11 April 2014

Charlie Shrem and Richard Stallman to Speak at Central European Bitcoin Expo


The Central European Bitcoin Expo (CEBE) is setting up to be one of the largest conferences to take place in Central Europe. Taking place in Vienna from May 31 to June 1, the expo will feature notable speakers from within the cryptocurrency space, which will provide insight into technology, international legislation and the future of virtual currency in Europe and abroad.

Recently added to the list of speakers for the event were Charlie Shrem and Richard Stallman. These two virtual currency advocates will be joined by the already extensive list of speakers to be featured at the expo including, Dan Held, Adam Vaziri, David Johnson, Kingsley Edwards, Vitalik Buterin and many more.

Charlie Shrem is Co-Founder and partner of BitInstant and has not stopped advocating Bitcoin even after his arrest in New York City for money laundering. Charlie recently spoke via internet web conference at the Texas Bitcoin Conference, and will do the same during the Central European Bitcoin Expo. “I’m really excited to be speaking at the CEBE. Vienna is my favorite city in the world, and one of the first major Bitcoin hubs I visited back in 2011,” Shrem stated. “The Expo has some amazing speakers and visionaries like Richard Stallman and Dr. Stephanie Murphy.”

Known freedom campaigner and President of the Free Software Foundation Richard Stallman will also be speaking at the Expo. Stallman is a software developer, computer programmer and free software activist. He has been involved in political advocacy for free software and user freedom, campaigning against software patents and the extension of copyright laws since the mid-90s. During the Central European Bitcoin Expo Stallman will be speaking about software freedom, while others featured at the event will speak about finance and economic issues regarding the use of virtual currency, mining, challenges and the future outlook of Bitcoin.

Tickets for the Central European Bitcoin Expo can be purchased at cebexpo.net

April 11, 2014 at 10:00PM

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Where Do You Bitcoin? BitScan Launches Mobile Applications

Late last month BitScan launched their new mobile applications, including a revamp of the company’s popular iOS application. The app is completely redesigned and streamlined for speed. Furthermore, in response to customer demand, the BitScan team has also launched a mobile application for Android. This launch comes months after the company began its crowd-funding of the Android version, which reached a third of the way to its goal in just five days in early March.

BitScan provides one of the largest Bitcoin directories and currently consists of over 6,000 merchants in more than 130 countries. The company believes that the continued promotion of Bitcoin commerce is key to the mainstream adoption of the virtual currency. In the months previous, BitScan has been focused on the development of their mobile platforms and website, designing them to support efficiency, speed and scalability for their users.

BitScan for Android was released on March 25 and much like the iOS application, provides users a source for Bitcoin news, and a location based Bit Trade Map and Bit Trade Listing platform. The release of the Android version of BitScan was supported by the company’s ambitious product development schedule that began earlier this year. They invested heavily in back-end technology and re-organized their data behind a REST API (representational state transfer), which has caused huge gains in application performance and made for a simpler user interface.

Within the application is Bit Buzz, a bitcoin news source which allows users to keep up with news regarding virtual currency from their mobile device. These stories are displayed in a very mobile friendly manner and contain valuable information into the cryptocurrency community – for both the basic and advanced user.

By far one of the best parts of BitScan’s mobile application is the Bit Trade Map. This interactive map provides pinpoint locations of Bitcoin merchants throughout the world and is as easy to use as other mobile-based map applications. In addition, users can also use the zoom function to explore every merchant around the world, which is perhaps the most eye-opening part of the application. Seeing the blue Bitcoin icons of the 6,000+ merchants gives a glimpse into just how large the Bitcoin community has become since its humble beginnings years ago. The application takes into account the user’s location and finds businesses and service providers in their area that accept Bitcoin. When the user finds the business, they can research their findings in further detail with a simple finger press. BitScan also provides users with contact information for each merchant, including phone, email and website.

Furthermore, the Bit Trade Listing feature allows users to see the same details contained on the Bit Trade Map, only in list form. The list is sorted by the merchant nearest to the user’s location and still provides further information on each merchant when pressed.

BitScan has a robust and scalable foundation in place, and has achieved a large grasp on the mobile market. From this, the company will shift its focus to adding additional tools to succeed in their vision of promoting Bitcoin commerce around the world. “Counterparty trust is, understandably, a big issue in the bitcoin space,” said Rob Wilson, CEO of BitScan in a recent company press release. “While multi-signature technology will, once commercially implemented go some way to reducing the trust component in consumers’ spending decisions, Bitcoin needs a means by which merchants can establish, build and demonstrate their trust credentials up-front. BitScan is working hard to provide them with the means of doing so.”

To download the application on both Android and iOS, simply search “BitScan” in the respective app-store.

April 11, 2014 at 06:34PM

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Video: Roundup of This Week’s Bitcoin News 11th April 2014


In this week of closures, crashes and heartbleed, here are three of the biggest stories we covered on CoinDesk.

Bitcoin price falls below $400: The price of bitcoin hit a low of $344 this week following deposit freezes at Chinese bitcoin exchanges. The initial drop happened after an announcement from Chinese exchange BTCTrade.com, which was then corroborated by similar statements from Huobi and BTC100.org. This is the lowest the price has fallen since November 2013.

National Australia Bank turns back on bitcoin: NAB has decided to disassociate itself from bitcoin and will be closing the accounts of its bitcoin costumers starting next month. NAB was previously Australia’s most bitcoin-friendly bank and its representatives were actively seeking to build relationships with bitcoin businesses.

Bitcoin Core Version 0.9.1 fixes Heartbleed vulnerability: Bitcoin Core Version 0.9.1 addressed the massive internet security bug, Heartbleed, also known as CVE-2014-0160. The vulnerability was patched by major bitcoin exchanges in a matter of hours.

Not the greatest week for bitcoin, but hopefully, we’ll have some better news next week. Have a good weekend, y’all!


April 11, 2014 at 04:04PM

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China’s Central Bank Governor: PBOC Won’t Ban Bitcoin

china central bank

The price of bitcoin recovered from a low of roughly $380 on 11th April, on the news that Zhou Xiaochuan, the governor of the People’s Bank of China (PBOC) issued new statements about bitcoin. According to reports, during Boao Forum, Xiaochuan offered his opinion on the nascent technology, saying that China would not seek to ban bitcoin and other digital currencies entirely. Said Xiaochuan:

“It is out of the question of banning bitcoin as it is not started by central bank.”

Xiaochuan continued, offering a potential new definition of bitcoin under Chinese law which suggests the PBOC, China’s central bank, may be actively considering how to regulate bitcoin:

“Bitcoin is more a kind of tradable and collectible asset, such as stamps rather than a payment currency.”

The price of bitcoin on the CoinDesk UDS Bitcoin Price Index (BPI) rose sharply on the news, climbing more than 18% at press time to pass $420. The price of bitcoin on the CoinDesk CNY BPI was up 12.9% at press time to reach ¥2630.70, up from the day’s open of ¥2,329.99.


April 11, 2014 at 02:02PM

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We Deliver Local Brings Bitcoin to the High Street

We Deliver Local

More than 40 independent and local shops in the UK are now accepting bitcoin. Someone of them don’t even know about it.

As of April 1st, We Deliver Local, a UK-based e-commerce solution for local shops added bitcoin as an official payment method.

We Deliver Local allows registered customers to buy products online from their nearby greengrocers, butchers, fishmongers and delicatessens. The company also provides a delivery service for a flat fee of £2 where drivers pick up all the orders from shops and bring to the customers’ address.

Below is a short video produced by We Deliver Local on how their system works:

Supporting two communities at once

If a customer were to pay in bitcoin, We Deliver Local would take about a week to remit the shops in Pound Stirling.

“Some of the shops probably don’t even know they are accepting bitcoin,” said We Deliver Local’s director and developer, Lee Parkinson. “Many of them don’t even know what bitcoin is.”

However, according to Parkinson, the decision to accept bitcoin is good for both the local shops, and the bitcoin community. Bitcoiners looking to spend their digital currency now have another outlet, and the local stores just got themselves a new set of customers.

Parkinson said:

“The great thing with bitcoin is that the entire bitcoin community is so passionate. We put a press release out and it started trending on reddit. So that drove a lot of traffic to the site and people were keen just to use bitcoin and buy something in bitcoin. It’s almost like people looking for an excuse for people looking to pay in bitcoin.”

In the last 11 days of bitcoin payment integration, We Deliver Local has received about four bitcoin payments.

A growing company

We Deliver Local was launched in April 2013 and it currently serves many of the major UK cities including: London, Manchester, Bristol and Sheffield. However, the entire network only has 40 stores as of now.

We Deliver Local bitcoin

Parkinson said that the company is regularly adding more shops to its network across the UK.

“We are a new company, but we are growing quite quickly,” added Parkinson.

e-commercefood and drinkUKWe Deliver Local

April 11, 2014 at 12:16PM

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10 April 2014

Take a Walk Down Bitcoin Boulevard

We often imagine a world where we can walk down the street and be able to pay using virtual currency everywhere we go. For a small suburb outside of Cleveland, Ohio, this is becoming a reality. Located in the Cedar and Lee district and just ten minutes outside of downtown Cleveland is what will soon be known as Bitcoin Boulevard US. Residing in Cleveland Heights, accurately named Bitcoin Boulevard US will soon give patrons of local businesses the ability to make purchases with Bitcoin. In early May, several businesses along Lee Road will begin accepting Bitcoin.

Organized by CoinNEO (koy-nee-oh), Bitcoin Boulevard US currently consists of eight merchants and 2 service providers, with the hope to have 10 on board by the date of the event. The event will be an organized community event in the same spirit as Bitcoin Boulevard in the Netherlands. CoinNEO is following a similar model, and will be one of the few Bitcoin communities of its kind centered in the United States. The event is planned for May 1, and will allow both the experienced and beginning user to get a handle on using Bitcoin within brick-and-mortar businesses. Bitcoin Boulevard US will cover over two walkable blocks along the same street, with opportunities to experience fine dining, retail shopping, salons and artisan sweets – all using virtual currency.

CoinNEO is a Bitcoin consulting firm based in Cleveland Heights which partners with organizations to explore opportunities, risks and solutions associated with accepting Bitcoin as a payment option for their customers and B2B associations. Founded by Nikhil Chand, CoinNEO helps educate safe and secure Bitcoin practices and implements Bitcoin tools for online and in-person transactions.

The company has worked hard to inform merchants about the benefits of Bitcoin, with the first being The Wine Spot in Cleveland Heights. Since that time, Chand has been focused on spreading knowledge of Bitcoin and organizing Bitcoin Boulevard US. In fact, the Wine Spot was the host of the most recent Cleveland Bitcoin Meetup. Chand and CoinNEO have been hard at work preparing merchants to accept Bitcoin for the opening of Bitcoin Boulevard US.

Among the current merchants will be Sweetie Fry, creator of “ridiculosly good fries” and hand-made ice cream; Mitchell’s Fine Chocolates; The Wine Spot, a cafe providing wine and craft beer; Shawn Paul Salon; popular restaurant and bar, The Tavern Company; sustainable clothing designers, Revive; Parnell’s Pub, The Katz Club Diner and service provider, Monroe Constructs.

A walk down Bitcoin Boulevard US will place you right in the middle of a Bitcoin economy in action. Bitcoin Boulevard US will provide a destination for Bitcoin commerce for both local and international patrons. The number of small businesses adopting virtual currencies fosters broader discussions on the role of these currencies, now and in the future. For local businesses like those who are part of Bitcoin Boulevard US, Bitcoin has the potential to increase margins by reducing processing and fraud fees, which is especially important to a small business’ level of success. Virtual currency can increase brand awareness, grow our customer base and reach globally.

April 10, 2014 at 04:30PM

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Lawyers Want Bitcoin Money Laundering Charges Dropped on Technicality


Lawyers representing two Florida men charged with bitcoin-related money laundering want to have the charges dropped on a curious technicality.

Adber Espinoza and Pascal Reid were arrested in February following an undercover sting operation. Police made the arrests after undercover officers took to LocalBitcoins.com posing as credit card fraudsters.

Officers were looking for someone to launder their cash and buy bitcoins needed to fund illegal activities, namely to buy stolen credit card data. Having allegedly agreed, Reid and Espinoza both stand accused of laundering money and running an unregistered money service.

Can’t launder without money

The Internal Revenue Service recently classified bitcoin as property rather than currency. Even before the IRS statement bitcoin was not considered money, at least not in the eyes of the law.

Lawyers representing Reid and Espinoza figured out a way of using this technicality to their advantage. The suspects pleaded not guilty and their defence is now looking to have the charges dropped, since bitcoins are not defined as money, hence money laundering legislation should not apply to them.

However, Miami-Dade County prosecutors disagree. The prosecution insists money laundering charges can stick and it believes they fit the alleged crime, Fox News reports.

Legal precedent or defence desperation?

According to IRS bitcoin guidance, issued on 25th March, digital currencies will be treated as property rather than currency. However, the IRS guidance only applies to federal taxes – bitcoin and other digital currencies are treated as property for US federal tax purposes, but general rules for property transactions still apply.

Miami-Dade State Attorney Katherine Fernandez Rundle says this is the first time any state decided to bring money laundering charges in a case involving bitcoin.

While it’s possible that defence lawyers may believe they have a trump card on their hands, it seems highly unlikely that Reid and Espinoza can beat the case on this technicality.

Earlier this month a similar case was made by Joshua Dratel, Ross Ulbricht’s defence lawyer. Ulbricht is of course facing serious charges stemming from his creation of online drugs bazaar Silk Road.

Dratel argues that at least one count of money laundering against Ulbricht should be dismissed, citing FinCEN and IRS guidance as proof of his argument. However, the case against Ulbricht to that involving Reid and Espinoza – as they allegedly accepted cash for their services, while Ulbricht allegedly dealt solely in bitcoin.

crimeFloridaIRSLocalBitcoins.commoney laundering

April 10, 2014 at 02:12PM

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Bitcoin Price Crashes as Chinese Exchanges Stop Bank Deposits

Bitcoin prices crashed today as Chinese businesses began receiving official deposit shutdown notices from banks, confirming recent suspicions of an impending crackdown. Exchanges will stop account recharging via bank accounts between now and 15th April.

Even though the news has been anticipated for over a week now, bitcoin prices internationally sank to under $410 after companies began making public announcements on their sites.


Exchange BTCTrade.com made an announcement just before lunchtime in China, followed shortly after by BTC100.org and Huobi. Interestingly, it appears Chinese banks started with smaller exchanges before working up to those with larger trading volumes.

The announcements have all come via the banks themselves, as the PBOC itself has still not provided exchanges with any official, or announcement ‘on paper’.

BTCTrade’s announcement said:

“With a heavy heart we make this announcement, that BTCTrade just received a telephone call from our bank the Kejicheng (Tech City) branch of China Agricultural Bank Hangzhou, that if we do not stop using our bank account to conduct bitcoin related businesses by 4/15 our account will be frozen. Therefore, we are forced to stop all RMB deposits by 4/15 midnight, although withdrawals will not be affected at current.”

BTC38.com, which specializes in altcoin trading, suspended account funding via bank deposit on 4th April.

At the time, prices of digital currencies other than bitcoin dropped by 20% or more. Hardest hit were megacoin (MEC) and TAGcoin (TAG), which each lost around 50% of their value, while quark fell by 40% and dogecoin around 25%.

Even litecoin, which is traded on most major platforms and is not considered an altcoin per se in China, fell by over 20% in value. It is now trading on BTC-e for just $10.22.

Focus elsewhere

OKCoin and FXBTC also stopped some account funding options after receiving notices from their banks and payment processor partners, but promised to continue trading otherwise after April 15th.

OKCoin CEO Star Xu said, however, that the company was focused more on future expansion plans, and would maintain regular daily operations otherwise.

Said Xu:

“OKcoin’s margin management, risk management, and cash withdraw and coin withdraw functions are working properly at this moment, OKCoin’s English version site will be up quickly, OKCoin will establish overseas offices and move servers there if needed.”

Community unperturbed

In fact, much of China’s bitcoin community shares that spirit and does not seem perturbed by regulatory moves.

“OK is always here, rumor-spreaders can leave now, we already have plans for April 15th,” said OKCoin’s Vice President He Yi.

The industry so far has shown nonchalance in the face of previous government bans, whether implied or actual, since last December, and have developed new ways for customers to move money in and out of exchanges without direct access to bank accounts. These have included a variety of third-party payment processors, pre-paid cards, and a voucher system.

Even BTCTrade’s announcement today ended on a positive note, informing of the company’s intentions to expand overseas in the near future.

“BTCTrade has always set our sites on the global market since coming online, and we have already registered companies in mainland China, Hong Kong, Japan and the US. We are planning to commence USD services soon, and the Japanese version of our website is already online and operational, and a new version will be online before 4/15.”

“Very soon we will publicly reveal our cold wallet address, and utilize 100% proof of reserves, in order to ascertain that the platform does not engage in any transactions, and that user assets are safe, open to public scrutiny.”


April 10, 2014 at 09:26AM

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9 April 2014

BitPay Expands to Amsterdam

Bitcoin payment processor BitPay has achieved rapid growth since its founding, and in the past month the company has opened locations throughout the world. With new Latin American headquarters and recently opened locations in San Francisco and New York, the company seems to truly be working to become the largest global Bitcoin payment processor.

Last week, BitPay announced the opening of their European headquarters in Amsterdam, exactly two weeks after the company announced openings of their additional locations and the onboarding of key personnel throughout the world. The Amsterdam headquarters will handle sales, implementation and support to the 7,000 current European merchants.

Joining the BitPay team will be Moe Levin as the European Director of Business Development who will work toward the company’s goal of growing to 30,000 merchants by the end of 2014. Before Bitcoin and BitPay, Levin served in various roles in management, marketing, entertainment and event management after graduating Magna Cum Laude from York University. Levin is actively involved in the Bitcoin community and recently arranged Bitcoin conferences in Amsterdam, as well as one of the largest US conferences in Miami Beach.

Also joining the team in Amsterdam as Senior Sales Engineer is Pieter Poorthuis, who will be responsible for sales and customer implementations throughout Europe. Poorthuis has experience in the finance industry, having previously managed the implementations of ING’s mobile payment products, with specialty in contactless payments.

In addition to opening the European headquarters, BitPay has also added former General Manager of Mastercard in the Netherlands, Marcel Roelants to the company’s Board of Advisors. “As the world of payments is changing rapidly, BitPay is at the forefront offering technology and support to merchants,” Roelants stated in a recent press release. “Establishing its headquarters in Amsterdam is a great way to be closer to its European customers.”

With the addition of two employees in Amsterdam, the Atlanta based payment processor has reached 33 full-time employees worldwide. In a single year the company has achieved vast growth in personnel and the amount of countries and merchants serviced; BitPay currently has over 26,000 merchants worldwide. Co-founders Tony Gallippi and Stephen Pair along with other key personnel are known as thought leaders in the Bitcoin space and have also been featured as speakers at several conferences around the world.

In fact, the company is sponsoring the Bitcoin Foundation’s Bitcoin2014 conference in Amsterdam, and will be exhibiting at The Next Web conference later this month. For many involved with Bitcoin, the continued adoption and technological advancement of virtual currency has heavy implications on the future of finance and the global economy. BitPay and many other companies provide solutions for businesses to begin accepting the popular cryptocurrency. If in fact Bitcoin is the future payment method, payment processors like BitPay will be positively positioned to provide merchant-to-consumer solutions throughout the world. “Being Bitcoin ready is about more than accepting bitcoin, it’s about being ready for the future,” says Levin.

April 08, 2014 at 11:10PM

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8 April 2014

Are Permacredits the Future of Sustainable Living?

The crypto community is expanding with new currencies centered around Bitcoin 2.0, some of which are increasing the possibilities of the Bitcoin ecosystem. Many of these cryptocurrencies give the possibility of the creation of contracts, surplus sharing and many more, built completely on the Blockchain.

One of these is Permacredits, a completely green credit that is creating an ecosystem to support permaculture and the future economy. Much like other Bitcoin 2.0 currencies, Permacredits are attempting to solve a problem. Xavier Hawk, a leader in permaculture and staunch supporter of cryptocurrency, is using Permacredits to create an ecosystem where anyone can enter into it. In combination with Hawk’s founding of eco-village Colony Earth, Permacredits and Bitcoin will eventually be used to fund the economics of the permaculture community.

Bitcoin Magazine had the chance to interview Xavier Hawk and attain more information on Permacredits and the permaculture movement.

Bitcoin Magazine: What projects have you been involved in besides Permacredits?

XH: I was a business consultant for many years. Soon after, my wife and I founded an eco development called Colony Earth, which I designed to run on Bitcoin and other alt currencies.

BM: How did you first hear about Bitcoin?

XH: I was looking for solutions for Colony Earth to have a local currency and found Bitcoin in late 2012.

BM: Could you explain what Permacredits are, how they’ll be used, and what locations will start to use them?

XH: Permacredits are Bitcoin 2.0 in action. They are a currency, an asset, a stock, a ledger, and a tally all rolled into one. All the vendors and villages in our network will accept them as currency, paying for things like rent, salaries, groceries, Permaculture Design Courses, books, apps, and more. We will be selling Permacredits and using the BTC we raise to fund Triple Bottom Line permaculture based businesses around the world.

So let me be clear here – This is the first time a coin is being used to directly build a market. It happens to be a market that is based on values like sustainability, rejuvenating soil, taking care of people and ultimately producing profits. Permacredits are actually backed by voluntarily gifted surplus profits, and have a base floor price equal to those profits shared back into the network by the businesses we fund. As we add more businesses and those businesses succeed, they gift a growing surplus back into the system across all Permacredit coins, and they raise in value. Essentially it is backed by the hard work, ingenuity, and profits of the entire world of Permaculture based businesses. Permacredits is a vehicle to transform the world into a healthy, sane, more balanced place for future generations and make money doing it.

BM: Will there be any Bitcoin to Permacredit exchanges?

XH: Yes, fungibility is one of our main focuses as it relates to the economic ecosystem of Permacredits. In fact, we are communicating with a number of exchanges and other solutions in order to provide easy entry and exit points for everyone in the ecosystem, the holders of credits. There is a great deal of interest we are receiving based on the unique nature of what Permacredits do and how they really stand out. With platforms like Ripple and new decentralized exchanges coming into play we have a lot of other options as well. What is even more exciting to me personally, is that we are developing some outside the box avenues that will increase adoption in markets that Bitcoin hasn’t yet even entered.

BM: How are Permacredits stored?

XH: We are currently using the Counterparty platform to issue and store credits. Their GUI is extraordinary and the developers there are excellent. We are ready to issue now with a fully functioning wallet, and they are working with us to tailor the functions and branding of those wallets directly for Permacredits. Since this is Bitcoin 2.0 in action, and rides on Bitcoin’s blockchain, you can store your credits in any bitcoin wallet. There are some caveats with that however, and you will not receive the full functionality in a wallet not designed to specifically handle Permacredits.

They are not mined. They are 100% green in that regard. They are a user created asset built on Counter Party, which provides us with the ability to be quick and flexible to respond to the market.

BM: What will you do to make Permacredits easy to use?

XH: Part of our first issuance will be earmarked for bounties and network development, unlike Bitcoin which had to bootstrap the entire network based on first mover organic discovery. We are in a position to actively engage vendors and build the network of places that accept Permacredits. Like Bitcoin, there is little risk because it can be converted directly into old money. We will have a directory and this will make it easy for holders of CREDITS to find locations that accept them. Also we are looking at integrating some straight text messaging platforms for our friends who live where smartphones do not.

We are also developing a decentralized decision making app that will be where Permacredits holders can choose new projects entering the ecosystem to get funding. The DAC structure we have put in place ensures the collective intelligence and incentivised participation of Permacredits holders, alongside an expert council to vet the best projects to ensure quality. The system will be self governing once it is explained and demonstrated. This is all very new and we expect some learning curve in the beginning.

BM: What market are you targeting with Permacredits?

XH: What is personally inspiring about this is a sentiment I shared at the first Bitcoin Conference I spoke at. I see the world of permaculture and sustainable living as a market similar to Bitcoin in that it has early adopters who are intelligent, disruptive, creative and risk taking. There is a strong desire in the world of permaculture for Local Currencies. We think Permacredits are a perfect solution. It is an appreciating asset, a local currency, an open sourced ledger, and voting mechanism. Permacredits allow for decentralized autonomous coherence between people with similar ideologies, desires, values, and interests no matter where in the world they are. This is a vehicle for people to create upward class migration and a healthy planet at the same time, just by involving themselves in the ecosystem.

BM: How will Permacredits work in Colony Earth?

XH: Our idea has been to use credits as units of value exchange within eco developments like Colony Earth. Work needed around the Development will be posted as Permacredit bounties in the app that are smart contracts that complete as the work is done and checked off on by the farm steward, or whomever placed the bounty. Rent is automatically paid in credits as self completing smart contracts, and community surplus is gifted into everyone’s wallets automatically. Imagine not having to touch money, write an invoice, chase down rent, or any of those things to simply live work and play in the environment you choose. I mean, this is the future.

BM: When will Permacredits be released?

XH: We are shooting for our first issuance to coincide with the summer solstice on June 1st of this year. We will therefore shoot for a launch of our sales window to open at the end of April or beginning of May. We have those goals, but really our launch is pegged to how quickly we can find a nation whose laws are not only friendly to cryptocurrency, but encourage its growth. We think we have found that nation and are actively engaging with their legislators and lawyers to incorporate there and clear the runway for our launch.

BM: How do you see Permacredits affecting the future of cryptocurrency and the permaculture movement?

XH: I honestly think Permacredits will define how DAC’s will express themselves in the near future. Ultimately, I believe we will be the seed that springs forth entire ecosystems of autonomous self governance that our civilization desperately needs if we are to mature into a truly coherent class-one civilization.

We are the first to market with such a dynamic currency that engages all of Bitcoin’s higher functions. We are templating Decentralized Autonomous Coherence amongst humans across the globe who share a similar passion for healing the planet, living in the kind of abundance that permaculture systems create, and taking care of each other.

Imagine being able to determine where you want your money to go when paying taxes. Would you choose bombs and war or would you choose bounty and healthy living environments that bring out the higher functions in you and your family? Imagine if the world got to actually decide coherently in a decentralized organic manner where they want to put their money, their energy, their life force, what would we create? Permacredits is asking that question.

Xavier Hawk, Permacredits and Colony Earth could very well change how we think of everyday living. “We are at a huge transition point in our society. If we can get this enterprise running, we can spark change for all mankind,” Xavier stated. Time will only tell what the impact will be.

April 08, 2014 at 04:18PM

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7 April 2014

Inside Bitcoins NYC Day 1: Bitcoin 2.0 Takes Center Stage

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More than 2,000 digital currency enthusiasts gathered at the Javits Center in New York City on 7th April for the city’s second Inside Bitcoins conference and expo, produced by Mediabistro.

Attendees traveled to New York from more than 30 countries and 38 US states to hear speeches from industry leaders about the usual topics like the future potential and big-picture implications of bitcoin for consumers and the financial markets.

As the day progressed, though, panelists began to emphasize the opportunities of Bitcoin 2.0 and applications of the Bitcoin protocol beyond currency, and notably turned attention to the topic of governmental regulation of digital currencies.

The event kicked off with Alan Meckler, the CEO and Chairman of Mediabistro, who welcomed the crowd and noted the dramatic increase in attendance from last year’s Inside Bitcoins NYC event, which he said had just over 150 attendees.

A “buzzing” crowd

Even before Circle’s Founder and CEO Jeremy Allaire kicked off his opening keynote address – which centered on bringing bitcoin to mainstream audiences, Inside Bitcoins NYC conference programmer Stewart Quealy commented on the energy in the room, saying:

“It’s great to be in this room and feel the energy of the crowd. There’s a certain buzz in the air of everyone who is excited about the potential in this industry.”

This was evidenced by the number of startup companies who signed up as exhibitors and showcased their work in a variety of fields like mining, cloud storage and regulatory compliance consulting.

Conference attendees lined the exhibition hall during the lunch break to learn more about the diverse offerings of exhibitors, and even participated in a live bitcoin trading session hosted by the Bitcoin Center NYC.

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Diverse topics and opinions

Day one of the conference played host to a diversity of topics discussed by a wide range of industry professionals. Panels focused on issues like regulation, mainstream adoption, the startup ecosystem and security, among others.

Unsurprisingly, the variety of topics brought with them a variety of opinions and viewpoints.

More than once when questions were fielded from the audience, members of the panel made a point to speak up in opposition of their fellow panelists’ perspectives.

In a panel titled “Moving Bitcoin Forward: Bringing Trust, Legitimacy and Transparency to the Market,” moderator Michael Terpin, co-founder of BitAngels, asked for a show of hands as to which area holds the most importance for increasing the number of bitcoin users: ease of use, security, regulation, public perception or economics and liquidity?

While there were votes for each of the five areas of concern, there was a clear majority consensus that bitcoin’s ease of use is the most important factor in growing the industry; members of the panel agreed.

A maturing industry

One recurring theme across the board from Monday’s panels and keynote speeches was the notion that the digital currency industry is rapidly evolving, and that it has already come a long way since its humble beginnings in 2009.

During a panel titled “New Ideas in Bitcoin,” speakers highlighted the emerging ideas in digital currencies that expand beyond bitcoin’s use solely as a currency.

Ryan Charleston, founder and CEO of Bitcorati, used the Internet as a metaphor for bitcoin’s potential:

Regulation and education

The topic of regulation was a primary focus in many of Monday’s panel discussions. A number of different viewpoints on regulation were presented from panelists, but the popular stance seemed to be that some level of regulation will be necessary in order for bitcoin to achieve mainstream adoption.

Jacob Farber, senior counsel at Perkins Coie LLP, noted the contrasting attitudes that the bitcoin community holds about regulation, stating:

“I’m struck by the seemingly mass acceptance of regulation in this room. There are contrasting interests between the original crowd who are averse to regulation and the new innovators working on Bitcoin 2.0.”

Other panelists, like Izzy Klein of Podesta Group, believe that regulation is inevitable.

As such, Klein argued that there needs to be more consensus among regulators in their approach to dealing with digital currencies:

Educating regulators about bitcoin’s underlying technology and its value for the global economy is paramount for productive and meaningful regulation, Klein said.

Closing remarks

The first day of Inside Bitcoins NYC drew a large crowd with diverse interests and opinions, and the variety of panelists and discussions ensured that the conference offered something to appeal to everybody’s interests.

Topics like regulation and entrepreneurial opportunity held a particular focus throughout the day, and though not everybody shared the same opinions, it was clear that attendees felt that they were part of a rapidly evolving and disruptive industry.

Images by Tom Sharkey and Pete Rizzo

conferencesInside Bitcoins

April 08, 2014 at 12:26AM

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A new chapter begins

Dear Community,

The time has come to flip to a new page in the magazine. My time as Editor-in-Chief at Bitcoin Magazine has come to an end. It has been a great honor and a tremendously fun and crazy adventure to take. From initial concept, to the form of a website and finally a paper magazine. We couldn’t have done it without your help and support. You believed in us from the beginning and for that I will always be grateful.

One of the best parts of this entire Bitcoin adventure is the people you get to meet. Before starting this new chapter, I wanted to take a moment to thank again everyone for their support, passion and hard work. Dedicated people like Elizabeth, Vitalik, Ryan, Adam, Vanessa, Corinne, Shane, Roxana, and the rest of our contributors are the heart of this magazine.

Our new editor, Ruben, is a good friend of mine, a fantastic person and writer. It feels great to know that the person who will be carrying the torch is one of the good guys. It is a pleasure to work with people that are driven by passion rather than money.

You are all inspiring colleagues, dear friends and genuinely good people. I know the future is bright and that the magazine will continue to even greater success.

When Vitalik shared his Ethereum idea with me back in November 2013, I instantly knew that I could help the project in some way. I wasn’t sure how at first. As months have passed, one of the Ethereum projects I have enjoyed most, has been working on the concept of “holons” – meaning something that is simultaneously a whole and a part, structures existing at a balance point between chaos and order. It is comforting to know that the magazine is in good hands while this idea unfolds.

Holons are purposeful physical manifestations of the protocol that use and develop distributed authority systems and open technologies. They are highly innovative and agile hubs synced across the globe, with the mission of enabling people to develop world changing tools – transparency, openness, inclusiveness, fairness and purposefulness being the defining traits of this new model.

This idea quickly evolved into a project on its own and the rabbit hole keeps getting deeper. It feels like this journey is shaping up without any estimation of a return date. The last time I had this feeling was when the idea of starting this magazine was in development. How far this new project can ultimately go is still unclear even to me. However, I do see a new and beautiful pattern for a decentralized global society starting to emerge.

The new chapter begins.

Thank you for everything,

Mihai Alisie

April 07, 2014 at 07:44PM

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Did the IRS Just Make Bitcoin a New Tax Loophole?

As most people have now heard, the IRS just granted itself the power to tax the gains realized when individuals sell or spend their bitcoins — much like stocks. That means you are also responsible for knowing exactly how much your Bitcoin holdings have increased in dollar terms since you bought them. If you are a miner, it even means all those 1’s and 0s sitting idly on your cold storage hard drive are now considered gross income. Naturally, this has produced some trepidation among Bitcoin lovers, who now are obliged to keep incredibly onerous tax records if they want to stay on the right side of the law.

Compliance will almost assuredly be an ongoing issue, given the private nature of the technology. “While users with sizeable Bitcoin wallets might be motivated to comply with the new policy, those with smaller wallets might not find the hassle worth their time,” noted the Tax Foundation in a recent blog post on the ruling. But there may be some unforeseen issues for the IRS — and benefits for Bitcoin users. Given the inherent difficulty with enforcement, the IRS ruling could backfire if more people self-report their Bitcoin holdings as capital losses (in order to gain tax benefits) than capital gains.

If that happened, Bitcoin could essentially become a tax loophole. With the reliance on self-reported Bitcoin holdings and the anonymity of private wallets, the government may need an army of cryptographers and a substantial increase in audits to ensure compliance from small-time Bitcoiners. As with pirated movies and software, enforcement would need to be so draconian it is likely infeasible.

Better yet: if the Bitcoin community managed to change the protocol to increase the rate that miners can “unlock” new coins… Bitcoin might have a built-in incentive to both adopt the currency and report taxable earnings. Let’s say that we accepted an inflationary Bitcoin, much like we have an inflationary dollar, around 2 or 3% annualized. At the end of the year, a consistently inflating bitcoin would trigger no capital gains liability, only capital losses, reducing the tax liability of the filer.

If this held, then Bitcoin could actually trigger regular refunds of varying quantities for both hoarders and spenders alike. Businesses large and small, as well as ordinary consumers could essentially earn a reduced tax burden every time they used Bitcoin, as long as its value kept falling.

Of course, proceeds from Bitcoin sales would still have to be reported, but that is less of a problem than reporting every single capital gain throughout the year. So inflation could mitigate the worries that many Bitcoin businesses and investors have about the new IRS rules.

A perpetually inflating Bitcoin would also be great for miners, in that it would both reduce the cost and increase the incentive to continue mining. It would also be great for law enforcement, since it would encourage voluntary tax compliance. This would also reduce the reporting burden for bitcoin users and add a little extra incentive to use the cryptocurrency. Everybody wins!

If the Bitcoin protocol doesn’t change in this respect, some other cryptocurrency might realize a potential competitive advantage here and take its place as the electronic money of choice. Many economists have already pointed out that a deflating Bitcoin is going to stifle adoption. The IRS ruling will likely only make that worse, forcing the Bitcoin community to improvise.

At the end of the day, Bitcoin is a very unique tool with properties of both an asset and a currency. In that sense, it remains malleable, and with sufficient momentum, may continue to outwit attempts to control or stamp it out. “While the IRS has finally provided an answer,” said the Tax Foundation, “there are good reasons to believe that they got it wrong. Virtual currencies are tricky assets to categorize.”

As Princess Leia said to Governor Tarkin in Episode IV: “The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.”

If the IRS starts to tighten that grip too much, expect Bitcoiners to start syncing up those wallets.

Author’s Note: Matt McKibbin of Liberty Panacea contributed to this post

April 07, 2014 at 03:09PM

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The Altcoin Debate Continues

Altcoins, or alternative cryptocurrencies such as , Primecoin and Dogecoin, have always been a popular and controversial topic in the Bitcoin space. The purpose of most of these currencies is to offer small modifications from Bitcoin proper, including faster confirmation times, attempts at socially useful mining algorithms and different monetary policies such as fast exponential decay, quadratic decay and even infinitely linearly growing supply, and investors and users of the coins believe that these additional features and modifications will make the currencies either overtake Bitcoin or at least survive in some niche. Detractors, on the other hand, argue that Bitcoin’s network effect is too large, and altcoins do not provide nearly sufficient value over Bitcoin to ever take over to any significant extent.

Daniel Krawisz from The Mises Circle has taken the lead in the anti-altcoin faction, with two lengthy articles written on the subject in the last few months. The first article, The Problem With Altcoins , introduced the issue of network effects, the property of interaction protocols such as social networks, file formats, currencies and languages to become intrinsically more valuable the more users they have, as an argument for why one currency succeeding is the only stable state, and used various arguments to attack individual altcoins. I later wrote a response, and Krawisz’ second article, The Coming Demise of the Altcoins , was in part a response to my response, expanding on his reasoning as to the exact nature of the network effect that he was describing.

The key parts of Krawisz’ argument are as follows:

The market cap of a currency should be seen as roughly proportional, all things being equal, to a currency’s liquidity, which refers to the value that can be bought or sold without significantly altering the price. While it is theoretically possible for a currency of a given market cap to support any volume of trade as a medium of exchange, this requires that people become less and less willing to hold the currency for any length of time as the volume of trade increases. In this situation, severe practical difficulties ultimately develop. For example, if someone wanted to buy something worth more than the entire market cap of the currency he was using, he would have to pay with several transactions.

And, on why this is important:

Consider the hypothetical example of an economy that uses exactly two currencies, Acoin and Bcoin, which are equally preferred by holders. For whatever reason, Acoin develops a very slight advantage over Bcoin. Consequently a few people exchange Bcoin for Acoin, thus very slightly increasing the market cap and liquidity of Acoin and slightly decreasing that of Bcoin.

Now, in addition to its initial slight advantage over Bcoin, Acoin has the advantage of becoming more liquid. As a result, more people will tend to sell Bcoin for Acoin. Thus, Acoin’s initial advantage is self-reinforcing, and as the disparity between Acoin and Bcoin increases, its superiority becomes more and more evident.

Eventually, Krawisz writes, this positive feedback loop would lead to exactly one coin succeeding. This is not the network effects argument that most people would expect with regard to currencies; the standard argument, and one that I had originally incorrectly inferred that Krawisz had in mind, is the network effect of merchant adoption: a currency is more useful if more merchants accept it, and merchants want to accept a currency that many customers use. This standard argument I refuted in my earlier piece, arguing that it is much easier for a merchant to simultaneously accept multiple cryptocurrencies than it is to accept both bitcoin and dollars, and so switching costs are small and therefore network effects are small. Rather, Krawisz is arguing for a different kind of network effect: the effect of liquidity, the precise argument behind which he outlined in the paragraphs quoted above.

Breadth and Depth

In finance, there are actually two definitions of liquidity, and it is not always clear which definition someone talking about liquidity is referring to. The first definition, and the one more often used in mainstream finance, has to do with market depth; the question is, how much of an asset can be sold on a market without affecting the price by more than some specified amount? For example, in the current Bitstamp order book, you can sell $100000 without bringing the price down by more than 1%, and you can sell $500000 without bringing the price down by more than 2%. On BTC-E’s LTC/BTC order book, on the other hand, you can go down 1% with $16000 and 1.5% takes $36000; the LTC/USD has a similar amount.

The second definition, however, and arguably the one that is much more useful to the average user, refers to the spread: what is the percentage that you lose when trading LTC for BTC or USD? This is what people mean when they say that currency is liquid, whereas a house is illiquid: the effort of buying or selling a house takes up a substantial portion of the amount that you are going to receive. In both Bitcoin and Litecoin, this measure of liquidity is made up of the bid/ask spread on the exchange (the difference between the lowest sell order and the highest buy order) and the transaction fee; in total, this amount is almost always less than one percent, and because exchange fees dominate there is actually not much difference between BTC and other altcoins.

Of course, the assertion that narrow spread is more important to average users than the ability to sell large quantities needs to be defended. In general, most purchases made with currency are very small; Overstock reports an average of $226 for Bitcoi customers, an average credit card transaction is $88 and the Android and iOS app markets show $14. On the employment market, on the other hand, transactions go up to the low thousands apiece. But in any case, it seems clear at least at first glance that most people fall far below the point at which the “depth” kind of liquidity even matters, especially once the much larger and more stable non-financial liquidity in the form of products for sale and workers for hire comes into play.

A more sophisticated, and audacious, reply may point out that the point of currencies is not to purchase goods and services; it’s to speculate on them. This argument may seem absurd at first glance, but Daniel Krawisz actually makes it, and so it must be responded to. In this case, it’s not the size of a single consumer transaction that matters when it comes to liquidity, but rather the total sum of an individual’s wealth. A currency is then sufficiently liquid if, in most cases, most individuals can liquidate their entire holdings, presumably to speculate on the next currency to come along, without taking too big a hit on the spread. In these circumstances, the weaker depth of altcoins does start to become an issue.

However, the idea that the primary utility of a currency is for moving one’s entire savings from one currency to another certainly needs to be questioned. In the current world, the main purpose of altcoins is indeed to speculate on them, but arguably that is only because cryptocurrencies have not yet found their intrinsic value and are largely treated as investment vehicles in comparison to the dollar. If cryptocurrencies do take on a much larger role, however, the point that BTC is more liquid will become moot. If BTC is the dominant currency, it will be the most liquid currency. But liquid against what? Altcoins? If so, it seems like altcoins do need to exist after all. Products? In that case, as we discussed, depth-liquidity really is not that much of an issue.

Smartcoins and Feature Coins

The category of altcoins that Krawisz describes in more detail is what can be described (in my words) as “feature coins” and “smartcoins” – essentially, currencies with either extra features on top or entire frameworks that allow users to write applications inside of them, categories that have also been described as cryptocurrency 2.0. Krawisz argues that the advantages of these platforms are also insufficient to defeat Bitcoin’s depth-liquidity advantage. Krawisz writes:

When people say, “But Ethereum can do smart contracts!” this is actually false. It is only the Ethereum protocol plus liquidity that make smart contracts possible. If Ethereum were not liquid, it would be impossible to build any real penalties into a contract because it would be impossible to tie a sufficient value into them. Since there is no logical reason to expect Ethereum ever to be liquid, there is no logical reason to expect that many people will be able to create smart contracts with it.

The problem with this argument is obvious: once again, you really don’t need that much depth-liquidity for the platform to be useful for ordinary people, and spread-liquidity has proven to be a trivial problem in any case (and, in Mastercoin and Ethereum’s case, will be even more trivial because of the possibility of decentralized exchange contracts reducing exchange fees to literally zero). If MSC, or ether, can have a depth-liquidity of even $5000 for 1%, then its smart contract functionality will work just fine for transactions under that size. If you assume that the smart contract functionality of these transaction media is powerful enough to be worth a 1% fee, then you can see how the platforms can be useful under that size. And even over that size, some merchants may want to accept MSC/ETH as currencies directly. And once enough people are using them, their depth-liquidity can go up, progressively tolerating higher and higher levels of maximum value.

Additional Considerations

Another reason behind the success of altcoins is the issue of anti-network effects: in some ways cryptocurrencies become less useful the more people use them. The main reason behind this is currently technical – a single blockchain gets bulkier the more people use it, and it becomes more cumbersome to download and use the client. Theoretically, this can be handled via scalability solutions such as light clients, verifier-based challenge-response protocols, Merkle mountain ranges and SCIP, but it exists for the moment. As a result, different currencies have different informal policies on what kind of transactions they want to accept; in the case of Bitcoin, for example, developers have proven very hostile to data inclusion and meta-protocols, whereas Datacoin is specifically designed for storing data. Dogecoin has vastly lower transaction fees than Bitcoin, making it ideal for small-value microtransactions. In the long term, of course, this will not last, since scalability technologies will make it more valuable to coalesce everything on one blockchain, but in the short term it is a valid reason why altcoins exist.

A more important argument, however, comes in the form of what Dmytri Kleiner calls the public function of money – the idea that money has a function beyond just its ability to facilitate transaction. This second function has to do with the concept of “seignorage” – when you create a new currency, you also need to issue new units of that currency, and those new units would need to be allocated in some fashion. As people start using the currency for trade and as a store of value, the value of those units increases from zero to nonzero, providing the initial recipients of that currency with a sort of “phantom” return that was not paid by anyone. This creates a powerful, decentralized, solution to the public goods problem: instead of expecting individuals to contribute money to useful projects where only a millionth share of the utility will go to themselves, we can fund said projects via emergent value created out of nowhere. Bitcoin uses this emergent value purely to fund network security; Primecoin tries to simultaneously fund network security and scientific computation, although its implementation is unfortunately a relatively weak one.

One of the main attractions of cryptocurrency 2.0 is the idea of “appcoins” – protocols with a currency or token system built in, where the token system generates the emergent value to fund the development of the protocol. Having every protocol add its own currency for funding purposes may seem ugly, but the quantity of potential monetization per unit ugliness is vastly higher than existing solutions, such as making a protocol that is proprietary, charging license fees and excluding users who cannot afford to pay, and releasing “crippleware” apps in order to facilitate monetization or advertising. In the future, using emergent network assets (including non-fungible assets such as namespaces) as a funding mechanism may become the dominant business model for decentralized applications. If Bitcoin was the only game in town, none of this would be possible.

This idea goes beyond just appcoins: this emergent network value from a currency can also be used to support communities, either by providing a limited “citizen’s dividend” program (eg. Auroracoin) or supporting other public goods that have nothing to do with cryptocurrency specifically. The concept of “branded coins” has become popular, particularly in the space of funding musicians and artists, and currencies based around “useful” activities, such as Curecoin, are becoming increasingly popular. Cryptocurrencies with a socially useful public function will benefit from superior community support and marketing, ensuring success at least among the community of people who care about the specific objectives that each individual “coin” supports.

In conclusion, the arguments in favor of altcoins can be summed up as follows. First, some altcoins do have substantial benefits over Bitcoin, with particular emphasis on cryptocurrency 2.0 platforms that offer smart contracts, the ability to issue custom assets, decentralized exchange, etc. Second, even without such benefits, there is a reason to have alternative currencies right now, which can basically be summed up as “lower transaction fees”. Third, currencies in general have a crucially important “public function”, and Bitcoin is very unimaginative in its attempt to exploit this possibility, using it solely to fund an arguably excessive amount of network security. Decentralized applications have the potential to use internal currencies and assets to fund themselves, and currencies can be used to fund external public goods as well.

Finally, out of the the main arguments of network effects, merchant adoption, spread-liquidity and depth-liquidity, the first is a non-issue because switching between altcoins is very easy, the second is a non-issue because exchange fees dominate spreads in any case, and the third is a non-issue because most ordinary users fall under the thresholds. In the future, I expect to see a power-law distribution in the crypto-asset space: a few large platforms, like Bitcoin, where the bulk of mainstream activity can take place, a larger number of platforms with coins built in of varying size, and a very large number of small altcoins whose main attraction is a specialized community. Let a million currencies bloom.

April 07, 2014 at 02:42PM

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What Is The Carbon Footprint Of A Bitcoin?


Just how much carbon dioxide do we produce when we mine a bitcoin? It’s becoming an increasingly important question. After all, it’s great to disrupt an inefficient and sometimes corrupt incumbent economic system, but most of us would rather not do it at the expense of the planet.

The bitcoin network is stuck in a circle that drives up its power usage. People tend to put more computing power on the network so that they can make more more bitcoins. The software underpinning the network reacts by changing a parameter that makes it more difficult to solve the mathematical problem needed to solve a bitcoin block.

Because it’s harder to solve the problem, people add even more computing power, and so on. As this cycle increases, it takes more electricity to mine a bitcoin. The hashing power of the network surpassed the world’s top 500 supercomputers almost a year ago, and things have moved along quite a bit since then.

Some might call this a vicious circle. Nick Gogerty, who conceived a coin for trading solar energy production called solarcoin, calls it the Red Queen problem.

“The Red Queen is originally from Alice in Wonderland. In the Queen’s race everyone runs faster, but you never get ahead,” he says. “The same happens in hashing. All of the participants are co-adapting. You have to keep adapting to keep up.”

Gogerty has been trying to put together a model for calculating the carbon cost of a bitcoin, but he admits that it needs work, and he is asking for volunteer help to improve it.

Other attempts have been made to nail down the cost of the bitcoin network in terms of carbon emissions and/or energy used, but it’s a tricky business, says Guy Lane, founder of sustainability advisory service Sea O2.

Based in Brisbane, Australia, Lane is also the founder of Bitcarbon.org, . That site contains his method for tracking bitcoin-based carbon emissions.

There are caveats. “Of course, bitcoin is mined everywhere from data centres, distributed locations, working pools, rigs set up in garages and even on PCs that have been hijacked by bots,” Lane says. This makes it very difficult to ascertain the true carbon cost, because there are so many different types of equipment running the mining software.

Still, it doesn’t stop him trying. His method is based on the premise that miners will spend up to 90% of the cost of a bitcoin on the electricity used to mine it. That electricity cost will naturally vary with the price of a bitcoin.

In the Queen's race everyone runs faster, but you never get ahead.

The method assumes that 50% of all the mining takes place in China or the US. It uses the most recent estimates from the International Energy Agency for carbon emissions per Kw of mains power in either country, and averages them. The result is that for every Mw of electricity spent mining bitcoins, 0.65 tons (1300lbs) of CO2 are released into the atmosphere, it says.

The method maps these figures against average electricity prices, to produce an average carbon intensity of 6.98 kg (15.38lbs) of CO2 for every dollar that is spent on electricity used for mining Bitcoin.

Lane last ran this model in December, when bitcoin was priced at $1000, and calculated that the entire bitcoin network was putting out about as much carbon as Cyprus.

Lane believes that the estimates could be lower than the reality. For one thing, it doesn’t account for the fact that miners might be willing to spend more electricity mining a bitcoin than the current value of that coin, in the hope that it may increase.

Another way to look at carbon output for bitcoin mining is to go and ask a professional miner. If anyone should know how many hashes and therefore how much power it takes to compute a bitcoin, it’s an institutional miner that makes a business of turning electricity into cryptocurrency.

Dave Carlson, founder of Megabigpower, runs a massive bitcoin mining datacentre in Washington state.

10 TH/sec (10,000 GH/sec) make 1 bitcoin per day at the current difficulty, he says. His hardware uses one watt per GH/sec, meaning that it takes 10,000 watts (10Kw) to run 10Th of equipment.

He runs that 10Kw of equipment for a whole day to mine a bitcoin, which means that he spends 240Kw/h. That’s 24% of a Mw/h.

Remember that according to the IEA data, 1 Mw/h of mains electricity produces 1300lb of electricity. Based on Carlson’s figures, that means that the energy he’s using would release 24% of that, or 312lbs, of carbon dioxide into the air per coin.

According to the EIA, that’s about the same as burning 15.9 gallons of gasoline, without ethanol.

That would be a lot of carbon for Carlson to churn out, if his electricity was produced by fossil fuels – but it isn’t.

“We are 100% hydroelectric,” he says, adding that he hopes to announce the largest solar/wind powered mine later this year. “I am also looking at re-investment in wind power generation (mostly as a hedge against power prices rising). We are very aware of our carbon footprint and the likelihood that it will increase.”

He isn’t the only one. Over in Sweden, ASIC mining manufacturer KnCMiner uses a co-hosting facility. The electrons it runs on also have a distinctly green hue.

“What I can say real quick is that our data centre is run on hydropower. So we are about as green as they get,” says co-founder Sam Cole.

So, a lot of bitcoins are being produced with green energy. But if you are burning fossil fuels for your bitcoins, then using just over a sixth of a ton of carbon for a single bitcoin isn’t good, given that the network is churning out 150 of them per hour.

It’s important to put this in perspective, though, by understanding what this is relative to, and what we’re getting for this carbon throughput. That’s what we’ll be looking at tomorrow, in the second article of this three-part series.

Power plant image via Shutterstock


April 07, 2014 at 07:22AM

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