1 March 2014

DAOs Are Not Scary, Part 2: Reducing Barriers


In the last installment of this series, we talked about what “smart contracts” (or, perhaps more accurately, “self-enforcing contracts”) are, and discussed in detail the two main mechanisms through which these contracts can have “force”: smart property and “factum” currencies. We also discussed the limits of smart contracts, and how a smart contract-enabled legal system might use a combination of human judgement and automatic execution to achieve the best possible outcomes. But what is the point of these contracts? Why automate? Why is it better to have our relationships regulated and controlled by algorithms rather than humans? These are the tough questions that this article, and the next, intends to tackle.

A Tale of Two Industries

The first, and most obvious, benefit of using internet-driven technology to automate anything is the exact same that we have seen the internet, and Bitcoin, already provide in the spheres of communications and commerce: it increases efficiency and reduces barriers to entry. One very good example of this effect providing meaningful benefits in the traditional world is the publishing industry. In the 1970s, if you wanted to write a book, there was a large number of opaque, centralized intermediaries that you would need to go through before your book would get to a consumer. First, you would need a publishing company, which would also handle editing and marketing for you and provide a quality control function to the consumer. Second, the book would need to be distributed, and then finally it would be sold at each individual bookstore. Each part of the chain would take a large cut; at the end, you would be lucky to get more than ten percent of the revenue from each copy as a royalty. Notice the use of the term “royalty”, implying that you the author of the book are simply just another extraneous part of the chain that deserves a few percent as a cut rather than, well, the single most important person without whom the book would not even exist in the first place. Now, the situation is greatly improved. We now have distinct printing companies, marketing companies and bookstores, with a clear and defined role for each one and plenty of competition in each industry – and if you’re okay with keeping it purely digital, you can just publish on Kindle and get 70%.

Now, let’s consider a very similar example, but with a completely different industry: consumer protection, or more specifically escrow. Escrow is a very important function in commerce, and especially commerce online; when you buy a product from a small online store or from a merchant on Ebay, you are participating in a transaction where neither side has a substantial reputation, and so when you send the money by default there is no way to be sure that you will actually get anything to show for it. Escrow provides the solution: instead of sending the money to the merchant directly, you first send the money to an escrow agent, and the escrow agent then waits for you to confirm that you received the item. If you confirm, then the escrow agent sends the money along, and if the merchant confirms that they can’t send the item then the escrow agent gives you your money back. If there’s a dispute, an adjudication process begins, and the escrow agent decides which side has the better case.

The way it’s implemented today, however, escrow is handled by centralized entities, and is thrown in together with a large number of other functions. On the online marketplace Ebay, for example, Ebay serves the role of providing a server for the seller to host their product page on, a search and price comparison function for products, and a rating system for buyers and sellers. Ebay also owns Paypal, which actually moves the money from the seller to the buyer and serves as the escrow agent. Essentially, this is exactly the same situation that book publishing was in in the 1970s, although in fairness to Ebay sellers do get quite a bit more than 10% of their money. So how can we make an ideal marketplace with cryptocurrencies and smart contracts? If we wanted to be extreme about it, we could make the marketplace decentralized, using a Diaspora-like model to allow a seller to host their products on a specialized site, on their own server or on a Decentralized Dropbox implementation, use a Namecoin-like system for sellers to store their identities and keep a web of trust on the blockchain. However, what we’re looking at now is a more moderate and simple goal: separating out the function of the escrow agent from the payment system. Fortunately, Bitcoin offers a solution: multisignature transactions.

Introducing Multisig

Multisignature transactions allow a user to send funds to an address with three private keys, such that you need two of those keys to unlock the funds (multisigs can also be 1-of-3, 6-of-9, or anything else, but in practice 2-of-3 is the most useful). The way to apply this to escrow is simple: create a 2-of-3 escrow between the buyer, the seller and the escrow agent, have the buyer send funds into it and when a transaction is complete the buyer and the seller sign a transaction to complete the escrow. If there is a dispute, the escrow agent picks which side has the more convincing case, and signs a transaction with them to send them the funds. On a technological level, this is slightly complicated, but fortunately Bitrated has come up with a site that makes the process quite easy for the average user.

Of course, in its current form, Bitrated is not perfect, and we do not see that much Bitcoin commerce using it. The interface is arguably not as easy as it could be, especially since most people are not used to the idea of storing specific per-transaction links for a few weeks, and it would be much more powerful if it was integrated into a fully-fledged merchant package. One design might be a KryptoKit-like web app, showing each user a list of “open” buys and sells and providing a “finalize”, “accept”, “cancel” and “dispute” button for each one; users would then be able to interact with the multisig system just as if it was a standard payment processor, but then get a notification to finalize or dispute their purchases after a few weeks.

But if Bitrated does get its interface right and starts to see mass adoption, what will that accomplish? Once again, the answer is reduced barriers to entry. Currently, getting into the consumer escrow and arbitration business is hard. In order to be an escrow service, you essentially need to build an entire platform and an ecosystem, so that consumers and merchants operate through you. You also can’t just be the one escrowing the money – you also need to be the one transferring the money in the first place. Ebay needs to have, and control, Paypal, in order for half of its consumer protection to work. With Bitrated, this all changes. Anyone can become an escrow agent and arbitrator, and an Ebay-like marketplace (perhaps CryptoThrift or the upcoming Egora) can have a rating system for arbitrators as well as buyers and sellers. Alternatively, the system could handle arbitration in the background similarly to how Uber handles taxi drivers: anyone could become an arbitrator after a vetting process, and the system would automatically reward arbitrators with good ratings and fire those with bad ratings. Fees would drop, likely substantially below even the 2.9% charged by Paypal alone.

Smart Contracts

Smart contracts in general take this same basic idea, and push it much further. Instead of relying on a platform like Bitfinex to hedge one’s Bitcoin holdings or speculate in either direction at high leverage, one can use a blockchain-based financial derivatives contract with a decentralized order book, leaving no central party to take any fees. The ongoing cost of maintaining an exchange, complete with operational security, server management, DDoS protection, marketing and legal expenses, could be replaced with a one-time effort to write the contract, likely in less than 100 lines of code, and another one-time effort to make a pretty interface. From that point on, the entire system would be free except for network fees. File storage platforms like Dropbox could be similarly replaced; although, since hard disk space costs money, the system would not be free, it would likely be substantially cheaper than it is today. It would also help equalize the market by making it easy to participate on the supply side: anyone with a big hard drive, or even a small hard drive with some extra space, can simply install the app and start earning money renting out their unused space.

Instead of relying on legal contracts using expensive (and often, especially in international circumstances and poor countries, ineffective) court systems, or even moderately expensive private arbitration services, business relationships can be governed by smart contracts where those parts of the contract that do need human interpretation can be segregated into many specialized parts. There might be judges specializing in determining whether or not a product shipped (ideally, this would be the postal system itself), judges specializing in determining whether web application designs meet specifications, judges specializing in adjudicating certain classes of property insurance claims with a $0.75 fee by examining satellite images, and there would be contract writers skilled in intelligently integrating each one. Specialization has its advantages, and is the reason why society moved beyond running after bears with stone clubs and picking berries, but one of its weaknesses has always been the fact that it requires intermediaries to manage and function, including intermediaries specifically to manage the relationship between the intermediaries. Smart contracts can remove the latter category almost completely, allowing for an even greater degree of specialization, along with lower barriers to entry within each now shrunken category.

However, this increase in efficiency is only one part of the puzzle. The other part, and perhaps the more important one, has to do with a topic that many cryptocurrency advocates hold dear: reducing trust. We will cover that in the next installment of this series.

The post DAOs Are Not Scary, Part 2: Reducing Barriers appeared first on Bitcoin Magazine.

March 01, 2014 at 08:47PM

Top Alabama Regulator Says Mt. Gox Was a ‘Disaster About to Happen’

New York, California, Texas – home to high-tech incubators and venture capital firms, these are states you expect to issue statements regarding a disruptive technology like digital currency. Alabama? Perhaps not.

But, if you were surprised by the Alabama Securities Commission’s recent warning about Mt. Gox and the dangers of digital currency investments, its director Joe Borg suggests you shouldn’t be.

The motorcycle-driving, mustachioed regulator boasts about bringing more securities violators to trial, executing more foreign extraditions and obtaining more prison time for financial criminals “than most of the other states combined”. In case that didn’t paint the picture, he headed the investigation to take down Jordan Belfort, the real-life inspiration for The Wolf of Wall Street .

Continue reading at CoinDesk

March 01, 2014 at 01:18PM

Singapore Shopping Mall Debuts Bitcoin ATM, Draws Impressive Queue

Singapore received its second official bitcoin ATM on 28th February when a Lamassu unit debuted at Citylink Mall.

With a retail space of 60,000 square feet, the country’s first underground mall is not the largest to host a bitcoin ATM. But, the venue is still in a high-profile location that connects City Hall with local transit and hotels, which should help ensure its visibility.

Of the launch, Zann Kwan, executive director of Singapore-based Bitcoin Exchange Pte Ltd, the company operating the ATM, said she was “happy to bring this potentially groundbreaking technology to Asia and Singapore”.

Continue reading at CoinDesk

March 01, 2014 at 09:02AM

28 February 2014

India Under Bitcoin Regulation? Or Not?

Bitcoin India

India Under Bitcoin Regulation? Or Not? post image

Recently in December 2013, the Indian Central Bank (Reserve Bank of India, RBI) decided to not regulate, and stated clearly that they lacked expert knowledge on the subject at that time. So they cautioned people not to trade in Bitcoin or any other similar crypto-currency. A few days after, one exchange and a Bitcoin information (and dust holder) site closed down, BuySellBitCo.in and rbitco.in, respectively. These actions were undertaken by the RBI’s own Enforcement Department (ED), which conducted the search and closure operations on two properties. These incidents occurred immediately after the following RBI announcement.

“Regulation comes only when people are doing certain business and we come to understand that something wrong is happening. First of all we don’t understand this subject.” ~ KC Chakrabarty, RBI deputy governor

This heavy-handed approach came with only the bank’s statement that crypto-currency was to be free within India, unregulated, but free.

RBI-ED sealed the home of Nilam Doctor during the raid conducted on 26th December 2013

RBI-ED sealed the home of Nilam Doctor during the raid conducted on 26th December 2013

“The RBI has no plans to come up with a regulatory framework for Bitcoins, the virtual currency, which has risen sharply in value in the past few months, a top official said.”~ The Times of India

You may guess that depends on one’s given definition of ‘free’. With the world’s second largest population at 1.237 billion, nearly the majority of citizens in India are amongst the unbanked, crypto-currency could do very well to get a proper foothold within the Indian sub-continent. An excellent piece on the regulatory framework within India and how it relates to Bitcoin and crypto-currency can be found here.

Summarizing that crypto-currency, under current regulation and legal framework, cannot be regulated, though with new regulation it may yet come under the umbrella of the political and banking powers. The RBI-ED then requested information on what these businesses actually do, the same businesses that they had just forced to close down. One of the affected businesses (rbitco.in), a website that explained the basics of Bitcoin and allowed registered customers to deposit ‘dust’ Bitcoin that customers gained via visiting various ‘free Bitcoin’ websites and promotions. The site allowed people to withdraw their dust once their account acquired a total of 0.5 or more. We can reveal that one of the individuals who had their house raided and closed (Nilam Doctor) ran this particular website, and after the property seizures the ED forwarded these questions.

  1. The official location of your company in India and the details of the company

  2. The details of your clients and their KYC

  3. The details of the sale and purchase of the Bitcoin.

  4. The details of your employees in India.

In summary, the site neither sold nor purchased any Bitcoin, and it was run by a single person (Nilam), and KYC was registered emails (seeing as customers only deposited dust and then withdrew their own dust once it accumulated to the required amount). Could it be drawn from these questions that the RBI-ED in fact knew nothing about the investigation and closures they were enacting? Who was pulling the strings if a law enforcement department can be sent off with no investigation or any pre-knowledge of what they are doing?

The Bitcoin Alliance India (BAI) and Bitcoin community members discussed the issue and released a press release with regards to the RBI and RBI-ED approaches towards crypto-currency and the legitimacy of a free market. Nishith Desai of Nishith Desai Associates explains the illegality of Bitcoins within India post RBI-ED invasion, in that Bitcoin (in India) is not illegal, yet the governmental authorities have the responsibility to warn national residents of the dangers inherent within the Bitcoin economy.

Nilam Doctor has advocated for bitcoin through his media presence, Paying in a different coin, Viable and attractive bitcoin and Towards a trading platform. He also contested for the Bitcoin Foundation individual seat; transcript is available here.

Nilam Doctor - bitcoin pro India

Nilam Doctor – Bitcoin Savant

He has been an outspoken pro-active Bitcoin supporter and advisory expert, and one of the individuals accosted has informed us that to date, the BAI are now waiting for the conclusion of an RBI central meeting with regards towards Bitcoin and their ‘illegality’ and function within India. This meeting was to have occurred two weeks ago; the BAI and related Bitcoin experts and community participants are awaiting the RBI’s conclusion to this meeting.

RBI was also issued a letter by Venugopal for assistance deciding about bitcoin’s fate, but the BAI have been waiting for nearly a month for a response. Naavi.org (Vijayashankar Na) also published some articles on bitcoin during the RBI-ED inquiries. In personal correspondence on the ongoing situation within India, Nilam Doctor informed us that they recently opened his sealed property in India, for the purposes of searching for bitcoin related money laundering documents and similar incriminating materials.

Needless to say, they found nothing but decided to take 2x 240 MB HDD’s (last used in 1998), after only taking 50 days to decide to finally open the property. These incidents point to the fact that regardless of RBI’s only communication policies, lack of knowledge and experience within Bitcoin and the related space, the central bank of India used its law enforcement department to close businesses without any prior knowledge of the business activities, nor any expert knowledge of what Bitcoin entails. To help promote the accessibility and future of Bitcoin within India, Nilam Doctor is raising funds to help support Bitcoiners within India and to help educate the relevant authorities and governmental bodies within India, to explain the virtues and positives that can be gained from Bitcoin adoption. Key features to address during the visit to India:

  • To form Bitcoin Foundation (India) as a non-profit organization in India.

  • Hold meeting with senior government offices in major cities.

  • Hold meet-ups with pro-bitcoiners in Bangalore, Mumbai, New Delhi, Pune, Hyderabad, Jaipur, Ahmedabad, Calcutta, Nagpur.

  • Create awareness to the benefits for general public to use virtual currencies.

During the tour to India, he will publish weekly reports of the development here on Bitcoin Magazine.

In the most recent article from the Sunday Guardian, Nilam Doctor has been portrayed as the Master of Bitcoin (in India) by the ED, clearly showing a strong lack of understanding of the concept behind decentralization and what Bitcoin really is.

If you wish to contribute to the Bitcoin movement within India then please feel free to donate: (1BfindEetm8qpwJH2M7Ht7rgmLztwpX83P). When 40 BTC is raised Nilam will tour India, visiting the relevant authorities and establishments on behalf of Bitcoiners as a whole, and especially those within India. He has informed us that he will keep us updated on all progress. Nilam can be contacted directly via (nilamdoc AT gmail.com). Nilam is a Lifetime member of the Bitcoin Foundation, one of the Founders & Directors of the Bitcoin Foundation India (chapter) and a Bitcoin Exchange developer.

The post India Under Bitcoin Regulation? Or Not? appeared first on Bitcoin Magazine.

March 01, 2014 at 04:38AM

Optimism Grows as Mt. Gox Chapter Ends and Bitcoin Turns the Page

The death bells tolled loudly for Mt. Gox this week as the threads of its elaborate cloak of cover-ups, lies and poor business practices came undone, first with the release of documents the revealed a struggling company desperately seeking new capital, then ultimately with its formal bankruptcy filing on 28th February.

The news reverberated beyond the industry, with mainstream media plunging headlong into the sensational story that was likened to some of the more infamous debacles in the history of the traditional financial system, such as Lehman Brothers and Bear Stearns.

Still, increased pressure from the outside world galvanized an impressive display of support and resilience from the bitcoin community as it worked to set facts straight and fight against the most recent wave of negative PR.

Continue reading at CoinDesk

February 28, 2014 at 11:31PM

HighKart Launches as India’s First Bitcoin E-Tailer

HighKart.com has become the first e-commerce site in India to exclusively accept bitcoin as a payment method.

Launched by Delhi-based entrepreneur Amit Kumar, the online store retails more than 150 products, ranging from digital currency mining equipment to fashion accessories.

Currently, there are more than 500 e-commerce startups in India – most having popped up within the last five years. Companies like Flipkart are dominating the local market, making it difficult for new players to enter.

Continue reading at CoinDesk

February 28, 2014 at 08:30PM

Why Citigroup’s ‘Three Risks Facing Bitcoin’ is Misguided

In the wake of massive problems that brought down the Japan-based bitcoin exchange Mt. Gox, some seem to think that bitcoin is experiencing a crisis of sorts.

For those who have long known about the problems and possible hazards of Mt. Gox, however, this news doesn’t seem incredibly startling.

For the financial establishment, though, Mt. Gox’s ineptitude appears to be bitcoin’s fatal blow.

Continue reading at CoinDesk

February 28, 2014 at 07:18PM

Vietnam Warns Against Bitcoin, Invokes the Ghost of Gox

Vietnam’s State Bank has issued another statement warning against bitcoin, blocking credit institutions from offering any digital currency services.

Authorities had already issued a strong warning back on 14th February, stating that the government and State Bank did not recognize bitcoin as a legitimate method of payment.

It also contained all the usual admonitions about money laundering, tax evasion, illicit trade, and the risk of speculation. Consumers would have no protection in the event of investment loss.

Continue reading at CoinDesk

February 28, 2014 at 03:11PM

BitTorrent Client Integrates Bitcoin Donations

Popular BitTorrent client Frostwire has integrated an experimental mechanism that will allow users to donate bitcoins to torrent sharers. In addition to bitcoin, the same mechanism can be used for litecoin, dogecoin and even PayPal.

FrostWire believes the idea will allow small content creators to easily monetize their content simply by getting tips from those who download it using the P2P client. Needless to say, Big Content is probably not thrilled by the prospect of decentralised content markets, let alone the fact that the technology could even be used to monetize piracy.

However, that is not what FrostWire has in mind, not even close.

Continue reading at CoinDesk

February 28, 2014 at 12:40PM

Mt. Gox Files for Bankruptcy, Claims $63.6m Debt

Mt. Gox is officially filing for bankruptcy protection with an outstanding debt of ¥6.5bn ($63.6m).

The exchange’s lawyer announced the news during a conference at the Tokyo District Court late on Friday afternoon, Japan time.

It’s not mentioned if the $63.6m debt figure includes any bitcoin value, or just what Gox owed in fiat currency. If bitcoin losses are as great as the 744,408 mentioned in the leaked report (a document since described by CEO Mark Karpeles himself as “more or less” true) then it would probably do best to stick to the notion that bitcoins have no value under current law.

Continue reading at CoinDesk

February 28, 2014 at 11:33AM

27 February 2014

Bitcoin Transaction Fees To Be Slashed Tenfold

The bitcoin developers are about to reduce the transaction fees on the bitcoin network tenfold, thanks to the relatively high value of the digital currency.

Transaction fees are small amounts paid to send bitcoin transactions around the network (think of them like postage stamps) and to get miners to confirm them by including them in a mining block. They’re paid in satoshis (tiny amounts of bitcoins), which means that as the price of bitcoin rises, the transaction fees get higher.

Recent fluctuations in the bitcoin world may have set the price yo-yoing, but that doesn’t mean that it isn’t doing relatively well. The CoinDesk Bitcoin Price Index is still hovering in the $540 range at the time of writing, a little over six times the price last July, when the Index was first introduced.

Continue reading at CoinDesk

February 28, 2014 at 05:23AM

Your Central Bank Steals Your Money. Here’s How.


We operate in a particular financial paradigm: a centralised order with extraordinary power concentrated at the top.

However, Bitcoin has created what was once unimaginable: a working, resilient and voluntary financial system with power distributed evenly according to contribution.

It may or may not be possible to reconcile the legacy financial order with this new system. The jury’s still out. Even without reconciliation one would assume that the majority would flock to the new system.

In flattening the financial structure you offer a greater value proposition to the majority. Assuming, of course, the majority can see that value proposition. But it is not always obvious. It would be if people understood that their central bank stole from them.

At the top of the existing structure is the central bank. They do indeed steal from you. They steal from you in disgusting quantities and every day. The theft is insidious and indirect. So, it is not obvious. But the theft is still very real.

The theft is not particularly complicated. Although it is dressed in confusing language: ‘quantitative easing’, ‘operation twist’, and ‘bailout’. Realizing how the theft works is important.

When the methods of the thief (central bank) are understood, the value proposition for the Bitcoin system becomes much more obvious.

Culturally and collectively we seem to instinctively understand that ‘printing money’ is bad. Arbitrarily increasing the supply of currency is incredibly detrimental to an economy. In essence this is what your central bank does. But why is it detrimental?

Money is not wealth. Goods and services are wealth. Money is how you represent and transfer that wealth. Printing money does not increase wealth (the quantity of available goods and services). Printing money simply divides the existing wealth into a greater number of pieces.

This is because the dollar you hold does not represent your share of the available goods and services. Rather, it only represents your share of the total money supply. That is the key.

Life is Like Monopoly

Paul Mckeever’s Monopoly game analogy offers a useful illustration. Take four players in a monopoly game. Each player, including the banker, has $100. The total money supply is therefore: $400. Each player has a ¼ share of the money supply.

The banker suddenly issues himself an extra $400. The total money supply is now $800.

The banker has $500 (this is now 5/8ths of the total money supply). Each of the 3 other players is still left only with their $100 of savings. This now only represents 1/8th of the total money supply.

Each of the other players has had ¼ of their money stolen. This was done when the banker increased the money supply and gave the new money to himself. He has unjustly enriched himself at your direct expense.

Each quarter of the other 3 players money: ¼ + ¼ + ¼ is absorbed directly into the banker’s newly issued money, moving him to 5/8ths of the money supply.

The effect would be exactly the same if the banker had instead kept his $100, not introduced any new money into the system, reached over and taken $25 dollars from each player. Of course, that theft would be too obvious. You’d slap him.

Notice that the total wealth (available properties) in the Monopoly game never increases. The only thing that increases is the banker’s capacity to purchase that wealth (properties) over the other players.

The act of arbitrarily increasing the amount of money in circulation simply transfers the capacity to purchase the existing wealth from those who hold money (workers and savers), to those who create additional money (bankers). The banker’s new money absorbs that stolen money.

It’s a neat trick and a very interesting form of thievery.

Of course, it is a zero sum game. The central bank gains directly at your expense, whereas real wealth increases benefit everyone. But they can only ever occur from productivity, creating more goods and services of higher value at a lower cost.

How does Bitcoin Solve This?

Quite simply, no one can arbitrarily increase the supply of Bitcoins and steal from you in this way. The central bank’s power to increase the supply of money and give it to themselves and their friends is gone.

The money creation process instead mimics the mining of a natural resource like Gold. Entrepreneurs must efficiently organise land, labour and capital to create the tools needed to dig Bitcoins out of the digital crust. It is an expensive and risky exercise.

The Bitcoins take time, effort, resources and sacrifice to dig up from the virtual ground. So it is true that over the next 100+ years those who mine Bitcoin will be creating new money. However, and, most importantly, it is not out of thin air – at zero cost.

The newly created Bitcoins will absorb value from the existing Bitcoins in circulation. This is true. But they will do this completely predictably over time and at a decreasing rate, minimising the negative effects on those who hold Bitcoins.

Most importantly however, the people who want to dig the Bitcoins out of the virtual crust must first spend Bitcoins and take on risk in order to do this. This money creation is not arbitrary. The central bank takes on no risk and increases the supply of money at no cost.

And of course, eventually, one day in 2140, the creation of new Bitcoins will stop and that is all there can ever be, mathematically. Can we say the same of the US dollar?

Bitcoin is often understood to be both dangerous and an unreliable store of value. In the worst logical leap it is claimed that Bitcoin is as worthless as centrally issued fiat paper. This accusation is more outrageous and egregious when one understands the particular aspects of how central banks steal your money.

The post Your Central Bank Steals Your Money. Here’s How. appeared first on Bitcoin Magazine.

February 28, 2014 at 12:56AM

EXCLUSIVE: Charlie Shrem Speaks Out About Mt. Gox, His Arrest and the Bitcoin Bromance

“I’ve known Mark Karpeles for a very long time. Mark is a very sweet guy. Very non-confrontational, but has he made bad business decisions? Yes. Has he failed to do everything he should have? Yes.”

So says Charlie Shrem, the troubled bitcoin entrepreneur, speaking to me from his parents’ house in New York, where he’s currently under house arrest.

He tells me he classes Karpeles, CEO of the disastrous bitcoin exchange Mt. Gox, as a good friend, but disagrees with a hell of a lot of the decisions the Frenchman has made.

Continue reading at CoinDesk

February 27, 2014 at 07:09PM

Federal Reserve Chair: US Central Bank Can’t Regulate Bitcoin

After months of silence on the matter, Federal Reserve chairwoman Janet Yellen has stated that the US central bank does not have the authority to regulate bitcoin.

Yellen was appointed as chair of the Federal Reserve last October after she was nominated to replace Ben Bernanke.

During an address to the Senate Banking Committee on 27th February, the top US banking official, said:

Continue reading at CoinDesk

February 27, 2014 at 06:16PM

Nearly 150 Strains of Malware Are After Your Bitcoins

Computer security firm Dell SecureWorks has managed to identify 146 types of bitcoin malware in the wild.

The company’s researchers found the distinct breeds of malware had been specifically designed to steal bitcoins – a number of them presenting quite a danger to owners with coins stored either online or on their computers.

The firm concluded that the number of Windows-compatible cryptocurrency stealing malware (CCSM) strains has gone up in line with bitcoin’s increase in value.

Continue reading at CoinDesk

February 27, 2014 at 03:42PM

Ukraine Protestors Turn to Bitcoin to Ease Cash Crisis

The dust is yet to settle on the recent, often violent protests in Ukraine that began last November and saw at least 82 people killed and hundreds injured, many seriously. President Viktor Yanukovych was removed from office and has gone into hiding.

On the ground in the capital, Kiev, particularly around the protests’ focal point, the central square known as Maidan Nezalezhnosti or simply ‘Maidan’, there are thousands of people volunteering to deal with the aftermath as winter drags on.

Field surgeries and hospitals treat the wounded, kitchens feed the crowds, blankets and clothing are distributed to those who need them, and people with vehicles shuttle everything around.

Continue reading at CoinDesk

February 27, 2014 at 12:32PM

Leaked Mt. Gox Document Linked to Consulting Firm Mandalah

Earlier this week, I published a document I received from a reliable source entitled “Crisis Strategy Draft”, which was allegedly a roadmap to show how Mt. Gox could recover from insolvency despite the mind-blowing loss of nearly 750,000 customer bitcoins.

Since that initial leak, I have had a number of conversations with industry insiders who have spoken about the situation both on and off the record.

They have confirmed the best news possible for Bitcoin given the damning evidence documented in the leaked presentation: Mt. Gox acted alone in its deceit, and ultimately failed in its desperation, to find an investor willing to bail them out.

Continue reading at CoinDesk

February 27, 2014 at 11:00AM

26 February 2014

How To Prove That Exchanges Really Have Your Money

From all the news surrounding Gox’s demise, it seems pretty certain at this point that it was operating with a fractional reserve, trading with only a small proportion of the money that it was supposed to have. The question now is, how can we be sure that others aren’t doing it, too?

Whether you’re a straightforward bitcoin wallet or an exchange, the hope is that you’ll have enough bitcoins to cover everyone’s accounts, should they all decide to empty their funds at once. This week, large bitcoin companies seemed eager to persuade people that they did.

In their joint statement condemning Gox, five major exchanges explained that they would be “coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner”. How do they do that, exactly?

Continue reading at CoinDesk

February 27, 2014 at 05:19AM

BREAKING: Full Mt. Gox Story coming...

I now have all of the pieces to the Mt. Gox puzzle. Mt. Gox acted alone and in desperation. Comprehensive post after I lawyer up.

Due to some angry Gox depositors, I’ve been advised to disclose that Karpeles was overstating the fact that he had “lined up” investors. The truth is, in a move of desperation, Mark asked several investors for a bailout, all of which seemed to have immediately notified the authorities once they learned the extent of the fraud, negligence or incompetence at Mt. Gox.

That is to say, my leak did NOT cost depositors their investments. There was no chance of a bailout. Please direct your anger at Mt. Gox, and please do not blame me for your losses. Even if you disagree with my reporting, there was nothing to gain by continuing to cover this up, but much prolonged agony for Bitcoin and perhaps additional damage for new depositors.

Thank you for your support and understanding.


February 27, 2014 at 02:32AM

Toronto Bitcoin Expo Speakers Announced, Tickets On Sale


The Bitcoin Alliance of Canada, the oldest and largest Bitcoin advocacy organization in the country founded by Anthony Di Iorio in April 2013, has announced a host of new updates relating to the Bitcoin Expo, an upcoming event that will take place in Toronto from April 11 to 13. Although there already have been two smaller Bitcoin-related gatherings in Canada, with the Bitcoin Summit in Toronto last October and Coinfest in Vancouver in February, the Bitcoin Expo will be the first major event to have a large marketing effort and attract attendees and speakers from Canada, the United States, Europe and Asia. The event has been in the works for several months, and was officially announced in November 2013; now, the Bitcoin Alliance has released a new website for the Expo, including the full speaker list, sponsorship packages and tickets on sale.

The Expo will take place in the Metro Toronto Convention Centre, the largest conference and meeting center in the country. The conference area will include at least four major rooms, including two speaking rooms each capable of seating 500 people, a smaller speaking room and a media room, and there will also be smaller rooms for events like fireside chats. The exact schedule has not yet been announced, but it is publicly known that the main event with presentations will take place on the Saturday and Sunday from April 12 to 13, with an optional gala dinner on Friday for whose who are willing to pay the extra $100 for a higher-level ticket. There will also be a free “Learn More About Bitcoin” event with 200 seats available on Saturday morning, as well as a hackathon dedicated to cryptocurrency technologies. The cost of the tickets is among the lowest for any Bitcoin event in the past year, with basic tickets at $200 (reducible to $180 if you take the simple step of becoming a free member of the Bitcoin Alliance of Canada) compared to $300 for the Bitcoin Foundation’s official 2013 conference in San Jose, €350 for their upcoming 2014 event in Amsterdam, $200 to $250 for Miami and $500 for the Inside Bitcoins conference in New York. The Expo will also be non-profit, relying heavily on volunteers to set up the event and with all proceeds going directly to the Bitcoin Alliance of Canada.

The speaker list now contains well over 40 speakers from a variety of walks of Bitcoin life; Bitcoin business owners and venture capitalists, members of the Canadian and US libertarian communities, non-profits, community organizers, a number of different “cryptocurrency 2.0″ projects (and other more humble altcoins), Bitcoin media outlets and developers are all represented. Some of the speakers include:

  • Anthony Di Iorio, founder of the Toronto Bitcoin meetup, the Bitcoin coworking space and community center Bitcoin Decentral, Kryptokit and the Bitcoin Alliance of Canada. Coming from a long career in geothermal drilling technology and later real estate, Anthony first joined the Bitcoin community in late 2012, and immediately proceeded to found the first Toronto Bitcoin meetup in November 2012, making Toronto the third city in the country to have a meetup after Vancouver and Montreal. He is now employed in several Bitcoin projects full-time, including KryptoKit, Bitcoin Decentral, Ethereum and the Bitcoin Alliance.

  • Andreas Antonopoulos, a well-known Bitcoin technology expert and public speaker at Bitcoin events. Andreas is also a regular participant in the podcast Let’s Talk Bitcoin, and has also recently taken up a position as the chief technology officer of blockchain.info.

  • Charles Hoskinson, a Colorado-based mathematician and cryptographer who studied analytic number theory and worked on the Goldbach conjecture in graduate school before moving on to cryptography and later Bitcoin. Charles is most well known as the founder of the Bitcoin Education Project and creator of “Bitcoin, or How I Learned to Stop Worrying and Love Crypto”, a Udemy-based online course providing an introduction to Bitcoin and its internal workings.

  • Cody Wilson, a Texan crypto-anarchist and founder and director of Defense Distributed, the organization that produced the first 3D printed gun. Cody has since become increasingly interested in Bitcoin, and is also a founding member of the Dark Wallet project.

  • Joseph David, the founder of the Calgary-based exchange CAVirtex, the oldest still running Canadian Bitcoin exchange and the first to start trading Litecoin. CAVirtex is also developing a platform for merchant services and is increasingly moving towards becoming a large player in the Canadian Bitcoin merchant ecosystem.

  • Jason King, founder of Sean’s Outpost, a homeless shelter feeding hundreds of people in Pensacola, Florida. Sean’s Outpost originally launched in 2012, but started accepting Bitcoin donations in March 2013 when the price of a Bitcoin first shot above $50. Jason made a post on Reddit asking anyone to donate a bitcoin and feed 40 homeless people at a cost of $1.25 per person. Four days later, Sean’s Outpost had raised over $600, and Sean’s Outpost has since become a regular presence in the Bitcoin community. More recently, Jason has also launched Satoshi Forest, a nine-acre “sanctuary for the homeless” in Pensacola, and he is now running across America to raise awareness for homelessness and Bitcoin.

  • Jonathan Mohan, the founder of BitcoinNYC, a professional association of Bitcoin users in New York, and the founder of the New York Bitcoin meetup, which has now become one of the largest in the country.

  • *Charlie Lee is the creator of Litecoin, the second largest cryptocurrency and one of the oldest that is still around today. Litecoin is most well-known for its use of the Scrypt mining algorithm, requiring a large amount of memory to compute in order to make it more difficult to produce specialized hardware for it. Charlie also works for Coinbase, one of the most popular ways to buy Bitcoin in the United States.

  • Ron Gross is a co-founder of the Israeli Bitcoin community, one of the most concentrated Bitcoin communities in the world with several thousand members in its Facebook group out of a total population of 500,000 in Tel Aviv and 8 million in Israel. He is now also the executive director of the Mastercoin Foundation, and is a founding member of the Global Bitcoin Alliance.

Tickets are available for sale on the Bitcoin Expo web site, and sponsorship packages ranging from $5000 to $35000 have also been posted. The Bitcoin community in Canada has been growing rapidly this past year, with burgeoning local communities in Toronto, Montreal and Vancouver, each with a large meetup group, a dedicated community center and a Bitcoin ATM; the Bitcoin Expo is shaping up to be the grand opening of the Canadian Bitcoin community to the world at large. Looking forward to seeing you there!

The post Toronto Bitcoin Expo Speakers Announced, Tickets On Sale appeared first on Bitcoin Magazine.

February 26, 2014 at 07:20PM

Bitcoin is trendy in Spain with 100+ ATM installations


Today, February 22, was the inauguration of the first Spanish bitcoin ATM in Diagonal Mar, a shopping center situated in one of the main avenues of Barcelona. With its installation comes 100 more ATMs over the next three months in the rest of Spain – a clear sign that interest in bitcoin, in this country, is settled.

This ATM, designed and operated by the Spanish companies Paymaq and Bbank respectively, starts the bitcoin fever that in the next three months will cover all the Spanish provinces with this service.

As we can see in other countries such as Canada, to buy or sell bitcoin in this machine it is necessary to identify in the system with your national ID card (an easy process that you can do with an integrated webcam).

Paymaq isn’t a unique company producing Bitcoin ATMs in Spain; Btcpoint is also selling attractive and well-designed machines. In a country where distrust, and even hatred, to banks is a constant, the adoption of this easy-to-use technology could have a good adoption.


Other ATMs are coming in the next few weeks from Catalonia, a country with a tradition of self-management and citizen innovation, inside the “Cooperativa Integral Catalana”, a comprehensive cooperative, with around 2,000 members and more followers, where projects such as DarkWallet are being developed.

The vision of CIC is to offer an alternative and independent-of-banking system and build a cooperative and stronger economic system across from the States. Purchased at Lamassu, the 5 CIC ATMs will bring service with Bitcoin, Litecoin and Freicoin with DarkWallet implementation.

In this first semester there will be CIC ATMs providing service in different “change offices” and one online marketplace around all the catalan country to make the possibility of commerce away from banks in the real economy.

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February 26, 2014 at 07:19PM

Robocoin Bitcoin ATM to Debut in North America’s Largest Mall

Las Vegas-based bitcoin ATM provider Robocoin has announced that its newest unit will open for business on 26th February at the West Edmonton Mall in Alberta, Canada, the largest shopping center in North America, and until the 2000s, the biggest shopping mall in the world.

Inspired by traditional urban bazaars, West Edmonton Mall includes 5.3 million square feet of retail space, features more than 800 stores and sees 30.8 million visitors annually. As if this wasn’t enough, the mall boasts an ice skating rink, a water park and the world’s largest indoor amusement park.

Drew Glover, co-CEO of BitNational, the local owners and operators of the ATM, said that West Edmonton Mall was excited to host the Robocoin unit upon learning of his plans last October, and that the attraction fit with its high-tech focus.

Continue reading at CoinDesk

February 26, 2014 at 07:02PM

First Bitcoin Inspired Art Show: March 6th 20Mission

Bitcoin Networked

The Time is Now Artshow

Image by San Francisco based artist Dan Gribben

Bitcoin inspires individuals around the world and certainly can spark creativity. On Thursday, March 6, 20Mission will host the first ever Bitcoin Inspired Art Show entitled, “The Time is Now”. As Bitcoin truly prompts individuals to rethink finances and the future of our financial system, now this innovative technology has also inspired artists. Bitcoin Magazine was pleased to learn of this event.

“The Time is Now” planning team issued the following press release:

‘The Time is Now’ will be the first Bitcoin inspired art show

Experience the Revolutionary spirit of Digital Currencies Through Art

San Francisco, California (February 25, 2014) – 20Mission is pleased to present The Time is Now, a Digital Currency inspired art exhibition. Please join us on Thursday March 6, from 7-10 p.m., to meet the artists and for the exhibition opening in which pieces of art will transport us to the future to re-invent our current financial system

To RSVP, please visit BitcoinArtShow.Eventbrite.com

20Mission (20Mission.com) is a co-living and co-working space in the trendy Mission District of San Francisco where engineers, designers, artists and entrepreneurs live, work and play.

Jered Kenna is 20Mission’s founder. Jered speaks regularly about Bitcoin, virtual currency, and the future of money and has been featured in major media outlets around the world.


฿ Brett Huntter

฿ Thomas-Joseph Carrieri

฿ Dan Gribben

฿ Sean Vallor

฿ Kelly Kharend

฿ Cassie Olitan

฿ Jeff Gomez

฿ Happy Dong

฿ Zachary Sweet


฿ Sure

฿ Michael Covington

The post First Bitcoin Inspired Art Show: March 6th 20Mission appeared first on Bitcoin Magazine.

February 26, 2014 at 06:45PM