U.S. Marshals Hold Third Bitcoin Auction

The U.S. Marshals Service is holding its third Dread Pirate Roberts (DPR) bitcoin auction this March 5^th, 2015. These bitcoin were seized from Ross Ulbricht, allegedly the Dread Pirate Roberts, in relation to the Silk Road prosecution, an online black market bust primarily related to the sale of illegal drugs.

At auction are 50,000 bitcoin separated into two series. The first (series A) will consist of ten blocks of 2,000 bitcoin each, requiring a deposit of $100,000. The second series (B) will consist of ten blocks of 3,000 bitcoin each, requiring a deposit of $150,000.

Not all of the coin at auction were necessarily involved in some form of illegal transaction. There were some legitimate merchants who sold perfectly legal goods through the Silk Road platform.

Like the previous two auctions, the current one is blind, meaning that bidders will not know the value of the other bids. The first auction was held last summer for just under 30,000 bitcoin, in nine blocks of 3,000 and a partial tenth block. Participants had to deposit a minimum of $200,000 to take part.

Tim Draper won all the blocks up for sale in the first auction.

He also claimed 2,000 bitcoin from the second auction of 50,000 bitcoin that was held in early December, 2014. The remaining 48,000 bitcoin (19 of 20 blocks) were won by syndicate bidders led by SecondMarket and the Bitcoin Investment Trust (BIT).

The second, most recent auction had 11 registered bidders and 27 resulting bids.

Parties interested in the upcoming third auction should be aware that the bidder registration has opened from February 17^th, but will close at 12:00 EST on Monday, March 2^nd, 2015.

Deposits for the auction must originate from a bank located within the United States, and bidders must confirm that they have no association with Ross Ulbricht.

Registration consists of the deposit along with a manually signed pdf copy of the registration form, a copy of a government issued photo ID (of the bidder or control person) and a copy of the wire transfer receipt.

The auction starts at 08:00 EST on March 5^th and will last until 14:00 EST the same day.

For more information about the auction, visit the U.S. Marshals site here.

February 21, 2015 at 12:51AM

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Bitcoin Wallet Maker WoodWallets to Sell Business

The owners of WoodWallets.io, the makers of handcrafted, wood-carved bitcoin wallets, have announced that the business has suspended operations and is up for sale.

The full post stressed that the owners were stepping away from the business due to unspecified personal reasons, and that they were unable to approach WoodWallets with the “same level of passion and dedication”.

The post recalls the origins of the project, which began one year ago after owner Nico issued a post on Reddit, before detailing how the owners want to move forward with the sale.

Nico writes:

”We would be more than happy to leave everything we built so far in the hands of a company or an individual who is capable of running it with the same level of passion – possibly even more – that we kept during this year.”

Nico went on to speculate that the alternative would be to allow the project to become another “boring online shop”, one that would lack the community spirit that he contends led to the sale of hundreds of Woodwallets.

CoinDesk received a specialty version of the Woodwallet this summer, at the time noting its careful and artful packaging, and elegant design.

The post concluded: “Whatever happens now, we will keep a good memory.”

Images via Woodwallets.io

Wallet

February 20, 2015 at 10:40PM

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Airbitz Enables BLE-driven Wireless Payments for iPhone and Android

If you’ve ever used bitcoin currency, you know that it can be frustrating to try to send and receive money when QR codes aren’t cooperating.

Solar reflection, phones with cracked screens, and poorly focusing cameras are among the issues that are hampering widespread use of QR codes and impeding Bitcoin adoption.

Developers at Airbitz, a Bitcoin wallet and business directory, have found a solution.

In October of 2014, Airbitz unveiled technology that allowed for iPhone users in close proximity to pay each other wirelessly via Bluetooth technology on their app– all without the need to pair iPhones. No more QR codes.

This is made possible by Bluetooth Low Energy (BLE).

When compared to Classic Bluetooth, the newer BLE uses less power and lowers costs while providing a similar communication range.

But not everyone uses iPhones.

The latest android software update (Android 5.0), however, has BLE capabilities. As a result, Airbitz has recently launched wireless Bitcoin payments for Android. The Airbitz protocol is compatible between iPhone and Android devices.

The idea for wireless Bitcoin payments emerged out of dissatisfaction with the QR code method of transacting with Bitcoin.

Paul Puey, CEO of Airbitz, explained:

“The idea came about after many frustrating experiences with QR codes, and the realization that most people are not familiar with them and their scary appearance. The advance of Bluetooth Low Energy (BLE), which can work without pairing, gave us the motivation to develop this feature and protocol.”

“Android was far more difficult to implement than iPhone,” adds Paul. “Our usage of BLE requires a mode called Peripheral Mode, which allows a device to behave like a beacon, broadcasting info to receiving devices. iPhone has had this capability since the iPhone 4S, allowing it to both broadcast and receive BLE payment requests. Android only introduced this Bluetooth feature (Peripheral Mode) as of version 5.0 (Android Lollipop). We developed the early beta versions of 5.0 with the expectation that old devices would support this feature. Before release, at the last minute, Google disabled Peripheral Mode for all devices except Nexus 6 & 9. Although a bit crippled by Google, the Airbitz wallet allows full send and receive via Bluetooth on Nexus 6 & 9, but only sending capabilities on most Android 4.3 devices and higher.”

Ultimately, this initiative is a move toward making Bitcoin user-friendly, something that the cryptocurrency will need if it hopes to thrive.

“Our focus,” concludes Paul, ” is to deliver software with an amazing user experience, both visually and functionally, simplifying this advanced technology and delivering it to the masses while still retaining Bitcoin’s core principles of decentralization and privacy.”

This important innovation can potentially make the process of adopting Bitcoin less like pulling out molars, and more like learning how to tweet.

Check out Airbitz’s website here.

February 20, 2015 at 04:44PM

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Fedcoin Rising

The idea of a government-sponsored digital currency has been around for quite some time. See, for example, the unconfirmed rumors reported in a March, 2013 discussion on the Bitcointalk forum titled “Fedcoin: A centrally-issued alternative to peer-to-peer currencies .”

Now U.S. economists are taking it seriously.

On February 3, David Andolfatto , Vice President of the Federal Reserve Bank of St. Louis, wrote a blog post based on a presentation he gave at the International Workshop on P2P Financial Systems 2015. The title of the blog post is “Fedcoin: On the Desirability of a Government Cryptocurrency .”

Andolfatto’s central thesis is that the government could solve the problems of digital economies as follows:

“Imagine that the Fed, as the core developer, makes available an open-source Bitcoin-like protocol (suitably modified) called Fedcoin. The key point is this: the Fed is in the unique position to credibly fix the exchange rate between Fedcoin and the USD. [Consumers and businesses] will have all the benefits of Bitcoin – low cost, P2P transactions to anyone in the world with the appropriate wallet software and access to the internet. [I]n short, Fedcoin is essentially just like digital cash. Except in one important respect. Physical cash is still a superior technology for those who demand anonymity.”

Finextra blogger Tom Hay notes that Fedcoin contradicts the radical ideology of those Bitcoin enthusiasts who want a fully P2P economy not centrally controlled by the state. But from a government perspective it’s an interesting idea, because it links the stability of fiat currency to the speed and convenience of the Bitcoin technical platform. He adds:

“Ecuador has already launched a government-backed digital currency pegged to the U.S. dollar. [T]he Ecuadorian system is not based on the blockchain, and indeed Ecuador has banned Bitcoin and altcoins, but the Philippines are considering issuing a blockchain-based e-peso. The idea of digital fiat currency clearly has legs.”

So is the rise of FedCoin inevitable?

The film “The Rise and Rise of Bitcoin ” is a fascinating recap of the rebellious history of Bitcoin since its inception in 2009 all the way to the Mt. Gox fall and the arrest of Charlie Shrem in early 2014. The film tells a typical Internet story of idealistic hackers who want to change the world and their unstoppable rise… until the big boys take notice.

Those old enough to remember their “Internet moment” of enthusiastic awe for the newborn Internet in the early 90s – yes, it will change the world so fast – remember also the rest of the story: from a plaything of geeks and techno-libertarian anonymous dreamers (a famous 1993 New Yorker cartoon observed that “On the Internet, nobody knows you’re a dog ”), the Internet quickly became a tool of Big Capital and Big Government.

Today, old-timers use Facebook like everyone else, but know that everything we say and do online is monitored by governments and businesses all the time. We know that, short of taking pro-level privacy measures, there is no way to escape online surveillance. Today the Internet, like it or not, belongs to the establishment.

Perhaps it’s naïve to think that exactly the same thing won’t happen to Bitcoin.

The main appeal of Bitcoin for the original Libertarian and anarchist enthusiasts was the possibility of anonymous and untraceable transactions. But bitcoin transactions are traceable by-design to a bitcoin address, and anonymous only if the bitcoin address can’t be traced back to a physical person.

In practice, bitcoin transactions are easily traceable to their originators, and that’s one of the reasons governments will warm up to digital currencies. Forget using Bitcoin to escape taxes – in a state-controlled digital economy, the tax man will be able to find all your income and expenses in the blockchain.

Bitcoin transactions are faster and cheaper than traditional transactions, which is an important incentive not only for end users but for government agencies as well, as shown by the recent Bitcoin bills in Utah, New Hampshire and New York City. It seems likely that governments will try to appropriate selected aspects of digital currencies, and eliminate undesired aspects such as anonymity and volatility, to create efficient and cost-effective but fully regulated digital economies.

February 18, 2015 at 08:21PM

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US Marshals to Auction 50,000 Bitcoins in March

The US Marshals service has announced it will auction off 50,000 BTC, worth 11.85m at press time, to the public on 5th March.

The auction will take place from 8:00 EST to 14:00 EST, with bids being accepted only by pre-registered participants. Bidders must complete the registration process by 2nd March to be eligible, while winning bidders will be notified 6th March.

As in previous auctions, the 50,000 BTC will be split into smaller auction blocks. This time 20 in total will be auctioned, with 10 blocks of 2,000 BTC and 10 blocks of 3,000 BTC for sale.

The federal agency, which manages assets seized during criminal investigations, obtained the coins from original owner Ross Ulbricht, who was recently convicted of running the online black market Silk Road and now awaits sentencing.

The news follows statements to CoinDesk in January that indicated the agency would plan to move forward with another bitcoin auction in the first quarter of 2015.

Image via Wikipedia

AuctionsRoss UlbrichtSilk RoadUS Marshals Service

February 18, 2015 at 05:45PM

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Look out NASDAQ, Here Comes the Winklevoss Gemini Exchange

“Gemini” means twins in Latin, and it’s also the name of the new Bitcoin exchange created by super-entrepreneurs and venture capitalists Cameron and Tyler Winklevoss. After its public launch in the spring, the New York -based Gemini exchange, announced in January on the Winklevoss Capital website, will be a fully regulated Bitcoin exchange built on rock-solid compliance and backed by the U.S. regulatory and banking infrastructure. The Winklevoss twins discussed their plans in an interview with Vice News.

Last month, investors including three of the world’s most respected financial institutions – The New York Stock Exchange (NYSE), a subsidiary of USAA, and BBVA Ventures – invested $75 million in the Bitcoin service provider Coinbase, bringing its total capital to $106 million. According to Coinbase, that was the first time financial institutions made a major investment in a Bitcoin company. Besides buying and selling Bitcoin, the Coinbase Exchange allows customers worldwide to hold and use US dollars. Therefore, as noted by David Bailey in a recent Bitcoin Magazine article, Coinbase can be considered as the first global bank, and “the AOL of Bitcoin.”

Not so fast, say the Winklevoss twins. In their opinion, Coinbase launched their exchange before completing the necessary regulatory homework. Vice News reports that regulators in New York and California haven’t yet issued all the applicable licenses. Mark Williams, a finance professor at Boston University, believes that Coinbase’s attempt to start business without all the required licenses was very risky. According to him, building trust with regulators is key to Bitcoin’s future.

The Winklevoss twins believe that the main selling point of Gemini will be its strict compliance with all applicable regulations and its firm base in the US banking system – a major U.S. bank is involved, and no money will cross borders.

According to a statement issued by the twins: “[I]t’s a U.S. home for people, where they don’t have to wire their money overseas, where their money can actually stay in America, where they can buy and sell bitcoin from a company that’s regulated and has consumer protections. We see this as really critical infrastructure to building bitcoin and realizing its potential. [W]e’ve had open dialogue with regulators for almost a year now and we feel that we’re close and we want to make sure that we truly [are] licensed, that’s one of our principles. We don’t want to half bake it, or hack our way through and be on the fringe of it, we really want to do this the right way and get the blessing of the regulators. And we do feel that that’s around the corner.”

An interesting issue raised by the Vice News article is the “sell-out” of Bitcoin, which apparently is taking distance from its cypherpunk roots in underground crypto-anarchist circles and embracing Big Capital and Big Government. Is the mainstreaming of Bitcoin is inevitable and necessary for its adoption by the masses? Some say the nature of the Bitcoin protocol makes it impossible to completely eliminate its potential for anonymous and untraceable transactions. Is that is the case, even in a Bitcoin economy that becomes more and more mainstream and regulated, there will always be underground pockets of unconstrained use.

In addition to Gemini, the Winklevosses are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to all investors on NASDAQ with the ticker COIN. The launch date is unknown, but the twins told Inside Bitcoins that everything is proceeding according to plan.

They added: “For those who are up for that and want to actually buy and sell bitcoin the asset, they can do so at Gemini.com. For those that just want bitcoin asset exposure or those, like institutions, pension plans, 401(k)s, etc., that cannot invest in bitcoin themselves, their only avenue to gain bitcoin exposure will be through a structure like an ETF where they are purchasing a security and not the underlying asset itself.”

According to the SEC filing, the value of COIN shares will reflect the dollar exchange rate of Bitcoin on Winkdex. That will be an interesting option for those traditional investors who are persuaded that the dollar exchange rate of Bitcoin will rise in the mid- and long term, but prefer not to hold Bitcoin.

Images via Gemini.

February 17, 2015 at 06:01PM

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