Bracing for Bitcoin in Buenos Aires

A Trip to the Embassy

The Entrance to Bitcoin Embassy. Subtle, and unimposing.

There is a large, imposing steel door along a popular street, in the bustling downtown business hub of Buenos Aires. There are no visible markings, or signs, that would indicate to passers-by what is housed inside. And given the time of day, it may take a few buzzes before anyone answers the door. But when someone does get around to letting you in, you’ll quickly find yourself in the nascent epicenter of Buenos Aires’ burgeoning Bitcoin industry.

Once inside, one will find an environment that is frenetic but welcoming. After a brief introduction to some of the building’s chief organizers, along with a tour of the facility, I was a fellow citizen in good standing, in the world of Bitcoin. Introductions aside, I was left alone with my laptop and an Internet connection, and any contribution to the brave new decentralized world was mine to create. This atmosphere seems to be working.

Judging by the piles of construction debris and unfinished cabling strewn on the floor, one wouldn’t be inclined to believe that this is an active work center. The smell of drying paint permeates the halls, and the occasional moments of silence are quickly disturbed by the jarring thunks of carpenters at work. But if you poke past the construction crew, and peer into the rooms lining the hallways, you will find the who’s who of the burgeoning Buenos Aires Bitcoin scene furrowing an eyebrow, and furiously typing on laptops at their desks.

After climbing the entrance stairs, the first floor greets me with a large, almost-finished reception desk and a poster that reads “The people’s currency.” To my right is a small, 40 person auditorium, decorated with posters sporting similarly patriotic memes. Bitpay is on the first floor, though they’ve only barely moved in. Alberto Vega is the regional manager, and an active participant in the construction of the embassy. Though not one to shirk a guest, introductions are kept short. Alberto is busy man who’s typically in a meeting, or on his way to a meeting that’s about to start. BitPay’s business model in Latin America is very similar to the North American model, but their value proposition is more focused on the response time in which their customers are reimbursed in fiat, whereas in the North America their offerings are typically justified by the low fees that are levied. The time at which a vendor is reimbursed for payment via traditional credit card contracts here in Latin America is typically thirty days. However, when inflation climbs to rates as high as 10% in a thirty-day term such ‘confirmation times’ can cause a vendor to lose their entire profit margin by the time fiat payments are deposited into their bank. With BitPay, a vendor can choose to keep their money in Bitcoin to hedge against fiat-volatility, as well as to receive fiat within one business day of the time of purchase. Seemingly, this cash-flow advantage is a particularly attractive selling point in Argentina, and Alberto is quick to pitch it.

After climbing a second set of stairs, on the second floor I found the smaller, but more densely packed offices of BitPagos. BitPagos’ business model is a bit different than Bitpay in that their target customer is typically smaller businesses, for which Bitpagos will process credit card payments, and compensate the business in Bitcoin. This model is in many ways the opposite of what’s being supplied by BitPay. By processing payments in the United States, and compensating in Bitcoin, BitPagos can circumvent many of the onerous taxes and restrictions imposed by the incumbent credit card processors in Latin America. Judging by what I see on the streets, this seems to be a popular service. Coinmelon and ZipZap are also located on the second floor, though their offices haven’t been fully moved in yet. Also on this floor are a few small stealth-mode startups hacking away in their offices. And not far from them, are the beginnings of a hostel-like room with bunkbeds and a shower. The intent of the dorm room is to house the hackers and dignitaries from the international community during their travels. Just like any other embassy, I would suppose.

On the roof is a very large patio, with a wonderful view of the skyline. The Bitcoin embassy is dwarfed in its size by the financial service and IT consulting neighbors on either side, but the location does afford a wonderful view of the bustling city below. There’s a large and imposing IBM building to the east, and there’s typically a smoking construction worker hanging out and enjoying his break on the corner of the roof just in front of it. The roof will eventually host open-aired parties and events, along with a large barbeque area with which to feed its attendees.

Wandering the halls one day, I bumped into James. James is an American, a student from Tufts University, and he has been hanging around the center since construction renovations started. He’s studying international business, and practicing his Spanish language skills. Walking around the city with James, it’s fresh to see an American’s take on the nuances of culture and attitudes towards money here in Argentina. The relationship that Argentinians have with their currency is significantly more nuanced and complex than most any group of citizens in the world.

The Liberty, it begins with you!

The Peso

Argentina is a free capitalist democracy, with many freedoms that their government is proud to showcase on its state-sponsored television. But seemingly, out of a growing desperation over its dwindling foreign exchange reserves, official policy over the the money supply have become increasingly onerous. Principally, Argentina has a single, official exchange rate that is used to determine the conversion rate of the local pesos to dollars.This rate is mandated by law for use with all banking, credit card, and official exchange purposes. Unfortunately for Argentinians, this official rate of roughly 8 pesos to the dollar is about 33% lower than the ‘actual’ free-market exchange rates that the rest of the world uses. There are many unofficial rates that are more accurately portraying the market’s view of the worth of the peso, but of the many competing rates, the “Blue” rate is the most ubiquitous. In fact, the “Blue” rate is so ubiquitous that it is featured prominently, each day, in the nation’s newspapers directly alongside the official rate. The spread between the official rate and the blue rate works to the advantage of the country’s treasury; it effectively acts as a tax on imports and exports, wherein the spread between the official rate and the blue rate is added to the country’s foreign exchange holdings. Adding dollars to the country’s reserves both provides the government with the ability to pay its debts in the dollars in which they must be repaid, but additionally, holding foreign currencies in its reserves is done in an attempt to prevent inflation from rising further. Whether it actually achieves this latter goal, is highly debatable.

The front door of this bar displays it’s accepted payment mechanisms. Bitcoin is proudly denoted next to it’s legacy counterparts.

The Peso as a Payment Mechanism

While walking the streets of Buenos Aires, and conducting transactions with merchants, you’ll notice that there’s more strangeness at work in the economy of Argentina than just exchange rates. Like other countries, vendors in Buenos Aires proudly advertise a long list of accepted payment mechanisms. These mechanisms include the standard Amex, Visa, and Mastercard logos we’re familiar with, and also list a number of competing mechanisms that Americans would not be familiar with (Visa Electron, Maestro, and Argencard being just a few). Unfortunately for patrons, these indicators are largely just a decoration. During the increasing times of uncertainty, merchants typically won’t accept anything but cash-money pesos. Similar to the US, when accepting credit cards, a merchant doesn’t receive their payments until thirty days have passed. While that’s an acceptable wait time in stable economies, for a currency which is inflating at a rate as high as 10% in a single month, this 30-day wait time on funds can destroy the merchant’s profits outright. As such, merchants are quick to declare that their credit card machine “isn’t working” during these periods of excessive devaluation, in an attempt to preserve their wealth.

Though cash money solves much of the cash-flow problems a vendor encounters on a daily basis, it comes with another set of problems. A visitor to Buenos Aires will quickly note that the money itself is of a notable sub-standard quality when compared to Euros and US Dollars. The largest denomination bill that’s printed by the treasury is worth about $8 US, and the smallest bill is worth about 15 cents. Because the denominations of the currency are so small, bills frequently change hands and deteriorate in their construction. Two-peso bills are often ripped and taped, and 100 pesos bills are very typically faded from so much use. The lack of quality in the currency allows for counterfeiters to more easily slip their bills into the market, and counterfeit 100-peso notes are very common. Even banks stumble on detecting counterfeits, and it’s not uncommon to receive a bogus note from an ATM or teller. Coins are rarely used, and typically all transactions are rounded to the nearest one or two pesos. Seemingly, the lack of coins is an attempt to reduce seigniorage costs on the part of the treasury. While the casual observer would suggest that “printing larger denominations” would solve these problems, the treasury is unwilling to do so, as that decision would be a tacit admission of the rise of inflation.

All of these policies, combined with years of mismanagement of fiscal resources, have eroded the public’s trust in the Argentinian currency, and citizens are reluctant to hold pesos for very long, let alone maintain a peso-based savings account of any kind. These problems further beget trust issues, and the peso’s cycle of inflation seems intent on continuing onward without an end in sight. In fact, prices in Buenos Aires change so often that it’s common to see printed menus featuring a blank space where the price should be. In this space will be a penciled-in notation of the current cost of the item, often with a dull coloration behind it caused by the erasings of multiple adjustments from the prior year.

In years prior, citizens were allowed to purchase dollars and Euros, at the official rate, in limited quantities. Typically these purchases were made under the auspices of a need to travel internationally, though in practice these purchases were made by citizens who had no other reasonable path to save their earnings. Though this program is supposedly still in existence, it appears to be largely a figurative gesture of equity by the central bank, as no-one seems to be able to qualify and actually use this program. Instead, as would be expected to arise in an underserved market sector, is a highly organized, albeit completely illegal, shadow banking industry.

Unstable prices require that many merchants denote the price of their goods in pencil.

The Peso as a store of value

There are two economies fighting in Buenos Aires: the black market economy and the official economy. Their territories are well established, and on the line between them, is Florida street. Driven by the blue dollar exchange rate, and the need to service a store-of-value for its users, a shadow banking industry has arisen around the fair-market denomination of the peso. All over Argentina, nearly everyone has at least some relationship with this black market economy. Principally, this market exists to facilitate currency exchange functions, though speculations abound as to the other customers and services of this system. US Dollars are the primary currency in this market, and they are most typically fed into this economy by international travellers. Upon arriving in Argentina, it’s made very obvious to tourists that the official exchange rate is not to be settled for. And, tourists are quickly funneled into “Florida Street”, which has plenty of obvious exchangers looking to make you a better deal than what you’d find at a brick and mortar exchange. These exchangers, affectionately called ‘arbuelitos’ (little trees) by the locals, are on every corner on Florida street and are shouting “Cambio!” into the air every minute or so, announcing their availability to onlookers. Once a tourist flags this person down, exchange terms are quickly negotiated, and the tourist is presented pesos in exchange for their greenbacks at a near-blue-dollar rate. These transactions are entirely illegal, and while police constantly patrol these areas and clearly witness these exchanges transpire, no action is taken on either the exchangers or the participants. The arbuelitos typically carry very little money on themselves, and between transactions, report and store their reserves at nearby ‘banks’ which operate clandestinely out of small un-advertised apartments or offices. These regional, black-market banks are called ‘cuervos’ (caves), and are the lifeblood of the black market banking system. The cuervos typically take the dollars earned from tourists, and sell them to local citizens who are in need of dollars as a store-of-value for their earned income. Argentinians will typically form relationships with specific cuervo operators, and make regular purchases of foreign currency as part of their relationship with the cuervo bank. This currency is typically hidden away at the Argentinian’s home, where the money will stay for as long as the holder can afford to keep it. The cycle is constant, and a mainstream, if not absurd, part of living in Argentina.

Enthusiasm, though still comparatively small, is growing. This Argentinian is learning to use a BTM at a local meetup

Enter Bitcoin

Standing against all of these improbable institutions, and working tirelessly on the third floor of the Bitcoin embassy, you will find the very ambitious Diego Gutierrez-Zaldivar. If Bitcoin needed a champion in the madness of the streets, it would be hard pressed to find someone as likable and friendly as Diego. By way of will, or mere talent, Diego is the emissary of Bitcoin that has appeared to represent the community to the general public, lawmakers, embassy tenants, and the world at large. Diego’s presence at the embassy is constant. And when he’s not pitching a presentation to investors, settling the fears of politicians, or explaining the workings of Bitcoin to citizens at a meetup, Diego can be found coordinating construction workers, welcoming international travellers, or even taking out the garbage around the embassy. Diego’s embassy is the culmination of a lifetime of experience in the Argentinian IT space and Diego is happy to share his vision with anyone who wishes to hear it. He’s well suited for the job, and it’s an infectious enthusiasm that he offers to everyone around him. His followers include all in attendance there at the embassy, plus the thousands of members in Bitcoin meetup groups all around Latin America to which he travels. Diego clearly sees Bitcoin as a solution for many of the problems that Argentinians currently deal with, but as the face of the embassy, and as its primary ambassador to the government, he has honed a reserved and practiced focus in the way he delivers his message.

Despite his enthusiasm, Diego is quick to suggest that Bitcoin has a long and hard road ahead of it in Argentina. While on the surface, Bitcoin in Latin America looks ripe for widespread and immediate adoption, once you look a bit deeper, the path towards adoption is far more complicated than hanging a welcome sign. Capital controls have worked in Argentina primarily due to a very effective border control, and where it has not worked, the entrenched black market is already working with dollars to great success. While Internet broadband rates in Argentina are amongst the highest in Latin America, there is still a large number of Argentinians who have been ‘robbed’ of their savings due to opaque banking systems that they do not understand. This pessimism has caused many Argentineans to be understandably wary of the fantastic claims being made by Bitcoin enthusiasts, who are still viewed as being a bit extreme, if not altogether indifferent to the cultural subtleties of the current regulatory frameworks. Boding well for Bitcoin is a government that has thus far provided no friction against the movement, as well as a large percentage of young adults who have been marginalized by their elders by not having the credit opportunities to own homes and cars, or to start a business. As international tourists begin to flood the market with Bitcoin, either by way of BitPagos, or their own bitcoin wallets directly, it would be expected that public acceptance and adoption will build. Perhaps thereafter, or in tandem, the large service-export sectors of the economy will similarly adopt and leverage Bitcoin for payment when working with international partners.

Argentinians take to the streets to celebrate their semi-final victory during the World Cup.

The Future

It’s Sunday in Buenos Aires, and the people at the embassy have long ago left to watch the World Cup with their friends and family. The plans for economic domination are on hold while a nation comes together to seek validation of their heritage, and their way of life. Baby blue flags are waving in the cars and on the backs of the citizens in the streets, and the absurdity of the daily grind is taking second place to the dreams of an entire nation aligned on a single goal. As the game begins, a microcosm of the surrounding economy takes the form of Visa advertisements on its sidelines and government-funded commercials advertising the creditworthiness of the Argentinian state between periods. Argentina loses, and the nation mourns. But come Monday, the embassy will be once again at work, its citizens tireless in their ambitions. The embassy is looking to stage its grand opening in less than a couple months, and there are still many contracts to hash out, and garbage bags to empty. Diego is down but not out. BitPagos and BitPay are deploying their newest codebase. And a construction worker enjoys his smoke break. Bitcoin is coming, and there’s plenty left to do.

Pictures from July of 2014 by Chris DeRose

The second floor of the embassy

A room for presentations and public hearings

People take to the streets after a semi-final victory on Wednesday night

The lobby for the soon-to-move-in “coinmelon”

Construction Underway on the third floor of the embassy

A view from the roof of the embassy

Another view of the roof atop the embassy

Bitcoin merchandise for sale at a Meetup

Lectures and community outreach is a focus for the Buenos Aires Bitcoin meetup groups

September 15, 2014 at 06:27PM

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Does Bitcoin’s Price Affect Business?

Have you ever wondered if the price of bitcoins affects bitcoin business? Could this be a reason for businesses not to accept a volatile currency? Do sales plunge when the price drops?

I started doing a little investigating into whether it does or it doesn’t, and I was somewhat surprised by the answer.

Transaction volumes have stayed in the $50 million dollar range over the summer for the most. However, it is hard to tell if the transaction volumes are just people moving bitcoins from one wallet to another or if those transactions represent the exchange of goods or services.

Some businesses may suffer from price fluctuations more than others, mainly mining services. Miners make more money if the price is higher, so it makes sense that mining companies would see a decline in sales if bitcoin’s price dropped.

In my case, I use fiverr.com all the time. It’s great; I get transcription services done for articles, logo designs for my startup, even video editing. I do think about the price in the back of my head, but I figure it’s only five bucks. Plus, I prefer to use bitcoin rather than searching for a credit card and typing in a bunch of numbers. You never know if your computer is corrupted with a keyboard logger or if any company is going to have its data breached.

But that’s only five dollars, a trivial amount. What’s the psychology of consumers spending more? I asked the CEO of Bloomnation, an ecommerce platform for local florists, for his insight on consumer spending and price volatility.

“We have not seen much correlation between the price of bitcoin and the usage of bitcoin. Although price fluctuations cause some people to react, we fundamentally believe in bitcoin and its existence and have made no changes to strategy with bitcoin. Regardless of the price, we feel that this cryptic currency is a great solution for a global currency.” – Co-Founder and CEO of BloomNation, Farbod Shoraka

Customers using bitcoin aren’t that worried about price, because they are often encouraged by promotions. In fact, Bloomnation’s bitcoin users tend to spend 50% more on their purchases. Newegg was offering $100 off when you spent $350 or more with bitcoin, which caused a lot of people to spend their bitcoins.

I wanted to get a better perspective of the market at large rather than just one business, so I asked BitPay’s VP of Marketing, Stephanie Wargo, about price fluctuations and their transaction volumes.

She started off by mentioning that BitPay is “still doing well over a million dollars in transaction volume” a day. This is also due to the fact that BitPay has continued adding merchants.

“As more merchants come on board there’s more options. You get into that everything that you need everyday, the things that you buy online all of the time. Now you’ll be able to pay in bitcoin for those things. That’s just going to continue to keep transactions up and eventually turn into the price continuing to go up,” Wargo continued.

Now that it is past Labor Day, the financial markets are picking up; bitcoin will see new interest spurred by the investment community and new merchants accepting the currency.

“A lot of merchants have been working through the process now, in preparation of announcing that September-October timeframe to capitalize on the November-December spending season,” said Wargo.

Many in the community have noted that merchants converting their bitcoins to fiat and miners who sell their bitcoins have pushed the price downward. But, Wargo doesn’t think this will push down the price during the fall. More merchants are holding on to portions of their bitcoin using a 90/10 or 80/20 fiat to bitcoin rule and the acceptance by new major retailers will further legitimize the digital currency and take the price closer to the moon.

All-in-all, bitcoin transaction volumes in exchange for products will pick up no matter no what the price. Many merchants have been passing down their savings in the form of promotions. As bitcoin becomes just as easy to spend as other payment forms with payment processors and bitcoin debit cards, it will be used just as often.

Anyways, “it should be a very fun fall,” Wargo concluded.

September 15, 2014 at 05:46PM

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Ross Ulbricht Pleads Not Guilty to New Drug Charges

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

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Being an Entrepreneur is Really Hard

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

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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.

READ:

http://ift.tt/14gogkG

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…

THE NATIONAL SUICIDE PREVENTION LIFELINE: 1-800-273-TALK (8255)

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

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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

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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

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An Interview With Bobby Lee, CEO of BTC China

Bobby Lee is the CEO of BTC China, a three year old exchange which he purchased in 2013. Following his purchase, Mr. Lee led a brisk expansion in market share that coincided with rising Bitcoin prices in the fourth quarter of the year. December 2013 saw BTC China leading the world’s Bitcoin exchanges in volume.

While trading activity has dropped off since then (BTC China is currently ranked 3rd in worldwide volume), Mr. Lee has continued to focus on growing and diversifying his company. 2014 has seen a number of impressive features rolled out including an HTML5 wallet called Picasso, the expansion of international deposits to include USD and HKD, and the debut of an official desktop client BTC China Trader. In May of 2014 he was elected to the Bitcoin Foundation’s board of directors.

I contacted Mr. Lee hoping to gain insights about the state of Bitcoin in China, his company’s direction for the future, and what he thinks about the Bitcoin ecosystem in general. He was kind enough to take the time for a phone conversation which I have transcribed below.

Bitcoin Magazine: In an interview with Forbes last year you said you were looking for more involvement from the Chinese government. That happened in December, and had a cooling effect on the overall Bitcoin market. Are you still looking for regulation from China? And if so, what kind of regulation are you looking for?

Bobby Lee: There are two ways to answer that question. The first, is by saying what I would like to see happen. The other is what I expect to happen as a smart, educated person. Like an educated guess. So let’s start with an educated guess and then go back to what I would like to see happen.

Here’s the educated guess. For now, regulation of Bitcoin in China was laid out in the December 5th memo. The powers [th]at be have spoken. They don’t tend to speak often and they’ve spoken only once, and that was on December 5th. All the other nuances and changes over the past six to eight months have been verbal adjustments, they haven’t been formal regulation. It’s effectively course adjustments but they don’t call it that. So as an educated guess I don’t think there will be any significant changes in the near term, unless there are larger changes globally, either related or not related to large changes in price. In other words if Bitcoin, the market itself stays stable over the next three, six, nine, twelve months, I don’t expect there to be any new regulation from China.

There are two exceptions to that. If New York state or the United States have some new heavy handed regulation then China might increase pace and put out some things to more closely emulate what’s going on in the international community. That would be exception number one. The BitLicense and how soon it gets formalized and how widely it gets adopted, China might take inspiration from that.

The second exception would be, in absence of the first exception, if there was some dramatic increase in price, let’s say another 10x, in which case China might come out and do something more regardless of what the rest of the world is doing or not doing.

Now, what I personally would prefer to see, and this is not a China specific statement, this is a global statement, is more governments around the world start treating Bitcoin as seriously as they take it. What I mean by treating it is treating it by law, and what I mean by taking it is how much they’re paying attention to it. I say this with the intent that governments around the world, many governments, many central banks, are looking seriously at Bitcoin. And the reason is it’s not a toy. It’s not Monopoly money. If it were Monopoly money, if it were just coupons at a shopping mart, if it were just tickets and tokens at an amusement park or arcade game, then governments and central banks and serious people with suits on and ties and jackets, they would not be paying so much attention to it.

But yet what we see time and time again over the last six months to a year is that they’ve been afraid to acknowledge it for what it is. They’ve been in denial so to speak in terms of regulation. They have not been, in terms of law, they have not been setting the right kinds of laws and regulations to treat it as an adult. I would prefer governments to take it more seriously and give it more legitimate legal status as “money”. Freely circulated by people.

BM: In China you cannot buy or sell goods with Bitcoin, correct?

BL: So this is where it gets fuzzy. Different people will tell you different things and the reason is that there hasn’t been black and white law about Bitcoin. The December 5th regulation, if you will, is a piece of regulation issued by the central bank of the People’s Bank of China, and it governs what the status is of Bitcoin according to the central bank’s perspective. My paraphrase is that it’s been treated as a digital commodity, and likewise it is not a formal currency by that standard.

But yet, if it is a commodity, it’s a private good a private asset that people have the freedom to own and also buy, sell, or trade it. This digital asset, this digital good. But what’s curious is that the same regulation also talks about forbidding banks and financial institutions and payment companies from dealing with Bitcoin. Now that side is perfectly fair because the central bank does have regulatory authority over those kinds of businesses, specifically banks, financial institutions, and payment companies. So these three kids if you will, these three examples are well regulated under the central bank. And when the central bank says something along the lines of “bitcoin cannot be used for payment” or “goods and services cannot be priced in bitcoin” which was also paraphrased in the regulation, now the difficulty is that there’s some suggestive interpretation.

The reason I say that is because it was clear cut that these businesses could not interact with Bitcoin, however if Bitcoin was truly just a digital asset, and people on the street, at a restaurant, at a shopping mall decide to barter and trade for things, that’s not payment per-se because payment involves money and Bitcoin is not money under the prior definition. And the central bank does not govern commercial transactions that don’t deal with money. They don’t govern barter, especially not restaurant or coffee shop transactions. Something like Ministry of Commerce would cover that. So it is slightly in a gray area.

BM: In contrast to how “gray” this regulation seems to be, do you think the Chinese government ever considered the option of completely banning Bitcoin use in the country? Does it seem like they consider it a threat?

BL: They don’t see it as a threat, per se. The regulation came out and it was never because Bitcoin was perceived as a threat. The notion that Bitcoin can become a threat is mostly the Bitcoiners are thinking that might be the true reasoning. There’s no evidence that anyone who’s actually done the deed of the regulation has done it because of the notion of Bitcoin was a threat to China or the economy here.

The reason has more to do with stability, with finances, with preventing another bubble of an asset class.

BM: Do you think China will ever ban bitcoin?

BL: That question is politically sensitive because there are a lot of questions about whether the Chinese government can or cannot, whether they should or should not, whether it’s right or not right to do so. And without getting into the weeds I would say: banning Bitcoin is a legal option but, as adults, we know that the law is one thing and how it is enforced is totally different. Countries can ban chewing gum, but the question is does it actually rule out all forms of chewing gum and all activities of chewing gum. Not necessarily.

BM: In the interview with Forbes you described yourself as a “global citizen”. As the world becomes more interconnected via the internet, do you see Bitcoin becoming a global currency?

BL: So there’s the word currency and then there’s the word money. And the reason I bring up these two words is because I’m a layman not a lawyer, but my layman understanding is that money is more colloquial whereas currency has legal definition and strict definition of whether something is a currency or is not a currency.

In terms of treating Bitcoin as a currency, that will be up to countries individually. As of today, I don’t think any country has recognized Bitcoin as currency. However, one day that’s bound to happen. During my lifetime, hopefully/cross my fingers, one country around the world or several will recognize Bitcoin as currency. That doesn’t mean to say that the elite countries will, but at least some will.

The second way to answer that question though is to answer if countries will be willing to allow Bitcoin to transact and flow as money, and that answer is surely yes. More and more companies globally will allow for Bitcoin to be utilized as “money”. And then you can pay for things and barter for things. It’s already happening, you live near Seattle, I’m sure you can find a handful of coffee shops or venues that accept Bitcoin. In that sense it’s being utilized as money.

I’ve been to other countries around the world, countries in Europe where merchants accept Bitcoin, and I’m sure it’s being done in Africa, so it’s a matter of time. It’s happening already.

BM: BTC China recently began accepting deposits in USD and HKD. Is this part of a strategy to expand your business globally?

BL: I’m going to be a bit careful when I answer this question, because I don’t want to give you wrong information or mislead the public. I recognize that sometimes things I say get taken very seriously. So here’s how I would say it.

We are certainly looking at how to expand the business beyond just China, however that’s not to say that we want global domination or that we want to launch international expansion plans to five continents in thirty days. It’s two different things. We have some intent to try that, but we’re not launching a full-fledged international expansion, so that’s sort of the situation right now. And I am sincere when I say that. So in other words, we welcome international customers to an extent and we are showing our actions by allowing for USD and HKD deposits and withdrawals through one of our affiliate companies. For the record it is not directly done with the PRC company because there are some legal restriction and so on and so forth.

BM: BTC China recently released Picasso, a hosted HTML5 wallet. What are your hopes for this product and how does it improve over existing hosted wallets?

BL: There’ve been many hosted wallets before Picasso; this is more of a trial for us. Adventuring into new territory so to speak, we’re eager to innovate in this area. We’re the first to come up with the concept of a mobile ATM where people can sell Bitcoins on the go, person-to-person, on-demand, operating as their own ATM operator without the hardware component.

We are using HTML5 which avoids all the app store controversy and we’re working on improving it day by day. I’m sure you’ve seen a few quirks and bugs in the past. We were also intending for it to be more of a worldwide product with multiple languages and with support for multiple currencies in terms of the display and the ATM sell feature. So we are venturing into this new area to innovate and this is a, technically, hosted wallet where we as the company hold the private keys for our users, and our users can transact their Bitcoin once they’re totally verified by us and authenticated. Then we allow you to dictate how you move the coins to and from people.

What I would say is that this a very mobile specific interface. There are only a few other products like it out there. Most mobile wallets that are popular are what we call the traditional wallets where the private keys are actually kept and stored within the device. So this is a hosted web wallet, a mobile wallet, so that’s one difference.

When things are fine it’s all the same for the user, but when things go wrong like if the mobile device is lost stolen or hacked, that’s when the difference shines in terms of are the bitcoins lost or not. If they’re held by the company, in that case the users don’t lose the bitcoins. But they have to trust us as a company to manage that for them.

BM: There are competing wallets that generate a passphrase so the user can recover their coins in the chance something happens with the parent company. Have you thought about allowing that feature?

BL: We’ve thought about it, but that isn’t to say we plan to do anything or operate along those lines. To explain the difference, a hosted wallet is like a debit card. You have access to funds when the debit card is authenticated by use of a PIN code, whereas a non hosted wallet is like cash. You put some money in your wallet and the money is with you. You get robbed, you lose your wallet, then the bank has no liability. Whereas if you lose your debit card, you report it lost, then you won’t lose money per se. You just get a new wallet and set up a new debit card. So that’s different and I think people in society appreciate both aspects. Some people appreciate holding cash in their wallet and some people appreciate holding debit cards and credit cards in their wallet. What we offer with Picasso is more in line with the card-based example. Your now asking if we’ve thought about offering things along the line of cash, and we’ve thought about it but we don’t have any product or service right now at this point.

In that direction though, people have talked a lot about multi-sig and, you know, I don’t want to poo-poo multi-sig, but I mean people who are advocates of multi-sig are still overlooking one problem.

This is, when you have two out of three, or let’s say three out of five, you think you’re safe because it’s hard for the hacker to get access to multiple keys, but the reality is that it’s not that hard because when they get access to one of them, they won’t tell you that they’ve got access to one, so you should now rotate your keys and move into a different set. Most of the time what happens is they get access to one of the three keys and they wait and keep hacking you until they get the second. And as soon as they get a second, poof, your money’s gone. And if that happens, if your money’s gone, how is that different than one out of one? From a security perspective.

BM: The argument would be that the hacker had to go through two different steps instead of one. Of course, however, you are also right that the more security steps you go through, the more points of failure are created. It seems to be an ongoing debate over which is better, going through all these steps to create a wallet securely or simplifying the process to reduce the risk of making a mistake along the way.

BL: Exactly. This is why the Bitcoin industry, despite the progress we’ve made over the last couple of years, we’re still so young and immature. For this thing to take off and become mainstream and cross the chasm and become ubiquitous, we are so so early. I’m one of the biggest supporters and I admit that we’re just not there yet.

BM: Lately there has been some backlash in the community against the Bitcoin Foundation, with the logic being that if we are supporting a decentralized currency, why have a centralized organization try to run the community? Since you are a board member, I wanted to ask, why do you think we need a Bitcoin Foundation?

BL: I’ll say this. I fully appreciate the decentralized nature of Bitcoin, that’s why we’re all in this industry, in this revolution. I may be biased but we don’t need the Bitcoin Foundation to run Bitcoin. The Bitcoin Foundation is centralized, I do acknowledge that. It’s trying [its] best to be a representative, democratic sort-of organization by having elections and having board members. But in the end it’s an executive team that has to hire people to get things done. So I recognize it as a centralized entity, but it’s not the gatekeeper of Bitcoin. It’s viewed better as a group of people, group of members who come together with a common goal and agenda, and a common sort of direction for how they want to help Bitcoin grow, help promote Bitcoin, in the face of challenges and push-backs from governments and other aspects of society. So in other words, even in a perfectly decentralized situation, right, where you pick gold or something else, some people will get together who have common goals and ideas and they should be free to do so.

For example you know that gold is decentralized, and let’s say you and I are big fans of gold then we get together and we form a committee and we say “hey, let’s do something together and let’s put our dollars to work and let’s make something happen. Let’s create an agenda and push gold and market it in some area.” It could be as ludicrous as putting gold on the moon or using gold in more industries, whatever. That’s what Bitcoin Foundation is. It was never intended to be the guardian or the gatekeeper of Bitcoin. It was more about people [who] have come together over the years, became members, both personal memberships as well as industry, and they share a common (pause), they try and share a common vision and agenda that they push along by voting with their feet and dollars, and saying “let’s put the foundation in charge, let’s have it go in this direction.” And some of that means talking to regulators, working on technical progress, and paying developers to do things. But by no means is it the only way to advance Bitcoin.

BM: The best argument I have heard against people complaining about the Bitcoin Foundation is that there is nobody forcing the community to support them.

BL: Yeah, it’s like, we know water is decentralized, we know every country around the world has water, rainfall, lakes, oceans and rivers. And what if you and I say hey let’s get together and push for an agenda to have clean water. Let’s try to bring water to the rest of society, let them have clean water. So we create standards for what is clean water, what the pH level should be, what kind of pollutant level. I mean, that’s fine right? We’re not saying everybody has to drink water that’s approved by the Clean Water Association. It’s just that people with a good will want to do something better. And that’s what the Bitcoin Foundation is.

BM: What do you think is the greatest threat to Bitcoin?

BL: Great question, thank you for giving me an opportunity to answer this.

Bitcoin is what people want to make of it. And I think the greatest threat to Bitcoin is apathy. If people, I mean broadly people, humanity, if they give up on Bitcoin then Bitcoin will die. That’s what it comes down to. If we give up, if we as human people, as citizens of the world, if we individually or collectively as a group give up on Bitcoin then Bitcoin will die. Period. And that’s at the most core.

And if you peel back a layer then, and ask what should Bitcoin haters do? To be successful as a Bitcoin hater you should then encourage everyone to give up on Bitcoin. And we’ve seen signs of that. When people spread Fear, Uncertainty, Doubt, when countries and governments and central banks spread FUD about Bitcoin, there’s a clear agenda, there’s a clear goal which is to get others to lose interest and give up on Bitcoin. And that’s the biggest threat.

So going back to what we do at the Bitcoin Foundation, we want to prevent that from happening. We want to prevent people from giving up on Bitcoin even though it’s still in its nascent stage. We want to encourage more adoption and we want to encourage people to see the light at the end of the tunnel that Bitcoin does have a future despite its infancy. And that’s what the foundation is going to do. And even if there is no foundation that’s what Bitcoin people want to do. We want to educate. But it’s about hope as well. Hope, education, and there can be a solution.

BM: When I view that hope aspect it’s part of my (admittedly optimistic) belief that this common technology can bring our culturally diverse societies together into a more unified global culture. Do you share that sentiment?

BL: Absolutely. I fully believe with you that Bitcoin for the first time is an empowering human and technology development where for the first time we allow for people to electronically send money anywhere in the world. From person to person. And what I really mean is from person to person with no intermediary. That is a huge huge step in humanity’s progress. We’re talking about sending real value.

Like you and I are on the phone right now, all we’re doing is we’re sending information, we’re communicating. I know information is valuable but we’re not sending something that’s uniquely valuable. I’m not sending you a crate of bananas. If I could teleport and send you a crate of bananas or a crate of Hershey’s chocolate bars that’s like teleportation, that’s awesome right? But if it’s just information, it’s valuable but you can replicate it, it’s easily copyable. It’s valuable to you but once I give it to you I don’t lose it.

There’s a difference between giving you something where once I give it to you, you have it, I don’t have it. Whereas right now I’m not giving you information I’m copying information to you, I’m distributing information. On the other hand Bitcoin allows me to give you something. So I’m not actually giving you a crate of bananas or a cup of hot chocolate but I’ve giving you something where you can then turn that into a crate of bananas or a cup of hot chocolate. And that’s the first time ever, as I recall.

BM: This is some amazing technology indeed. Why do you think someone like Satoshi would go through all the trouble to make such a revolutionary invention, and then just walk away from it without taking credit?

BL: You know I certainly don’t know the answer, I won’t even pretend to know the answer but…I’m too young to speculate on the full range of answers but it is understandable. To me it’s within the realm of possibility. I can understand why that would happen. Certainly not everyone in the world would do the same thing but I can see why some people would choose to do it this way. And that’s the best answer I can give. I don’t have any other speculation as to why Satoshi, the pseudonym, decided to remain anonymous. People can speculate whether he’s still alive, people can speculate whether he will come out eventually, but we just have to accept it for what it is today.

BM: Your brother Charles Lee once said that he thinks cryptocurrencies are such a powerful concept, that they could one day overturn governments. Do you think some governments have come to this same realization?

BL: I’ll say this, any government who might be at threat of being overturned because of cryptocurrency, those governments are also the ones that are going to be blind to it. Those will be the very same people who will be ignorant and not understand what’s happening until it’s all said and done. In that case, they will not know what to do to counter cryptocurrency. The very governments that have the power to counter and to slow down this movement are not the ones at threat. At least not yet.

These are uncompetitive governments. They’re not thought leaders or industry leaders where they have the wherewithal to stop the advancement of cryptocurrency. It goes back to what you asked me earlier about China. I know you didn’t have China in mind and I don’t have China in mind with this question and answer, but you did ask me if China can ever ban Bitcoin and I didn’t finish my thought which was: by law they can ban it. Any country can ban Bitcoin. Any company or any organization can ban Bitcoin, I can ban Bitcoin in my house. If I’m the head of the household I can ban it in my house. Or the state of Washington can ban Bitcoin in the whole state of Washington. Or the city of Seattle can ban Bitcoin.

But then the question is, it’s like banning marijuana or cocaine. In the U.S. my understanding is cocaine is not allowed, it’s an illegal drug. But banning it is not to say that there is no single ounce or gram of cocaine within the entire United States border. I’m sure there is, I’m sure there’s cocaine in Washington. I happen to know there’s no cocaine in my home, but banning or not banning cocaine in my home, it’s just words and intent.

BM: It also comes back to what the mission of the government is supposed to be. They are supposed to be trying to implement policies that will be a net positive for society. So it comes down to: Is it a net positive for a country to work with Bitcoin? Are there things countries can gain from having a progressive stance towards this technology?

BL: I think this will change over time. Let me give you two examples. Both China and the U.S. have fallen victims to this. For example the IRS tax guidelines in the United States are not very favorable. It’s really going to suffocate Bitcoin down the road.

On the other hand I’m very hopeful. I’m a U.S. citizen, dual-citizen, along with Hong Kong, China, so I’m still hopeful because I know the IRS is an organization that’s run by people and people are allowed to change their minds and it’s very conceivable. We’ve seen the IRS change taxation rules over time so it’s conceivable and I’m hopeful that the IRS will change their view on how taxation for Bitcoin will be done down the road. It might take a year or three to change or it might take twenty years or thirty years but I think that will happen.

And the same in China. Today Bitcoin is stated to be allowed but I’m hopeful that as a country that wants to succeed and be relevant, where it wants people to develop and the economy to grow, then it would make sense to embrace the best technologies and services. And Bitcoin speaks for itself.

Bitcoin wasn’t born to harm the Federal Reserve or the China PBOC. I would say that the core of Bitcoin is that it’s the world’s first digital asset. And as the world’s first digital asset, why not? Our world is getting digital, why not have digital assets. Prior to Bitcoin everything was physical assets. Commodities or equities or real estate, they all have physical manifestation. But now for the first time in humanity you have a digital asset that people can invest in. And carve out and say “I own this much and you own that much, my country owns this much your country owns that much, my company owns this much your company owns that much.” It’s a measuring stick.

BM: In an old interview you said that “people are sitting on the sidelines in China.” Now, we know there is demand in China for this digital asset. It’s a widely held belief that Chinese demand is what was behind the run up to $1,000+ prices in December of 2013. Do you think that demand will come back anytime soon? Or are they waiting on more clarification from the government?

BL: Let’s clarify a little bit. I’ll use this example, I don’t know how relevant you may see it or maybe you see it as well. You live in Seattle, I lived in Seattle for one summer when I interned at Microsoft and I remember I lived in Redmond. At the time, almost 20 years ago, Bellevue, Redmond, it was still developing. There was still more housing to be built and stuff like that. What I’m trying to say is that when a new town gets developed further out from the so called city center, what happens is the property developers anticipate there to be demand by building these townhouses and residential areas and shopping malls. They pave the roads, demarcate areas for commercial and residential, and so on. So when they build the shopping mall, the shoppers are not there yet. Building the shopping mall in anticipation of: one day this will be a thriving community filled with shoppers where people will go to restaurants and watch movies.

The analogy to Bitcoin is that what happened with the run-up last year is that people in China, the so-called developers, said A-ha! This is an untapped market. There’s a billion people here, they’re all going to go and want to live here and go to these shopping malls and watch movies and buy cars and fill up the car at these gas stations, so let’s lay the groundwork to do all this. But when they do all that, people are still not there yet, they’re waiting for people to come. So what happened December 5th is that “uh-oh…the people are not coming.” Because of this fear, uncertainty, and doubt [was] spread by the government.

Therefore when they don’t come or when they take a break or when they do a six month hiatus, then everyone thinks that was a false alarm and we shouldn’t [have] gone crazy with the shopping malls and the parking lots. And that’s why the price came back down.

When I’m talking about people sitting on the sidelines I’m talking about the end consumers, the ones who were intended to come in, but never did. The people who came are the early people buying up the land, intending to build the shopping malls and the paving the roads.

BM: The infrastructure isn’t there yet for the people on the sidelines to join.

BL: Yeah and I’m not even thinking about payment infrastructure, I’m just talking about whether people feel safe holding Bitcoin as an asset class, as an investment. They’re safe from a technology perspective with correct storage but there’s also the word safe from the legal, governmental perspective. When your average Joe Grandma buys Bitcoin, even if they forget about or don’t understand the so-called technology and safety against hacking, they might want to consider what is my regulatory safety. Am I allowed to hold Bitcoin? Is it legal for me to own Bitcoin?

BM: The general perception can be pretty dismal overall. The first thing that comes to most people’s heads when I talk to them about the subject is something negative they heard on the news about a theft or drugs.

BL: Exactly, that’s exactly it. It takes a lot of education to overcome that initial setback. And that’s what I’m talking about. People in China are no different, that is the reaction I get from the passersby here in China. It’s a setback, with Mt. Gox and the PBOC ruling, so it might be a six month setback, it might be a six year setback until we overcome it collectively as a society, as a country.

BM: Thank you very much for your time, Mr. Lee.

BL: Thank you, it was a pleasure speaking with you.

August 29, 2014 at 01:39PM

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Storj Introduces Decentralized Cloud Storage

Storj has made waves in the name of complete decentralization of your cloud storage. As businesses and consumers alike are moving to the cloud, Storj provides an innovative means of solving the problem, “How do I keep my valuable information out of the wrong hands?” Winner of the Bitcoin Hackathon at this year’s Texas Bitcoin Conference, the company gives users the ability to not only secure their information using P2P technology and encryption, but users can also earn money for their extra hard drive space with Driveshare. Storj has also released a beta of their most recent application called Metadisk, giving you true ownership of every bit, byte, mega and gigabyte of your information.

The company launched last month and raised nearly 1,000 BTC with the pre-sale of their network access tokens. The Storj press release follows:

The Cloud is Powered By Storj

“It is time for the cloud to truly become a cloud, made up of a vast multitude of resource droplets that are added and subtracted as the cloud forms, moves and changes shape.” – Metadisk Whitepaper (2014)

AUGUST 26, 2014 — The world is getting smaller as the speed of information is growing. Natural resources are becoming more scarce and yet the population of computer-enabled Gen-X’ers is becoming more vigilant as innovations in communication and trust abound.

As we continue into the future, we will see a sharp increase in the demand for more information that is accessible – for a generation used to Internet-access on demand and wi-fi enabled everything, the expectation for readily-available data and immutable space for it will continue to grow.

A startup with its origins in Bitcoin has proposed an innovative solution to this problem. Aptly named, Storj – the company launched last month with a pre-sale of their network access tokens, STORJCOIN X raising over 900 BTC.

Led by two entrepreneurs with a growing community behind them, the Storj platform and the coin are both key elements to the beginnings of a future where all computer storage will be decentralized. Its first release will be a user-friendly web application called Metadisk – a web based drag-n-drop file storage system.

Described as an entry-point into the Storj network and currently available as a developer-prototype, Metadisk is the first of its kind that allows trustless storage and client-side encryption. Projects like Maidsafe, and Tahoe-LAFS were the first to demonstrate the feasibility of decentralized storage and the use of trustless nodes across the network. Using similar principles, Metadisk communicates with the Storj network to locate available resources (hard drive space) and then transfers the file to at least 3 separate locations to maintain the 3x redundancy considered the industry standard for cloud storage.

However, to achieve the scalability, security, and cost effectiveness of a truly secure storage system, the company must think outside the box (a centralized server box that is!). Projects like Bitcoin, Bittorrent, public key encryption, and cryptographic hash functions encompass the missing elements needed to establish a self-managed network of trustless nodes cooperating together, where the coin will serve as a means to pay for and exchange storage space and bandwidth.

“This model harnesses the powerful free-market force of self-interest to drive the network’s growth and efficiency while remaining decentralized,” explains Shawn Wilkinson, Co-Founder, from his home in Atlanta, GA. By incorporating Bitcoin technology into the platform, Storj is able to utilize an open-ledger system to keep the nodes of the network in check. Through the use of encryption and hashing of the file we can ensure that files can’t be accessed or tampered with, even on untrusted hardware.

Since the release of the Metadisk prototype, members of the community have been developing numerous apps to demonstrate the power of the Storj network.

Decentralized Video:

http://ift.tt/1sIlpKp

Decentralized Images:

http://ift.tt/1qE9D5g,

http://ift.tt/1qE9D5k

Decentralized Audio:

http://ift.tt/1qE9E9m

PDF / Txt Demo

http://ift.tt/1sIlpKB

If you would like to test your skills in developing an app that will be Powered by Storj, there is a publicly available API and reward bounty of 10,000 Storjcoins X on their forum: storjtalk.org. Check out www.storj.io for more details.

August 28, 2014 at 03:30PM

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John Scianna’s Draper University Campaign

My friend John Scianna, an active participant in the bitcoin community (and writer for Bitcoin Magazine), is working to attend Draper University and needs our help to fund his endeavor.

He told me about his plan, and other than donating a few satoshis, I didn’t know how I could be of service to this fellow bitcoiner. Then I had a lightbulb moment: I’ll write about it.

While putting together the questions below for John to anwswer, I realized how important it is for us as a community to support each other – because if we don’t, who will? Donation info is at the bottom of the page.

1. What is Draper University and why do you think you’d be good for it?

Draper University is an entrepreneurship program, it’s in San Mateo, California and was started by the “free-spirited” venture capitalist Tim Draper. It covers everything you would find in an accelerated MBA program for entrepreneurship. The program is quite unique, it’s in the historic Benjamin Franklin Hotel where students and startup founders live. You literally eat, sleep and breathe among entrepreneurs seven days a week for seven weeks.

I believe I will be perfect for Draper University, because this is something I have always wanted to do. I have dreamed about going to California and working in the technology space ever since I was little. My favorite song is even “Going to California” by Led Zeppelin, I think the culture out there just suits me best. Draper U is becoming increasingly Bitcoin focused now that Tim bought 29,658 bitcoins. Tim’s son Adam also has an accelerator program, Boost, in which about one-third of the startups are bitcoin related.

2. What is your professional background?

My professional background ranges from agricultural sciences to financial services. I have worked at the University of Florida’s Tropical Research and Educational Center where I did plant tissue culture on tropical plants and took part in a study on jatropha curcas, a plant that makes biodiesel. I have also interned for the USDA where I did research on consumer preferences of tropical fruit and I got to go to the USDA’s headquarters in Washington, D.C. to present my research.

On-campus I focused on developing my marketing expertise. Freshman year I was a part UF’s Multicultural & Diversity Affairs, where I was the External Marketing Director. My responsibilities included promotion, partnering with other organizations, event planning and hospitality services at MCDA’s Institute of Hispanic-Latino Services.

This past year, I was the Community Outreach Director for UF’s Nourish International. In Nourish we have small business ventures on-campus to raise money for sustainable development projects. This year it was for a project in Uganda to help send AIDS orphans to school. We would do ventures like sell bows on game day and donuts in the morning. It really taught me how to put myself out there and sell, plus everything went to a good cause.

What was even harder than selling bows, was trying to sell life insurance and other financial products when I was at Northwestern Mutual. I think that was the hardest job I have ever had. I would cold-call people all day hoping to get a meeting or two, it was tough, but it definitely taught me how to be persistent and to overcome failure.

It wasn’t until my first Bitcoin conference that I became a journalist in the field. I have always liked voicing my opinion and I saw it as a great way to meet interesting people. I had learned all about bitcoin through mining, it really speeds up the learning curve when you dive into something that technical; so, I had enough knowledge to write on the subject and went right into it.

3.What are you currently busy with?

Like most in this community, I am busy with Bitcoin. I am an intern for the Chamber of Digital Commerce and I work closely with Perianne Boring. This past week we spent our time calling the offices of congressmen and women scheduling meetings with them for the inaugural Congressional Bitcoin Education Day. I think this is a great way to inform our leaders of the great promises of Bitcoin, no matter what your political views are; regulation affects us all. If we choose to do nothing we will ultimately lose, so by doing this we can educate politicians about the benefits of bitcoin and dismiss all the negative propaganda that Bitcoin has faced in the past. My work with Perianne mostly focuses on education and addressing public policy issues like New York’s BitLicense.

In addition to that I also write for a few Bitcoin media outlets, and I have been working on a tea startup, teatoshi, that my co-founder and I plan to launch soon.

4. What do you wish to get out of Draper University?

The most valuable thing I wish to get out of Draper University is the connections with other entrepreneurs and venture capitalists. I think this is the most valuable aspect of the residential experience. Draper University has an online course, but you won’t get the same benefits as being there.

I think going to the residential program is important because entrepreneurs and venture capitalists share a synergistic relationship; there are so many ideas out in the world but without venture capitalists many [of] these projects wouldn’t be able to get off the ground or scale. You can create an app or e-service from space, but there won’t be any venture capitalists there; this is why you find so many entrepreneurs moving out to the Valley.

Hopefully, once I graduate from DU I can be apart of Tim’s or Adam’s incubator programs – that way I can stay in California and get my ideas out my head and into the world.

5. How can the bitcoin community help you?

The community can help by donating whatever spare bits they have in their wallet so I can cover the expenses of the program or simply by sharing this article. You can introduce me to someone who might be able to help or if you are a company you can sponsor me. I will wear your company gear, I will even shave my head if you want me to, all I really care about is being able to go.

You can donate in Bitcoin or Fiat, but I actually prefer bitcoin because gofundme charges about 8% and you can track the funds to Draper U’s address.

BTC: 1KfpoCwWcAbyxdiwqGvWtKcdGwcLhB4zuK

Fiat: http://ift.tt/1sIdQDB

August 28, 2014 at 03:17PM

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Discount Available For The Digital Currency Summit

by Ferdinand Reyes on August 28, 2014 { }

Just today, Thursday, August 28th, by paying with bitcoin you can buy one of the 25 discounted tickets for the Digital Currency Summit that will be in Andorra next September 17-19.

Only for 2 BTC, instead of the regular price of 1190€, you can participate in this event and enjoy a wide range of talks organized in different categories like investment opportunities, regulation laws, banking, and workshops where speakers will be several of the best Bitcoin experts from around the world and in Europe like Jon Matonis, Marco Santori, Jan Kees de Jager, Constance Choi, Alberto Gómez Toribio and many more.

To enjoy this great offer you must buy the ticket, today only, following the steps described in this page.

August 28, 2014 at 03:09PM

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Dominica to Be the First Bitcoin Nation

The “Bit Drop” to distribute Bitcoin to all islanders

AUGUST 28, 2014 — Dominica is set to be the first nation to adopt Bitcoin following a successful collaboration between island officials, Coinapult, Aspen Assurance, Bitcoin Beauties and the College Cryptocurrency Network, who have partnered to deliver the project, officially titled The Bit Drop.

The Bit Drop project will to send Bitcoin to every resident on Dominica, a Caribbean commonwealth island, via SMS texting. With a population of over 70,000, this project will create the world’s largest and highest density Bitcoin community.

The Bit Drop is scheduled to take place on 14th March 2015 at 09:26 to coincide with Piday. To mark this unprecedented event The Bit Drop will be throwing an island-wide party with celebrities, musicians and supporters of Bitcoin, fire dancers, sponsored tropical island spirits, free giveaways, and bitcoin education booths during the event. This will be the first time a government has embraced the potential of Bitcoin for the population of a whole nation.

More information can be found at http://ift.tt/1zWCMMl

About Let The Bit Drop Partners

• Coinapult is a bitcoin wallet, and merchant services provider.


• Aspen Assurance accepts bitcoin for corporate, licensing, and bond services


• College Cryptocurrency Network’s MIT chapter is responsible for the distribution of bitcoin to every undergraduate later this year.


• Bitcoin Beauties is a global organization of women who evangelize and use Bitcoin to monetize their passions.

Contact for further information:

Sarah Blincoe – Project Manager Sarah@Letthebitdrop.com

Ira Miller, CEO Coinapult ira@coinapult.com

Francis Ford, Senior Advisor Aspen Assurance

Hon. Dr Kenneth Darroux, Minister of the Environment & Physical Planning

Jeremy Gardner, Director College Cryptocurrency Network

August 28, 2014 at 02:09PM

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SF Bitcoin Meetup @ Geekdom

by Ryan Taylor on August 27, 2014 { }

BTC: 13xJRq2FDTmPrWj9BxWEkFgv1JKxZsuujC

LTC: LfeDFoC4c6YyEsXw6pXZ7R6ADHqRxfgy7L

DOGE: DSYwWb71hmvnhp18wDVzvQepVkNazSfKAk

By Ryan Taylor

Ryan Taylor, a native of northern California, is a twenty first century renaissance man who firmly believes in making the world a better place through art and technology and making the web a better place through collaboration and transparency. An accomplished photographer, graphic designer, web designer and developer, Ryan’s skills portfolio also includes videography, post-production, and both live stream video and DVD production. While Ryan has been with the magazine since its inception as a regular content contributor, he has also assisted in the capacity of designer and developer.

August 27, 2014 at 03:51AM

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