. For banks and other financial services companies, the complexity of KYC/AML and safeguarding customers’ private information has been the number one barrier to providing services cost-effectively. This has effectively priced banks out of providing services to much of the world’s population – creating massive global unbanked population without access to basic banking services. This includes 10 million households in the US along and many hundreds of million more globally.”

Edan Yago CEO, Epiphyte

***

“Online media properties and data brokers collect an unprecedented amount of information about consumers which could be easily abused. ZipZap fully supports the open source platform proposed by the ID3 Team which lays out the groundwork to shift the control of personal information back to the individuals as the rightful owners, while not preventing legitimate commercial or government access. It provides a path for a perfect balance between the need to know and the need to protect a citizen’s personal information.”

Alan Safahi, CEO, ZipZap Inc.

October 20, 2014 at 06:03PM

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Bitcoin… We Are All The Blockchain

Bitcoin… we are all the blockchain

Since the first great jump in Bitcoin’s exchange rate in early April 2013, speculative trade has stolen the limelight as the main Bitcoin story. Tweets of “To the moon!” echo like a rallying cry, selling what amounts to a collective vision statement. But what’s the vision? A respected VC assures us it’s “still headed to 10k” as if Bitcoin was a prize thoroughbred being written down by the Bookies, but still had a few Derbies left in her… Is that all this is about?

Whatever one feels about the ‘profiteer mentality’ so evident across the Bitcoin movement, it is clear that without this driver, this long overdue financial systems innovation may not have taken hold. So we may as well accept that the ‘greed factor’ is serving a greater purpose. However, whenever the Bitcoin price slides, editorials claiming the demise of Bitcoin demonstrate that both the detractors and the devotees are focusing on an artifact of the system rather than the system’s innate value.

It’s about all of us…

Bitcoin’s real value is closely related to the manner in which its transactions are validated across a highly distributed network in what amounts to a collaborative process. This inclusive decentralized validation process is, after all, one of the key differences between Bitcoin and centralized financial systems. It must be understood that decentralization is inherently attractive to people because it’s about all of us.. .and the promise of guaranteeing impartiality and fairness. It is Bitcoin’s greatest achievement to date that its version of decentralization, being achieved in an area as tricky as financial transactions, actually works at all.

However, the real value of Bitcoin is not reaped at an individual level. If a few thousand of us get rich, is that what Bitcoin is about? Are we heading towards replicating the wealth disparity evident in western capitalism in the digital currency space too? If we are, perhaps we should pause and take a few breaths.

We are all the block chain, metaphorically

The real value of Bitcoin resides and is apparent at a group level. We are all the blockchain, metaphorically. Technically, miners may process the transactions by computing and embedding blocks into the blockchain, but it’s the people who make the transactions that drive the system. But what kind of transactions? This question hints at a conflict issue within the way the existing system is working, i.e. if Bitcoin continues to be hoarded and transaction volumes are mainly associated with cashing in and out of Bitcoin on exchanges, we are indeed mainly treating it as a commodity, rather than leveraging from its utility, like hoarding a limited supply of gasoline instead of using it to fuel a car to go from A to B.

Alternatively, we could be asking: ‘What can Bitcoin do that traditional currency systems cannot?’ Simply buying things with Bitcoin instead of normal money is still a very basic use of the technology, as it doesn’t really begin to exploit the full potential of the medium. But like most innovations, when they first arrive they tend to be associated with legacy systems: the ‘Horseless Carriage'; the ‘Electric Candle’; the ‘Digital Super Highway.’ In other words, we inevitably tend to match them with existing concepts that we are familiar with. This is where most of us still are with Bitcoin… even the devotees.

One just has to look at the plethora of startups and VC backed businesses in the alt-currency space (with a few notable exceptions) that are only focused on the handling or holding of Bitcoin rather than leveraging from its innate characteristics to drive innovation in other sectors, to know that we are still very much in a Bitcoin 1.0 world.

To grow Bitcoin adoption, we don’t really need endless ‘money handling’ applications competing with each other, we need mass market applications that offer new forms of value facilitated by Bitcoin transactions, millions and millions of them. But what has been the reality so far?

Like the great Railway boom and land grab in the USA in the 1850s and 60s

Since early 2013 the Bitcoin/cryptocurrency space has resembled a kind of land grab by those who quickly saw the Bitcoin revolution as an unpopulated parallel monetary universe with vacant land as far as the eye could see. Yes it has indeed been like the early days of the web, but perhaps more like the great Railway boom and land grab in the USA in the 1850s and 60s. Back then, just like in this current cryptocurrency frenzy there was technology innovation, dramatic new efficiencies, opportunism, greed and yes… those legendary ‘snake oil’ salesmen.

The explosion of interest in Bitcoin has been like a large room full of empty chairs: someone opens the doors, a crowd floods in and everyone tries to grab a seat. In this group there is the wider community of bitcoin users, the Crypto-Developer Community, the anti-government Libertarians, Crypto-Anarchists, Bitcoin and Alt-Coin Entrepreneurs, Bitcoin friendly VCs and of course the ‘Investopreneurs’ at the BitAngels. It’s a diverse bunch, and they are not all driven by a common philosophy.

The inevitable search for a multiplier, in a realm where copies cost nothing…

Most successful business people learn to look for a ‘multiplier’ when evaluating business opportunities. A multiplier is a way to achieve economies of scale, to pump out widgets that are in demand, and to fill that demand. Think: rolls of Kodak film, tubes of toothpaste, CD blanks that cost less than a dollar but sold for $20.

So it has been inevitable with the sudden advent of a new technology like Bitcoin, that was in effect a ‘money protocol’ and an idea that could be fairly easily duplicated, that a bunch of enterprising folks would want a piece of that for themselves. But herein lies the problem… There is a growing but relatively limited demand for cryptocurrencies, yet we already have (at time of writing) apparently 985 tradeable crypto coins and an indeterminable number of vaporware ‘crap coins’ being pumped out, before most people have properly understood, or in some cases, even heard of Bitcoin.

It’s almost reminiscent of that scene in Aliens when Sigourney Weaver’s character ‘Ripley’ stumbles on the Alien hatchery.

We now have what amounts to parent alt-coins that enable enumerable child alt-coins, and parent ‘crypto-crowd-funding marketplaces’ that can be used to give birth to enumerable child ‘crypto-crowd-funding marketplaces’… It’s almost reminiscent of that scene in Aliens when Sigourney Weaver’s character ‘Ripley’ stumbles on the Alien hatchery. Its the pandemic (coindemic) idea of something that is rapidly duplicating and escalating out of control.

In contrast to just over 12 months ago, the teams working on alternate cryptocurrencies, app-coins and coin generating marketplaces, now massively outnumber those working on pure bitcoin projects and the core bitcoin protocol. In many ways, what we are seeing is an endemic cookie-cutter approach to the Bitcoin phenomenon by teams trying to duplicate and (sometimes) improve on Bitcoin, but sowing the seeds of massive fragmentation in the process.

When something can be copied at near zero marginal cost, it will inevitably become valueless

As Kevin Kelly pointed out in 2007 on his influential blog The Technium, the Internet has made the cost of making copies near zero, and so everything from web pages to books to music to movies are copied and distributed at near zero marginal cost.

Kevin Kelly: “Copies are worthless; sell what can’t be copied”

Kelly’s observations relate to what economists call ‘zero marginal cost economics’. With traditional physical goods, marginal costs tend to rise over time due to constraints; with digital goods the marginal cost of goods tends to drop toward zero. The music industry is a classic example. From CD sales to Napster to iTunes to Spotify we have seen the price of music to the consumer effectively fall close to nothing at all, because the cost of that reproduction has become negligible. However, in contrast to tech savvy musicians working in today’s music industry who are still economically constrained by legacy industry structures imposed by record companies and the RIAA, it’s the class of people who are adept at working with computers and software in new areas like the alt currency movement that are prevailing in digital markets.

Tyler Cowen in his book Average is Over argues that: “As computer based digital goods start to dominate the economy, their odd zero marginal cost economics will loom larger and larger. Computers will accelerate our existing trend toward a more stratified society. People adept at teaming up with computers will get richer, while those who aren’t will get left behind.” ¹

As everyone in the field knows, there will be a finite maximum of 21m Bitcoins mined. It’s a big world, so as an illustration, if for instance everyone in Australia would end up only owning one bitcoin each, there goes your 21 million. Too bad for the other 7+ billion people in the world right?

So, to maintain Bitcoin’s pre-eminent status there will be an inevitable division of Bitcoin into smaller and smaller but increasingly valuable fractions, and the utility of Bitcoin will be extended, but its integrity maintained by systems that are benign to Bitcoin rather than competitive with it. The Sidechain project by Adam Back and Austin Hill of Blockstream to create pockets of crypto-innovation, double pegged to the main Bitcoin blockchain, is an obvious example of a project that strengthens the core of Bitcoin. The 900+ tradeable crypto coins are, regrettably, pulling in the opposite direction.

We have already seen a number of instances of crowd sales of alt-coins with many orders of magnitude higher eventual numbers of coins than Bitcoin, i.e. MaidSafe’s crowd sale of 400m Safecoins being “only 10% of all Safecoins that can ever be produced!” ² purchased at the ratio of 23,800 to 1 BTC. The inducement being the prospect of massive capital gains, like the gains we all witnessed with Bitcoin, which of course would be less and less likely with each successive competitive alt coin.

However, it is the practice of using Bitcoin as the preferred medium of exchange for these alt currencies that is particularly revealing. Not only as evidence of Tyler Cowen’s prophesy (above) that “People adept at teaming up with computers will get richer, while those who aren’t will get left behind,” but also as testament to which crypto-currency is clearly being perceived as having the most innate value and the least ‘value-risk.’

The promise of a perpetually exploding crypto universe…

As crypto-entrepreneurs hoover up thousands of Bitcoin from enthusiastic early adopters in exchange for the promise of a perpetually exploding crypto universe (who more than likely purchased their small holdings of Bitcoin with hard earned fiat currency), are we seeing the beginning of an era where it is the tech elite that will own the vast majority of Bitcoin, while the devout legions of early adopters will be left with crypto wallets full of tokens with values unlikely to be sustained by the scarcity that will continue to underpin Bitcoin?

This is a problem worth considering. Because if Bitcoin is indeed ‘about all of us’ because we are all metaphorically its blockchain, do we risk a collapse of confidence in the ‘idea’ of cryptocurrencies due to this fragmentation and dilution, or will the alt-coin leaves fall off the tree, to leave the Bitcoin trunk intact and strong?

Clearly market forces of demand and supply will always have the effect of injecting liquidity back into the Bitcoin economy from the ‘have lots’ to the ‘have nots,’ but that precious goal of the ever increasing exchange rate of Bitcoin to the US dollar will be much more likely to occur if it is built on real participation by a growing global constituency of users experiencing genuine value, unique to using Bitcoin, rather than speculation in it as a new kind of commodity.

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1. Nathan Taylor, praxtime.com

2. Hill, Kashmir (8 April 2014). “Beyond Bitcoin: Crypto-Ownership Companies Hope You’re

Ready To Decentralize Everything On The Internet”. Forbes. Retrieved 30 July 2014.

October 20, 2014 at 01:33PM

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Gems Bitcoin App Lets Users Earn Money From Social Messaging

A new social messaging app is aiming to disrupt the established social media business model through the power of crypto 2.0 technology. If big social media companies make money by monetizing data, the Gem project asks, shouldn’t users also profit from the service?

Launching today at Inside Bitcoins Tel Aviv, Gems is seeking to uncover whether consumers can be compelled to change the way they view their relationship with social media, and in the process, embrace cryptocurrency.

Though lofty in its ideals, lead developer Daniel Peled told CoinDesk that users should find the Gems social messaging service familiar. Peled compared Gems to Whatsapp, with one addition, the user’s username is also an alias for their bitcoin address, an innovation that allows Gems users to send both bitcoin and gems, an in-app token that will effectively decentralize ownership of the network itself.

Unlike with Whatsapp, users are incentivized to grow the network, receiving gems for certain actions. Gems can then be exchanged for bitcoin and ultimately sold for fiat dollars, Peled explained, meaning users are essentially paid for spreading the network:

“Everything we do on Facebook or Whatsapp, [the companies are] making money out of it. They’re using our information, they’re selling it to advertisers and we don’t see anything out of it. We think that the users should be rewarded much more for using the application. So anything that we can do to incentive people, we do it with Gems.”

Gems is now available for both iPhone and Android users.

Empowered by Counterparty

On a technical level, Gems is built on top of the Counterparty protocol, the peer-to-peer decentralized exchange that allows for asset issuance and trading.

Upon registering, Peled said, users receive a passphrase to their Gems account, which is actually working with Counterwallet, the project’s web wallet. However, for users, all of this technical maneuvering happens behind the scenes, which Peled and his team hope will encourage more users into the bitcoin ecosystem.

“You get a passphrase and a wallet built inside the social messenger, and because your name is also an alias to your phone number and to your bitcoin wallet, it makes it very easy to send Gems and bitcoins inside the application. It’s just like sending a text message to a friend,” Peled said. “You don’t need to know too much about the public address or private key, it makes everything very, very simple.”

Peled added that Gems does not save or keep user passwords on its servers. Privacy-conscious users also don’t have to provide a phone number, though Peled said that, as with Skype, this makes it easier for users to identify others on the Gems network with whom they may want to message.

Expanding bitcoin’s appeal

Peled indicated that the Counterparty protocol was critical to the Gems platform, as it enabled the development team to create assets without worrying about mining infrastructure, as this function is provided by the bitcoin network.

However, he disagrees that Gems is perhaps not giving back to bitcoin by not creating its own block chain, arguing that new Gems users will increase the size of the bitcoin network.

“At the end of the day, trying to bring new people onboard, for every new person I talk to, I need to open a bitocin wallet for him, explain the user experience, explain the private key and the public key and cold storage,” Peled said, noting the issues he hopes Gems will solve. “It’s very, very difficult and it takes one to two hours.”

Sending messages on the bitcoin block chain itself, rather than a cloud service, he said, would slow down Gems, making it less appealing to consumers.

“I haven’t seen a good social application built on top of bitcoin that works as smoothly as Whatsapp,” Peled explained. “So, the messaging side is just like any other messaging application, we use a server infrastructure, but the ownership and the reward model is built using block chain technology.”

Building value for Gems

Of course, there remains the question of why users would want to accumulate Gems given that they may fluctuate and even fall in value. However, Peled sees Gems as being more compelling than other altcoins on the market, as the strength of the platform’s userbase will add value to the asset.

“There are two things that will give real value to Gems, one is the users, 40% of the Gems are going to be distributed in a couple of years for inviting people in the network,” Peled said. “The second thing is we’re trying to build a social network that is more fair for the user.”

Notably, users can also earn Gems by choosing to view advertisements on the platform. Publishers, in turn, will need to use Gems in order to market to app users.

“Sending messages to your friends is free, but if you want to send unsolicited messages or if advertisers want to send messages to a specific target, then they would have to spend Gems,” Peled explained.

Users can elect to see advertising and be rewarded with Gems, or opt out of this part of the service. However, the difference with Gems, Peled said, is that unlike Facebook and other alternatives, his platform gives the ultimate choice to the user.

Long term, Gems will seek to encourage application development on its platform, allowing entrepreneurs to build in-app features that leverage the currency.

“I can think of a lot of things you can do when you have a social network that is monetized,” Peled added.

Pre-sale coming soon

Like many other crypto 2.0 projects, Gems is also seeking to promote its initiative through an initial pre-sale of its native currency in what it characterized as an attempt to build a community of dedicated users, though the process has proved to be a point of contention for other projects in the sector.

However, Peled said that Gems believes there are real advantages to appealing to the bitcoin community rather than relying on VC capital.

“Basically we’re building a small community. A lot of us are already trying to add people to the ecosystem so if we give them a tool to show they can download this app, that it’s a lot of fun, it’s basically a tool that people are looking for,” Peled said.

Images via Gems

Crypto 2.0

October 19, 2014 at 08:20PM

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