30 January 2015

Bitcoin: Perhaps the Most Promising Investment Opportunity of Our Age

A technology is called “disruptive” if it creates a new market that first disturbs and then displaces an earlier technology. Bitcoin is potentially such a technology and much more. The fact that it can disrupt the largest and most interconnected marketplace in the world—money, banking, and finance—makes it perhaps the most promising investment opportunity of our age.

Unlike our current increasingly unstable and unpredictable financial system, Bitcoin has 21st century technologies at its very core. The digital currency and clearing network is open source, mobile, peer-to-peer, cryptographically protected, privacy oriented and native to the Internet. The fusion of these technologies allows for a level of security and efficiency unprecedented in the world of finance. These are some of the areas in which Bitcoin-oriented technology can directly compete:

  • $2 trillion annual market for electronic payments,

  • $1 trillion annual e-commerce market,

  • $514 billion annual remittance market,

  • $2.3 trillion hedge fund market,

  • $7 trillion gold market,

  • $4.5 trillion cash market,

  • $16.7 trillion offshore deposit market.

Indeed, Bitcoin has been noted in glowing terms by industry moguls such as:

  • Microsoft Founder Bill Gates (“A technological tour de force.”)

  • SWIFT CEO Gottfried Leibbrandt (“Don’t see why we could not send transactions in Bitcoin as a currency.”)

  • Entrepreneur Marc Andreessen (“Personal computers in 1975, the Internet in 1993, and I believe, Bitcoin in 2014.”)

  • Legg Mason Portfolio Manager Bill Miller (“If it becomes 10% as popular as gold, you can make 120 times your money.”)

  • Fortress Investment Co-CIO Michael Novogratz (“Put a little money in Bitcoin, come back in a few years, and it’s going to be worth a lot.”)

The core value proposition of this network is the fact that, in the words of IBM executive architect Richard Brown, “Bitcoin is a very sophisticated, globally distributed asset ledger.” What Brown and others hint at is that Bitcoin will in the future be able to serve not only as a decentralized currency and payment platform, but also as the backbone for an “Internet of money.”

This entails a decentralized global platform, smartphone- accessible, on which companies and individuals can issue, buy, and sell stocks, bonds, commodities and a myriad of other financial products. The effect will be to remove much of the current bureaucracy and barriers to entry, presenting a huge opportunity for the world’s 2.5 billion unbanked people.

This raises the question: why Bitcoin, and not some other cryptocurrency? The answer may lie in the network effect: of all the cryptocurrencies, Bitcoin is the one with the highest adoption rate and the strongest security. The combined computing power of the Bitcoin mining industry serves as a protective firewall around the payment network, with a replacement cost of at least $1 billion— and it is growing quickly. In short: no other cryptocurrency is as secure as Bitcoin. This attribute in itself attracts more capital, which in turn makes the network even more secure and performant.

Because of its robustness, the Bitcoin network is now the reference protocol for the new paradigm in finance. And just like TCP/IP became the mainstay for the Internet of information, the Bitcoin network will likely become the value anchor for the Internet of money and finance. Speed may be provided by off-chain or side-chain transactions, but for the high-value transactions of tomorrow, Bitcoin could very well become the security-providing reference currency.

So, how much of all this potential is already realized?

Well, since inception of Bitcoin in 2009, its market cap has grown by a minimum of 10 times every year. It now stands at over $8 billion, with an annual turnover of +$50 billion. According to Coinometrics.com, this makes the Bitcoin currency stock more valuable than that of 108 national currencies, including Panama, Macau, Ghana, and Malta. Currently over 80,000 merchants accept Bitcoin as payment.

Enticed by its great potential, venture capital is also warming up to Bitcoin. In 2013, 40 deals were made that raised a total of $74 million, and the 2014 run rate for the year is currently US $250 million. To put this into context, investments in the Internet of 1995 were an inflation-adjusted $387 million— which is why many Bitcoin investors believe we are at a stage similar to the Internet in 1993 or ’94.

Furthermore, the Bitcoin price has been rising at an exponential rate of +1,000% annually. This can be explained mostly by the fact that it is a scarce commodity (maximum supply is 21 million) with a rapidly growing user base. Here are a few possible scenarios for the future value of one bitcoin:

The scenarios projected above are, of course, not cast in stone. Bitcoin faces several risks going forward. These include:

  • Compromised security of the major exchanges,

  • The emergence of a much better digital currency that steals its market lead,

  • An undetected bug in the system,

  • A sustained attack by an organization with substantial computational resources,

  • A coordinated clampdown on Bitcoin by a multi-national entity such as the G20.

How serious of a risk do these challenges pose? Let us examine them.

A better currency is possible, but experience shows that disruptive protocols—such as SMTP for email and TCP/IP for Internet—have proven to be very resilient once adopted by a critical mass of the population.

An organized attack on the network is possible but expensive, and there are many potential defense mechanisms.

As with any software application, the discovery of bugs may destabilize the system, but the open source nature of Bitcoin allows for many eyeballs to help track problems, and many brains to help figure out a solution.

That leaves government clampdown as the most likely risk to Bitcoin. However, with many regulators implicitly or explicitly already accepting Bitcoin, and the robust, decentralized nature of its network, such a move would have little long-term structural impact and is thus unlikely.

Because of its strong network effect, the outcome of the Bitcoin story is likely to be binary: either it will experience a downfall as it is superseded by a vastly superior technology, or the value of bitcoins will rise dramatically over the coming years as an increasing share of the global population adopts the currency.

In any case, to me it’s exceedingly clear that the technology of the cryptocurrencies is here to stay. Bitcoin does not appear to be a fad or bubble, nor merely a one-off hedge against gold. With a risk-reward proposition this attractive, holding a small percentage of bitcoins in one’s portfolio as a speculation on increased adoption may be one of the wisest investment decisions of our age.

This article originally appeared in yBitcoin magazine.

January 30, 2015 at 10:45PM

29 January 2015

Bitcoin Processor GoCoin Adds Fiat Payout Options


GoCoin has added three new fiat currencies as payout options for merchants – euros, pound sterling and Singapore dollars.

The announcements come amid a string of new details about the company’s business progress. Since raising $550,000 in November 2013, GoCoin has arguably become a big-three payment processor alongside BitPay and Coinbase due to its agnostic approach to digital currencies, accepting litecoin and dogecoin alongside bitcoin.

In statements, CEO Steve Beauregard asserted that the company has “greatly exceeded its growth projections in 2014”, and is well-positioned for success this year.

"We now have a clear vision of how to focus our efforts in order to drive payments innovation in the sectors that will benefit the most,” Beauregard.

The announcement was made during Beauregard’s keynote address at Inside Bitcoins Singapore, a two-day conference taking place 29th to 30th January at the Suntec Singapore Convention and Exhibition Centre.

GoCoin's full payout terms and conditions can be found on its website.


January 29, 2015 at 08:22PM

FTC Complaints Detail Troubled Past of Bankrupt Bitcoin Miner CoinTerra


“I feel like I [was] cheated.”

The statement is just an excerpt from one of the 39 formal complaints filed with the US Federal Trade Commission (FTC) against now-bankrupt bitcoin mining company CoinTerra and revealed in a new Freedom of Information Act (FOIA) request.

The 39 complaints are a far cry from nearly 300 complaints lodged against competitor Butterfly Labs before it was temporarily shut down by the FTC in September. However, the complaints paint a detailed picture of the frustrations long faced by CoinTerra customers.

The full complaints, which were received with personal information redacted, showcase the breadth of customer accusations that CoinTerra failed to meet advertised shipping dates, build hardware to the desired specifications or issue refunds in a timely manner.

One customer complaint reads:

“On 12/1/2013 I purchased a computing unit for a total of $6,288.35 (including all applicable taxes and shipping). The unit purchased had stated performance numbers. Once the units started shipping, they were not close to meeting the performance numbers promised.”

The customer goes on to state that Cointerra missed suggested refund times, before ceasing communications with the customer, in what was just one of many customer service frustrations detailed in the assembled remarks.

Others showcase the alarm many customers felt at the lack of response from the company.

“Just yesterday, 7th May, I had called the company more than 30 times, and after calling and calling, I finally was able to talk to someone, however, I got disconnected halfway,” another complaint reads.

Escalating issues

The complaints indicate that customer frustrations were heightened in April, when the company continued to delay refunds for TerraMiner IV products.

One filing illustrates the lack of faith among customers at the time that their concerns would be addressed by CoinTerra.

“After repeatedly asking when my funds would be returned, today (22nd April), Cointerra replied with this: ‘We are drawing near to your queue position for your refund, but before we process it I wanted to reach out to you regarding an offer,’ which clearly indicates that they have made no effort to return my funds,” the filing reads.

Pre-order refund updates related to the mining unit would continue through June. During this time, CoinDesk continued to receive complaints about the refund process from customers as well.

Responses suggest international customers also appealed to the FTC for assistance with refunds.

“It's a terrible shopping experience in US. I had believed American company will never do anything against law,” reads another complaint. “It seems I have made a mistake.”

Reimbursement unknown

Though customer complaints indicate many customers may still be owed funds from CoinTerra, it remains unclear when or if buyers will be reimbursed.

Statements from the company as recently as 8th October suggest 70% of customers had been reimbursed as of that time. However, some customers have reported failing to receive refunds as recently as 2nd January.

CoinTerra would later announce that it had defaulted on its secured notes and that payments made to customers would be suspended indefinitely.

CoinTerra filed for a Chapter 7 bankrupcty on 24th January, citing between $10m and $50m in liabilities and including a lengthy list of creditors that included commercial partners like data services provider CenturyLink, US bank Wells Fargo and C7 Data Centers, along with a wide range of private citizens and investors.

Still, CoinTerra CEO Ravi Iyengar has remained steadfast in statements that suggest he believes the company did its best to satisfy its customers, but that it was sometimes hindered by its own success.

“We were probably among the only few who delivered on time and in most cases ahead of time,” Iyengar told CoinDesk on 14th January. “We have no customers who wanted their hardware that didn’t receive it.”

Image via CoinTerra


January 29, 2015 at 07:38PM

CoinDesk's Regulation Sentiment Survey

regulation sentiment survey

Are you for it, or against it?

It's no secret that the bitcoin community can be divided when it comes to the topic of regulation – some believe it's necessary to bring bitcoin to the mainstream and others believe that bitcoin was built specifically to circumvent regulation.

To get a better idea of where the industry stands as a whole, CoinDesk wants to hear directly from our readers about how they view bitcoin regulation around the world.

Please take a minute or so to fill out CoinDesk's regulation sentiment survey below:


January 29, 2015 at 06:44PM

27 January 2015

Spark Capital Leads $2.5 Million Investment in Colored Coins Startup Colu


Crypto 2.0 startup Colu has raised $2.5m as part of a seed funding round that will find it seeking to advance the development of the colored coins concept.

Led by VC firms Aleph and Spark Capital, contributing investors also included VC Barry Silbert’s Bitcoin Opportunity Corp and boutique angel fund Box Group. Notably, Spark Capital’s past investments include now-famous tech startups such as Foursquare, Tumblr and Twitter, as well as fashion startup Warby Parker.

Speaking to CoinDesk, Colu framed its project as one that would strive to find everyday use cases for the more advanced applications of bitcoin’s blockchain as a record-keeping tool for online identity and the Internet of Things.

For example, co-founder and CEO Amos Meiri indicated that Colu’s first application will focus on using bitcoin tokens as a form of two-factor authentication, but that the company will more broadly seek to uncover new use cases for cryptographic tokens.

Meiri further sought to position Colu as a market leader in the crypto 2.0 space owing to the status of its assembled investors, stating:

“This is the first time that blue chip investors have invested in 2.0. That gives a lot of confidence to big companies that want to integrate with the technologies.”

The nine-member team has been focusing on development to date, but aims to use the funds to improve its business prospects. Meiri indicated that Colu will now seek to find partner companies, while growing its team to 12 members.

The investment is also one of the first from major VC firms in foundational crypto 2.0 technology, as similar projects in the ecosystem have to date relied on bitcoin-enabled crowdfunding to secure capital.

From art to ticketing

Crucial to encouraging the wider of use of colored coins, Meiri contends is that Colu’s technology appeals to developers. This means investing in creating simple APIs and software development kits (SDKs) that allow companies to tap into bitcoin’s capabilities.

Overall, Meiri framed Colu as a Chain for colored coins, comparing his startup to the bitcoin API developer that received $9.5m in a funding round this August.

In addition to a bitcoin-based social authentication alternative, Meiri said Colu is already talking with companies that are seeking to build more specific applications of the technology without the need to become experts in the specifics of bitcoin technology.

“One example is an art app that wants to issue tokens to certificate art and have it be tradeable,” Meiri explained. “We want people to use 2.0 technology without even knowing they’re using bitcoin.”

Other examples he cited included using tokens for ticketing and as access mechanisms for connected devices.

Putting tech first

Meiri also sought to position the funding as evidence that the concept of colored coins, while one of the oldest in the crypto 2.0 space, can still compete with newer entrants.

Like a number of projects including the more recently prominent Counterparty and Ethereum, colored coins use the bitcoin blockchain as a transfer mechanism. While projects like Counterparty or Omni have issued new coins on the bitcoin protocol to achieve this end, colored coins is a layer that augments bitcoins to signify specific assets.

Alongside Colu’s lead developer, Meiri is also a leading influence behind the recently relaunched Colored Coins foundation, a membership body representing startups experimenting with the technology including ChromaWallet, CoinPrism and CoinSpark.

Meiri said that while Colu has ambitious mainstream goals, the project’s first priority will be to ensure that the colored coins ecosystem can continue its drive toward interoperability.

“First we want to get colored coins back up on its feet. We want to have a standard for colored coins,” Meiri said.

The Colored Coins foundation expects to publish its standard in the coming months.

Images via Colu

Colored CoinsCrypto 2.0FundingInvestors

January 27, 2015 at 07:40PM

LazyCoins to Preview The Killer Bitcoin App LazyPay at BitcoinExpo 2015 London

London, January 24, 2015 — LazyCoins demoed their killer Bitcoin app LazyPay at the BitcoinExpo 2015 in London last weekend. The company has spent months carefully and quietly planning to take the app public. Including running the payment and merchant services app through testing with a security firm. And holding Q&As in order to perfect their software and get everything right before debuting to the world.

The free conference ran from January 24–25 at the Central Foundation Boys’ School on Cowper Street, London. LazyCoins Founder and CEO Danial Daychopan calls London, “a great place for bitcoin businesses and entrepreneurs.

Daychopan began his talk at the conference on the importance of security. He stressed this is the number one focus for both their exchange and their merchant services app, to guarantee “rock solid security” for their users.

LazyCoins announced the beta version of their new exchange six months ago in July, but they chose not to go public right away in order to learn from and avoid the mistakes of other exchanges. They launch in direct competition with similar-service industry leaders BitPay and Coinbase.

The goal with the LazyPay app is to make Bitcoin use a part of everyday life, increasing its volume of use in the in-person merchant market, getting more people to use digital currencies as a form of payment, rather than just as a speculative investment tool.

Their secure mobile wallet and user-friendly merchant app aim to make doing business in digital currencies simple and safe for both merchants and customers. The aim is to “make buying and selling goods as easy with bitcoin as it is with cash and credit cards—only faster, safer and more convenient.”

The average person needs to be able to find more places to spend bitcoin, they don’t know how to obtain it, and transactions seem too complex. Lack of education among retailers and the lack of an easy-to-use, trusted merchant platform are also problems.

LazyCoins and LazyPay are designed to fix such issues, with security at the top of their priorities. Cold storage wallets and two-factor authentication for accounts, fingerprint access for the app, and multi signature keys are just some of the many features. And a policy of crediting a merchant account on the day of their transactions, by the exact amount that the user pays, will eliminate the risk of price fluctuations.

They are on a mission to sign up merchants and educate them on the benefits and ease of accepting Bitcoin. The app is free, offers zero-transaction fees, daily direct payments to bank accounts and no chargebacks. LazyPay will demonstrate how credits cards are slower, riskier and more expensive in comparison. Operating the app will be intuitive for the non-tech person; easier than using a cash register or credit card point-of-sale terminal.

On top of all these features, the app will include a live, automatically updated map showing the locations of local Bitcoin merchants and businesses. It will offer NFC-enabled payments for super fast POS transactions, the ability to buy and sell bitcoin from the app and a direct in-app link to bank accounts. And the merchant will require no hardware and not be asked to sign contracts or make any commitments.

“We’re on a mission,” says Daychopan, “to spread the word and sign up as many merchants as we can. And London is our chosen starting point for this crypto-crusade… Then we can give those Silicon Valley lot a run for their (digital) money,” becoming “a dominant force in crypto.”

For more information:





January 27, 2015 at 02:32PM