5 September 2014

Ross Ulbricht Pleads Not Guilty to New Drug Charges

ross ulbricht

Ross Ulbricht, the accused ringleader of the now-defunct online black marketplace Silk Road, has plead not guilty to a series of new charges levied against him by federal prosecutors.

Filed on 21st August, the charges include narcotics trafficking, conspiracy to traffic fraudulent identification documents and distribution of narcotics by means of the Internet. Those charges followed previous allegations that Ulbricht had engaged in drug trafficking, computer hacking, money laundering and engaging in a criminal enterprise.

The 30-year-old Texas native appeared in a Manhattan federal court today to answer to the charges issued in the latest indictment, Bloomberg reports.

At the time, Ulbricht’s attorney Joshua Dratel, of Joshua L. Dratel, PC, told CoinDesk that the new charges were simply an attempt by the government to overwhelm the jury when the case finally plays out in court, saying:

“These additional charges simply demonstrate the government’s penchant for converting a single alleged course of conduct into a set of multiple similar, interchangeable charges.”

CoinDesk reached out to Dratel for further comment on this latest case updated, but did not receive an immediate response.

Ulbricht’s trial is set to begin 3rd November.

Case updates continue

The news of Ulbricht’s latest plea followed an update in another long-standing court case that has garnered headlines in the bitcoin space.

On 4th September, both former BitInstant CEO Charlie Shrem and former Silk Road operator Robert Faiella plead guilty to separate charges, each agreeing to pay $950,000 in damages to the US government under the terms of the deal.

Speaking to CoinDesk earlier this week, Shrem framed the plea deal as the first step in moving forward from the charges that have held back his ability to interact with the broader bitcoin community.

Unlike Ulbricht, Shrem, who currently serves as a business development advisor for bitcoin buying service Payza, will not go to trial.

His future will be decided at a 20th January sentencing hearing, and he faces up to 60 months in prison for aiding and abetting an unlicensed money-transmitting business.

Dark markets evolve

Notably, despite the demise of Silk Road, recent reports suggest that the shutdown has done little to stem the bitcoin-enabled online drug trade.

Online black market Agora, which operates using the Tor network and accepts only bitcoin payments, now has 200 more listings than Silk Road 2.0, the successor to the illicit business Ulbricht is accused of heading, Wired reports.

The media outlet suggests that Agora has been able to dominate the market due to security breaches that have affected its major competitors such as Silk Road 2.0 and Cannabis Road.

Hat tip to Wired

Image via RollingStone

Ross UlbrichtSilk Road

September 05, 2014 at 11:00PM

4 September 2014

Being an Entrepreneur is Really Hard

Written by Jason King of Sean’s Outpost and reposted with his permission from reddit .

For over a week now, I’ve been trying to write a year in review piece for Satoshi Forest. The words, which usually just flow like a spigot when I’m passionate about something, seem to just dribble out. And what little ekes by is hardly print worthy. Maybe it’s just writer’s block? Writer’s block happens. Or maybe I’m not as passionate about Satoshi Forest as I used tao be?

But, I am passionate about Satoshi Forest, perhaps more than I ever have been. And writer’s block, if it is the culprit, cannot explain why I haven’t responded to Elizabeth Ploshay’s ALS Ice Bucket Challenge in a timely fashion. I guess I’ll have to donate now. You see it’s not just the Satoshi Forest year in review, it’s everything. Emails from friends I haven’t responded to, phone calls I let go to voicemail, new endeavors at Sean’s Outpost I let sit unannounced (http://ift.tt/1lfrWOb). And then it hits me. I’ve been here before.

I’m really depressed.

And it seems to be going around.

Since the tragic suicide of Robin Williams, four (4) people close to me have also tried to kill themselves. One succeeded. An anecdotal survey of my friends has seen an equal uptick in the number of people talking about or attempting suicide.

It’s been really disturbing.

In the preparations for the Bitcoin in the Beltway conference this past June, I had one of the more surreal conversations of my life. An east coast sales director for Marriott called me wanting to know if bitcoin was linked to suicide. They had heard of the tragic death of Autumn Radtke in March (http://ift.tt/1e5FrXp) and were concerned about hosting a conference for a technology that was making people kill themselves. I was sure he was joking. He was not. The conversation I had with him must have allayed his fears. #BitcoinBeltway went great, can’t wait to do it again next year.

Obviously, bitcoin does not cause suicide. And while we are quick to sticky a “suicide prevention hotline” when the price crashes, bitcoin is not causing depression. What we may want to look into is something that is not bitcoin related, but more something that comes part and parcel with “bitcoiners”: the woes of entrepreneurship and startup culture.

Being an entrepreneur is f*ing hard. Really hard. Most people don’t even attempt it. It might not feel that way to you, but likely that’s because you surround yourself with other entrepreneurs. Your friends work at startups. Your trips are to startup conferences and conventions. Your news feed is r/bitcoin and hacker news. You are firmly in the echo chamber.

Most people will never try and build a product or company, so most people will never experience what it is like to fear you won’t make payroll and someone else will not be able to pay their rent because of you.

Most people will never know how difficult it is to raise money: to get someone else to believe in you enough to open their checkbook and support you financially…the hours you spend and the mental strain that comes from hearing “No” again and again and again. And if you get a “Yes” the pressure doesn’t dissipate! It increases! Now it’s your crazy idea and someone else’s money you’re responsible for.

Being an entrepreneur is really hard.

And we are really hard on ourselves. We are afraid to show any weakness, because we’ve been taught being weak or vulnerable is to be shunned. If someone asks you how your company is doing, “We’re killing it.” probably comes off your lips before you’ve even processed the question.

It is statistically impossible for everyone to always be “killing it.”

But ask at your next mixer or meetup and almost everyone will be “killing it.”

And that pressure to succeed, to perform, to win is immense. And I think that pressure may be even worse in bitcoin.

Not to everyone, but to a lot of bitcoin early adopters, and especially to a lot of early bitcoin entrepreneurs, bitcoin is a promise, a glimpse of a better world free from the inequalities brought by our legacy financial system. So if you fail in bitcoin, it is easy to feel that you are failing on that promise too.

I’ve felt that way – felt that if I screw up I am screwing it up for every non-profit and charity, that they will somehow not get the benefits of bitcoin because I failed. I see it in others. Just a week ago at #Cryptolina I talked with a group of brilliant entrepreneurs who were convinced that if they didn’t beat an incumbent payment solution to market, they had lost the war. And that whole segment of the market would NEVER benefit from cryptocurrency.

Being a bitcoin entrepreneur is hard.

And I don’t have the answers to how to deal with all the pressure and depression that come from doing what we do. But I have learned a couple of things and maybe someone else that is experiencing depression or having dark thoughts can read this and gain some value from what I’ve learned. And even better, maybe someone that has dealt with depression in the past can riff on what I’ve said and provide some insight into how they cope.

1) You are not alone.

When you are depressed, it seems like everyone else has it all together and you are the anomaly. That’s not true. They probably don’t have their s*t together either. And everyone has problems we don’t see. Everyone.

Some of the greatest entrepreneurs and investors of all time have had brutal fights with depression and suicidal thoughts.



2) Bitcoin needs you and it doesn’t need you. And that’s ok.

Bitcoin needs you. It really does. But it doesn’t need only you, it needs all of us. You are not the single point of failure. Bitcoin’s success is just as decentralized as the blockchain. So give yourself a break. It’s okay to make mistakes and it’s okay to fail. It’s even okay to fail spectacularly.

Think back to how many times bitcoin has been declared dead. How many times has the price crashed? How many times has a major bitcoin institution been corrupted/hacked/found to be a scam?

And yet, here we are. An you are here too.

3) It is okay to ask for help.

This is hard to learn. We come from a self sufficient culture. And if you ask for help, people will realize that you are not as awesome as they thought you were…BULLSH*T. Asking for help has ZERO bearing on how awesome a person you are. In fact, your friends WANT TO HELP YOU. Being there for you in a moment of crisis is something your friends are probably really down for. But if you ignore them or won’t tell them you are having problems it is really difficult for them to help. Talk to someone. If all else fails you can always call…


I know all of this might not make a difference. When you are caught up in your head in the middle of a depressive episode nothing seems to help. Try to find something that you can concentrate on just to get you through the worst of it. For me, I go play with my kids. It helps me, sometimes more than others.

If you are feeling down, try to talk to someone. And if you see someone feeling down, try to lend a supportive ear.

Bitcoin needs you alive.

September 05, 2014 at 02:56AM

Coming in September, Inside Bitcoins Conference and Expo Will Feature Over 40 Virtual Currency Experts and 21 Sessions

Inside Bitcoins , the leading international conference and expo exploring the business opportunities and threats posed by the growth of cryptocurrencies, debuts in London, 15-16 September, 2014.

Taking place at the Grange St. Pauls Hotel, on the doorstep of the City of London, Inside Bitcoins already has attendees from over fifteen countries registered and is expected to be the largest virtual currency conference in Europe to date. Exhibitors and sponsors confirmed for the event so far include CEX.IO, Ghash.IO, Strevus, Airbitz, AMT, Bitmain, Black Arrow, CoinTerra, Jumio, meXBT, ROCKMINER, Butterfly Labs, btc.sx, CoinSimple, Cryptopay, Jumio, meXBT, Digital Jersey, Unocoin, Verne Global, VirtusData Centres and Seedcoin.

20+ future-forging sessions, delivered by 40+ Bitcoin Visionaries with 400+ Bitcoin enthusiasts will set a new standard for conferences on this topic in the UK. Current speakers include: Gavin Wood, CTO, Ethereum; Steve Waterhouse, Partner, Pantera Capital; Hakim Mamoni, Co-Founder and CTO, Seedcoin; Nicolas Cary, CEO, Blockchain.info; Will O’Brien, CEO & Co-Founder, BitGo. View the full agenda and roster of speakers here.

The program is designed to provide an understanding of where the crypto currency industry is today and the associated business opportunities and threats presented to FinTech and infrastructure start-ups and investors looking to capitalise on the rise of a new industry and major corporations seeking innovative solutions providing cost-savings and customer acquisition opportunities.

London is only one of the participating international cities in the Inside Bitcoins world tour, along with Berlin, Hong Kong, Las Vegas, Melbourne, New York City, Seoul, Singapore and Tel Aviv.

We’re pleased to announce that Bitcoin Magazine is partnering with Inside Bitcoins to offer all readers 10% OFF a full conference pass. Enter code BMAG14 at checkout to redeem your discount. Register now!

Companies interested in sponsoring or exhibiting should contact exhibit@risingmedia.com.

September 05, 2014 at 12:02AM

2 September 2014

The Value Foundations of Bitcoin: Austrian Redux, part I

There have been a number of Bitcoin detractors. Most mainstream economists and intellectuals denounce the idea as either impossible or a hoax, or they misconstrue it along the lines of play money or niche money. Another group of Bitcoin detractors comes from an Austrian/Hard Money contingent. These gentlemen who recognize the invalidity of the Keynesian models have nevertheless made their own various arguments attempting to demonstrate that Bitcoin cannot serve as money. For naysayers of this persuasion, there is nothing improper about the economic incentives of such a system, but simply that it will succumb to State control or prohibition, that it is trackable, or even that Bitcoins are intrinsically worthless.

The Keynesian response is understandable, though lamentable. Their schema for viewing economic operations precludes Bitcoin’s success as a money just as many Austrians would consider the introduction of demurrage money to be completely incapable of performing the role adequately. What is not so understandable is the resistance from Austro-libertarian circles, especially given the obvious complementarity of Bitcoin within the larger Austrian/Misesian framework.

The chief impediment of these thinkers is ignorance – not of economics, certainly – but of technology, specifically open-source code, distributed networks, public-key cryptography, and proof-of-work systems, all of which are integral to understanding Bitcoin’s value proposition. They do not understand how Bitcoin works, hence they cannot identify with other people who subjectively place value on acquiring Bitcoin. It is a simple step from there to suggest there is no value to Bitcoin – that it is a tulip mania, a frenzy, a bubble, a hoax, sure to crash to zero, etc.

The explanation for this negativity ultimately relies on a misuse of the regression theorem as provided by Mises and Menger, as well as a subtle denial of the subjective theory of value. In the eyes of Austrian economists, money – the most salable good in society – must emerge from a state of barter. It must be a good for which prior direct use value existed before it could ever acquire exchange value. Nobody would ever accept a good for indirect exchange unless it already commanded widespread desire through services it natively offered. Thus, gold and silver were widely popular monies for centuries because they offer use value. Bitcoin, on the other hand, emerged, not spontaneously, but as an “invention” that was “intended” to be used as a medium of exchange. According to this perspective, Bitcoin could never become money because there is never any initial use value any single person acquires from them. One holds Bitcoin only because he expects others to accept it indirectly for goods and services, and thus they laugh and scoff and compare Bitcoin to Ponzi schemes or other scams. It is ridiculed on par with perpetual motion machines – an impossibility similar to a medium of exchange without any direct use value. [ref]Thus, explanations for Bitcoin’s popularity from these folk amount to a Greater Fool Theory, where they imply Bitcoin traders have no fundamental value in investing in Bitcoin, but simply to unload them on to a greater fool who will pay more down the road. This is similar to the Keynesian beauty contest perspective in stock investing.[/ref]

This perspective, I believe, is obviously incorrect. Instead, the perspective that should be advanced is one that understands: (1) That Bitcoin as an emerging money perfectly satisfies the conditions of Mises’ regression theorem; and, (2) That value is subjective. The regression theorem demonstrates that a medium of exchange must have prior use value; thus, if we find a good operating as a medium of exchange, we should conclude it therefore has direct use value. This seems straightforward, and yet this approach is rarely taken. Instead, carts are put before horses; interlocutors will examine the perceived absence of use-value, not its presence as a currently functioning medium of exchange. Witnessing Bitcoin operating as a medium of exchange usually involves two further attempts at debate; either we must “throw out” the regression theorem (challenge its praxeological rigor), or the regression theorem is fine, but it proves Bitcoin cannot be money. If Bitcoin is “not money,” then any valuation placed on it is spurious and unsustainable. This is what fuels the charges of tulip mania. Without recognizing any inherent use value, these commentators (who presumably have never interacted with Bitcoin lest they fall prey to “hoaxes”) insist that there is none at all. However, this is a complete non-sequitur. Simply because neither Gary North nor Peter Schiff are creative or observant enough to identify the use value does not imply there is none. Absence of evidence is not evidence of absence. Mises explains the strictness of the regression theorem:

It does not say: This happened at that time and at that place. It says: This always happens when the conditions appear; whenever a good which has not been demanded previously for the employment as a medium of exchange begins to be demanded for this employment, the same effects must appear again; no good can be employed for the function of a medium of exchange which at the very beginning of its use for this purpose did not have exchange value on account of other employments. And all these statements implied in the regression theorem are enounced apodictically as implied in the apriorism of praxeology. It must happen this way. [ref] Mises, Ludwig Von. “Chapter XVII: Indirect Exchange – The Determination of the Purchasing Power of Money.” Human Action: A Treatise on Economics. New Haven: Yale UP, 1949. 410. Print.[/ref]

Thus, for those who support Mises’ theorem, to take the argument that Bitcoin has no direct use value is to deny the empirics of the situation: that Bitcoin currently is serving as a medium of exchange, and accordingly there must be an underlying value that spurred the creation of its exchange value. There is no other way it could have acquired such.

The second major error is a subtle rejection of the subjective theory of value. When I point out that Bitcoin necessarily must have a use value, people will frequently demand to know what it is. What could possibly compel people to spend hard-earned fiat money in exchange for digital tokens? Usually I suggest social purposes. Bitcoin – being a scarce, digital good – is unique in that creation of one requires solving cryptographic puzzles of increasing difficulty. Thus, in the early days, before Bitcoin had either money prices or exchanges – in Menger’s words, “organized markets” – the only way to acquire Bitcoin was from a friend or to download the client and mine Bitcoin directly. The protocol’s newness and its underground nature enabled Bitcoin to become a status symbol. Cypherpunks and hacktivists – those closest to understanding the value proposition it offered – began to acquire them and mine them (and report their electricity/mining costs on message boards), and from there eventually Bitcoin spread to other markets and social groups. That’s it. The regression theorem does not admit of quantitative tests (ie, “how much” value a certain item or commodity requires before mass acceptance) – it simply states the necessity for prior direct value. This social status value Bitcoin acquired is real. It is a value accruing to whosoever desires it. Hobbyists place value on all sorts of bizarre goods many people would never think to acquire. Even objects of pure fads like Beanie Babies offer real, legitimate value: they offer the value of social inclusion or of being “in the know.”

Historically, while this account suffices to describe Bitcoin’s launch into becoming a medium of exchange, it doesn’t quite answer the question as to why Bitcoin units are individually valuable to users. The answer to this is straightforward. Bitcoin as a payment system is valuable; it renders amazing services nothing else can. The only means to use the payment system, however, is through the use of Bitcoin units. Therefore, as the units themselves are scarce, required means of action, they command a market price. Users are willing to purchase digital space on a ledger in order to take advantage of the manifold benefits they enjoy. The network cannot transfer dollars, euro, or yen. It can only move Bitcoin.

Understanding the Bitcoin units in the larger context of utilizing the Bitcoin network brings clarity to confusion. There is no contradiction or paradox in Bitcoin becoming money; it emerged as a scarce, digital item, which became a good (when scores of people began acquiring and discussing them), and then proceeded to become a medium of exchange (when it was used to indirectly purchase pizza). Whether it becomes liquid enough to crowd out the rest and become money to everyone will have to be seen, but it should be apparent that, from an Austrian perspective, there is no problem whatsoever with global Bitcoin adoption. Digital currencies are real assets that acquired exchange value – just as all media of exchange have – and it is the historian’s job, not the economist’s, to understand the empirical details that gave rise to this exchange value.

September 02, 2014 at 04:30PM