3 April 2015

Align Commerce Launches Public Beta of International Payments Platform

Align Commerce announced yesterday that the public beta of its international payments platform had launched, which could cut the cost and time of transactions in a $24 trillion market. Thirty-four countries are now exposed to this beta.

“The $24 trillion cross-border payments market is growing at a breakneck pace, expected to eclipse $54 trillion by 2022, despite a highly inefficient and expensive system in which businesses spend over $50 billion on wire and foreign exchange fees, wait up to seven days for transactions to complete and have no visibility into the process,” said Marwan Forzley, CEO and Founder of Align Commerce, in a statement.

Align Commerce uses the blockchain to expedite money transfers. When transferring money through the normal banking system, numerous intermediaries each take a small fee. By eliminating that, the money can move much faster and for fewer fees.

Forzley explained the workflow in an email to Bitcoin Magazine: Business A pays its bill using a local payment system such as Automated Clearing House (ACH.) Business B gets paid via its own local payment system.

“The speed of the payment end-to-end depends on the speed of the local payment systems, and that varies on a country-by-country basis,” Forzley explained.

What makes the tool particularly useful for potential businesses is that there are no changes to the way they do business.

“The key is that there are significant advantages for the businesses using the blockchain in terms of savings in time and money,” Forzley explained. “In addition, there is no change of behavior required. The blockchain is used behind the scene as a rail that moves fiat to fiat between two parties.”

“Align Commerce is the first company to successfully tackle international payments between businesses using the blockchain, allowing companies an easier, faster and less expensive option for cross-border transactions,” said Dan Morehead, CEO at Pantera Capital, in the statement.

Align Commerce is able to cut the cost for businesses as well by cutting time it takes to process the payments and how many middlemen participate in the transfer. Only the company that has to change currencies pays a 1.9 percent exchange rate fee on top of the amount of money it wants to send. Therefore, the buyer has to pay the exchange rate fee.

Businesses might be worried about the volatility of Bitcoin while the payment is going from point A to point B. Though it is faster than traditional means, Align Commerce still can’t have the payment transfer instantly because of local exchanges. But according to Forzley, the company manages any price volatility issues.

Using the blockchain to make faster payments around the world is a use case Bitcoin enthusiasts have been proponents of for a long time. Align Commerce hopes to finally fix that problem.

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April 03, 2015 at 09:56PM

2 April 2015

Coinbase Issues Request for Bitcoin Micropayment Services

In a thoughtful blog post, Coinbase offers ideas for new Bitcoin applications and business models. Based on the applications under development by the more than 7,000 developers using the Coinbase API, it appears that four main categories of Bitcoin applications are gaining popularity among developers: P2P tipping, cross-border payments, international microfinance and reputation platforms.

The Coinbase post identifies other promising Bitcoin application categories and business models that haven’t been targeted by many developers so far, and recommends to Bitcoin developers and startups: “Here’s 10 ideas for Bitcoin startups that we would love to see more developers working on.”

Coinbase recommends developing innovative email and online content services based on bitcoin micropayments. We are used to a “free” Internet where nobody has to pay, but, of course, there is no such thing as a free lunch. The price that we pay for free email is spam, and the price that we pay for free content is rampant advertising – often annoying, intrusive, and ugly – and disclosure of browsing habits to marketers. Paid models based on bitcoin micropayments could change that.

For example, email could be a pay-as-you-go service, with a small fee (say 0.1 cents) to send a message. That wouldn’t be too much of an annoyance for normal email users, while at the same time it would impose prohibitive costs to bulk email campaign and mass spamming. Similarly, web ads could be replaced by micropayments for viewing articles and videos. For example, an article or a video could be unlocked for one hour when a dedicated Bitcoin address receives a micropayment.

Micropayments are impossible to implement with traditional payment systems, because the overhead costs (transaction fees) would be too high. But the fast micropayments with low transaction fees, permitted by Bitcoin, allow the switch to alternative models for paid online content.

That would also permit creators, such as artists, fiction writers and filmmakers, to make a living with their work.

Coinbase also recommends developing applications that incentivize nodes to provide resources to communications networks, such as the Tor network or the Bitcoin blockchain itself, by rewarding participating nodes with micropayments.

Internet pioneers such as Ted Nelson, Marc Andreessen and Tim Berners-Lee thought that the Internet should have a built-in framework for micropayments. Berners-Lee tried to include micropayments in Web protocols, but the idea was never implemented.

The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution ,” a 2014 book by Walter Isaacson, has the full story:

“In the late 1990s Berners-Lee tried to develop a micropayments system for the Web through the World Wide Web Consortium (W3C), which he headed. The idea was to devise a way to embed in a Web page the information needed to handle a small payment, which would allow different ‘electronic wallet’ services to be created by banks or entrepreneurs. It was never implemented, partly because of the changing complexity of banking regulations.”

Berners-Lee revived the effort to develop an official W3C micropayments framework in 2013. The work hasn’t been completed so far, but Bitcoin is a good solution, because sending a micropayment with Bitcoin can be as easy and immediate as clicking a button.

Isaacson reports that Andreessen mentioned Bitcoin as a good model for standard Internet payment systems. “If I had a time machine and could go back to 1993, one thing I’d do for sure would be to build in Bitcoin or some similar form of cryptocurrency,” Andreessen said.

Images by Freepik

April 02, 2015 at 04:36PM

31 March 2015

Three Methods for Simple Bitcoin Business Accounting

This is a guest post from Digital Currency Council Member Marty Zigman.

Recently, I gave a webcast presentation to AICPA members to help accounting professionals understand Bitcoin and how to treat it on the general ledger. If you are an AICPA member, the webcast is available for your viewing. In this article, the key points from that presentation are outlined and will help accountants fundamentally understand and approach business based Bitcoin transactions.

Bitcoin and General Ledger Treatment

There are three key processes that ultimately produce different accounting practices and general ledger treatment when Bitcoin is involved. These three processes coincide with Bitcoin’s adoption phases as follows:

  1. Payment Method

  2. Foreign Currency

  3. Base Currency

Bitcoin as a type of “Payment Method”

Within the context of modern accounting systems, examples of payment methods include cash, checks and credit cards. Very simply, they define the medium used to exchange money.

Today, the most common business use for Bitcoin is to treat it as a payment method. Much of the reason for this is because a) the price is relatively volatile and b) acceptance by employees, suppliers and partners is relatively limited. Services such as BitPay or Coinbase have effectively made it easy to accept bitcoin in a business. Instead of the business actually receiving bitcoin during customer payment, these services deliver traditional government-issued (fiat) currency.

Under this method, Bitcoin acceptance is easy to understand and it follows accounting practices widely used in business today (e.g., consider payment by services such as PayPal). Traditional accounting systems should have no problem under this practice. Generally, define a new payment method in the accounting software, relate it to the bank account that the funds will settle, and then follow the procedures that the Bitcoin service provider prescribes for accepting bitcoin in the business.

Bitcoin as a type of “Foreign Currency”

The next adoption wave will happen if bitcoin price volatility stabilizes and it becomes more widely accepted. Some leading-edge businesses already work in this fashion. Under this method of accounting, bitcoin is treated as a foreign currency; just as one would treat accepting Euros in a USD-based organization. To do this well, the business accounting system will need to understand foreign currency and related exchange prices. Traditional accounting platforms are designed with “currency data types” to accommodate only two decimal places. I was one of the early advocates to logically shift the bitcoin decimal place to the right by six digits and base bitcoin in micro bitcoin (µBitcoin) thus allowing it to work in common general ledger accounting systems.

Not all accounting systems allow for new foreign currency definitions — hence, if the business software is designed only for local currency, this method of accounting will not work. In addition, some accounting systems “hard code” their foreign currency references, and accountants may find this to be a limitation in their client or internal systems.

Under foreign currency accounting, a business bases its transactions in a local currency but may denominate transactions and/or accept foreign currency to conduct business. This practice is well understood in larger organizations — especially ones that transact in international trade.

Under this method of accounting, without respect for local tax regulations that demand different regulatory reporting requirements, bitcoin transactions effectively trigger both realized and unrealized gains and losses based on changing market currency exchange rates and timing differences between when transaction obligations are recognized and ultimately settled.

Finally, when bitcoin is treated as a foreign currency, the accounting software will price every single transaction relative to the base currency. With this price information in hand, a tax accountant can reconstitute the records offline to meet regulatory reporting requirements; such as the recent IRS guidelines that demands that bitcoin be treated as a property.

Bitcoin as a type of “Base Currency”

In the final adoption wave, while it may be far off, it is conceivable to see businesses deem bitcoin as the base currency and thus treat all other currencies as foreign — even the home currency. While this is simply an enhancement of the Foreign Currency treatment previously discussed, this method may be valuable for organizations that are fundamentally global and trade with customers, employees, suppliers and partners anywhere and everywhere. While, this accounting treatment will produce a different orientation and obviously introduces interesting reporting questions, if many organizations elect this method, it does represent a way to measure whether bitcoin has indeed achieved wide global acceptance.

Is Bitcoin integrated with the General Ledger today?

Companies that run NetSuite are set up to transact globally and with BTC4ERP, they have the full range of options to configure their accounting practices based on the way they see bitcoin used in their business. I witness some companies who simply seek a bitcoin price feed into their accounting system to help them with their own manual methods of accounting. Others indeed treat Bitcoin transactions as foreign currency and rely on the automatic bookkeeping and transaction coordination provided by my service. If bitcoin gains wider acceptance, I suspect we will see these accounting treatments on a wider range of accounting systems.

March 31, 2015 at 04:28PM

Sidekik: Decentralized Video Streaming and Storage

The Sidekik app, which is accepting bitcoin in its crowdfunding campaign, is intended to bring real-time accountability to law enforcement by streaming video and audio of encounters with police to Maidsafe.

The goal is to protect the integrity of evidence.

The app, which began its second stage of crowdfunding March 9 , will do far more than just video and audio streaming. An army of attorneys is being built who will compete to be your representative if you happen to need them during an encounter with police. Sidekik seeks to connect attorneys with potential clients when they need legal representation the most.

The Sidekik team says there is an inherent power imbalance between law enforcement and civilians during these encounters, as “the vast majority of people do not know their rights well enough and tend to crumble under the pressure.”

Essential evidence also tends to be scarce, too often turning court testimony into a your-word-against-mine scenarios, which the Sidekik team believes tilts the balance of justice in favor of law enforcement.

The app is designed to gather as much relevant information as possible, including GPS location, audio and video, while calling licensed attorneys via video to deal with the encounter lawfully.

Concerns about data storage lead Martin to Maidsafe, a decentralized storage company currently in closed beta.

The value of decentralized storage

During an interview with Bitcoin Magazine, Martin expounded on the need for secure cloud storage of this sensitive information and the company’s relationship with Maidsafe.

“The concern is totally valid about having data centralized, any data,” Martin said. “It’s not just about being able to store video and making it so that whatever entity cannot hack into one server and destroy that video. It’s about a lot more than that; it is about contact lists, it’s about people’s confidential information.

“People get notices all the time from different companies that they do business with, such as credit card companies or maybe their schools, saying ‘Hey our servers got hacked, your Social Security number, your birth date, your name, someone has it,'” he said. “With Maidsafe that really is a thing of the past, there’s no more hacking that one server and grabbing all that data.”

Martin said he met Page Peterson of Maidsafe at Libertopia in San Diego last November and had his CTO Jessie Wallace talk to her about how Sidekik could use Maidsafe for the massive amounts of data that will be coming from the app.

“We’ll be storing the data on multiple secure servers, but those are centralized,” Martin said. “So we are also going to be working with Maidsafe … This is a perfect merger with them in terms of features. This way, there will not be one single place where the powers-that-be can go to and say ‘We don’t want that video released to the public.’”

What if the officer takes the phone?

The Sidekik app can also be configured to require a pin from both the user and the attorney to stop the phone from recording and streaming data once it has started.

Even if the officer takes and destroys the phone, Sidekik believes enough evidence would be gathered and stored in the cloud to show the nature of the encounter in court.

Stage of development

The first phase of funding ended late last year, enabling the development of the graphic user interface of the app, as well as feasibility studies and a blueprint of the full development of the complex software app.

Phase two, which would be funding the full development of the app, began earlier this month, and a variety of perks are available for crowdfunding supporters at Indiegogo. Those who contribute with bitcoin receive the same rewards for a contribution of 10 percent less.

To develop the app, Sidekik is working with Zco, one of the largest app development companies in the world.

March 31, 2015 at 04:09PM

DEC_TECH Toronto with Keynote Speaker Andreas Antonopoulos: This Week on Decentral.tv

All this week, decentral.tv will be airing segments from the first Decentralized Technology (DEC_TECH) event held at MaRS Discovery District in Toronto, presented by Decentral. Held on March 17, 2015, the event drew a crowd of over 300 digital currency enthusiasts.

Monday’s segment begins with opening remarks from host Anthony Di Iorio of Decentral and Adam Nanjee of MaRS.

A series of presentations follows, beginning with Gerald Cotten, CEO of QuadrigaCX. QuadrigaCX is a Canadian exchange that recently became the first publicly traded bitcoin exchange in the world.


Henry Chan, business technology analyst from Deloitte, then speaks about the value and the potential of the blockchain, followed by Mat Cybula of Cryptiv, who talks about how tipping can act as a gateway to the world of bitcoin.

Cybula is followed by Amber Scott, Chief AML Ninja at Outlier Solutions, who discusses the changing landscape of bitcoin regulation in Canada.

Tuesday’s segment will feature a panel discussion on “Bitcoin and the Future of Payments” moderated by William Mougayar of Startup Management. Panelists include Amber Scott, Adam Nanjee, and Jeff Coleman of Kryptokit.

Tune in on Wednesday for featured speaker, Andreas M. Antonopoulos, Bitcoin evangelist and author of Mastering Bitcoin . Always entertaining and engaging, Antonopoulos spoke to the packed conference room of over 300 audience members about the inevitability of bitcoin acceptance by legacy institutions. Over the course of the two segments, Antonopoulos walks his audience through the banks’ “Seven Stages of Grief” as they come to grips with the fact that the old way of running things is coming to an end.


Decentral.tv will close out the week with two segments of follow-up questions for Antonopoulos from the audience. On Thursday and Friday’s installments, he will address topics such as scalability, security and adoption.

All episodes will air on decentral.tv at 3:00 pm EST. Past episodes will be available on the decentral.tv playlist.

March 31, 2015 at 03:28PM

30 March 2015

Barclays CEO: The Banking Sector Has Not Yet Felt the Full Disruptive Force of Technology, but It Will

The Wall Street Journal reports that Wall Street is exploring innovative applications of digital currencies to mainstream banking and financial issues. The recent wave of Wall Street interest in Bitcoin technology is inspired by a growing appreciation of the inevitability of radical changes in the financial industry, which is long overdue for the kind of Internet-driven cost savings that have affected other industries.

The emphasis is on efficiency and cost-effectiveness: Bitcoin technology could slash costs, cut settlement times and reduce default risks. The Journal mentions several recent digital fintech news items, including investment opportunities, announcements, acquisitions and appointments of high-profile financial professionals, reported by Bitcoin Magazine in the last few weeks.

“It’s an opportunity for Wall Street to streamline some operations that are pretty antiquated,” says Duncan Niederauer, the former chief executive of NYSE Euronext. Niederauer is now an adviser to TeraExchange, the first Commodities Futures Trading Commission-regulated Bitcoin derivatives platform.

“Not only [is Bitcoin not] a threat, it’s potentially an opportunity,” Niederauer said. “If the train’s leaving the station, you’d rather be on it and be the conductor than a bystander on the platform.”

Other high-profile banking executives worldwide express similar views: The financial industry should jump on the digital fintech bandwagon and appropriate Bitcoin technology for increased efficiency at reduced cost.

Speaking at the Morgan Stanley European Financials Conference in London, Barclays’ CEO Antony Jenkins warned the “banking sector has not yet felt the ‘full disruptive force’ of technology – but it will.” He elaborated on the growing concern among financial institutions that faster, cheaper payment systems will start to seduce their consumer and business customers in the coming years.

“In a world where growth is harder to come by,” Jenkins said, citing the ongoing cost- and jobs-cutting measures in the banking sector, “I’m more convinced than ever that costs will remain the strategic battleground for our sector over the coming years.”

Jenkins’ remarks don’t mention Bitcoin explicitly, but it’s clear that the faster and cheaper transactions permanently recorded in a public tamper-proof ledger, permitted by Bitcoin, represent a growing threat to traditional, cost-inflated banking operations.

“Apple pay doesn’t change the way payments happen,” notes Mariano Belinky, who runs Banco Santander’s $100 million venture fund Innoventures. “But it’s the blockchain-like technologies and the decentralized ledger – that will be source of real innovation.”

Belinky, who before joining Santander was a strategy adviser at McKinsey & Co., is persuaded that mainstream adoption by the financial industry is the future of digital currencies.

“Bitcoin has the wrong set of advocates and affiliates. Evangelists highlighting the anonymous, untraceable nature of the technology have tarnished its reputation. A bank won’t get involved with bitcoin if there’s a perception it has links to money laundering or terrorism,” he says. “I’m excited about Stellar, Ethereum, Ripple – the same technology but coming from a completely different angle – making payments more efficient for the financial industry.”

A recent article from Credit Suisse also underlines the potential of digital currencies to cut costs and streamline financial operations.

“When combined with the traditional financial system, bitcoins could have cost advantages over credit cards or providers such as Western Union when used as a transaction system,” notes the report.

March 30, 2015 at 03:58PM