The New Stellar Consensus Protocol Could Permit Faster and Cheaper Transactions

Stanford professor David Mazières thinks he has a faster, more flexible and more secure alternative to Bitcoin, MIT Technology Review reports.

Two independent reviewers, from Stanford and Cornell universities, agree that the new technology could make digital payments and other transactions cheaper, safer and easier.

Alternative blockchains are often dismissed as worthless “me-too” copycats or scamcoins, which, unfortunately, has some element of truth. But Mazières’ approach deserves a place among the serious alternatives to Bitcoin that have been proposed, alongside Ethereum and Ripple.

Public digital currency ledgers rely on distributed consensus protocols to propagate valid transactions. In the Bitcoin network, independent nodes (miners) work together without preferential trust relations. In other words, each node implicitly trusts every other node.

In the new protocol, called Stellar Consensus Protocol (SCP), each node explicitly selects a set of publicly trusted peers, and forwards only the transactions that have been validated by a certain majority of its trusted partners.

If correctly implemented with a critical mass of nodes with overlapping trust circles, valid transactions propagate in ripples through the network and eventually achieve systemwide consensus.

“Bitcoin is good, but we wanted to start from scratch,” says Mazières. He is persuaded that the SCP can overcome important limitations of Bitcoin, such as the long confirmation delays and the fact that mining is now a very energy-intensive process. The new system would be able to reliably verify transactions much more quickly and with less energy, and provide enhanced scalability.

Mazières’ protocol has been adopted by Stellar (hence the name SCP), an open-source protocol for value exchange, launched in 2014 by Ripple Labs founder Jed McCaleb (who also founded the infamous Mt.Gox exchange), and backed, among others, by payment processor Stripe. Besides bitcoin payments, Stellar supports fiat currency payments, for example in euros or U.S. dollars, via Stellar exchanges and gateways.

Initially, Stellar used the Ripple protocol, which also requires nodes to identify a set of trusted nodes to achieve a rippling effect across overlapping trust circles. But problems with the original Ripple protocol prompted Stellar to take steps to build a new consensus protocol, which resulted in the SCP.

Mazières is taking leave from Stanford to work four days a week on the project as Stellar’s chief scientist.

The SCP whitepaper, titled “The Stellar Consensus Protocol: A Federated Model for Internet-Level Consensus,” is available online on the Stellar website. The whitepaper is a technical paper not easy to understand for casual readers, and therefore Stellar has provided a readable summary.

The SCP implements “Federated Byzantine Agreement,” a new approach to achieving consensus in a real-world network that includes faulty “Byzantine” nodes with technical errors or malicious intent. To tolerate Byzantine failures, SCP is designed not to require unanimous consent from the complete set of nodes for the system to reach agreement, and to tolerate nodes that lie or send incorrect messages.

In the SCP, individual nodes decide which other participants they trust for information, and partially validate transactions based on individual “quorum slices.” The systemwide quorums for valid transactions result from the individual quorum decisions by individual nodes.

According to Stellar, the SCP is the first provably safe consensus mechanism that simultaneously enjoys four key properties: decentralized control, low latency, flexible trust and asymptotic security. The SCP achieves optimal resilience against ill-behaved participants, allowing an organic growth model similar to that of the Internet for the Stellar network.

Image via stellar.org.

April 17, 2015 at 04:56PM

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Newly Declared European Microstate Liberland Plans to Create Its Own Digital Currency

A group of Czech citizens has declared a new state, the Free Republic of Liberland, in a tiny 6-square-kilometer territory along the Danube River between Croatia and the Republic of Serbia. The Liberland territory is not claimed by either of these two states, which according to the group permits it to declare a new “microstate” in compliance with international law.

After the Yugoslav Wars, some borderland territories have been disputed, but this area has remained unclaimed. Liberland was created entirely in accordance with international law because it is based on the no man’s land which was claimed neither by Serbia or Croatia in the process of demarcation, InSerbia News reports.

On April 13, 2015 a Preparatory Committee declared the new state on the spot and raised a flag to claim the land. Vít Jedlička, who was elected by the committee as president of the republic, is preparing a constitution as well as diplomatic notes, to be sent to the two neighboring states and to the United Nations, and later to other countries, to inform them about the establishment of the new state of Liberland.

Creating a new micronation and getting it formally recognized is a daunting task, but Jedlička is persuaded that the initiative will succeed.

“The only thing that could stop us is an army,” he told Bitcoin Magazine. He added that the process to claim sovereign nation status recognized by the international community has started.

Jedlička is associated with the Czech Party of Free Citizens, a libertarian political party in the Czech Republic. The party is against too much government intervention in the economy and in the personal lives of citizens. Its members are free-market advocates and oppose the centralization of political power. In accordance with libertarian politics, the motto of Liberland is “To Live and Let Live.”

While BBC News questions whether Liberland is actually just a publicity stunt, the microstate is accepting applications for citizenship from people everywhere – provided they don’t have a “communist, Nazi or other extremist past.”

“The objective of the founders of the new state is to build a country where honest people can prosper without being oppressed by governments making their lives unpleasant through the burden of unnecessary restrictions and taxes,” states the Liberland website. “One of the reasons for founding Liberland is the ever expanding influence of interest groups on the functioning of existing states and the consequent worsening of living conditions of people. The founders are inspired by countries such as Monaco, Liechtenstein or Hong Kong.”

This sounds very appealing to libertarians everywhere, but the challenge is big. It seems likely that the powers that be could easily crush the new microstate as soon as they notice it. Perhaps the only thing that could protect tiny Liberland in its delicate launch phase is a massive display of popular interest. And, in fact, it appears that Liberland is going viral on the Internet, with tens of thousands of signups on its Forum and Facebook page and a lot of applications for citizenship from all over the world in only a couple of days. It appears that many people are ready to try alternatives to traditional politics.

The idea that Liberland could adopt a cryptocurrency, and make it official, is trending on the Liberland Forum and Reddit. Jedlička briefly discussed the idea with the Czech press, and a participant in the Reddit discussion provided a translation. Jedlička answered the question “So do you want to create your own currency?” by stating that Liberland is planning to create its own cryptocurrency (a digital currency like Bitcoin), but on the territory of Liberland it will be possible to use any currency.

Jedlička confirmed to Bitcoin Magazine that Liberland will not have an official currency, but accept all currencies, including bitcoin and other digital currencies. There are plans to establish a Liberland banking system and, according to Jedlička, some banks have already expressed interest.

Perhaps the tiny libertarian dreamland in the Balkans doesn’t have much of a chance in the harsh reality of real politics, but the adoption of bitcoin as one of the currencies accepted by a sovereign state could have a huge impact.

Image via liberland.org.

April 16, 2015 at 05:24PM

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MIT Launches Digital Currency Policy and Standards Research Initiative

MIT Media Lab has announced the launch of Digital Currency Initiative, a three-pronged program aimed at increasing awareness of the technology on campus and abroad while providing research to promote policy and standards initiatives.

The news was first detailed in a post penned by former White House senior advisor and Digital Currency Initiative director Brian Forde, who today officially joined the university-run research laboratory.

Forde previously worked with the administration of current US president Barack Obama to help the government leverage emerging technologies.

Media Lab director Joi Ito, who earlier this week suggested an imminent announcement regarding the future of bitcoin at MIT, expressed his enthusiasm at the appointment while praising digital currencies for their disruptive potential.

Ito said:

“Brian’s experience mainstreaming emerging technologies from the rural mountains of Nicaragua to the White House will be invaluable as he tackles the challenges of digital currency – one of the most promising emerging technologies for the next 10 years.”

In a separate Medium post, Forde went on to detail how the Digital Currency Initiative will seek to address questions regarding the technology's security, scalability and privacy, while convening governments and nonprofits "to research and test concepts" related to its use.

MITMIT Bitcoin Project

April 15, 2015 at 07:23PM

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Ripple Labs Expands to Asia Pacific Region

The company behind the consensus network and currency, Ripple, has announced a new office in Sydney, Australia as part of a push further into the large Asian and Pacific markets.

“We are excited to formally unveil a presence in Asia Pacific — an area that has been aggressively pursuing faster payment technologies for both domestic and cross-border payments,” said Ripple Labs CEO and co-founder Chris Larsen.

According to a Ripple Labs s, the expansion is to meet a “growing demand” for the currency’s payment services in the region. Unlike Bitcoin, Ripple relies on intermediaries to work as gateways and exchange the ripple currency (XRP) for fiat currencies or intermediaries. The Ripple currency serves as way to send any form of value (fiat currencies, precious metals, etc.) across the globe quickly and cheaply.

Since it is not decentralized like Bitcoin, the alternative cryptocurrency has been able to find use cases as a money transfer service and seen adoption among small financial institutions. Fidor Community Bank, a banking startup, and the Bank of Weir, another experimental bank, became Ripple gateways last year.

“I am thrilled to bring Ripple Labs to Sydney, where we can more effectively serve eager markets in India, Singapore, the Middle East and across APAC,” said managing director of Ripple Labs Asia Pacific, Dilip Rao. “Banks and enterprises can leverage Ripple to more efficiently service the exploding trade and remittance flows in this region.”

“Dilip is a natural fit to lead this office because of his years of experience in the space and his deep, engaged network in the region,” Larsen added.

Rao will be leading Ripple Labs’ efforts in Australia and throughout Asia in his new role as head of the Asia Pacific subsidiary. The first Asia Pacific office will be opened in a large Australian city, but the company plans to expand to other parts of central and eastern Asia in the coming year.

Rao will bring more than 25 years of management and business development in the technology and payments sector to the digital currency company. He was the founder and CEO of Australia’s first peer-to-peer payments company, Paymate. More recently, he founded Woomera Labs, Inc., a business development firm that matches innovative startups with large companies.

He also holds degrees in physics and electrical engineering and an MBA from the Indian Institute of Management, Ahmedabad, India.

Rao will be in charge of the company’s business development and expansion in the region, as well as leading the company’s efforts with regulators, lending banks and central banks.

Though this is the first official presence of Ripple Labs, numerous third-party Ripple gateways already exist in the region. Japan, Singapore, China, Israel, India and South Korea are just some of the countries with Ripple exchanges.

The new office and focus could mean more activity for the digital currency in the region.

April 11, 2015 at 07:20PM

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eBay and PayPal Confirm Upcoming Separation, Support for Bitcoin Payments

In September 2014, eBay announced plans to separate eBay and PayPal. In a recent SEC filing, eBay confirmed that a newly formed corporation named PayPal Holdings, Inc. (“PayPal”) will take over the businesses that make up eBay’s payments segment. eBay, the existing publicly traded corporation, will continue to operate its marketplaces business.

The separation, which will provide current eBay stockholders with equity ownership in both eBay and PayPal, will be effected by means of a pro rata distribution of 100 percent of the outstanding shares of PayPal common stock to holders of eBay common stock.

“As two distinct publicly traded corporations, eBay and PayPal will be better positioned to capitalize on significant growth opportunities and focus their resources on their respective businesses and strategic priorities,” reads the eBay announcement. “As independent companies, we expect eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets. eBay and PayPal also will benefit from additional flexibility and agility to pursue new market and partnership opportunities.”

“Following the distribution of all of the outstanding shares of PayPal common stock by eBay Inc. to its stockholders, PayPal will be an independent, publicly traded company focused on making money work better for people and businesses around the world,” says Daniel H. Schulman, President and CEO-Designee of PayPal Holdings. “The access to and movement of money is an important market that affects the lives of almost everyone. Our mission is to increase our relevance for consumers, merchants, friends and family to access and move their money anywhere in the world, anytime, on any platform and through any device (e.g., mobile, tablets, personal computers or wearables).”

In the SEC filing, eBay and PayPal confirm that merchants with a standard PayPal account also can integrate with Braintree to begin accepting bitcoin payments.

Payment processor Braintree, which was acquired by eBay for USD $800 million in September 2013, will be part of PayPal Holdings under the new structure. Braintree permits merchants to accept bitcoin payments seamlessly in partnership with Coinbase, allowing their customers to pay with bitcoin instantly and securely on any device without manually transferring bitcoin or scanning QR codes. The Braintree bitcoin payments service, currently in public beta, has zero transaction fees on the first $1 million in bitcoin sales and a 1 percent fee for cashing out bitcoin to a bank account.

“Sell your products and services in the currency of your choice and let your customers pay with Bitcoin,” reads Braintree’s invitation to its clients. “We take care of the conversion, transfer, and transaction reporting that fits in with your existing Braintree workflow. Bitcoin transactions are confirmed in less than a few seconds, eliminating chargebacks, which reduces your exposure to online fraud.”

Besides bitcoin, PayPal allows merchants to accept Apple Pay and Venmo payments via Braintree.

The separation of eBay and PayPal, which will take place in 2015 (no exact date is given in the SEC filing) will allow the two companies to more effectively pursue distinct operating priorities and strategies and opportunities for long-term growth and profitability. In particular, PayPal’s management will be able to focus exclusively on its payments business, and enjoy “increased flexibility to pursue new partnership and strategic opportunities that may have previously been unavailable for strategic or other reasons.”

It seems likely that the increased flexibility and exclusive focus on online payments could result in PayPal taking a more active role in the Bitcoin ecosystem.

April 10, 2015 at 05:30PM

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XAPO Partners with Online Gaming Company CEVO; Holds $21,000 Giveaway

Bitcoin company Xapo announced a partnership with e-sports company CEVO and bitcoin-based gaming service Leet to provide a seamless, bitcoin-enabled competitive gaming experience to players.

“We believe that gaming presents one of Bitcoin’s most exciting growth opportunities, as fast, inexpensive and secure bitcoin payments have the potential to open the global gaming community to players who lack access to a bank account or credit card,” notes the XAPO announcement. “CEVO users will now be able to earn and challenge their friends for bitcoins across some of the world’s most popular games.”

Founded in December of 2004 with the intention to transform competitive online gaming into a professional sport, CEVO (“Cyber Evolution”) hosts free and pay-to-play tournaments across a variety of AAA games such as Counter-Strike, a first-person shooter video game developed by Valve Corporation, League of Legends and Team Fortress 2. Most CEVO e-sporting tournaments are based on the latest game in the Counter-Strike franchise, the online tactical first-person shooter Counter-Strike: Global Offensive (abbreviated as CS:GO). Leet also offers CS:GO and League of Legends tournaments.

CS:GO players join either the Terrorist or Counter-Terrorist team and attempt to complete objectives or eliminate the enemy team. Players purchase weapons and equipment at the beginning of every round, and winners receive compensation after the game ends. CS:GO is extremely realistic and addictive to hordes of adrenaline-filled online gamers who enough energy (and money) in the game to justify the label “e-sport.”

Upcoming Virtual Reality headsets such as the Oculus Rift, are expected to be able to provide even more realistic 360-degree immersion in online games, will further increase the appeal of e-sports.

“Over the last several months Xapo has invested substantial resources in trying to better understand how Bitcoin can be used to improve a game’s engagement, retention and monetization,” says XAPO’s Director of Business Development Fernando Gouveia. “As part of that effort, we have been developing new APIs that allow game developers to easily build in-game functionality for managing bitcoin deposits, withdrawals and transactions.”

“Do you play @CounterStrikeGO?” – asks Gouveia on Twitter. “Well now you can play against your friends for #bitcoin with @xapo, @cevo and @leetgg! “

XAPO recently partnered with multiuser Minecraft server BitQuest to explore the potential of bitcoin in online games and virtual worlds. BitQuest leverages the Xapo API and the open-ended feature set of the massively popular Minecraft game to create a compelling online gaming experience with an easy-to-use internal economy based on bitcoin.

“Bitcoin is the best candidate to be the official currency of virtual worlds and BitQuest, making it beyond gambling, using it to fuel virtual societies for fun and connecting people together, is a leap forward in the direction we want to see Bitcoin in gaming,” chief BitQuest developer Cristián Gonzáles told CoinDesk.

BitQuest has “serious gaming,” including a virtual architecture contest. That’s but a first example of converging virtual reality and blockchain technology, and shows how bitcoin can be a solid foundation for the in-game economies of social games such as Second Life and forthcoming virtual worlds such as “Second Life successor” High Fidelity.

Meanwhile, CEVO is giving away $21,000 in bitcoin to new users who open a CEVO account and link it to their XAPO bitcoin wallet.

April 10, 2015 at 04:50PM

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Bitcoin for Freelancers: Popular Billing Service Hiveage Adds Bitcoin

Operating a small business with Bitcoin just got a bit easier. Online billing service Hiveage has announced its integration with Bitcoin wallet and exchange Coinbase , allowing its 45,000-plus small business and freelance clients around the world to invoice and accept payments in bitcoin.

“Bitcoin is quickly becoming a useful way of transferring value, and it’s been highly demanded over the past few months by our users,” says Hiveage founder and CEO, Lankitha Wimalarathna.

The company started receiving requests to add bitcoin support in June 2014, citing high transaction fees charged by other payment methods as the main reason.

“Many of the customers who wrote to us were already accepting payments in bitcoin,” said Prabhath Sirisena, co-founder and creative director of Hiveage. “Our new integration with Coinbase allows them accept direct bitcoin payments on their digital invoices sent via Hiveage. This makes it easier for them to keep track of their business finances, regardless of the currency.”

Hiveage offers clients the ability to send invoices and estimates, accept payments online, track time and expenses, manage teams and view detailed reports. While invoicing is a free service, other features are offered at an additional cost.

Connecting a Coinbase account and adding bitcoin as a payment and invoicing option will cost users $1.95 per month.

With clients in more than 140 countries worldwide already, Hiveage is planning a major push into the EU market, beginning with the Netherlands and Germany. Adding new payment services options, including bitcoin, is an important part of their global expansion strategy.

“Coinbase has a very strong position in the U.S., and they’re actively expanding in Europe,” said Sirisena. “This aligns well with our plans, too: The majority of our customers are from the U.S., but this year we’re focusing on making Hiveage an attractive option for the European market, where 20 percent of our customers come from.”

The company decided to focus on Amsterdam as a starting point after attending the Uprise Startup Festival in March. Amsterdam is also known to be a hub of Bitcoin activity, boasting an active meet-up community and Embassy . It was also the host of the Bitcoin 2014 conference last May, and will host Bitcoinference 2015 this May.

“There’s no shortage of great startups looking to share their experiences,” said Sirisena. “I’m really looking forward to seeing how people react to us and learning how we can make their billing workflows easier.”

April 10, 2015 at 04:35PM

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French Telecom Giant Orange to Invest in Bitcoin Startups

French telecom carrier Orange is looking to invest in Bitcoin startups in the coming months, Bloomberg reports. Orange (formerly France Telecom), one of the largest telecom firms worldwide, is now one of the first big international phone carriers to become interested in the technology behind the digital currency.

“There’s something intriguing in this technology, so we want to be there as early as possible,” said Georges Nahon, CEO of Orange Silicon Valley. “This could be a digital platform of the future.”

Orange Silicon Valley has been holding Bitcoin events at its offices in San Francisco and is talking to two Bitcoin companies, Nahon said. The group can directly invest $20,000 per startup and tap into the larger funds of Orange Digital Ventures, the venture capital arm of Orange, which plans to support 500 startups worldwide by 2020 as outlined in its “Essentials 2020” strategy plan.

The Bloomberg article notes that venture capital investments in digital currency startups hit an all-time quarterly high of $233.95 million in the first quarter of 2015.

It may seem odd that Orange is planning to invest in Silicon Valley startups when there is plenty of talent in France and throughout Europe, but Nahon is persuaded that Silicon Valley still has an edge when it comes to disruptive technology development.

“Here’s where the spark of digital innovation is located and how the communication ecosystem is rapidly evolving,” he wrote in February. “This is why Orange Silicon Valley is in the San Francisco Bay Area. We’re here to work with companies to actively participate in these disruptive innovations.”

According to Nahon, the digital payments space will begin to see a marriage of new tech with incumbent institutions, which will opt for acquiring smaller, more agile and mobile-based startups, reminiscent of when mobile advertising firms were rapidly purchased in the past two years.

The Bloomberg article reports that, according to Nahon, Bitcoin technology could be used to cheaply transfer money between different countries. Orange already has more than 12 million users for its money transfer service Orange Money in Africa and the Middle East, and is looking to expand the business.

But Nahon realizes that the blockchain technology can have far-reaching implications beyond money transfer.

“Cryptocurrencies such as Bitcoin will remain a popular topic, but the focus starting in 2015 will be the adoption of blockchain,” Nahon wrote in January. “Developers and companies will flock to the technology in pursuit of developing the ‘blockchain killer application.’ Innovation like this will have implications far beyond payments, as it’ll be a new way for us to trust each other more generally, and facilitate changes in how society exchanges things of value.”

He added that new sources of funding and support for tech startups will come from renewed accelerators and incubators.

A related initiative is Orange Fab, the startup accelerator for Orange. It’s a three-month program that works with exceptional startups that are changing how people connect and communicate. Those accepted into the Orange Fab program receive help from engineers and business analysts onsite at Orange Silicon Valley, and also from thought-leaders, industry experts and investors active in Silicon Valley and the San Francisco Bay Area.

April 09, 2015 at 05:19PM

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OneBit: Use Bitcoin Anywhere MasterCard PayPass is Accepted

Startup OneBit is developing a Bitcoin wallet app that lets users pay at any store with contactless mobile payments via the MasterCard PayPass payment network.

OneBit securely converts bitcoin on the fly at market rate into any major local currency using BitPay, and pays the merchant via their NFC payment terminals. OneBit will permit users to pay at any MasterCard PayPass-accepting merchant worldwide, with zero fees.

“The magic that happens underneath” is done by BitPay, which converts the OneBit user’s bitcoin to the local currency of the merchant, and MasterCard, which actually sends the money to the merchant.

OneBit was developed by entrepreneur Toby Hoenisch at a Mastercard Hackathon and, according to Hoenisch, got very positive feedback from MasterCard.

MasterCard is helping OneBit get a partnership with a card issuer, and OneBit is trying to secure funding for industrialization. OneBit is available on an invitation-only basis to selected early-access testers.

“We don’t want to launch a half-assed Bitcoin wallet that gets us in trouble for violating KYC laws,” says Hoenisch on Reddit. “And yes, legal is the main reason we can’t just ship it.”

Anyone can apply for early access on the OneBit website.

Hoenisch has a background in AI, IT-security and cryptography, and his co-founders have backgrounds in user interface design and security.

“I have been fascinated by Bitcoin for the last three years, but never quite found the right idea to form a company around until now,” says Hoenisch. “We managed to get MasterCard and DBS bank interested in OneBit and with their help, I am confident that we can build OneBit without getting burned like Charlie Shrem did.”

OneBit has been invited to the selection days of the startup bootcamp fintech accelearator in Singapore. If Hoenisch and his team get into the startup bootcamp accelerator program, which will also give them access to DBS bank and their network, they plan to launch OneBit at the end of their three-month program on July 28th.

If Hoenisch and his team manage to get funding and launch the project, OneBit promises to be nothing short of revolutionary: Bitcoin holders will be able to pay merchants directly from the Bitcoin wallet on their phones without requiring merchants to take direct steps to accept bitcoin.

NFC-enabled PayPass payment terminals are very common in Europe and Singapore, and increasingly common in Canada and Australia. Therefore, it seems likely that OneBit will make the life of daily bitcoin users much simpler and reduce their dependency on exchanges.

The direct involvement as a partner of MasterCard, whose APIs and SDKs are used together with those of BitPay to power the OneBit platform, may seem surprising to those who remember recent statements by MasterCard that indicated hostility to Bitcoin.

In a December 2014 submission to an Australian Senate inquiry, MasterCard urged regulators to move against the pseudonymity of digital currencies such as bitcoin.

“Contrary to transactions made with a MasterCard product, the anonymity of digital currency transactions enables any party to facilitate the purchase of illegal goods or services; to launder money or finance terrorism; and to pursue other activity that introduces consumer and social harm without detection by regulatory or police authority,” said the MasterCard statement.

It’s interesting to note that the Reserve Bank of Australia (RBA) recently replied to the same Senate inquiry by stating that it is unlikely that any benefits of Bitcoin regulation would outweigh the potential costs. RBA’s head of payments policy Tony Richards also said that, while digital currencies are not legal tender, there is nothing to prevent two parties agreeing to settle a payment using a digital currency.

Perhaps, after many similarly open-minded positions on Bitcoin taken by governments worldwide, MasterCard realizes that Bitcoin is here to stay and moving toward more integration with mainstream fintech.

Image via OneBit.

April 08, 2015 at 04:51PM

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Former Nike CIO Joins Bitreserve

Former Nike CIO and member of the exclusive Fortune 40 Under 40 list Anthony Watson has joined the Bitcoin bank Bitreserve as President and Chief Operating Officer.

“I am thrilled to join Bitreserve at such a pivotal moment in the evolution of cloud money and financial technology,” says Watson. “Money is a common language around the world, and Bitreserve democratizes how people access, hold and move value. We have the unique opportunity to craft a lasting legacy of delivering transparency, massive innovation and positive social impact to financial services and in peoples’ everyday lives.”

“Anthony will drive Bitreserve’s efforts to inform industry leaders and work with members of the global financial services community to deliver transparency, portability and independence to current and future customers around the world,” says Bitreserve founder and CEO Halsey Minor. “His knowledge and deep insight into financial systems is invaluable as we continue to grow and make strides towards a future that enables anyone to access and participate in the digital economy.”

“I was itching to make an impact,” Watson told Fortune . “I wanted to do something that is valuable for people broadly, not just in one industry. And what Bitreserve is looking to achieve really democratizes finance. It’s going to help people all over the world. The financial system is inherently unfair – it’s always the richest who have access, and the poorest don’t have access, or when they do, they have to pay astronomical rates.”

Bitreserve solves bitcoin’s volatility problem by enabling users to hold bitcoin as stable, real-world currencies. Bitreserve currently offers eight options: U.S. dollar, euro, U.K. pound, yen, yuan and the latest two additions – Indian rupee and Mexican peso.

Bitreserve, which also offers commodities – for now, the metals gold, silver, platinum and palladium – recently expanded to Mexico in partnership with its largest investor, Grupo Salinas CEO Ricardo Salinas-Pliego.

With this expansion, Bitreserve wants to grab a slice of the large market for remittances sent from migrant Mexican workers in the United States back to their families in Mexico. It is working in partnership with a major financial services company and community bank.

The plan combines the faster and cheaper remittances permitted by Bitcoin with the convenience of using the national currency.

Minor told Fortune that “the great magical beauty of bitcoin” is that it allows for the creation of financial institutions without having to go through the traditional financial system.

“We’ve taken the idea of Bitcoin and applied it to the world consumers already live in, rather than trying to force consumers into a new world that has high risk,” he said.

Minor’s thoughts about the future of Bitcoin are especially interesting: “I’ll be surprised if Bitcoin is here in five years,” he said. “It’s a means to an end. The value of Bitcoin isn’t the currency, but the technology. I think once the world becomes more accustomed and attuned to the platform of Bitcoin, the noise will go away, and the currency will go away, too.”

Watson is a high-profile spokesman for a growing number of workers who value work-life balance and refuse to sacrifice personal life for their career. As such, the Fortune article notes, he values the modern, distributed workplace at Bitreserve.

“Millennials don’t want to or need to work in one big concrete building in one location,” he said. “That’s not how the world works anymore,” he said. “Some people want to work remotely from home, some want to work from a coffee shop, some want to work at an office.”

April 07, 2015 at 04:44PM

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Coinbase Issues Request for Bitcoin Micropayment Services

In a thoughtful blog post, Coinbase offers ideas for new Bitcoin applications and business models. Based on the applications under development by the more than 7,000 developers using the Coinbase API, it appears that four main categories of Bitcoin applications are gaining popularity among developers: P2P tipping, cross-border payments, international microfinance and reputation platforms.

The Coinbase post identifies other promising Bitcoin application categories and business models that haven’t been targeted by many developers so far, and recommends to Bitcoin developers and startups: “Here’s 10 ideas for Bitcoin startups that we would love to see more developers working on.”

Coinbase recommends developing innovative email and online content services based on bitcoin micropayments. We are used to a “free” Internet where nobody has to pay, but, of course, there is no such thing as a free lunch. The price that we pay for free email is spam, and the price that we pay for free content is rampant advertising – often annoying, intrusive, and ugly – and disclosure of browsing habits to marketers. Paid models based on bitcoin micropayments could change that.

For example, email could be a pay-as-you-go service, with a small fee (say 0.1 cents) to send a message. That wouldn’t be too much of an annoyance for normal email users, while at the same time it would impose prohibitive costs to bulk email campaign and mass spamming. Similarly, web ads could be replaced by micropayments for viewing articles and videos. For example, an article or a video could be unlocked for one hour when a dedicated Bitcoin address receives a micropayment.

Micropayments are impossible to implement with traditional payment systems, because the overhead costs (transaction fees) would be too high. But the fast micropayments with low transaction fees, permitted by Bitcoin, allow the switch to alternative models for paid online content.

That would also permit creators, such as artists, fiction writers and filmmakers, to make a living with their work.

Coinbase also recommends developing applications that incentivize nodes to provide resources to communications networks, such as the Tor network or the Bitcoin blockchain itself, by rewarding participating nodes with micropayments.

Internet pioneers such as Ted Nelson, Marc Andreessen and Tim Berners-Lee thought that the Internet should have a built-in framework for micropayments. Berners-Lee tried to include micropayments in Web protocols, but the idea was never implemented.

“The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution ,” a 2014 book by Walter Isaacson, has the full story:

“In the late 1990s Berners-Lee tried to develop a micropayments system for the Web through the World Wide Web Consortium (W3C), which he headed. The idea was to devise a way to embed in a Web page the information needed to handle a small payment, which would allow different ‘electronic wallet’ services to be created by banks or entrepreneurs. It was never implemented, partly because of the changing complexity of banking regulations.”

Berners-Lee revived the effort to develop an official W3C micropayments framework in 2013. The work hasn’t been completed so far, but Bitcoin is a good solution, because sending a micropayment with Bitcoin can be as easy and immediate as clicking a button.

Isaacson reports that Andreessen mentioned Bitcoin as a good model for standard Internet payment systems. “If I had a time machine and could go back to 1993, one thing I’d do for sure would be to build in Bitcoin or some similar form of cryptocurrency,” Andreessen said.

Images by Freepik

April 02, 2015 at 04:36PM

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Align Commerce Launches Public Beta of International Payments Platform

Align Commerce announced yesterday that the public beta of its international payments platform had launched, which could cut the cost and time of transactions in a $24 trillion market. Thirty-four countries are now exposed to this beta.

“The $24 trillion cross-border payments market is growing at a breakneck pace, expected to eclipse $54 trillion by 2022, despite a highly inefficient and expensive system in which businesses spend over $50 billion on wire and foreign exchange fees, wait up to seven days for transactions to complete and have no visibility into the process,” said Marwan Forzley, CEO and Founder of Align Commerce, in a statement.

Align Commerce uses the blockchain to expedite money transfers. When transferring money through the normal banking system, numerous intermediaries each take a small fee. By eliminating that, the money can move much faster and for fewer fees.

Forzley explained the workflow in an email to Bitcoin Magazine: Business A pays its bill using a local payment system such as Automated Clearing House (ACH.) Business B gets paid via its own local payment system.

“The speed of the payment end-to-end depends on the speed of the local payment systems, and that varies on a country-by-country basis,” Forzley explained.

What makes the tool particularly useful for potential businesses is that there are no changes to the way they do business.

“The key is that there are significant advantages for the businesses using the blockchain in terms of savings in time and money,” Forzley explained. “In addition, there is no change of behavior required. The blockchain is used behind the scene as a rail that moves fiat to fiat between two parties.”

“Align Commerce is the first company to successfully tackle international payments between businesses using the blockchain, allowing companies an easier, faster and less expensive option for cross-border transactions,” said Dan Morehead, CEO at Pantera Capital, in the statement.

Align Commerce is able to cut the cost for businesses as well by cutting time it takes to process the payments and how many middlemen participate in the transfer. Only the company that has to change currencies pays a 1.9 percent exchange rate fee on top of the amount of money it wants to send. Therefore, the buyer has to pay the exchange rate fee.

Businesses might be worried about the volatility of Bitcoin while the payment is going from point A to point B. Though it is faster than traditional means, Align Commerce still can’t have the payment transfer instantly because of local exchanges. But according to Forzley, the company manages any price volatility issues.

Using the blockchain to make faster payments around the world is a use case Bitcoin enthusiasts have been proponents of for a long time. Align Commerce hopes to finally fix that problem.

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April 03, 2015 at 09:56PM

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