4 April 2014

DATA Series: Interview of Patrick Murck, General Council of The Bitcoin Foundation

Patrick is originally from Washington DC, the city hosting the data conference, but is currently living in the Pacific Northwest. He has been part of the Bitcoin movement in 2011 and really became known in the community after fall of Bitcoinica in 2012. Here’s the cover of Bitcoin Magazine around that time.


Ruben Alexander: What made you want to become a lawyer?

Patrick Murck: That’s a great question. I was tricked into it.


(laughs) My wife tricked me into taking the LSAT and I ended up in law school. Before I knew it, I was on the path to being a lawyer. Both of my parents are lawyers so in some ways you could say I was raised by wolves.

How long have you been a lawyer?

Too long. I’m on year 8 now.

What was the most difficult case you’ve worked on?


Woah. In what way were you involved with Bitcoinica?

I helped recover funds from Zhou and negotiated the placement of those funds into what we thought was safe keeping. I also worked with creditors to come up with a strategy to move Bitcoinica into liquidation.

It was a situation where no one had an interest in cooperating so it was quite difficult. More difficult than it needed to be. And of course there was a lot of drama.

Yes, that’s what I’ve heard. Was this the first Bitcoin company to go under?

It wasn’t the first, but there was a lot of drama.

Were you introduced to Bitcoin through Bitcoinica?

I was employee #1 at a digital currency startup called BigDoor before the Bitcoin whitepaper came out. It was probably in 2010 that I saw the Bitcoin whitepaper. And then I got more interested in learning about Bitcoin, because I was already involved in digital currency and this was a different approach that solved a lot of the big problems I was experiencing firsthand.

I wasn’t involved with Bitcoin because I had a day job that occupied all of my time. I was also a digital currency attorney and there weren’t many around at that time so a number of Bitcoin people reached out to me. Jon Matonis emailed me early on. I met Charlie Shrem and Jared Kenna in San Francisco and they officially roped me into the Bitcoin space.

What are your thoughts on the recently published IRS notice?

I thought it was a net positive. It is good they published the guidance. At the same time it is not perfect. As usual, the mining is the most difficult thing for everyone to wrap their heads around and that’s where some of the issues crop up.

If you read the guidance, you book revenue the day you mine your Bitcoin and you receive your block reward. The block doesn’t mature until 100 blocks so there could be some cases where that’s not in the same day.

That is a very good point.

Does that mean you are forced to book revenue at a mark to market value that is on a non-fungible asset? Shouldn’t you be booking that revenue when the block has ripened at 100 blocks? It is not a big deal, but it is clear that those were the things that were missed. Those are the kinds of things, had it been put out for notice or public feedback, that probably would have been caught early.

Gmaxwell changed the block maturity from 120 blocks to 100 blocks 7 months ago.

That’s why I always try to get the regulatory community to put guidance, which doesn’t have to go out for public notice and comment, put it out for public comment anyways. With complicated matters involving new technology that isn’t easy to understand, let the people in that community inform the regulations through standard Administrative Procedures Act procedures.

At a higher level, I think it is interesting that from a policy perspective you have an incongruity happening. With FinCEN’s guidance they appropriately are very neutral on encouraging how Bitcoin is used, whether it is for investment or as a medium of exchange. FinCEN’s guidance probably favors medium of exchange slightly, because there is no registration requirement when you are transacting within the digital economy itself for goods and services. Whereas on the tax side from the IRS, which is also in the Treasury Department, clearly encourages investment and speculation and discourages Bitcoin’s use as a means of exchange or as a payment system. Which isn’t really a great outcome. It doesn’t treat Bitcoin the same way it treats other similar payment systems. It discriminates against the Bitcoin technology as a method of payment. It is never a good thing, from a policy perspective, for rules, regulations, or guidelines to discriminate against one technology over another or pick winners and losers in the market. That is usually a bad outcome and needs to get sorted out.

It is not clear to see how the IRS can do that given their current rules. But I think there is enough flexibility that you don’t need to go to the legislative branch. It is another thing that could have been called out early through public comment.

The approach they took towards mining was peculiar. I know that Germany declared Bitcoin private money and charges a sales tax on Bitcoin transactions…

Germany has a unique history in that regard that the US doesn’t have with private monies. They are familiar with that concept where each village has a private currency. You are going to see this happen where in some cases Bitcoin fits into one [government] framework better than another.

There is still a sales tax on Bitcoin or dollar transactions in the US. The difference is [with the current IRS notice], even on very small transactions, I am going to realize a loss or gain. And that is burdensome on your everyday consumer. Even if it was treated as foreign currency it would still book a capital gain or loss on large purchases.

It affects microtransactions the most. If Bitcoin Magazine were to throw up a Bitcoin paywall someday, and I want to pay a bitcent ($0.01 or .023 mBTC) to get to my articles, realizing a capital loss or gain every time I spend a fraction of a Bitcoin is going to be cumbersome. I don’t think anyone wants this outcome, including the IRS.

As you can tell we could go on and on about this.

I figured the exchanges would be the most efficient place to tax. It would cover anyone entering into the dollar and put the burden of tax liability at the exchange. It could also be viewed strictly as a commodity since it can be mined anywhere in the world.

The answer isn’t taxing it as a commodity or as a currency. The Bitcoin Foundation’s position is that Bitcoin isn’t a monolithic object. It is about how people are using it. If you are using it like a currency, it should be treated that way. If you are using it like a commodity or something else, it should be treated that way.

You can never pin Bitcoin down in a regulatory framework as one particular thing or another, especially this early on.

Does DATA have any goals related to public education or policy feedback for 2014?

We haven’t set goals. I’m hoping that will be the outcome of the meeting with DATA members next week. I think it is appropriate to have a conversation with the members first.

The first thing I would like to see is to develop a framework for how to analyze Bitcoin issues. Jim Harper just published a study where we walk through all the potential threats to Bitcoin and assess the likelihood of the risks occurring. Even using this document as a starting point would help prioritize goals and measure success and failure.

The second thing we need to do is set best practices and standards for Bitcoin exchanges. The focus for DATA should be on the Bitcoin exchanges. They are the critical control points of the ecosystem. They have a need to have their own voice in the conversation. To have credibility they will need to have best practices and standards that are adopted by Bitcoin exchanges.

The third thing would be to build credibility in the regulatory and legislative community based on the good work we are doing by establishing best practices and standards, and prioritizing risks.

(reading Jim Harper’s study) I will include some content from this paper. This is a great list of the risks that threaten Bitcoin.

This is what I hope to bring to DATA. I want to approach these issues with rigor and take actions that bring value to Bitcoin. When you are lobbying or trying to influence through various government relations, it is good to have some thought, deliberation, and measurable goals so you can understand where you are succeeding and where you are failing.

Here is an excerpt from the document Jim Harper shared on the Bitcoin Foundation’s blog.

“…There are complexities, but managing risks to Bitcoin involves a relatively simple series of steps:

  • Response characterization, finally, determines in the abstract what steps the foundation should take to address the most likely and most significant threats to Bitcoin’s success. This step can guide the activities of the foundation and, to the extent possible, reveal measures of progress toward the outcomes the foundation seeks.”

- From page 2 of the Bitcoin Foundation Research Brief No. 1 released during Spring 2014

Will DATA concentrate its time working with the US government, or will you split your time across several governments?

Based on my experience at the Bitcoin Foundation, we need to marshal our resources and focus on where you are going to have greatest impact for the entire ecosystem. The way you do that is you pick, based on your resources, a certain number of jurisdictions. You can’t cover the whole world. You can’t fly on airplanes from capital to capital. You’ll never be effective if you are just responding constantly to events as they come up. You need to proactively identify the jurisdictions where you will have the greatest impact and plan to spend time and resources there.

What is the ideal outcome of the DATA annual meeting where DATA community & board members, the IMF, and World Bank will be gathered in one place?

We will plant a flag so that people can see that DATA exists with real people behind it. We’ll educate people and create a two-way dialog, which is a soft benefit from having this type of event.

Additionally, we would like to raise some funds. Buy tables! Attend. That would all be good.

We also want to engage the membership. If you are a member, please come and help shape the agenda, priorities, and what we are thinking about. Out of everything, getting membership feedback is the most important to help us focus our time.

This interview is part of a series of interviews of the DATA board members Edan Yago, Patrick Murck, Constance Choi, John Beccia, and Stan Stalnaker.

The DATA annual meeting will be in Washington DC on April 10-11. To find out more, visit DATA’s annual meeting website.

April 05, 2014 at 02:56AM

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DogeParty: Calling All Shibes



Much Party.

When: Friday, April 4th, 2014 7:00pm-1:00am

Where: Meltdown Comics & Collectibles

7522 Sunset Blvd, Los Angeles, California 90046

Who: Shibes only
Admission: Free

Spelunk.in has decided to take the party to the west coast. This Friday, April 4th, Meltdown Comics & Collectibles will be hosting a one-of-a-kind DogeParty.

Yes, this is an actual party starting at 7:00pm and running to about 1:00am on the wonderful Sunset Boulevard. You can adopt-a-dog with doge because real shiba inus and cousins will be there thanks to two shiba inu rescue centers.

You can also vote for your favorite shibe for Best in Show. The proceeds of this will help the two local shiba inu rescues, Two Dog Farms and the Southern California Shiba Inu Rescue.

Meltdown Comics will also be accepting dogecoin for their products. Also forget about all the miners, because this party will feature a digging demonstration by Sebuh Honarchian, CEO of Infinite Solutions (sebuh.com).

The party will be live with music from DJ Headshot and Carl Schwenk. Let’s Be Frank will be serving up hot dogs and doge-treats from their truck.

So go get your doge on. It will be as the shibes say, such fun.

To the moon!

April 04, 2014 at 10:15PM

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What Might Ulbricht’s Defense Mean for Charlie Shrem?

Ross Ulbricht, alleged Silk Road HBIC, is claiming that new federal bitcoin laws classifying bitcoin as assets and not money invalidate the money laundering charges he faces. In short, he argues that you can’t launder money if you’re not using it.

Earlier this year, Robert Faiella, 52, and Charlie Shrem, 24, were arrested on federal money laundering charges for their bitcoin activity on Silk Road. It would stand to reason that if Ulbricht did not break anti-money laundering laws, they didn’t either. The two allegedly sold more than $1 million in bitcoin to Silk Road users. Selling assets isn’t money laundering.

The defense also brings up the wisdom of keeping money laundering laws on the books in the first place. If money laundering laws are worth their compliance costs and the erosion of privacy they create, surely they are worth enforcing fairly and should apply to Bitcoin as well, since it’s clearly a medium of exchange which can be used for criminal enterprises.

However, the evidence is extremely clear that the laws aren’t worth it. Anti-money laundering efforts in Europe and North America cost billions according to the Economist, and the magazine deems the laws a costly failure at trying to keep people from financing terror. Efforts to stamp out money laundering also erode privacy. “Know your customer” laws force banks to be cops, essentially conscripting private businesses “into agents of the surveillance state,” according to the American Civil Liberties Union.

Bitcoin, on the other hand, makes all transactions public, which is a level of transparency not seen in other currencies.

Ulbricht was arrested last October in San Francisco and accused of running the online marketplace under the name “Dread Pirate Roberts.” His lawyers are arguing as well that the hacking, narcotics trafficking, and criminal conspiracy charges against him in connection with the site are “unconstitutionally broad” and can’t be applied to the normal operation of a website.

Ultimately, providing a violence-free marketplace for drugs and selling bitcoins are victimless crimes, completely and totally unworthy of prison time or punishment. While classifying bitcoins as assets as opposed to currency makes no logical sense, hopefully it will help free these people from prison and help erode the remaining misplaced support for deleterious legislation against money laundering.

April 04, 2014 at 10:10PM

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Canadian Government to End ‘MintChip’ Digital Currency Program

mintchip canada

The Canadian government has announced that it will end its MintChip electronic payment system, and that it will look to sell the business to the private sector.

Announced in 2012, MintChip was not a digital currency akin to bitcoin, but rather a digital payment mechanism meant to function as an electronic cash that could be transferred between users.

Still, it was widely viewed as an alternative to bitcoin that was famously criticised by Bitcoin Foundation director Jon Matonis for “missing the point” of the technology.

A spokesperson for the Canadian Mint confirmed the news to The Wall Street Journal, stating:

“The Mint is currently working with the [Canadian] Department of Finance to explore divestiture options. The Mint is also in the process of completing development of MintChip to package the assets for divestiture.”

The news is surprising given that as recently as this past September, the government was reportedly working on a second version of its MintChip concept.

Further, the development is notable as it was theorized by some in the community that Canada’s potentially harsh rhetoric regarding bitcoin regulation was meant in some way to promote the government-made MintChip, though such a connection was never established.

How MintChip works

MintChip used a silicon chip with a unique ID as a store of value, which was then to be sent to brokers who would trade them to consumers and businesses. Users could embed MintChip devices onto USB sticks, wallets, laptops and tablets, or store their digital cash with a third-party service provider.

A value of ’1′ on the chip would equal one Canadian dollar.

For a more detailed overview of MintChip’s design, click here.

Bitcoin in Canada

The news comes as Canada continues to develop a robust bitcoin ecosystem. Home to the first bitcoin ATM in Vancouver, bitcoin’s profile has been growing within the local community, even as major Canada-based bitcoin exchanges face operational resistance from financial institutions.

Just last week, the most recent version of Canada’s 2014 Federal Budget Implementation Act mentioned potential regulations for bitcoin, though the only provision would apply cash-like controls meant to restrict the movement of sums of digital currency of more than $10,000.

The country’s domestic bitcoin exchanges have reported difficulties since meeting their banking needs recently, a development they attributed to statements made by the Canadian government, which, like most countries, has yet to introduce bitcoin regulation.

Image via Wikipedia Commons


April 04, 2014 at 08:44PM

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BTC China Dismisses PBOC Fears in Open Letter

Bitcoin exchange BTC China

Shanghai-based exchange BTC China has published a statement reassuring Chinese investors that its operations will resume as normal despite looming regulatory uncertainty.

The People’s Bank of China (PBOC) is widely expected to issue a public notice later this month, which would effectively put an end to bitcoin-related money transfers in China. The rumoured notice is expected to go official on 15th April.

However, since nothing is official yet, there is plenty of misinformation floating around. The spread of PBOC-related fear, uncertainty and doubt has been blamed for the latest price slump.

Until the rumoured PBOC statement is issued, it’s unclear what effect it will have on Chinese exchanges and bitcoin-related businesses.

BTC China remains confident

However, BTC China appears to be quite confident. The exchange points out that the so-called 15th April rumour and the uncertainty it spawned has already caused plenty of issues. In an open letter addressed to the Chinese bitcoin community, the exchange pointed out that it has not received any official notice from the PBOC:

“We’ve been tracking this issue. Whether it is local banks, Beijing’s central bank level, media channels and industry peers, we are paying close attention and keeping in contact. If we have any updates, we will immediately inform you.”

The exchange stressed that people are not afraid of the notice itself, but rather the “unknown” future.

Doom and gloom

BTC China then outlined the possible effects of the 15th April notice, dismissing many doomsday scenarios which have been proliferating in recent days. The exchange insists that the “core values” of bitcoin, notwithstanding the price, will remain intact regardless of what the PBOC chooses to do.

The exchange also argues that the notice will probably not have a long-term impact on the price, although it has already caused short-term price fluctuations.

BTC China also pointed out that many countries around the world are moving to supervise or regulate the bitcoin market. It cites recent regulatory moves in New York, Britain, Singapore and other financial hubs as proof that the world’s most developed economies are becoming actively involved in bitcoin.

The exchange argues that central banks and regulators are expected to tread cautiously. The impact of bitcoin on the wider economy is negligible for the time being, so rather than ban bitcoin and force it underground, regulators are more likely to recognise it as just another trend and regulate it to mitigate the risks.

This is actually a very good point and for the time being regulators appear to be doing just that. A P2P system would be next to impossible to dismantle, forcing it underground would simply make the risks much greater.

The great bitcoin bubble of China

BTC China admits that the domestic bitcoin market is indeed a bubble. The exchange explained its creation as follows:

“A general lack of domestic investment targets, coupled with the lack of understanding of bitcoin led to bitcoins becoming speculative grade. After the April 15 message, investors will re-evaluate bitcoin, an industry reshuffle may also occur.”

The exchange adds that it would welcome a reshuffle and that it sees the notice as “pre-dawn darkness.” It insists that China’s bitcoin community needs confidence to develop further. BTC China insists it is doing its part to restore confidence.

BTC China says it will upgrade its bitcoin trading platform, introduce regular third-party audits and publish their results, but more importantly it says it will expand its communication with regulators. The exchange is also planning to introduce new products which are currently in beta and it will also try to improve the overall user experience.

In essence, BTC China insists it is in it for the long haul.

BTC ChinaChinaPBOC

April 04, 2014 at 12:08PM

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3 April 2014

Tipping Platform Patreon ‘Exploring Bitcoin Integration’

Patreon tip-donation jar

Online tipping and funding platform Patreon is planning to accept bitcoin “hopefully soon”, allowing fans to make regular micropayments to their favorite online artists.

Founded in 2013, Patreon has to date raised more than $2m in seed funding, and is one of a host of recent startups looking to help content creators recoup revenue otherwise lost to online middlemen like YouTube.

The announcement comes courtesy of an email the company sent to reddit user ‘camponez‘, who wrote Patreon to enquire about bitcoin integration, and received the following reply:

“Thanks so much for your note! We are actually exploring bitcoin integration right now.”

“Be sure to follow us on Twitter @patreon because we will be making the announcement of when it is live on there!”

Patreon co-founder, musician Jack Conte, confirmed the message in a reply to the thread:

“It’s true, we’ve been talking about bitcoin for months. my co-founder, Sam, already built most of the code, but it’s not pushed yet. We’re fixing some bugs and tweaking. don’t know when it will happen. hopefully soon.”

How Patreon works

Patreon is different to other project-funding sites like Kickstarter, focusing instead on creators who release a stream of smaller, regular works. Rather than raise a large sum of money for one big project, Patreon allows donors to set up payments closer to $1-10 to be paid out whenever their favorite artist or creator releases a new work; such as a YouTube video, podcast, web comic or even a news article.

Patrons have full control over the regularity and size of their payments, with monthly maximums. The system also allows creators to set rewards and perks for their patrons, such as tutorials, Google Hangouts or concert tickets.

Conte demonstrates how the system works in a video here, which also shows he gets over $4,000 in tips for every video he releases from his 1,200+ ‘patrons’.

Bitcoin advantage

To use Patreon either as a Creator or a Patron, you need to sign up for an account (or use a Facebook login). Currently, Patrons must have either a credit card or a PayPal account, limiting the number of potential tippers.

Of course, any artist with a web presence can simply publish a bitcoin address or QR code image to collect 100% of all tips. But, this is better for one-off payments, since it requires a benefactor to actually visit the site and enter each tip manually.

With Patreon, payments can happen regularly and automatically without the need for a special visit.

Tip jar image via Shutterstock


April 04, 2014 at 05:17AM

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The Great South African Bubble

A recent article in Forbes caused a stir. The piece was entitle “A Guide to South Africa’s Economic Bubble and Coming Crisis”. The article lays out the economic case that current South African economic growth is illusory: fuelled by ‘hot money’ and a resulting credit bubble that is ready to pop.

It is argued that a global economic environment of low interest rates has resulted in the necessary economic distortions to drive this massive credit bubble.

Interest rates should represent the price of savings in an economy. People either save or spend their earnings. What isn’t spent is saved. Those savings are held in a bank or savings institution. The bank then offers those savings to borrowers who need capital to build businesses and fuel real economic growth.

When savings are low, interest rates are high: as borrowers compete for the limited savings. If savings are plentiful, interest rates are low: as borrowers compete for a relatively large pool of funds. So interest rates are a function of the amount of savings in the economy and the demand for them. This is the usual case in an economy with a sound monetary unit of account.

When there is a central bank this can become very distorted, very quickly. By printing money the central bank can fool the economy into believing more savings are available than actually exist. This sends all kinds of incorrect signals to the marketplace. Interest rates go unnaturally low as the market judges there to be plenty of savings available for investment.

However, these are not real savings, just printed money. So the end result is simply inflation. Prices rise as the fake savings flow through the economy. This money can cause asset inflation in unpredictable sectors of the economy, as the economy receives false signals about savings.

According to Forbes this is where the South African economy finds itself.

Forbes argues that major global players like the US printed too much of their own currencies, in a quest to keep interest rates lower than they otherwise would be. The economy received the false signal of excess savings. The price of savings (interest rates) dipped to unnatural lows: all very predictable according to theory.

Investors all over the world have borrowed this ‘cheap money’. In search of high returns they have sent it into emerging markets like South Africa.

South African Government bonds in particular have been the recipients, providing plenty of cheap borrowing for the S. African Government. They have spent this borrowed money on infrastructure projects. Government never spends money efficiently, as it has no profit motive.

The South African Government has gone into debt. Yet the output from this debt spending has provided no real economic growth. This should always be expected of government spending.

In the years following 2008 interest rates across the South African economy decreased substantially, in a cascading effect. The banks now had an excess of ‘cheap money’ for everyone. They started predatory lending practices, similar to the subprime mortgage lending practices of the US, pre-economic crisis.

The predatory lending unique to South Africa has its own flavour. It has been uniquely aggressive. The borrowed funds found their way into the housing market, as is so often the case. Real estate prices rise and there is a wealth effect that has everyone feeling high for a while. Of course, it is only inflation fuelled asset appreciation and there is no increase in the real underlying value of the assets themselves.

Forbes argues that the entire economy is now dependent on ‘cheap money’: a vicious addiction. Like heroin, it takes ever-increasing dosages to have the same effect and the need is eternal. Of course, interest rates cannot stay low forever. The ‘cheap money’ will become expensive again.

As printed money flows globally, seeking increasing returns, it distorts economies. This is exactly how the Iceland story played out. Forbes argues the same is happening in emerging markets like South Africa at the moment. It is all playing out in a perverse Déjà Vu.

The laws of economics, like the laws of physics, are immutable. Savings cannot be faked. They are the denominated evidence of human sacrifice. When we save we are forgoing present consumption so that future generations can live better.

Savings are the ultimate representation of what it means to be human: they separate us from all other mammals. The idea that you can print human sacrifice at no cost is ludicrous. That is only inflation, and you should only expect the social ills that come with debasement.

April 03, 2014 at 11:45AM

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Bitcoin Breaks the Fourth Wall of Liberty

The most pressing problem evangelical bitcoiners and libertarians face is one of communication. Occasionally on purpose, but more often by accident, they erect four walls and create a barrier between their world and the rest of the world. They struggle to project their glorious message beyond a four-sided prison. In order to engage the audience, they must learn to communicate directly via a medium the audience can relate to and understand. In short, they must learn how to break the fourth wall.

The idea of the fourth wall traces its roots back to Ancient Greece, the birthplace of dramatic theatre. A formal construction of the concept didn’t exist until 1758, however, when Denis Diderot, a French Enlightenment philosopher most famous for his role as co-editor of the Encyclopédie alongside Jean le Rond d’Alembert, published his Discourse on Dramatic Poetry. In the ensuing nineteenth century, “breaking” the fourth wall became a trope in realist theatre.

Shakespeare shattered the fourth wall time and time again, most notably in Richard III. In the 1995 film adaptation of the same name, Ian McKellan stars as the eponymous power-hungry king and breaks the fourth wall with panache. As Ferris Bueller, Matthew Broderick playfully talks directly to the audience. In the cultural phenomenon that is House of Cards, the fourth wall gets repeatedly upended by Kevin Spacey’s Frank Underwood.

As a palpable manifestation of liberty, Bitcoin is the sledgehammer that can break through liberty’s fourth wall and tear it down—in two revolutionary ways.

First, Bitcoin is not a monologue, a soliloquy, or an aside. Instead, it’s a direct communication with the audience. It’s money—something everyone uses, interacts with, and relates to. Despite being an exclusively digital technology, there’s a certain tangible quality about it. Perhaps that’s because, in addition to reading about it or thinking about it, you can actually use it and do stuff with it. Philosophical treatises on rights theory are no longer needed to explain the greatness of liberty. All you need to do is send someone bitcoin.

There’s a universal law that, upon using bitcoin for the first time, you exude effervescence and joy. It’s just the way the world works. Suddenly, you’re all agog to see it in action again and again. In an instant, doubters of decentralization, free exchange, and liberal ideas in general are immediately swayed.

Second, Bitcoin breaks barriers by virtue of its appeal to broader audiences. As a digital currency aware of no political boundaries, bitcoin unites the globe. The unbanked and semi-banked of the world will finally be initiated into the world economy, unleashing the full power of exchange, trade, and the division of labor. By reducing reliance on credit (scores), the impending application of smart property will empower the poor, the youth, and even third-world farmers caught in a quagmire of ineffectual policy and Western self-righteousness.

Recently, detractors of Bitcoin have seethed about problems of privilege that afflict the nascent crypto-currency. It’s true that Bitcoin’s neutral protocol can help quell considerations of race, gender, sexuality, class, and wealth. It erases the problems of traditional banking and financing by eliminating the need for trust. It doesn’t care who you are or where you came from.

But only if you know about it.

That’s where the privilege problem comes in. Right now, Bitcoin’s audience is narrow and small, made up mostly of well-off males who are (highly) computer-literate. While there’s no privilege-perpetuating flaw in the protocol itself, there is an awareness gap that divides the “knows” from the “don’t-knows.” And it’s the “don’t knows”—women, the poor, the unbanked, the third-world—who have the most to gain from Bitcoin. Because of the nature of the network effect, however, the current privileged Bitcoin class has no incentive to keep its secret.

Libertarians and non-libertarian Bitcoin enthusiasts must be careful not to subsume themselves within a dramatic box. They have access to the greatest tool ever to break the fourth wall and connect with the public on a visceral level. Yet Bitcoin merely equips us with the ability to break the fourth wall. We have to make it happen through dedicated vigilance and conscious effort. Outreach will shrink and ultimately abolish the awareness gap, guaranteeing that everyone can enjoy the magnanimity of Bitcoin. From there, Bitcoin can demonstrate and explain to people across the world the true beneficence of human liberty.

At its core, the fourth wall encloses the drama, preventing it from seeping out and spilling onto the audience. The tidy delineation permits the audience to observe the action without becoming a part of it. As such, it also prevents any direct, potentially beneficial interaction between the actors and the audience from taking place.

In the theatre of life, libertarians often find themselves reading from a stilted script. Bitcoin invigorates the narrative with a refreshingly real and accessible element. Money is something everybody can relate to. If spread with care and attention, Bitcoin can break liberty’s self-imposed fourth wall, demonstrating to the world that freedom is much more than a quaint matinée. It’s the main event, one in which everyone can participate.

April 03, 2014 at 07:13AM

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Safello Introduces Europe-wide Bitcoin Trading

Swedish bitcoin exchange Safello introduced European wide instant payment

Swedish bitcoin exchange Safello is making a strong move to establish itself as Europe’s leading bitcoin exchange with direct payments now available from 86 European banks in 11 countries.

Safello is using the instant Sofort payment system, meaning there will be no need to wait for an international bank transfer to be cleared in Safello’s accounts.

“The only way many people were able to buy bitcoin before was via an international bank transfer. But now they can simply do an immediate payment,” said Ludvig Öberg, Vice President of product development in an interview.

“As soon as we get your money, whether it is euro, Swedish krona or pounds we send you bitcoin. If you send us bitcoin we will send you fiat straight away.”

Safello hopes that the speed and ease of a Sofort payment will open up the market around Europe and introduce bitcoin trading to new customers.

Strong backing

The move comes only two months after the company secured $600,000 in investment – much of it from major bitcoin players such as the Erik Voorhees of Coinapult, serial bitcoin investor Roger Ver and Nicolas Cary from Blockchain.info.

And with such backing, both financially and in knowhow, Safello could be forgiven for talking big.

“We are aiming to be the Coinbase for Europe,” Öberg said.

The Safello website will be available in nine local languages and the company hopes to set up local representatives to deal with customer service around Europe in the future.

Meeting a need

According to Öberg there has been a clear gap in the market for a pan-European exchange for some time, and Safello intends to fill that gap as soon as possible.

“Currently there is no easy bitcoin reseller that is available for everyone. Rather there are a lot of local players but no one is making it easy to buy and sell local for the whole of Europe,” he said.

Swedish bitcoin exchange Safello introduced European wide instant payment

The 11 countries which will be available for direct payment via the Sofort direct payment system are: Belgium, Poland, Spain, Hungary, the Netherlands, Sweden, Italy, Switzerland, Germany, France and Austria.

Safello already supports the Dutch payment system iDeal, SEPA (Single Euro Payments Area) payments, and will continue to support international wire transfers.

Opportunities from current events

It might seem like a strange time to make a major bitcoin push, since the cryptocurrency has been battered in the eyes of the general public following the much-publicized Mt. Gox bankruptcy.

But according to Öberg the Mt. Gox collapse has opened up opportunities for new exchanges like Safello, which transfers the bitcoin to the customers’ wallets without holding any of the bitcoins themselves.

Safello was founded in Stockholm in August 2013 and quickly grew to become Sweden’s leading bitcoin exchange.

In October 2013 it expanded to trade in the Netherlands, the home country of CEO Frank Schuil, and in December 2013 it made news as it unveiled Sweden’s first bitcoin ATM.

Swedish entrepreneurs are already behind such success stories as Spotify, Skype and SoundCloud.

It remains to be seen if Safello can join this club of Scandinavian trailblazers.

For Öberg the European launch is just the first step. He says he believes Safello is marching towards a “global introduction.”

bitcoin exchangesEuropeSafelloSweden

April 03, 2014 at 08:00AM

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2 April 2014

I Sign, You Sign, We All Sign: Explanation of Multi-signature Transactions

Everyone is concerned about the security of their bitcoins, and we are constantly reading stories of one or another persons getting their bitcoins stolen. Of course, following bitcoin best practices should reduce your chances of being victimized. Advice such as is described at: http://ift.tt/1ih4OIs is a good start.

One big step forward in the improvement of bitcoin security is a little known, rarely used feature called “multi-signature”. The bitcoin core reference libraries support multi-signature capabilities and I expect to see a significant uptake in the usage of this important feature. Let’s explain what multi-signature is all about.

Just like the name implies, a multi-signature transaction requires more than one signature. Let’s say that Bella has some bitcoins and needs to pay Murray. In a regular Bitcoin transaction Bella will simply use her wallet to enter one of Murray’s Bitcoin addresses and “send” the bitcoin. Murray would see the new bitcoin in his wallet and that’s the end of the story. In a multi-signature transaction Bella would still be sending bitcoin to Murray, however in order for Murray to actually receive the bitcoin, a third party, Gail, would also have to sign the transaction. Note that this requirement for a third party, an arbitrator, also greatly improves the security of the bitcoins in your wallet. Even if a nasty party found the private key for Bella, he still couldn’t spend the bitcoin without also knowing Gail’s private key, a much less likely event.

By the way, a multi-signature address always begins with the number 3, and looks like: 34CRZpt8j81rgh9QhzuBepqPi4cBQSjhjr. This lets you quickly visually scan the address and verify that it is indeed a multi-signature transaction.

Using multi-signature features will let you organize secure payments in a variety of creative ways. Some of the types of transactions enabled by multi-signature are an escrow service where a trusted 3rd party holds the money until all are satisfied or a chargeback service so consumers have recourse in case products are not delivered.

To quote from information on the bitcoin.org site describing multi-signature capabilities:

“Bitcoin includes a multi-signature feature that allows a transaction to require the signature of more than one private key to be spent. It is currently only usable for technical users but a greater availability for this feature can be expected in the future. Multi-signature can, for example, allow an organization to give access to its treasury to its members while only allowing a withdrawal if 3 of 5 members sign the transaction. It can also allow future online wallets to share a multi-signature address with their users, so that a thief would need to compromise both your computer and the online wallet servers in order to steal your funds.”

When reading descriptions of multi-signature features you will typically see statements such as “m of n signatures” are required, and so on. In a concrete example, we can say that 2 of 3 people in a transaction would be needed for the spending of the bitcoins. Alternately 7 of 11 members might be needed. The point is that there are a total of “n” people (or entities) involved in a transaction. Of the total population “n”, “m”, usually a lessor number, must sign off. It’s a little confusing at first but makes a great deal of sense. Some subset of all the people involved must sign the transaction. This prevents one person from having the ability to steal bitcoins and ensure that some percentage of people agree to whatever transaction is taking place.

There is a good, more technical article, about multi-signature on BitcoinMagazine at: Multisig: The Future of Bitcoin by Vitalik Buterin. Multi-signature wallet capabilities are just beginning to fill the Bitcoin ecosystem and we can look forward to many new innovative wallets that will make the creation and usage of multi-signature transactions simple. There are a few multi-signature capable wallets, such as BitGo, Bitrated and the core reference Bitcoin-QT. Usage of multi-signature is still new and somewhat novel, so beware. However multi-signature transactions promise to greatly improve the security of Bitcoin, and I’m very much looking forward to lots of user friendly implementations.

Don’t forget to check out BitcoinInPlainEnglish.com

April 02, 2014 at 03:00PM

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University of Nicosia Launches Free ‘Introduction to Digital Currencies’ Online Course


Cyprus’ University of Nicosia announced today it has opened a six week, free and open enrolment online course called ‘Introduction to Digital Currencies’, aimed at anyone wishing to gain a greater understanding of the fundamentals of bitcoin and digital currency in general.

The MOOC (Massive Open Online Course) is due to start on 15th May, with other sessions offered starting every month after that based on demand, plus accelerated formats for the fast-learning and time-poor.

The only prerequisite for enrollment in the MOOC is enough proficiency in English to understand the instruction, which will be given by University of Nicosia Computer Science and Finance professors, as well as bitcoin experts including Andreas Antonopoulos, a University of Nicosia Teaching Fellow. He said:

“It is an excellent opportunity for anyone to develop a good understanding of the technical and non-technical aspects of decentralized currencies in general and, more specifically, explore both bitcoin (the network) and bitcoin (the currency).”

To participate, registered students will need to participate in course sessions, complete exercises along the way and complete an assessment task at the end of the course.

Masters in Digital Currency

The University of Nicosia (UNIC) is the largest independent university in Cyprus and one of the largest English language universities in southern Europe. In November last year it introduced a Masters of Science Degree in Digital Currency, a 13 to 18 month course costing €11,760 ($16,250) and bridging aspects of computer science, economics, banking and finance and law, as well as other digital currency-specific topics.

The Masters Degree course is available both online and on-campus, and is aimed at solidifying the knowledge of anyone involved in the digital currency sphere, from finance professionals and entrepreneurs to government officials. The University is currently accepting registrations.

UNIC is also offering up to €5m in scholarships to students classified as living in ‘low and middle income countries’.

The free MOOC serves as an on-ramp to the Masters Degree, representing the first six weeks of that course. Students registered in the Masters program will simply carry on after the MOOC is completed, and anyone who completes the MOOC gains credit for the Masters should they choose to continue in future.


Antonis Polemitis, a venture capitalist at Ledra Capital as well as an adjunct faculty member and University of Nicosia board member, is one of the driving forces behind the courses as well as a teacher.

UNIC’s program was truly unique, he said, bringing together the interdisciplinary fields of study that all-round digital currency expertise demanded.

“Last year, several members of our Board and our faculty started studying bitcoin and came to the conclusion that it was a major innovation in Computer Science that would have significant implications for finance,” he said.

“Given that we believe that this will be an important societal area, we decided, as the Board-level to make an investment of time and resources in this area.”

He added that other universities around the world, including Princeton, Stanford and George Mason, were also considering the topics. University of Nicosia, however, remains the only university currently offering an actual Masters Degree and free MOOC, open to anyone.

He said that although Cyprus is a leading trainer in and provider of financial services, the programs had a worldwide focus and stressed that anyone at all could sign up to study online.

UNIC began accepting bitcoin as payment for tuition in November last year and, within weeks, received its first bitcoin payment from a student. The University offers a 5% discount to any student paying in bitcoin.

Anyone looking to enroll in the MOOC can visit this page, where there is also information about the Masters Degree course.

Graduation image via Shutterstock


April 02, 2014 at 10:11AM

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