18 November 2014

Wineries Growing the Bitcoin Ecosystem: Where Wine Goes So Goes the World

Serving up bottles of select vine varieties, Picnic Wine Co. was the first winery dedicated to selling wine exclusively for bitcoin. Emblazoned on their bitcoinwine.com homepage, a prominently displayed mission statement reads, “Let’s stay in Bitcoin, shall we? The bigger the ecosystem grows, the fewer reasons to go back and forth between fiat . . . Close the loop.”

A product of the millennial generation, Picnic Wine Co. was founded by three school friends, Grant Hemingway, Jeff Anderson, and Zach Bryant, with a knack for entrepreneurial ventures. Hemingway and Anderson are the winemakers of the business, crafting highly acclaimed wines, while Anderson handles the business end of the vinting.

Anderson, hailing from Pomona College with a major in Economics, described in a company linked blog Bitcoin as a currency and why they decided to become the first winery in the US to start accepting it. “[Bitcoin] is controlled by no government, financial institution, etc. Bitcoin is regulated by Bitcoin users,” Anderson explains and says, “No more bailouts, no more Quantitative Easing (1, 2, or 3).” He then described why they decided to start accepting it, stating “ . . . in order for this thing [Bitcoin] to really take off it can’t be traded solely as a commodity. We need ‘utility’ to play catch-up, and that means there needs to be goods and services available for purchase. [It] just so happens, we make a good. A delicious good.”

Another winery, Mondo Cellars located in Napa, California owned by brothers Mitch and Doug Mondo, may not have been the first winery to start accepting bitcoin, but they are the first winery to produce wines by paying for all the wine production costs in bitcoin. Mondo Cellars’ first production of bitcoin wines involved paying vendors in bitcoin for all the raw materials needed, everything from the wine corks to the glass bottles.

In other words, Mondo Cellars sees the importance of growing the Bitcoin economy in a very fundamental way—buying the necessary inventory materials needed using bitcoin and selling their goods in exchange for bitcoin, through and through. Doug Mondo, co-owner of Mondo Cellars, says, “In creating the first Bitcoin wines, it became apparent to us that forging new niche Bitcoin ecosystems is viable at this time, despite volatility.”

Mondo Cellars was also the first winery to offer investors fractional ownership of their winery for bitcoin. Investors were offered a 2% equity ownership stake in the winery for every 250 bitcoins, with each 250 bitcoin stake also including ownership of a sprawling 82 acres of winery land. In total, the offering allowed investors to purchase up to 30% of equity ownership stake. At the heart of this business strategy, Mondo explains the goal is to keep at least 75% of funds in Bitcoin, which again shows Mondo Cellar’s steadfast commitment to the Bitcoin ecosystem.

Mitch and Doug Mondo are also actively working to grow a business-to-business, business-to-consumer bitcoin only ecosystem, dubbed the Abundance Marketplace. Mondo says, “This process has a twofold effect: it will create numerous local businesses with active Bitcoin wallets and it will expand the offering of the Marketplace allowing Marketplace attendees to spend their Bitcoins on products and services they use daily.”

Mondo’s approach of focusing on a Bitcoin business-to-business network first may prove to be an effective way to create a truly complete Bitcoin ecosystem—one that avoids using fiat altogether. Mondo says, “The goal is to create a working model whose systems and structure can be replicated worldwide, aimed at benefiting society as a whole.”

Note: Bitcoin figures represent the bitcoin price at the time of this writing.

[Photo: Flickr user Dennis Jarvis]

November 18, 2014 at 03:20PM

DACs VS the Corporation

In certain corners of the crypto community, ‘Decentralized Autonomous Companies’ (DACs), or ‘Distributed Autonomous Organisations’ (DAOs) are all the rage. In the same way that Bitcoin is decentralizing money, DACs seem to offer the potential to decentralize the entire world of business, commerce, finance, and the economy. They are businesses that can potentially be owned and run by their customers and their ‘employees’, with no single owner, and, like Bitcoin, no central authority to act as a board of directors. They are, to some people, a big step on the road to greater freedom and autonomy in our own working lives and an antidote to the corruption and crony capitalism of our current corporate world, and the dehumanising influence that corporate hierarchies can have on regular working people.

Ideas like these have created quite a bit of discussion and excitement. Various ‘Bitcoin 2.0′ projects now claim to have developed or to be working on ways for people to create DACs, and the Bitshares project even claims to have started launching them.

But what does a DAC actually look like? How do they actually differ materially from traditional companies – and could any business become a DAC? Even amongst enthusiasts, many people still have no clear idea what the answers to these questions are, partly because until we decide exactly how we want to define what a DAC is, there is no exact definition. Exploring exactly what it is that makes a business a DAC is, I think, an interesting exercise which can simultaneously serve as an exploration of the limits of what a company like this is capable of doing. In order to do that, let’s take each word and its definition in turn:


A regular corporation has its ownership, whether it is private or in the form of shares, registered with a central government authority. It has a head office where a central board of directors gets together in the same physical location to run the company. The organisation of the business is hierarchical, and ultimately there is one individual, the CEO, who has authority over all decision making.

It is generally assumed that a DAC, on the other hand, has its ownership verified by a block chain or other P2P public ledger. This block chain is ‘distributed’ just as Bitcoin is, because it is run by a large number of peers, none of which has a privileged position over the others. Beyond this, however, it is also generally assumed that decision making power and even the work done to produce the company’s product or service is also ‘distributed’, meaning that it is spread out across a large number of peers, each of whom has equal authority. If this is the case (it may not necessarily be so) then the fundamental structure of a business like this is egalitarian and co-operative rather than hierarchical – and this probably the biggest difference between a DAC and a regular business.


There really is no single vision of what a DAC looks like, and this comes out the most when you consider what is actually ‘autonomous’ about it. Currently there are two main competing visions, represented by the two biggest projects to have set out to create an infrastructure and protocol for the creation of digital autonomous companies or organisations: Ethereum and Bitshares.

Ethereum was the project which first introduced me to the concept of DACs and DAOs, and whilst the emphasis of its development team seems to have shifted more towards apps and ‘web 3.0′ technology, these things are still likely to be a big part of what Ethereum’s Turing Complete scripting language will enable. At its heart Ethereum is a ‘smart contract’ system, and any DAO created on this protocol is likely to be composed of an interlocking web of contracts automatically executing to perform specific functions. In this sense an Ethereum DAO would be autonomous in that it could run independently of human intervention. It could trigger payments to pay for its own hosting, run code to provide a service, and perform any other required functions completely on its own. It would not only be completely ‘autonomous,’ but potentially also completely ‘automated.’

On the other side of the coin are projects like those created with the Bitshares ‘tool-kit,’ in which a ‘Delegated Proof of Stake’ (DPoS) system is used, which means that coin holders vote for 100 ‘delegates’ who are allowed to earn revenue for running the nodes which maintain the network. The analogy of these people as the ‘board of directors’ of the business is sometimes used, as the ‘shareholders’ who own coins are encouraged to vote for people who work to make the business successful. Through this method the DAC effectively has employees, hired by the crowd.

The hiring of human employees blurs the line of what is ‘autonomous’ within such an organisation – the business is no longer a self-contained piece of software, although this may still be the core of the business, but instead pays people and presumably relies on them, at least in part, for its success. Individual ‘delegates,’ however, do remain autonomous. Each person hired by the DAC works independently, and there is no hierarchical structure.

The Advantages and Limitations of a Pure DAC

The first of the two systems described above, in which an organisation is structured entirely as a software entity independent of any human guidance or control, can perhaps be thought of as the most pure conception of a DAC.

There are some obvious advantages to having a company structured like this. It would, of course, be impervious to any kind of human corruption, greed, and frailty. When dealing with a company like this, as an investor, partner, or customer, you would know exactly what you are going to get – you would not need to trust them to behave well and you would not need to worry about human error messing things up. An organisation like this would also be able to operate effectively whilst making little or no profit, because software only needs the cost of its hosting to ‘live off’ and doesn’t get greedy for more.

But of course there are some equally obvious disadvantages, as you also consign human flexibility, creativity, understanding and compassion to the dustbin. As things stand there is a very limited number of things that can be accomplished by software working autonomously of human control. As Tom Ding, chief philosopher at Decentralized App crowd-funding specialists Koinify explains in ‘2020: A Call for DApps and DAOs,’ an organisation like this is ideally suited to performing work composed of small, simple and repetitive tasks in which “each task within the network can be easily divided, with the result of work being verifiable either programmatically or through human input; which is very hard to manipulate.”

Currently it is very difficult to see how any large or complex organisation could have all of its functions defined precisely and completely enough to be structured like this – and if it did, then having its operations ‘set in stone’ would make it inflexible and unable to adapt to a changing business environment. Over time one could imagine a situation in which an interconnected web of smart contracts develops, in which various ‘organisations’ and ‘companies’ may be built up from the same sea of source contracts and may reach reasonable levels of complexity. One could also imagine an organisation like this using contracts to hire human beings to perform tasks a machine cannot do on their own, but this is so far away from our current position it is difficult to envision with any clarity. If such a thing were to happen it seems to me that it would be something that would build up organically over time, with people focussing on building the contracts rather than the DACs, but with these contracts working together with each other in organisational structures which could only loosely be called a ‘company.’ Various contracts, each with their own set of relatively simple rules, may come together for a while into what may appear to be a ‘business,’ before dissolving their relationships to form new structures with new partners as they adapt to changing times. For the moment, however, there are very few areas of business simple enough to be conducted in this way, and very few ‘smart contracts’ operating out there in the wild.

Maximum Fuzziness and the DACification of the Corporation

The second class of DAC described above, in which a group of ‘employees’ or ‘directors’ is elected via the block chain, has its own unique advantages and disadvantages.

By creating a role for actual human beings you allow human characteristics like creativity and flexibility to play their part in the success of the business. But each human being is still working individually – autonomously – in the way that they see fit. Of course a co-operative approach between ‘employees,’ in which each one is free to do as they see fit but they still work together to build the business, is still possible; but it is easy to argue that this co-operative approach will inevitably be less efficient and more fragile than a traditional business, as there will always be times when people are pulling in opposing directions, or where a lack of support across the business would cause a good initiative to fizzle.

This kind of organisation seems as if it works best where there is a core product which can be completed even before the launch of the business, but in which the success of the business is dependent on a surrounding ecosystem of services or promotional initiatives. This is what we are seeing so far with Bitshares, in which the core product – each of the DACS that’s been launched so far – is a block chain with a relatively small and well defined set of key innovations funded through a pre-sale of coins or tokens. The Bitshares X banking DAC, for example, introduces assets such as BitUSD pegged to the value of external currencies and assets. Beyond publishing price feeds for these assets, which is a relatively trivial and a purely technical task which will not change over the years, the ‘delegates,’ or employees of this business, are not expected to maintain or develop this core business. Instead they are expected to build services and businesses which accept its digital currencies and assets like BitUSD, to promote its banking features to new users, or to support the current community of users in some way.

A DAC built like this is perhaps a little less ‘pure’ than one which doesn’t need human employees, and in return perhaps is a little bit more flexible and capable of a wider range of business activities, but it is still clearly very limited compared to a regular business. One interesting question to ask, however, is how many ‘impurities’ can you introduce before a company ceases to be a DAC?

For example, there is no technical reason why a business built with something like the Bitshares tool-kit could not have different classes of delegate: each might have a different probability of finding a block (and hence a different level of earnings). Perhaps these classes could relate to a marketing department, product development department, and so on. If you push this principle even further you could imagine a wide range of different employees being directly elected by shareholders – or you could just as well imagine a human resources department being voted in to hire other employees. Likewise you can imagine the core block chain being pushed into the back-room; imagine a physical shop, for example, with a Point of Sale system which allows the cashier to accept a $10 cash payment and automatically buy $10 of the company’s token on the open market and use it to purchase a product. The block chain now goes from the core service to a piece of back-end accounting software.

The specific advantages of doing something like this are entirely dependent on the specifics of the implementation. Whether a business like a big chain store implementing things like this would still qualify as a DAC or not is largely a matter of our own personal choice. But it may be that in the future the seemingly stark line between a DAC and a traditional business is a whole lot fuzzier than what we see at the moment, and that a wide range of businesses may be amenable to some form of ‘DACification.’

November 18, 2014 at 02:26PM

17 November 2014

LAST CALL! Inside Bitcoins to Launch in Paris This Week – Get 10% OFF!

Inside Bitcoins is kicking off their inaugural Paris event on November 20-21, and we’re offering our readers 10% OFF with the discount code BMAG14!

The conference, which will take place at Espaces Cap 15, will explore the growth of crypto currencies, FinTech, business trends, investment strategies, tools and much more. Don’t miss your opportunity to explore where the industry is today and what business opportunities and threats are in the horizon, with keynotes from Nicolas Cary, CEO, Blockchain.info, and Bernard Lietaer, Research Fellow, Advisor to Jetcoin Institution, Center for Sustainable Resources of the University of California at Berkeley, as well as two days of seminars by industry leaders. See the full roster of speakers here!

Session Topics Include:

  • Decentralized Technologies: Lifeboats for Society

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  • International Review: Bitcoin Stories from Across the Globe

  • Moving Towards a Bitcoin Society

Interested in learning more? Check out the conference agenda , which will cover topics ranging from Crypto-Law and Regulatory Compliance, to Investment & Funding and The Developing World.

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inside bitcoin paris

November 17, 2014 at 10:00AM

16 November 2014

bitcoin.info portal launches: Designed to give Professionals Accurate Bitcoin Market Info

Press-Release: 16th Nov 2014

By: Techemy ltd

For: General news distribution.

With the explosion of interest in Bitcoin over the last 24 months, keywords, trademarks and domain names around

bitcoin have become somewhat of a commodity.

Techemy Ltd, a NZ based start-up, has secured a key domain name in the bitcoin space: Http://bitcoin.info

Company co-founder and CEO, Fran Strajnar stated:

“After having spent 11 months building a stable price index (BNC Price-Index via Bravenewcoin.com), we wanted to

offer the world a clean website with a solid domain name for 1 reason: Accurate Price-Discovery (and related


Price-Discovery is the economic concept of finding the value & price in a marketplace. This is a basic requirement for

an emerging industry to build products and services around.

Strajnar expands with;

“MtGox represented the bulk of trading in Bitcoin until the end of 2013. It was easy to discover the price during

Gox’s reign. Since then, literally dozens of exchanges have open shop all around the world and surprisingly no other

index out there, captures anywhere near all of this data, making Price Discovery somewhat questionable. We believe

Price Discovery to be a ‘Public-Good’, and will not be charging for this. Our API is free to use, constantly added-to as

new exchanges open their doors, accurate & stable. A public good for the industry to use”.

What sort of services require an accurate global-bitcoin-price?

 Wallets: Consumers want to pay an accurate market price at all times.

 Futures & Financial products: Financial products require stable backbone. One example: 796.com, the

world’s largest Bitcoin-Futures exchange, uses this API calculate their Millions of USD worth of weekly


 Billing platforms: Invoicing & billing services require a current price to generate correct fiat figures for

business owners.

 Portfolio Management: Tracking your client’s or your own investments.

 Gaming Industry: Settlement calculation or Fiat value displayed to gamers.

 News & info Services: News agencies and search engines can now display comprehensive market data.

 & Any possible product or service that requires an accurate price Fiat price for Bitcoin.

The API is available here: http://ift.tt/1ETbtVx

Techemy Ltd collects a ton of data from the Bitcoin & Altcoin marketplaces. If you or your company require

something custom or more advanced, like global consolidated order books, or plan on running a service where such

data is critical and you require a Service-Level-Agreement, the company can be reach on contact@bitcoin.info

November 17, 2014 at 02:39AM

How Kraken is Seeking to Solve Bitcoin's Banking Dilemma

Jesse Powell, Kraken When Fidor Bank's Michael Maier spoke to CoinDesk in June, the Internet bank COO framed his industry as one that bitcoin would grow to challenge directly, suggesting at the time that its partnership with Kraken demonstrated its intent to accept this future and even cooperate with it.

However passive these statements may have seemed at the time, they came into sharper focus on 31st October, when Fidor announced it would team with its San Francisco-based bitcoin exchange partner to launch "the world's first cryptocurrency bank".

The unnamed project seeks to build a regulated financial institution that would help bitcoin startups that have struggled to secure and maintain accounts even for day-to-day business.

Given this backdrop, Kraken CEO Jesse Powell sees his company's most prominent collaboration with Fidor as more than an exercise in bringing another first to the ecosystem. In a new interview, Powell positioned the specialized bank for cryptocurrencies as a necessity should the ecosystem succeed at delivering on bitcoin's full technological potential.

Powell said:

"For Kraken to be a viable business long term, for most players to be viable, we need to see the pie grow. That’s what we want to do with Fidor, is create a bank with the specific mandate to bank bitcoin companies and provide reliable banking to end-users of bitcoin."

By providing stable banking partnerships to companies in the ecosystem, Powell aims to, in turn, return lost time and energy to the community. In the process, he will also expand his business beyond one that targets market makers and bitcoin companies with a VC-backed order-book exchange.

However, Powell contends that Kraken has the experience it will take to rise to the challenge and deliver on its goal.

"We’ve talked to more than 200 banks in the last year-and-a-half about banking bitcoin companies, and the successes are the ones you’ve seen so far, the 1% success rate," he said. "[The bitcoin community] can’t go on wasting time. How many man hours is the industry wasting talking to banks? It’s just insanity."

A 'bitcoinized' financial institution

Though Powell was clear on the goals the project is set out to achieve, his statements suggest that Fidor and Kraken are far from solidifying any concrete plans on the types of services they will provide. As the original release relayed, even the name of the bank – BICONDO, BYSE Bank or Cryptocurrency Bank – remains a matter of debate.

Fidor, Kraken

However, Powell indicated that the bank does intend to offer certain services to clients, like the ability to borrow against bitcoin assets and invest in lending products.

"We hope to leverage blockchain technology to offer some additional services and 'bitcoinized' traditional financial services," Powell added.

While acknowledging that the potential that lies in advanced financial services provided by crypto 2.0 protocols, Powell said that it remains "early days" for such projects. Still, he doesn't rule out that they could enable Kraken to build a more robust cryptocurrency bank offering.

"With colored coins, sidechains and Counterparty, there’s all sorts of interesting things that could merge and we could see more assets being held in this bank account that could serve as collateral," Powell mused.

He went on to suggest that the bank may seek to leverage the blockchain's applications for identity, implying that the institution could help other bitcoin companies validate customers even as he cautioned that any of the products the bank offers will need to meet the approval of European regulators.

Fighting back against big banks

Powell sought to frame the survival of Kraken as depending on the success of the bitcoin ecosystem itself, stressing that his company's main goal is to increase the size of the customer base it can serve in its current target markets, Europe and Japan.

He suggested that he sees the banking initiative as being in line with Kraken's existing goals.

"You see that Google is trying to bring faster Internet connections to people, because that will increase the number of searches, and that’s their business," he said. "We can give people a secure place to store and convert their bitcoin between fiat currencies and make bitcoin more functional."

Powell suggested he doesn't see the business incentive in the US market, which it stopped serving in February, given its hurdles and risks.

He further elaborated on his company's own struggles gaining access to banking in the US market, noting that it has lost key partnerships even though it is structured specifically to avoid this concern. Kraken is owned by parent company Payward Inc., which Powell described as a software company that officially licenses software to the Kraken exchange.

"When we go to a bank and say we need an account, we can legitimately say that we’re offering software and nothing else," Powell said.

Despite this, he said Payward has lost accounts at both Bank of America and Chase, accounts that were kept only for handling company expenses.

"Bank of America and Chase both terminated our account," he said. "The reason they gave was that they evaluated our account, they do it once in a while, and they determined that for the protection of our users they didn't want to service our account, some bullshit like that."

These frustrations, he suggested, caused operational difficulties that he hopes a cryptocurrency bank will help avoid once and for all.

Regulatory hurdles low, risks high

Powell went on to state that in the context of some of the more ambitious projects in the space, the regulatory hurdles for the new bank are low.

"In Germany, bitcoin is basically money, so this wouldn't be like having a bank account with multiple currency balances, one account with dollars and another in euros, it would be an account with euros and bitcoin. It fits within the framework that exists, and we’re not pointing out any problems there," he explained.

When asked if there had ever been a bank created to meet industry-specific needs, Powell compared the new offering to credit unions that serve specialized employees like teachers and firefighters, but stressed that the bitcoin ecosystem requires unique solutions.

Still, Powell said that the project isn't without its risks, noting that savvy banks could begin to serve the bitcoin industry, creating an ecosystem of new competitors.

Competition from banks aside, he said, should a sizeable portion of the ecosystem seek to utilize the institution, it would be easier for regulators to harm the industry as a whole.

Though optimistic about its potential, Powell suggested he sees the cryptocurrency bank as a necessary experiment, though one capable of falling short on its aims.

"It’s still not a foolproof plan," he concluded.

Images via LinkedIn; Cryptocurrency Bank

BankingFidor BankKraken

November 16, 2014 at 06:38PM