Month: February 2015

Pay your taxes in bitcoin? Maybe, if you live in one of three states now considering bills in support of that option.

In January, Utah Republican state representative Mark K. Roberts introduced a bill, H.C.R. 6, to create a Council on Payment Options for State Services that will study how Utah could accept Bitcoin as a valid form of payment. The bill includes the possibility for Utah residents to pay state taxes using Bitcoin.

In February, eight New Hampshire state representatives introduced a bipartisan bill, NH HB552, to propose that New Hampshire should officially accept Bitcoin for taxes and fees. The bill calls for the development of a detailed implementation plan, followed by operational acceptance of Bitcoin by the state before July 1, 2017.

It seems almost surreal that Bitcoin, often portrayed by the popular press as a means to avoid taxes and hide cash and illicit activities from the government, could find one of its first official applications in tax payments.

The short and pragmatic text of the New Hampshire bill only mentions the financial implications of collecting tax payments in Bitcoin. Republican Representative Eric Schleien believes that the adoption of Bitcoin for tax payment purposes would be a boon for the state, and argues that Bitcoin transactions are cheaper and more secure than those made with credit cards, so that the law would offer both state and taxpayers a more reliable payment option at a reduced cost.

The Utah bill is more visionary. It mentions the important benefits that an official adoption of Bitcoin could bring to the state’s technological leadership and economy:

“Technology industries, including emerging technologies, play a growing role in [economy] and culture. The state must also remain open to new technologies and ideas to continue attracting talented and educated entrepreneurs. [Bitcoin] provides merchants with an attractive alternative mechanism for accepting payments, because transaction fees for Bitcoin are generally much lower than those imposed by other payment processors. “

Reading between the lines, a key passage here is “attracting talented and educated entrepreneurs.” Rep. Roberts seems fully aware that new, disruptive technologies can create fast growth and “iPhone moments” that boost entire industries. He appears to be persuaded that Utah could become a Silicon Valley for cryptocurrency business. Perhaps someday visitors to Utah will be greeted by a “Bitcoin Rockies” sign.

Utah is also the home state of Overstock, a large online retailer that allows customers worldwide to pay in bitcoin. Overstock is also behind one of the most interesting and potentially disruptive developments in the Bitcoin space: their Medici crypto-stock exchange project aims to create an open alternative to traditional stock exchanges such as NYSE and NASDAQ, based on blockchain technology and accepting Bitcoin payments.

The Free State Project, a hardcore Libertarian group based in New Hampshire, greeted the New Hampshire bill with a blog post titled “Bitcoin for Taxes and Fees? Only in NH.”

“New Hampshire is known as a libertarian hot spot, and the Bitcoin community here is strong. Read about the rich connections between Bitcoin and the Free State Project here.”

Meanwhile, last week, Democratic member of the New York City Council Mark Levine introduced a bill that would allow residents to pay for any fines and fees they owe the city using Bitcoin. In an interview with CoinDesk, Levine said:

”It started with realizing how much money the city of New York is losing on transaction fees on credit cards, ultimately it’s several million a year because of all sorts of fees and fines. [I] think that being the first major city in the U.S. to make this move sends a clear signal that we’re innovators here.”

Levine’s arguments are similar to those used to promote the New Hampshire and Utah bills: accepting Bitcoin payments would save the city a lot of money, and a vibrant Bitcoin economy would attract top tech talent to the city.

The passages quoted represent two often conflicting aspects of the developing Bitcoin economy: the business-oriented vision of a regulated Bitcoin economy that informs the Utah and New York City bills, and the free-wheeling Libertarian spirit reflected in the Free State Project comments to the New Hampshire bill. As often happens, future Bitcoin developments are likely to be influenced by both.

Speakers from the top companies in the Bitcoin industry will present a full-day mini-conference of Bitcoin-related content during the SXSW 2015 Interactive Festival. The event will take place Monday, March 16, at SXSW’s Startup Village in the Austin Grand Ballroom of the Hilton Downtown in Austin, Texas.

The event will feature five sessions focusing on topics about the Bitcoin industry, with information from basic to advanced. Good and bad myths will be addressed, and speakers will share their vision for a future with Bitcoin.

The hour-long sessions for the day are titled “What is Bitcoin?,” “Bitcoin 2.0,” “A Future with Bitcoin,” “Impact on Developing World,” and “Real World Applications.”

Speakers for the event include:

• Nic Cary,  co-founder at Blockchain
• Stephen Pair, CEO and co-founder at BitPay
• Will O’Brien, CEO and co-founder at BitGo
• Tatiana Moroz, founder at Crypto Media Hub
• Charlie Lee, creator of Litecoin and engineering manager at Coinbase
• Jed McCaleb, co-founder at Stellar Development Foundation
• Constance Choi, principal at Seven Advisory
• Tina Hui, CEO and founder at Follow the Coin
• Dan Elitzer, founding president at MIT Bitcoin Club
• Jake Benson, CEO and founder at LibraTax
• Connie Gallippi, executive director and founder at the BitGive Foundation
• Jonathan Zobro, co-founder at 37coins
• Sebastian Serrano, CEO and co-founder at BitPagos
• Sean Percival, venture partner at 500 Startups
• Adam Ludwin, founder at Chain.com
• Nick Sullivan, CEO and founder at ChangeTip
• Vinny Lingham, CEO and co-founder at Gyft
• Adam Draper, CEO and founder at Boost VC

 

Bitcoin at SXSW 2015 is sponsored by BitPay, Gyft, LibraTax, ChangeTip, and Chain. Information about speakers, sessions, and sponsors can be found at www.BitcoinAustin2015.com. The event is organized by volunteers Naveed Lalani, Christa Clark, and Chris Hogue.

The SXSW Interactive Festival, taking place March 13- 17, has come to be known as the place to preview the technology of tomorrow. The event will feature five days of compelling presentations and panels from the brightest minds in emerging technology.

It will also include networking events hosted by industry leaders and a lineup of special programs showcasing the best new websites, video games, and startup ideas the community has to offer. Registration information for SXSW Interactive Festival is at http://sxsw.com/interactive.

Crypto Facilities Ltd., a London-based broker founded by former Goldman Sachs Executive Director Timo Schlaefer, has announced the launch of its bitcoin derivatives trading platform.

In financial jargon, a derivative is a contract that derives its value from the performance of an underlying entity, in this case the exchange value of bitcoin. Crypto Facilities trades financial products such as bitcoin options and futures, allowing users to “go long” and bet that the price of bitcoin will rise, or “go short” and bet the price will fall. The first derivative offered by Crypto Facilities is a forward contract – a contract to buy or to sell an asset at a specified future time at a price agreed upon today – on the U.S. dollar price of bitcoin. The forward contract serves to hedge against bitcoin volatility, or to benefit from future swings in the bitcoin price.

The forward contract comes with different maturity months, and traders can choose from the nearest three in the March, June, September and December cycle. Once a forward reaches maturity, it will be settled automatically. Traders do not have to wait until maturity to get out of their position, but can trade out at any time. Buying one forward – the minimum trading unit – requires a minimum deposit of 0.50 bitcoin. To sell short one forward, the minimum deposit is 0.25 bitcoin.

As of this morning, one forward at September 15 was trading at USD $242, while the current Crypto Facilities Instantaneous Bitcoin Price Index (CF-BPI) was USD $236. The CF-BPI is calculated continuously based on the current best bid and ask prices observed on major bitcoin exchanges.

“Our forward is probably the simplest and most effective tool out there to protect yourself against bitcoin volatility,” said Crypto Facilities Co-Founder and COO Jean-Christophe Laruelle. “If you want to lock in the value of one bitcoin, you sell one forward.

Forward contracts are traded between investors on the platform developed and managed by the brokerage, which matches sellers with buyers without acting as a central counterparty and takes a commission on all trades based on the official fee schedule. The brokerage, targeted at institutional investors and expert individual investors used to trading derivatives and futures, operates in bitcoin.

Crypto Facilities, which employs a team of qualified financial experts, was founded by Laruelle, a former Senior Trading Architecture Designer at BNP Paribas/Société Générale and Schlaefer, a former Executive Director in Credit Quantitative Modelling at Goldman Sachs who holds a doctorate in financial engineering.

The firm, registered with the U.K. Financial Conduct Authority (FCA) as an appointed representative for broking exchange-traded futures and options, adheres to strict compliance and security standards and holds bitcoin deposits in cold storage on offline, encrypted servers.

The availability of mature financial products such as Crypto Facilities derivatives shows that Bitcoin is taken more and more seriously by the financial establishment and that – like or not – the Bitcoin space is becoming more professional and mainstream.

“The Bitcoin space still lacks professional, reliable marketplaces, and this is what we provide,” Schlaefer said. “We apply the same standards in terms of risk management, compliance and reporting as you would see in the traditional finance space.” He added that the firm has a number of additional financial products in the pipeline and plans to expand its range of services.

Schlaefer told CNBC that he saw real potential in the technology behind Bitcoin – the blockchain – which is a publicly-distributed ledger system that makes sure all transactions are verified in a transparent, decentralized and secure fashion. The CNBC article observes that, like Schlaefer, the Bank of England has also said it sees huge potential for the technology behind Bitcoin.

In a recent paper titled “One Bank Research Agenda,” the central bank said that Bitcoin could reshape the financial industry. A section of the paper (Page 31), dedicated to a Fedcoin-like scenario where central banks might issue digital currencies such as Bitcoin, notes that both the technology and financial sectors need to be engaged, as each brings important and distinct expertise.

“Creating such a system would entail creating a protocol for value transfer over the Internet, akin to what Berners-Lee did for information,” the Bank of England paper says.

It was an interesting experiment, but the Bitcoin Foundation’s bid to hold on-blockchain elections today seems to be over.

In a letter sent to members dated February 25, 2015 at 12:46:33 a.m. EST and posted on the Bitcoin Foundation blog, the Foundation’s Director of Communications, Jinyoung Lee Englund, announced that the run-off elections being held to fill two board member seats would be utilizing a new voting platform in co-operation with Swarm.

“The Foundation’s mission is to advance blockchain technology and this is an important new avenue of innovation,” said Patrick Murck, Executive Director of the Bitcoin Foundation, in the announcement. “While we may not have had the smoothest experience in this experimental launch, it’s important for us to push the boundaries and spark innovation — even if things get a little messy sometimes.”

“Messy” seems to have become the operative word.

From the outset, voters have complained of duplicate email, overly complex processes, inability to vote for all eligible candidates and general confusion.

The first of the four run-off candidates to draw attention to voting protocol problems was Michael Perklin. In a posting on the Bitcoin Foundation forum, before the first ballots were even cast, Perklin listed several concerns:

• A significant and cumbersome number of steps that voters need to take before being able to cast a vote.
• The new voting platform is not mobile friendly.
• The order of candidate names appears to be static but also random. (Who chose that order and why?)
• Privacy concerns.
• Entrusting voter email addresses to another third party – in this case, Swarm.

These concerns and others were quickly reiterated by fellow candidates Olivier Janssens, Jim Harper and Bruce Fenton, as well as many forum participants.

Candidate Olivier Janssens went so far as to accuse Patrick Murck, Director of the Bitcoin Foundation, of  “a serious breach and a clear attempt at throwing a wrench in the machine” and “totally and purposefully [manipulating] the voting process.” He then called on the Foundation to cancel the voting round immediately and switch back to the earlier Helios platform.

Candidates Jim Harper and Bruce Fenton also called for a reset. Bruce Fenton noted that some voters have complained that his name wasn’t listed as a vote option. “I agree that it should be reversed immediately,” he said in a forum post. “I don’t think the results are trustworthy.”

“I think we can reach consensus among candidates about restarting the election on the original system,” Jim Harper stated in the online forum discussion. “Given that a full day has already passed when voting was supposed to be underway, I think resetting the vote, with a new announced start date and voting period, would be best, but I’m open to discussion.”

Other concerns that emerged included lack of adequate explanation, lack of transparency in the decision-making process and publication of results while elections are still ongoing.

In response to the heated discussion on the forum, which saw voters calling the whole process “a complete mess,” “ baffling,” and “a disaster” — some going so far as to refuse to participate in the election at all — Patrick Murck has agreed to re-launch the run-off elections.

In his latest post, he says: “… I’m glad we took a chance to innovate and spark a conversation. I’m also glad that we had a fallback option in place in case things didn’t work out. Whether or not you believe voting on the blockchain is a worthy avenue to explore, if the system isn’t working for voters then we should move on.”

[Updated at 4:25PM EST]

In written comments to Bitcoin Magazine, Murck said, “This clearly struck a nerve with folks that think blockchain technology should only be used for transferring Bitcoin and not other [applications] like voting. [It] sparked a debate on how people use the blockchain.” He also said that there were many people who were excited to try using blockchain voting.  Joel Dietz, founder of Swarm, could not be reached for comment.

[Updated at 5:53PM EST]

The Bitcoin Foundation has released a new blog post outlining the new election process. Here are some of the most important details:

1. Members will receive an email from Helios to vote. Ballots cast on Swarm are not valid. Members who cast a vote via Swarm already will need to recast their votes using Helios.
2. Members will receive Helios emails by end of day today (Wednesday, February 25, 2015 at 11:59pm EST).
3. The runoff election will be extended by an extra day. The new deadline for voting is Saturday, February 28 at 11:59pm EST.
4. Election Results will be posted on Sunday, February 29, 2015.

The post states, “We knew this was going to be messy and that there was a risk that it might not even work. In response to the difficulties with user interface and ballot presentation, in order to maintain the integrity of the runoff election, as promised, we are hitting “reboot” and starting over. “

The Foundation also thanked members for providing feedback on its first attempt at implementing on-blockchain voting and encouraged them to continue to test out the Swarm platform and give feedback, even though votes cast there will not be counted.

A new secure mobile payment solution for Android will be showcased at the Mobile World Congress, March 2 – 5 in Barcelona, Spain. The new payment app developed by Rivetz and other partners – an Android alternative to Apple Pay with Bitcoin support – will be available in the second quarter of 2015 and is compatible with over 350 million existing Android devices, including Samsung smartphones. Demonstrations on a Samsung Galaxy 4 smartphone will be held daily at the Samsung partner booth (Hall 8.1), Trustonic booth (Hall 7, Stand 7G81), and at the Intercede booth (Hall 7, Stand 7B81).

“We are very pleased to be combining trusted computing technology with the innovations in Bitcoin and blockchain technology to offer consumers the most secure bitcoin payments,” Rivetz CEO Steven Sprague told Bitcoin Magazine. “For consumers, the killer app is having money on the phone, and for the merchants, the built-in security of the system will make it easier to persuade them to accept bitcoin.

“Rivetz developed this application over the last year, integrating the contributions of the partners and using the Trustonic Trusted Execution Environment (TEE) as an operating system for the application. Our solution reflects the latest specifications for mobile payment technology by Global Platform and Trusted Computing Group,” he said.

With Apple Pay, announced at the iPhone 6 launch event last September, Apple wants to grab a big slice of the exploding – and potentially very profitable – mobile payments market. Apple Pay is compatible with a wide range of point-of-sale payment solutions used by merchants, including the terminals provided by the major credit card companies, but requires an Apple device (iPad, iPhone 5 or higher) on the consumer side. That is an important limit since only 12 percent of smartphones in use are made by Apple, and most are older iPhones that don’t support Apple Pay.

Google is not watching idly – it recently acquired Softcard technology to power its payment solution Google Wallet — and established agreements with Verizon, ATT and T-Mobile to pre-install Google Wallet on the smartphones sold by the carriers. Google Wallet is available for Android smartphones, which have an 85 percent market share. (Note, however, that not all Android devices support Google Wallet at this time.)

Besides smartphones, both Apple Pay and Google Wallet will also run on next-generation smart personal devices, such as connected watches, which will add to their appeal and ease of use. But Apple Pay and Google Wallet don’t support Bitcoin, which is an important limitation for the fast-growing community of Bitcoin users, consumers and merchants alike. The new Android payment solution, developed by Rivetz, Trustonic, Intercede and Bitcoin payment processors Coinapult and BitPay, supports bitcoin payments and can be integrated with bitcoin wallets.

“Rivetz is delivering state-of-the-art support that will help Bitcoin [become] a standard, secure capability on every handset,” said Tony Gallippi, Co-Founder and Executive Chairman of BitPay. “We look forward to enabling the Rivetz capability as an option for millions of Bitcoin users.”

The new open-source payments technology is easy to use and compatible with any Trustonic-enabled smart device. The solution is compatible with many thousands of Bitcoin merchants, offering consumers peace of mind that their Bitcoin transactions are safe, private and secure. Furthermore, the new solution meets all of the requirements of the recently implemented regulations for European payments using smart devices, which opens the way for deployment in Europe.

The new solution developed by Rivetz uses Trustonic’s Trusted Execution Environment (TEE) built into millions of smart devices to store and process Bitcoin private keys, and Trusted User Interface (TUI) technology for secure PIN entry and secure display of the users’ transaction details. Rivetz provides a software developer toolkit for secure TEE-enabled Bitcoin payment apps.

“We are pleased to be working with Rivetz to bring state-of-the-art security and ease of use to consumers,” said Trustonic CEO Ben Cade. “The Rivetz team is offering a great model for any app developer to leverage the advanced security that Trustonic TEE provides.”

Intercede’s MyTAM cloud service is used to protect the user’s bitcoin wallet and data from malware and any threats that may be present on the handset.

“Apps used for executing Bitcoin transactions are an attractive target for hackers, who are developing increasingly advanced methods to deploy their malware onto Android handsets,” said Intercede CEO Richard Parris. “By ensuring the activities of apps are kept separate and secure from the main OS, end users can be assured their Bitcoin transactions are protected.”

This development is important for the Bitcoin ecosystem, because it integrates bitcoin payments in a comprehensive, secure mobile payment solution that is technically as advanced – or more advanced – than competitors Apple Pay and Google Wallet, supported by leading smartphone manufacturers, and fully compliant with applicable regulations. It will facilitate Bitcoin adoption among consumers and merchants, reduce regulatory obstacles and bring Bitcoin closer to mainstream.

Morgan Spurlock, Academy Award nominated director of “Super Size Me,” is CNN television’s “Inside Man.” In 2014, he spent a week living on bitcoin. The resulting “Inside Man” episode aired on February 19, 2015, affording a large television audience an in-depth Bitcoin experience that was no doubt a first for many viewers.

The episode begins with a brief explanation of Bitcoin founder Satoshi’s goals, as defined by the white paper, “Bitcoin: A Peer-to-Peer Electronic Cash System”.

“[Satoshi] wanted to create a global currency that existed outside of a central bank or government,” Spurlock explains.

Starting at the Bitcoin Center in New York City, Spurlock buys his first bitcoin from the live auctioneer at the site. He then proceeds to make his first bitcoin purchase, a slice of pizza and a bottle of water. He buys groceries and later, a massage.

Morgan interviews Dan Kaminsky, a white hat hacker (ethical hacker) and Chief Scientist of White Ops Inc, about the average consumer’s number-one concern: whether or not Bitcoin is safe. Dan explains how, when he first heard about Bitcoin, he was quoted as saying: “This is going to fall immediately.”

Dan continues to explain how, like many of us, he was wrong. That although some businesses plugged into the network may have failed, Bitcoin, the core, is solid.

What Spurlock does not mention here is the open source nature of the core. Bitcoin is available for any and all to view the source code, and exactly how it works– if you understand it.

Bitcoin’s open source nature is one of the key reasons why it is a trusted system. If it had been released as closed source software, with limited transparency, there would have been far more distrust in the system. Bitcoin’s open source nature has allowed for global reading, understanding and inclusion.

The open source nature not only allows anyone to read the code, but it also allows anyone, worldwide, to contribute (via GitHub) additional changes to the core. This contribution does go through a rigorous testing and approval phase, and it allows for continual strengthening of the system’s reliability.

After making his purchases, Morgan visits a Bitcoin mining facility.

Viewers here should be aware that although the blockchain discussion in this segment is excellent, the Blockchain.info on screen is not the actual blockchain, but a third-party business that performs a variety of bitcoin-related services, one of which is watching the blockchain and reporting information for users of the site.

The blockchain can be viewed via a variety of other third party businesses, and is not limited to Blockchain.info.

Notably, the blockchain is not “stored on the Internet” as Spurlock reports. The blockchain is stored by people who provide bitcoin nodes. These are the individuals (or mining businesses) who hold full copies of the blockchain.

If the Internet went down tomorrow, the blockchain would still exist, and would simply be waiting to be used.

Spurlock goes on to try to pay his utility bills with bitcoin, make a purchase on the internet, and discuss the future stability of bitcoin compared with fiat currencies. He winds the broadcast up with a conversation with U.S. Senator Joe Manchin of West Virginia, who called for a ban on bitcoin in early 2014. Manchin mistakenly states that Bitcoin “ … has been banned in two different countries – Thailand and China – and South Korea stated that it will not recognize bitcoin as a legitimate currency.”

Bitcoin is actually thriving very well in South Korea, and there are no signs that it will not continue to do so.

Realising that Bitcoin adoption depends on each individual’s ability to teach others the merits of digital currency, Spurlock ends his show by convincing a coffee shop to accept bitcoin, and walking the shop owner through the process.

Spurlock’s final interview, with tech entrepreneur Andreas Antonopoulos, lifts the curtain on the future of Bitcoin.

Antonopoulos explains how Bitcoin investment (at that time, summer 2014) has experienced more growth than the Internet had in its dotcom boom period. Antonopoulos goes so far as to label digital currency as the “third wave” of Internet growth (dotcom was the first, social media was the second).

“It takes time, and for more regular people to be seen using bitcoin for legitimate activities,” Antonopoulos comments.

Whether you have been involved in the sector for years, are new to the ecosystem, or want to explain the subject to someone you know, this video does a very good job and is highly recommended. But keep in mind that this documentary was made more than eight months ago, and that is a long time in the Bitcoin world.

BitGo, a leader in Bitcoin security, announced Tuesday it had secured first-of-its-kind insurance coverage for bitcoin theft from the global, A-rated XL Group insurance companies. With this announcement, BitGo joins the list of industry leaders including Xapo and Coinbase that offer insurance for bitcoin stored using their services.

All of BitGo’s paying customers are eligible for protection under the XL policy for up to $250,000 in covered theft claims, just by signing up for BitGo services. Customers can increase the amount of protection available to them for an annual fee.

“We are proud to partner with XL Group and Innovation Insurance Group on this game-changing insurance product,” said Will O’Brien, CEO and co-founder of BitGo. “The entrance of an underwriter of XL Group’s size and reputation signals that the technologies and standards for Bitcoin security, like multi-sig, have reached a threshold of viability to take the industry to the next level. For our large enterprise customers, an insurance-backed guarantee is the final missing ingredient for peace of mind in a robust security software offering.”

The customized insurance product, exclusive to BitGo, was structured in collaboration with XL Group and Innovation Insurance Group LLC. It is a robust cyber and professional liability policy that goes well beyond narrow crime policies previously adopted by some bitcoin vault providers. BitGo partnered with Ty Sagalow, president of Innovation Insurance Group LLC, to develop and negotiate this unique product. This was an obvious choice, according to O’Brien. “Ty Sagalow has over thirty years of experience in launching innovative products in the insurance industry. He was instrumental in structuring this unique bitcoin insurance policy with XL Group.”

BitGo customers who opt-in to the program are protected from acts, errors or omissions of BitGo technology, processes and employees, including external hacking incidents and employee theft. Both hot wallets and cold storage are eligible for coverage in the policy.

This insurance coverage is unique because in the event of a covered loss, the policy would reimburse BitGo’s customers directly for the value of the lost or stolen bitcoin. This is similar to how the Federal Deposit Insurance Corporation (FDIC) operates; it reimburses bank depositors directly for the value of their deposits (up to $250,000) in the event a bank is unable to return those deposits.

“In collaborating with BitGo and Innovation Insurance Group, we tailored a first-of-its-kind insurance product to help protect the rapidly growing Bitcoin industry,” said John Coletti, Chief Underwriting Officer, Cyber and Technology Insurance, XL Group.

“BitGo’s multi-signature architecture delivers a significant level of security, realizing how seriously they take cyber security. We confidently developed a comprehensive insurance solution that offers BitGo and their customers another layer of protection,” he added. In addition, the policy provides BitGo unprecedented ability to work directly with its customers in the management and resolution of such incidents

Coinciding with the announcement, BitGo said it would be offering two additional major services to its customers — BitGo Enterprise™, the leading institutional bitcoin web wallet, and BitGo Platform API™, a highly scalable set of tools and services that allows any developer to rapidly deploy state-of-the-art operational infrastructure for their Bitcoin business. The bitcoin theft insurance provided by XL Group covers the risk of theft or loss of bitcoin secured with both services.

“This is a critical step in professionalizing the Bitcoin ecosystem. BitGo now offers the leading institutional multi-sig web wallet and platform API. By securing a comprehensive insurance policy from XL Group, BitGo has again set the bar for bitcoin security and customers can feel even more confidence and peace of mind about using the BitGo platform,” said O’Brien.

Images via BitGo, ulifunke.com / bitcoin.de

German Bitcoin exchange bitcoin.de and Fidor Bank have announced a new “Bitcoin Express” option for Fidor Bank customers to buy and sell bitcoin instantly on the exchange.

The new option addresses the delays involved in exchange transactions. Bitcoin exchanges like BitStamp, which are not licensed banks, must often wait hours or even days for a transaction to be cleared by an external bank. But because Fidor Bank is fully licensed, it is able to provide a direct interface to the mainstream banking system, eliminating transaction delays.

As a result, holders of a “Fidor Smart Giro Account” are now able to purchase bitcoin directly from a bank account and receive bitcoin immediately after the purchase. They can also sell bitcoin to another Smart Giro Account holder and have the money instantly credited to their account. Since the money is always in the user’s bank account, customers don’t have to worry about the possible insolvency – or dishonest behavior – of an external exchange operator.

The Smart Giro Account is a full bank account with all the standard features, including interest on credit balances and a low-cost credit card. The latter is, in practice, equivalent to a card that can be recharged with bitcoin.

Oliver Flaskämper, board member of bitcoin.de, said, “That is not only good news for all Bitcoin fans, but also good news for fintech companies based in Germany. “

Fidor Bank CEO Matthias Kroener commented: “The prompt conducting of [Bitcoin transactions] from one bank customer to another bank customer enhances security massively. As such Fidor Bank is setting a further milestone in digital banking.”

In related news, Fidor Bank disclosed plans to expand to the U.S. market. Kroener praised U.S. authorities’ open and pragmatic middle-of-the-road approach to Bitcoin regulation.

Kroener is persuaded that traditional U.S. banks are losing their appeal, especially among younger generations, because they don’t offer the innovative services that today’s tech-savvy consumers demand.

“The reason that a lot of very successful fintech startups are happening in the U.S. is not only because there are so many talented people setting up those businesses. It is also because there is a huge gap in innovative services.”

Fidor Bank is known as a modern Internet Bank and an early adopter of new trends in fintech with innovative services for connected consumers. Fast Company named Fidor Bank one of the world’s top 10 most innovative companies of 2015 in personal finance, and described it as a social bank that leverages cutting-edge technology to respond to customer wishes.

Fidor Bank’s fintech community website invites developers, notably dubbed “Pirates of Banking,” to become “part of reshaping the post-crisis banking industry through cutting-edge technology instead of doing the minimum to be compliant.” The deployment of innovative fintech services in the U.S. market could boost the mainstream acceptance of Bitcoin and the digital economy as a whole.

Decentral, Toronto’s home to tech start-ups, announced it’s organizing the 2015 Canadian Blockchain and Fintech Expo for the second week of September as a follow up to last year’s successful Bitcoin Expo.

Toronto will again play host to Bitcoin enthusiasts as event organizers assemble a growing list of all-star speakers for the Expo, including Vitalik Buterin, Gavin Wood and Anthony Di Iorio of Ethereum, David Johnston of DApps Fund, Matthew Roszak of Tally Capital, Brock Pierce of ChangeTip, Tether, and the Bitcoin Foundation, David Bailey of BTC Media, Joel Dietz of Swarm, Paul Snow of Factum, Shawn Wilkinson of Storj, Jason King of Sean’s Outpost, Jamie Robinson of QuickBT, Jeff Coleman of Kryptokit, William Mougayar of Start-Up Management, Michael Terpin of Social Radius, and Gerald Cotten of QuadrigaCX.

Event organizer Anthony Di Iorio explained that response from last year’s Expo prompted the follow-up conference for this fall, adding September was chosen to avoid conflicts with summer holiday schedules.

“Given the amazing feedback we received from the previous event, it was decided that we’d to go for it again this year. Toronto is a great location for events like this, especially since such a large percentage of the Canadian population is within a five-hour drive of Toronto. It is also such a prominent financial and technology center that it just simply makes sense to hold an event here again,” Di Iorio told Decentral.

The event will also feature a two-day hackathon that will be held along with Canadian university students. Stepan Vorobiev, head of the University of Toronto Decentralized Tech Association, said the hackathon would help create a “clear vision with definitive actions on how to integrate these technologies into the current system,” Decentral reported.

Di Iorio organized last year’s Expo, which attracted over 50 speakers from across the globe and more than 700 attendants. Decentral will announce further information and updates, including Expo dates and location on its website. http://decentral.ca

Media and partnership information for the Expo is available by contacting Di Iorio at anthony@decentral.ca.

Bitrated has announced an online reputation management system for its multi-signature (multisig) escrow service for bitcoin payments. The two innovations combined provide unprecedented consumer protection to Bitcoin users, buyers and sellers alike.

Bitrated‘s bitcoin payment service uses multisig transactions where a trusted third party (trust agent) is nominated to resolve disputes and reverse payments in case of fraud. Two out of three signatures are required to unlock a payment: the seller’s, the buyer’s and the trust agent’s. So if the buyer is happy with the purchased goods or services, the payment can be unlocked by the buyer and the seller alone, with no intervention required from the trust agent. Otherwise, the trust agent will arbitrate the dispute for a fee, and eventually take either the side of the seller, in which case the payment will proceed, or the buyer, in which case the escrowed bitcoin will go back to the buyer.

With multisig, the trust agent is not able to take the money and run, because the payment address is fixed and any decision of the trust agent must still be validated by the seller or the buyer. But as usual, the devil is in the details: a dishonest trust agent could collude with a dishonest seller – or buyer – behind the scenes. Bitrated’s reputation management system addresses this problem.

“We believe that Bitrated holds the key to the next wave of Bitcoin consumer adoption,” said Bitrated CEO Nadav Ivgi . “While disputes about e-commerce are usually settled in a fairly easy process, Bitcoin transactions still hold a major risk of fraud. The new reputation management system is a huge leap forward in consumer protection when combined with the secure payment system, and it can help bring Bitcoin one step closer to the massive numbers of users in e-commerce.”

Bitrated created a marketplace for arbitration services where trust agents can compete for customers by providing quality dispute resolution services, utilizing their domain expertise, building a reputation and offering competitive fees.

“Because trust agents never hold user funds in escrow, we can greatly reduce compliance costs, lower the entry barriers, encourage competition and allow smaller and specialized players to participate in a way that was never possible before.”

To join Bitrated, users need to create a profile like this and link their social network accounts. At this moment, reputation scores are mostly based on the various karma systems and number of friends/followers on the social networks. Later, it’s to be expected that reputation scores will be based on user reviews, successfully completed transactions and dispute resolutions on the Bitrated system itself.

To create a new trade, buyers need to specify what they are buying (a description of the product or service, delivery method and other agreed upon terms), the price in bitcoin, the user name of the seller (an external email address can also be used, in which case the seller will receive an invitation to join Bitrated), a refund bitcoin address, and the user name of the trust agent. Trust agents, who can be found in the Bitrated user database, can specify their fees: a base fee (for example 0.5%) and a dispute resolution fee (for example 2%). If the system catches on, top-rated trust agents whose services are in demand could earn significant fees.

Bitrated is a very welcome addition to the Bitcoin ecosystem, and one that meets an important need. It can be seen as an open and transparent alternative to the native escrow and reputation systems of specific Bitcoin marketplaces – where often escrow and dispute resolution are provided by the operator itself. Bitrated, which is essentially a public marketplace for arbitration services with a crowd-sourced reputation system, is a good solution to manage trust issues in the digital economy.

Decentral Talk Live features a diverse collection of guests this week from all over the decentralized and disruptive technology community. Topics include security and regulatory compliance, publishing, branding, web-development, and building features on top of the Bitcoin blockchain.

Balancing security and privacy with regulatory compliance is a tricky business when it comes to digital currencies. This week, DTL talks with Amber Scott, founder and “Chief AML Ninja” of Outlier Services. Scott is a Certified Anti-Money Laundering Specialist (CAMS) and a Certified Privacy Professional (CIPP) with a degree in psychology from the University of Waterloo, where she helped develop the first applied psychology course on criminal profiling. In 2013, she founded Outlier Solutions to provide AML and CTF compliance for financial services (including casinos, insurance, accountants, real estate, securities/investments, digital currencies and more). Among other security-related topics, Scott delves into the complex world of financial regulation and gives tips on dealing with banks — always a tricky problem for Bitcoin companies.

Craig Sellars, the CTO of the Mastercoin Foundation, joins DTL to discuss its communications protocol. Mastercoin uses the Bitcoin blockchain to enable features such as smart contracts, user currencies and decentralized peer-to-peer exchanges. A common analogy used to describe the relation of the Master Protocol to Bitcoin is that of HTTP to TCP/IP. Like the Master Protocol, HTTP is the application layer for the more fundamental transport and internet layers of TCP/IP, such as Bitcoin.

As co-founder and CTO of Tether, Sellars also answers questions about this fiat currency token platform on the Bitcoin blockchain. Tether aims to provide a quick and secure way to store, send and receive real-world currency as if it were bitcoin.

Themes for this week will also include communication and marketing in the Bitcoin space.

Rik Willard, CEO of MintCombine, a think tank and product lab delivering blockchain solutions for brands and causes, will talk about the challenges of navigating the complex economic environment of emerging decentralized digital engagement ecosystems.

Mitchell Callahan, Founder and COO at Saucal, will provide insight into his Bitcoin & web application development firm.

Jeffrey Tucker, Chief Liberty Officer of Liberty.me, a subscription-based, action-focused social and publishing platform for the liberty minded, will share his enthusiasm for sharing and promoting ideas that support freedom.

Decentral Talk Live airs new episodes at 3 pm EST, Monday through Friday, on decentral.tv.

On Tuesday, February 17, the Canadian Bitcoin community was surprised to learn that its biggest and longest-serving exchange, CAVIRTEX, was to wind down operations by March 25. Enter QuadrigaCX, heir apparent to the title of Canada’s largest Bitcoin exchange.

An older version of the CAVIRTEX database, including 2FA secrets and hashed passwords, may have been compromised. Their website states, “We believe that damage to the company’s reputation, caused by the potential compromise, will significantly harm our ability to continue to operate successfully.” Kyle Kemper, VP of CAVIRTEX, also cited a difficult banking relationship as a contributing factor.

CAVIRTEX was the second exchange to go down in Canada this year; Vault of Satoshi also declared its intent to close as of February 5th, 2015.

“We’ve definitely seen an increase in new accounts over the past few days,” said Gerald Cotten, CEO of QuadrigaCX. He added that the closure of CAVIRTEX came as a “total surprise” to him. Like everyone else following the Bitcoin news in Canada, he knew about some of CAVIRTEX’s difficulties, but didn’t think they were serious enough to close the company. “Security and banking issues…come with the territory when one operates an exchange,” he said.

Can QuadrigaCX avoid a similar fate?

Cotten places his faith in the company’s security system. QuadrigaCX clients’ passwords are encrypted both server-side and client-side, on-site and in-browser. Even if someone managed to hack in and steal their password hashes, as in the case of CAVIRTEX, those hashes would be useless to the thief.

“Total security is incredibly hard to achieve,” Cotten said. “You make one little mistake and a hacker can and will exploit it. Banks can’t guarantee they won’t get robbed; exchanges can’t guarantee they won’t get hacked. That’s why we keep as little [bitcoin] online as possible.” The rest of the funds are kept in cold storage. Cotten added that QuadrigaCX participates in the Bug Bounty program run by Crowdcurity, so their system is continuously being tested for weak points of entry.

As for its banking relationships, QuadrigaCX appears positioned to keep legacy banks onside. When it comes to banks, said Cotten, an exchange is “always walking on eggshells.” Before its launch on December 26, 2013, QuadrigaCX registered with FINTRAC as a money services business, becoming the first exchange to do so in Canada. While it isn’t strictly required by law, such registration is perceived by banks as a sign of legitimacy, and registration has minimized the number of banking issues the exchange has had to face. QuadrigaCX was also the first Canadian exchange to integrate INTERAC^TM Online.

It also helps to have a little luck. Just before it was thrust into the spotlight, QuadrigaCX began a global marketing campaign to expand its business outside of Canada, targeting more international markets. At the moment, it carries CAD/BTC, USD/BTC and Gold/BTC order books, and accepts clients from most countries around the world. Due to regulatory complexities, however, QuadrigaCX does not accept U.S. clients.

As for the prospect of other foreign exchanges encroaching on the Canadian Bitcoin space, Cotten isn’t worried. He points out that Bitstamp and Bitfinex are already active in Canada, but he doesn’t foresee too many other companies making a push into the Canadian market. “Trading volume is still very low [here],” he says. “It’s not really worth it for them.” And Canadians who might try to migrate toward foreign exchanges are likely to find the process too complicated and expensive by comparison.

To see a recent, in-depth interview with Gerald Cotton, and learn more about QuadrigaCX, visit decentral.tv. For this episode of Decentral Talk Live, Cotten spoke with host Ethan Wilding and guest host Hai Nguyen shortly before the CAVIRTEX announcement.

Commentary by Giulio Prisco

One of the first actions of Greek PM Alexis Tsipras, after the January 25 elections that brought the “anti-establishment” party Syriza to power, was to appoint renowned economist Yanis Varoufakis as Finance Minister. Since the elections, the European media has been full of reports about the financial situation in Greece, and the efforts of Tsipras and Varoufakis to renegotiate the Greek debt with European Union (EU) authorities. Rumors of a possible “Grexit,” the exit of Greece from the EU, keep surfacing.

Syriza – officially known as “Coalition of the Radical Left” – is usually considered a political force of the left, as its formal name implies. However, Tsipras formed an “anti-austerity” government coalition with the Independent Greeks of Panos Kammenos, a political party very much on the right. Actually, categorizing Syriza as either right or left would be inappropriate – the party is a political movement unique to the 21^st century, beyond the old categories of right and left, with a radical and unconventional approach to contemporary political issues.

Varoufakis , the new Greek Finance Minister, is no stranger to radical and unconventional thinking. In 2012, he became Economist-in-Residence at Valve Corporation, creators of the popular video games Half-Life, Portal and Counter-Strike. At Valve, Varoufakis researched in-game digital economies and maintained the Valve Economics blog. He praised the very informal management structure at Valve with words that one wouldn’t expect from a politician of the left.

“Now read my political economy analysis of Valve’s management model,” he wrote. “One in which there are no bosses, no delegation, no commands, no attempt by anyone to tell someone what to do. Can useful lessons be drawn about not only Valve’s inner workings but, importantly, regarding the future of the corporate world?

“I realized that this bunch of people were not just weird but also wonderful and, to boot, that what they were describing, the digital community they had facilitated into existence, was an economist’s dream-come-true,” Varoufakis  wrote in an account of his first contact with Valve. “Think of it: an economy where every action leaves a digital trail, every transaction is recorded.”

In the Bitcoin block chain, every action leaves a digital trail and every transaction is recorded, so here Varoufakis is describing something very similar to Bitcoin as an economist’s dream come true. It’s therefore interesting to learn what he thinks about Bitcoin, and whether he sees something like Bitcoin – or, more likely, a state-controlled “Fedcoin” – playing a role in the (necessarily creative) rescue of the Greek economy.

“It is quite natural that many dream of a currency that politicians, bankers and central bankers cannot manipulate; a currency of the people by the people for the people,” Varoufakis wrote in 2013. [But] there can be no de-politicized currency capable of ‘powering’ an advanced, industrial society.”

According to Varoufakis, Bitcoin is intrinsically deflationary and essentially a digital equivalent of gold, which can’t provide solid foundational support for a modern economy. He added:

“Would it be possible to calibrate the long-term supply of bitcoin in such a way as to ameliorate for the deflationary effects described above, while tilting the balance from speculative to transactions demand for bitcoin? To do so we would need a Bitcoin Central Bank.”

We are definitely in Fedcoin territory here. In a 2014 follow-up article titled “Bitcoin: A flawed currency blueprint with a potentially useful application for the Eurozone,” Varoufakis keeps endorsing Fedcoin, or perhaps “Eurocoin.”

“[T]he technology of Bitcoin, if suitably adapted, can be employed profitably in the Eurozone as a weapon against deflation and a means of providing much needed leeway to fiscally stressed Eurozone member-states,” he says. He goes on to explain in detail how peripheral EU countries could create their own payment system with a Bitcoin-like algorithm to make it transparent, efficient and transactions-cost-free.

He concludes, “[W]hile Bitcoin is too deflationary by nature to act as a widespread currency alternative to the dollar or the euro, its design can be used profitably in order to help the Eurozone’s member-states create euro-denominated electronic payment systems that help them, at least in the medium term, overcome the asphyxiating deflationary pressures imposed upon them by the Eurozone’s Gold Standard-like [and, indeed, Bitcoin-like] austerian design.”

When Varoufakis wrote these words in 2013 and 2014 he was just another economist, with a reputation perhaps slightly tainted by association with the video-gaming industry. But now he is the Finance Minister of a nation forced to consider new solutions to heal its collapsing economy, and in possession of considerable negotiating power with the EU authorities that wish to avoid the prospect of “Grexit.” It will be interesting to keep watching.

Image of Varoufakis via Wikimedia Commons.

The U.S. Marshals Service is holding its third Dread Pirate Roberts (DPR) bitcoin auction this March 5^th, 2015. These bitcoin were seized from Ross Ulbricht, allegedly the Dread Pirate Roberts, in relation to the Silk Road prosecution, an online black market bust primarily related to the sale of illegal drugs.

At auction are 50,000 bitcoin separated into two series. The first (series A) will consist of ten blocks of 2,000 bitcoin each, requiring a deposit of $100,000. The second series (B) will consist of ten blocks of 3,000 bitcoin each, requiring a deposit of $150,000.

Not all of the coin at auction were necessarily involved in some form of illegal transaction. There were some legitimate merchants who sold perfectly legal goods through the Silk Road platform.

Like the previous two auctions, the current one is blind, meaning that bidders will not know the value of the other bids. The first auction was held last summer for just under 30,000 bitcoin, in nine blocks of 3,000 and a partial tenth block. Participants had to deposit a minimum of $200,000 to take part.

Tim Draper won all the blocks up for sale in the first auction.

He also claimed 2,000 bitcoin from the second auction of 50,000 bitcoin that was held in early December, 2014. The remaining 48,000 bitcoin (19 of 20 blocks) were won by syndicate bidders led by SecondMarket and the Bitcoin Investment Trust (BIT).

The second, most recent auction had 11 registered bidders and 27 resulting bids.

Parties interested in the upcoming third auction should be aware that the bidder registration has opened from February 17^th, but will close at 12:00 EST on Monday, March 2^nd, 2015.

Deposits for the auction must originate from a bank located within the United States, and bidders must confirm that they have no association with Ross Ulbricht.

Registration consists of the deposit along with a manually signed pdf copy of the registration form, a copy of a government issued photo ID (of the bidder or control person) and a copy of the wire transfer receipt.

The auction starts at 08:00 EST on March 5^th and will last until 14:00 EST the same day.

For more information about the auction, visit the U.S. Marshals site here.

On February 18, 2015, CNN Money quietly announced via Twitter its new Bitcoin quote page, with the ticker XBT.

Like all CNN Money quote pages for public stocks, the XBT page has a price chart, updated daily, and a compilation of recent Bitcoin news.

CNN Money is no stranger to Bitcoin. It often publishes related news, and has a simple infographic page to explain Bitcoin. In September 2014, CNN Money’s Jose Pagliery published a book, Bitcoin: And the Future of Money, which is considered one of the best general reference books on the subject.

Now that CNN Money readers know about Bitcoin, how can they trade XBT? So far, only one option is available: trade Bitcoin on a reputable exchange like Bitstamp or Coinbase. Soon, another option more suitable to traditional investors will be available: the Winklevoss twins’ planned Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to all investors on NASDAQ with the ticker COIN and reflect the dollar exchange rate of bitcoin on Winkdex. That will be an interesting option for those who are persuaded that XBT will rise in the mid- and long term, but prefer not to hold bitcoin.

It’s interesting to note that CNN Money treats Bitcoin like a stock. Today many people know Bitcoin as some kind of investment vehicle whose value goes up and down, and consider it as either a currency or a stock depending on whether they use it to trade on forex or stock exchanges.

But it’s important to realize that Bitcoin is not a stock.

Company stock prices go up and down in the bulls-and-bears stock market depending on the public perception of the company. When there is good news about new products on the market or strategic acquisitions, the bulls want to buy and the price goes up. When there is bad news, the bears want to sell and the price goes down. In both cases, investors buy and sell depending on what they think will happen to the stock price. That’s how the stock market works, and so far Bitcoin is no exception.

But while you can’t buy things with Apple or Microsoft stock – no pizza costs 0.2 MSFT shares – you can buy more and more things with bitcoin, including consumer goods, iPhones, meals in restaurants, groceries in supermarkets that accept bitcoin, plane tickets and more. With Bitcoin adoption sky-rocketing among consumers and merchants alike, more and more consumers use bitcoin for purchases. Those purchases are equivalent to sell orders, and they bring the price of bitcoin down.

Therefore, the growing enthusiasm of corporate investors and venture capitalists, who believe that Bitcoin is the next big thing and bet on next-generation Bitcoin killer apps, won’t necessarily result in a rise of the XBT price. It’s important that investors bear that in mind.

If you’ve ever used bitcoin currency, you know that it can be frustrating to try to send and receive money when QR codes aren’t cooperating.

Solar reflection, phones with cracked screens, and poorly focusing cameras are among the issues that are hampering widespread use of QR codes and impeding Bitcoin adoption.

Developers at Airbitz, a Bitcoin wallet and business directory, have found a solution.

In October of 2014, Airbitz unveiled technology that allowed for iPhone users in close proximity to pay each other wirelessly via Bluetooth technology on their app– all without the need to pair iPhones. No more QR codes.

This is made possible by Bluetooth Low Energy (BLE).

When compared to Classic Bluetooth, the newer BLE uses less power and lowers costs while providing a similar communication range.

But not everyone uses iPhones.

The latest android software update (Android 5.0), however, has BLE capabilities. As a result, Airbitz has recently launched wireless Bitcoin payments for Android. The Airbitz protocol is compatible between iPhone and Android devices.

The idea for wireless Bitcoin payments emerged out of dissatisfaction with the QR code method of transacting with Bitcoin.

Paul Puey, CEO of Airbitz, explained:

“The idea came about after many frustrating experiences with QR codes, and the realization that most people are not familiar with them and their scary appearance. The advance of Bluetooth Low Energy (BLE), which can work without pairing, gave us the motivation to develop this feature and protocol.”

“Android was far more difficult to implement than iPhone,” adds Paul. “Our usage of BLE requires a mode called Peripheral Mode, which allows a device to behave like a beacon, broadcasting info to receiving devices. iPhone has had this capability since the iPhone 4S, allowing it to both broadcast and receive BLE payment requests. Android only introduced this Bluetooth feature (Peripheral Mode) as of version 5.0 (Android Lollipop). We developed the early beta versions of 5.0 with the expectation that old devices would support this feature. Before release, at the last minute, Google disabled Peripheral Mode for all devices except Nexus 6 & 9. Although a bit crippled by Google, the Airbitz wallet allows full send and receive via Bluetooth on Nexus 6 & 9, but only sending capabilities on most Android 4.3 devices and higher.”

Ultimately, this initiative is a move toward making Bitcoin user-friendly, something that the cryptocurrency will need if it hopes to thrive.

“Our focus,” concludes Paul, ” is to deliver software with an amazing user experience, both visually and functionally, simplifying this advanced technology and delivering it to the masses while still retaining Bitcoin’s core principles of decentralization and privacy.”

This important innovation can potentially make the process of adopting Bitcoin less like pulling out molars, and more like learning how to tweet.

Check out Airbitz’s website here.

Announced on Twitter on February 11, 2015, Telebit started to gain traction earlier today.

Telegram is an instant messaging app for smartphones, tablets and the web. Similar to Whatsapp, the popular instant messaging app acquired by Facebook in 2014 for $19 billion, Telegram offers better privacy and security, as well as an open protocol and API.  These features have gained Telegram 50 million faithful users.

A Bitcoin wallet integrated with Telegram, Telebit allows bitcoin to be exchanged among other Telegram users as well as external bitcoin addresses.

“The [Telebit] system has been live for 2 weeks now, and we are now satisfied with its feature set and stability,” reads today’s announcement on the Bitcointalk forum. “Telebit leverages the Telegram messenger app itself which is well known, tested and available on pretty much every device.”

With Telebit, all Telegram users have an instant, easy-to-use Bitcoin wallet. To start using the service, search for Telebit on Telegram and send the message “wallet.”  Telebit will send back your Bitcoin address as both an alphanumeric string and a machine-readable QR code, with a welcome gift of 0.00025 bitcoin. You can send a deposit to your new wallet, and send bitcoin to other Telegram users or any external Bitcoin address with a simple text message to Telebit. See the Telebit website for a list of Telebit commands, or send the query “help” via Telegram.

Like other online wallets, Telebit wallets are stored in the cloud, so it’s not recommended that you use Telebit for receiving or storing large sums. Rather, Telebit is a portable wallet that you can carry on your smartphone and load with the bitcoin that you expect to spend in the short term – just like cash in a physical wallet.

What happens if you didn’t put enough money in your Telebit wallet this morning, and now you don’t have enough to buy a beer? Just ask a friend on Telegram to send you some bitcoin.

Bitcoin transfers to other Telebit accounts are instantly processed off-chain with no transaction fees. Transfers to an external Bitcoin address, to be processed by the block chain, can be initiated with a text command. Users can set a limit to the amount of bitcoin they wish to hold in a Telebit wallet, and automatically forward overflows to an external Bitcoin address.

Telebit is the brainchild of Eric Goforth and Jonathan Harrison. A couple of weeks ago the latter left his previous venture SatoshiPoint to “concentrate on [his] stealth btc project.”

Telebit has could be a game changer. The recent history of the Internet shows that momentous things begin to happen when online services reach a critical degree of simple usability, and Telebit makes handling bitcoin as simple as sending a text message.

Now imagine a hypothetical service similar to Telebit but built on Whatsapp, owned by Facbook, which has more than 600 million users and could eventually be integrated with Facebook’s messaging system. That would be a real game-changer: all Facebook users would have a Bitcoin wallet and easy one-click access to bitcoin transactions.

Telegram is not as popular as Whatsapp – yet. But it is growing very fast, and it seems a prime target for acquisition by a major Internet company. If that happens, the impact on the Bitcoin economy will be profound.

Image via telebit.org 

The idea of a government-sponsored digital currency has been around for quite some time. See, for example, the unconfirmed rumors reported in a March, 2013 discussion on the Bitcointalk forum titled “Fedcoin: A centrally-issued alternative to peer-to-peer currencies.”

Now U.S. economists are taking it seriously.

On February 3, David Andolfatto, Vice President of the Federal Reserve Bank of St. Louis, wrote a blog post based on a presentation he gave at the International Workshop on P2P Financial Systems 2015. The title of the blog post is “Fedcoin: On the Desirability of a Government Cryptocurrency.”

Andolfatto’s central thesis is that the government could solve the problems of digital economies as follows:

“Imagine that the Fed, as the core developer, makes available an open-source Bitcoin-like protocol (suitably modified) called Fedcoin. The key point is this: the Fed is in the unique position to credibly fix the exchange rate between Fedcoin and the USD. [Consumers and businesses] will have all the benefits of Bitcoin – low cost, P2P transactions to anyone in the world with the appropriate wallet software and access to the internet. [I]n short, Fedcoin is essentially just like digital cash. Except in one important respect. Physical cash is still a superior technology for those who demand anonymity.”

Finextra blogger Tom Hay notes that Fedcoin contradicts the radical ideology of those Bitcoin enthusiasts who want a fully P2P economy not centrally controlled by the state. But from a government perspective it’s an interesting idea, because it links the stability of fiat currency to the speed and convenience of the Bitcoin technical platform. He adds:

“Ecuador has already launched a government-backed digital currency pegged to the U.S. dollar. [T]he Ecuadorian system is not based on the blockchain, and indeed Ecuador has banned Bitcoin and altcoins, but the Philippines are considering issuing a blockchain-based e-peso. The idea of digital fiat currency clearly has legs.”

So is the rise of FedCoin inevitable?

The film “The Rise and Rise of Bitcoin” is a fascinating recap of the rebellious history of Bitcoin since its inception in 2009 all the way to the Mt. Gox fall and the arrest of Charlie Shrem in early 2014. The film tells a typical Internet story of idealistic hackers who want to change the world and their unstoppable rise… until the big boys take notice.

Those old enough to remember their “Internet moment” of enthusiastic awe for the newborn Internet in the early 90s – yes, it will change the world so fast – remember also the rest of the story: from a plaything of geeks and techno-libertarian anonymous dreamers (a famous 1993 New Yorker cartoon observed that “On the Internet, nobody knows you’re a dog”), the Internet quickly became a tool of Big Capital and Big Government.

Today, old-timers use Facebook like everyone else, but know that everything we say and do online is monitored by governments and businesses all the time. We know that, short of taking pro-level privacy measures, there is no way to escape online surveillance. Today the Internet, like it or not, belongs to the establishment.

Perhaps it’s naïve to think that exactly the same thing won’t happen to Bitcoin.

The main appeal of Bitcoin for the original Libertarian and anarchist enthusiasts was the possibility of anonymous and untraceable transactions. But bitcoin transactions are traceable by-design to a bitcoin address, and anonymous only if the bitcoin address can’t be traced back to a physical person.

In practice, bitcoin transactions are easily traceable to their originators, and that’s one of the reasons governments will warm up to digital currencies. Forget using Bitcoin to escape taxes – in a state-controlled digital economy, the tax man will be able to find all your income and expenses in the blockchain.

Bitcoin transactions are faster and cheaper than traditional transactions, which is an important incentive not only for end users but for government agencies as well, as shown by the recent Bitcoin bills in Utah, New Hampshire and New York City. It seems likely that governments will try to appropriate selected aspects of digital currencies, and eliminate undesired aspects such as anonymity and volatility, to create efficient and cost-effective but fully regulated digital economies.

“Gemini” means twins in Latin, and it’s also the name of the new Bitcoin exchange created by super-entrepreneurs and venture capitalists Cameron and Tyler Winklevoss. After its public launch in the spring, the New York -based Gemini exchange, announced in January on the Winklevoss Capital website, will be a fully regulated Bitcoin exchange built on rock-solid compliance and backed by the U.S. regulatory and banking infrastructure. The Winklevoss twins discussed their plans in an interview with Vice News.

Last month, investors including three of the world’s most respected financial institutions – The New York Stock Exchange (NYSE), a subsidiary of USAA, and BBVA Ventures – invested $75 million in the Bitcoin service provider Coinbase, bringing its total capital to $106 million. According to Coinbase, that was the first time financial institutions made a major investment in a Bitcoin company. Besides buying and selling Bitcoin, the Coinbase Exchange allows customers worldwide to hold and use US dollars. Therefore, as noted by David Bailey in a recent Bitcoin Magazine article, Coinbase can be considered as the first global bank, and “the AOL of Bitcoin.”

Not so fast, say the Winklevoss twins. In their opinion, Coinbase launched their exchange before completing the necessary regulatory homework. Vice News reports that regulators in New York and California haven’t yet issued all the applicable licenses. Mark Williams, a finance professor at Boston University, believes that Coinbase’s attempt to start business without all the required licenses was very risky. According to him, building trust with regulators is key to Bitcoin’s future.

The Winklevoss twins believe that the main selling point of Gemini will be its strict compliance with all applicable regulations and its firm base in the US banking system – a major U.S. bank is involved, and no money will cross borders.

According to a statement issued by the twins: “[I]t’s a U.S. home for people, where they don’t have to wire their money overseas, where their money can actually stay in America, where they can buy and sell bitcoin from a company that’s regulated and has consumer protections. We see this as really critical infrastructure to building bitcoin and realizing its potential. [W]e’ve had open dialogue with regulators for almost a year now and we feel that we’re close and we want to make sure that we truly [are] licensed, that’s one of our principles. We don’t want to half bake it, or hack our way through and be on the fringe of it, we really want to do this the right way and get the blessing of the regulators. And we do feel that that’s around the corner.”

An interesting issue raised by the Vice News article is the “sell-out” of Bitcoin, which apparently is taking distance from its cypherpunk roots in underground crypto-anarchist circles and embracing Big Capital and Big Government. Is the mainstreaming of Bitcoin inevitable and necessary for its adoption by the masses? Some say the nature of the Bitcoin protocol makes it impossible to completely eliminate its potential for anonymous and untraceable transactions. Is that is the case, even in a Bitcoin economy that becomes more and more mainstream and regulated, there will always be underground pockets of unconstrained use.

In addition to Gemini, the Winklevosses are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to all investors on NASDAQ with the ticker COIN. The launch date is unknown, but the twins told Inside Bitcoins that everything is proceeding according to plan.

They added: “For those who are up for that and want to actually buy and sell bitcoin the asset, they can do so at Gemini.com. For those that just want bitcoin asset exposure or those, like institutions, pension plans, 401(k)s, etc., that cannot invest in bitcoin themselves, their only avenue to gain bitcoin exposure will be through a structure like an ETF where they are purchasing a security and not the underlying asset itself.”

According to the SEC filing, the value of COIN shares will reflect the dollar exchange rate of Bitcoin on Winkdex. That will be an interesting option for those traditional investors who are persuaded that the dollar exchange rate of Bitcoin will rise in the mid- and long term, but prefer not to hold Bitcoin.

Images via Gemini.

 

One of the challenges of storing bitcoin securely is finding the appropriate tradeoff between security and convenience. On one end of the spectrum, hosted online wallets make it super simple to store your bitcoin online and access them from any computer by logging in with a username and password. However, this means that your account can be compromised easily by an attacker who learns your email and password. This also means that you must trust your hosted wallet provider to offer appropriate security measures.

On the high-security end of the spectrum, paper wallets allow you to store bitcoin completely offline, but the process of creating a paper wallet securely and spending bitcoin from your paper wallet is quite complex and can be intimidating for first time users.

Enter the hardware wallet: the security of offline storage with the convenience of a hosted web wallet. There are two hardware wallets on the market today, the Ledger Wallet Nano and the TREZOR. At only 29 euros (~$33), the Ledger Wallet is a more affordable option than the TREZOR, which retails for $119. Both offer similar functionality; the TREZOR has more features, including a dedicated screen that accounts for the higher price, but it may appeal to a more select group of users than the basic, all-purpose Ledger.

The Ledger Wallet is a hardware wallet, which means that the private keys to your bitcoin address are stored in a secure chip on the wallet. This allows you to use the wallet even with a computer that may be untrusted, as your private keys cannot be extracted from the hardware wallet. This concept was made popular by the TREZOR wallet, the first bitcoin hardware wallet released.

The Ledger Wallet itself looks similar to a standard USB thumb drive. It comes with a recovery sheet and a security card in a black pocket.

To set up a Ledger Wallet, the first step is to visit the Ledger website using the Chrome browser to launch the application. This application walks you through the setup process for the Ledger Wallet and allows you to send and receive bitcoin using the wallet.

When you first open the application, you’re prompted to plug the wallet into the USB drive of your computer. Once you’ve plugged it in, you have the choice of either creating a new wallet or recovering an existing one. Choosing to create a new wallet begins the simple, four-step setup process.

 

Step one is to confirm that the computer you’re using for the setup process is secure. The setup application handles highly sensitive data about your wallet, so this configuration should only be done from a malware-free computer. For the super security conscious, this means using a fresh install of Linux on a computer without internet access. However, once you’ve completed the setup process, you can use the Ledger Wallet from any computer, even an untrusted one. (Here is where a key feature of the TREZOR may appeal: it can be setup without using a computer, with no extra security precautions needed.)

Step two is to set up a four-digit PIN code that must be entered every time you plug in your Ledger Wallet. If you enter this PIN incorrectly three times, the Ledger Wallet is wiped and you must restore it using the recovery process. This prevents anyone who gains access to your Ledger Wallet and security card from completing transactions without your PIN code.

Step three is to simply confirm the PIN code you’ve chosen during the setup process.

At step four, the Ledger Wallet application generates a 24-word recovery phrase and instructs you to record it on the recovery sheet. This 24-word phrase can be used to restore your Ledger Wallet, so it must be stored in a safe place apart from your wallet, like a safe deposit box. If your Ledger Wallet ever becomes lost, damaged or deleted, you can use your phrase to recover your account and bitcoin     to any Ledger Wallet. This is the same recovery process that the TREZOR wallet uses.

 

Once you’ve written down the recovery phrase, the Ledger Wallet setup is complete and you’re ready to start sending and receiving bitcoin. Simply enter your PIN code to unlock the Ledger Wallet and you’re presented with an interface that allows you to send and receive bitcoin and view your transaction history.

 

 

To receive bitcoin, you can either send a request via email or simply display your wallet address as plain text or a QR code containing your public key.

 

To send bitcoin, you can enter the recipient’s bitcoin address or scan a QR code and enter the amount you’d like to send. However, the Ledger Wallet adds one additional step to the sending process to confirm the intended address. The Ledger Wallet application shows the address you’re sending bitcoin to, and randomly chooses four characters from the receiving address. For each character, you use the security card that came with your Ledger Wallet to look up the corresponding character, e.g. a = 0, b=9, c = 3, etc. This step is important because it ensures that you’re only sending bitcoin to the address you intended, and that this address hasn’t been modified by malware. The TREZOR has a dedicated screen on the hardware wallet so that you can verify the intended bitcoin address before signing the transaction. The Ledger Wallet team has stated that the next version of the Ledger Wallet will also include a screen.

Overall, the Ledger Wallet is a great solution for users who desire a simple yet secure way to store bitcoin. The setup and use of the Ledger Wallet is simple and easy to follow, even for those new to bitcoin. It is small, easy to carry and features a very intuitive interface. The Ledger Wallet’s Paris-based team says that many improvements are in the works, including features for use of multiple accounts as well as a smartphone application instead of the security card, to confirm the destination address. A second version, the Ledger Wallet Proton, which will include NFC transaction signing, is currently under development.

Decentral Talk Live will cover a diverse array of topics. Co-hosts Anthony Di Iorio and Ethan Wilding prepare us for a decentralized road-trip with Steve Coast, founder of OpenStreetMaps. OSM is a free and open map-data project that is updated through the collaborative efforts of its decentralized users. Viewers will find out more about how to become part of this robust and fast-growing project.

Among the users of OpenStreetMaps is the Digital Humanitarian Network. Patrick Meier of DHN beams in to the DTL studio to talk about the role of digital networks in the delivery of 21st century humanitarian response. He will discuss the interface between formal, professional humanitarian organizations and informal, yet skilled-and-agile, volunteer & technical networks.

ChangeTip has been making headlines lately with its community engaging efforts to spread bitcoin among hard-core crypto believers and neophytes alike. CEO Nick Sullivan joins DTL to give more insight into the recent tipping phenomenon and to answer questions sent in by the community.

Similarly, Vinny Lingham, CEO and Co-founder of Gyft, also makes an appearance, answering community- generated questions about this popular site that allows bitcoiners buy, send and redeem eGift cards from a large assortment of popular vendors.

Decentral Talk Live airs new episodes daily from Monday to Friday at 3:00 pm EST on decentral.tv.

The internet was a vague idea for most people, before AOL arrived and gave the world a usable, daily internet access tool. The recent launch of Coinbase Exchange will change Bitcoin no less spectacularly. If you need further evidence, compare the early user growth rates of AOL with those of Coinbase. Coinbase adoption rates are significantly outpacing those that AOL made history with back in the early 1990s.

Here’s how and why.

Since Bitcoin growth rates seem to be stagnating compared to their 2013-2014 highs, most of us are accustomed now to leadership and innovation in the industry coming from the heavily venture-backed companies. From the standpoint of a VC, the space has matured over the past year from a field of slim pickings to one filled with heavyweights such as Coinbase, BitPay, Circle, BitGo, ChangeTip, BitFury, Chain, BitNet, OkCoin, Blockchain and many more. Amazing teams, amazing businesses, incredible growth trajectory and promise. If you haven’t been watching closely, you may have missed this transformation.

The recent news of Coinbase’s $75 million series C and the fruit of their labor, the Coinbase Exchange, was well publicized. However, few took note of the company’s rollout of fiat-backed accounts. On a pragmatic level, this means you can now sell your bitcoin and hold local currency with Coinbase. Individually these announcements are exciting, but in unison they represent a game changer. Bitcoin, beyond its philosophical or technological promise, has finally gained legal utility.

Let me lay this out for you in more detail.

Coinbase just used its Bitcoin foundation to become the world’s first global bank. Let that sink in. Sure, there are international banks, but operationally these banks function more as group of allied national banks who share a brand. That is not the same thing as a global bank. A customer in Greece, for example, who opens an account with Coinbase, is now doing business directly with a U.S.-based “bank.”

Thanks to Coinbase’s $75 million funding round provided by the NYSE, large U.S. banks, a multinational telecom company and a roster of finance VIPs, you can now open an account in a country such as Poland or Greece, fund your account via bitcoin or wire, and hold your money in U.S. dollars in the comparatively stable U.S.A. Your money is now completely insulated from your local currency issues, but spends the same as euros in your local bank account. This is the best of both worlds: all the functionality of your existing bank (and more), without the associated risks and fees. In addition to the banking services, Coinbase has just created the easiest, cheapest, least corrupt and most secure way to buy dollars. I imagine we’ll see an increasing number of local currencies you can hold in your account, too.

This week has seen an additional series of important announcements from Coinbase. On February 10, the company announced that it has expanded its bitcoin buy-and-sell functionality to five additional countries: the Czech Republic, Hungary, Bulgaria, Norway and Croatia. This brings the total number of countries where Coinbase’s buy-and-sell features are available to 24, with its wallet functionality available in 166 others.

All Coinbase needs now is a debit card and they could complete the circle. What if Coinbase gets shut down locally? If they were smart, they’d shut down operations in that country and refund everyone their deposits in bitcoin. Let the customer unload it locally at a small discount. The result: risk-free dollars. Funded by the NYSE. And INSURED.

If you are an exchange, it is imperative that you start taking notes and start moving fast. Coinbase has created the world’s first truly global bank, with features and low fees that a legacy bank is technically incapable of offering, unless they use Bitcoin.

Congratulations are in order for Coinbase. This was no easy feat. But surely now, other financial institutions have taken note of BBVA and USAA involvement, and will be looking for their own play in the space. As soon as Coinbase turns on the marketing engine that brands it as a gateway for USD, Coinbase use will surge internationally and, by its nature, introduce those users to the world of Bitcoin. Consumers have a use case, businesses have a use case, and the best-performing venture investors are salivating. Now it’s just a race to the first 10 million users.

FOR IMMEDIATE RELEASE

CHANGETIP TEAMS UP WITH FIRST 501 (c) (3) BITCOIN CHARITY BITGIVE

Tip-Redirect Feature Allows For Automated Donations

SAN FRANCISCO – February 9th, 2015 — Today, fintech start-up ChangeTip announced that it has selected BitGive, the first Bitcoin charity registered as a 501 (c) (3), to benefit from its Tip Redirect feature. ChangeTip has many users who, due to their social or employment status, wish to not receive tips for their work. As a result, the company has set up an automatic Tip Redirection feature, enabling users to channel all their money to the charity of their choice. This week, ChangeTip launches with popular Bitcoin not-for-profit BitGive to highlight the benefits of frictionless payments over social media to facilitate charitable initiatives automatically.

“The two best use cases for Bitcoin are micropayments and charitable giving, because of low transaction fees and frictionless public sharing on social media,” explains Victoria van Eyk, Head of Community Development. “We see this partnership as a natural fit for us and want to enable automatic giving in a powerful, robust way for organizations doing really great work.”

Connie Galippi, Founder and Executive Director of the BitGive Foundation elaborated: “We are pleased to see this new feature and are honored to be partnering with ChangeTip on its debut. Bitcoin has made microdonations a reality, and ChangeTip makes it fun and easy using social media interactions. We are excited to see ChangeTip’s support for charity continue.”

The Tip Redirect feature is available to every ChangeTip user as of Tuesday, February 10th, for the popular #tippingtuesday and, when selected, automatically funnels all received tips to BitGive. To initiate this feature for yourself, simply log into your ChangeTip account, click on the highlighted option (featured below) and choose “Redirect My Tips To A Cause.” ChangeTip anticipates adding more and more causes every week.

 

 

###

About ChangeTip:

ChangeTip is owned by San Francisco-based ChangeCoin Inc., a Delaware corporation. ChangeTip allows people to express appreciation or pay other individuals or organizations via monetary “tips.” Tips are sent natively within the chosen social media platform and allow users to transact seamlessly in the normal course of their Twitter, Reddit, YouTube, and other social media interactions. In this way, ChangeTip represents not only the next level of financial payment infrastructure, but also the next iteration of the Internet of Value. Utilizing Bitcoin blockchain technology, the company’s platform allows instant transactions between two parties.

*In keeping with American law and financial industry standards, the ChangeTip service is not available in FATF “non-cooperative” and other “blacklisted” countries such as Liberia and Myanmar.

About BitGive

The BitGive Foundation is the first 501(c)(3) Bitcoin nonprofit charitable foundation. Their mission is to leverage the power of the Bitcoin community to improve public health and the environment worldwide. They are focused on demonstrating Bitcoin’s social value on a global scale through supporting charitable organizations with fundraising campaigns, education, and partnerships. Several of their charity partners include Save The Children, The Water Project, Medic Mobile, and more. Visit: www.bitgivefoundation.org

Press Contacts:

Victoria van Eyk

ChangeTip

victoria@changetip.com

Connie Gallippi

1-916-625-6BIT

info@bitgivefoundation.org

There was no holding back on opinion, speculation or creativity at the first annual Satoshi Roundtable, an invitation-only gathering of 50 Bitcoin entrepreneurs at Punta Cana, Dominican Republic, February 6-8, 2015. According to attendees, the private, limited-attendance nature of the event created a venue for open discussion and commentary.

According to Bruce Fenton of the Bitcoin Association and Atlantic Financial, who organized the event with Anthony Di Iorio of Ethereum, many CEOs hold back on their commentary in public for fear of drawing the attention and ire of regulators, the media or competitors. To establish an atmosphere that would allow participants to freely explore current issues, problems and opportunities in Bitcoin, the event organizers elected to keep the event small and private.

The event’s website list of confirmed attendees included notable Bitcoin CEOs, entrepreneurs and early adopters such as Roger Ver, Erik Voorhees, Charlie Lee, Vitalik Buterin and Nic Cary.

Hints are now being released of trending issues and prognostications that surfaced after two days of sessions:

• Mining Hardware Sales Down – A tectonic shift in the economics of mining has led to a downturn in hardware sales, with one manufacturer reporting a 95 percent drop.
• Multisig – Industry experts predict that 2015 will be the year of mass adoptions for multisig wallets among consumers and businesses. If your product does not have multisig capabilities, it is behind the curve of progress for security measures.
• Mining Fees Gaining Prominence – Fees will become more prevalent as a critical component of the economic feasibility of mining, especially as the next halving approaches in early 2016.
• Bitcoin ATMs – Given the high hardware costs and overhead of operation, we will probably see these first coming into play under the umbrellas of the larger Bitcoin brand names who have the ability to amortize the expense.
• Mining End Cost Profile Shrinking – Conference attendees concluded that to be profitable, a mining enterprise now must operate with total end costs of less than nine cents per kilowatt hour. Forecast: less efficient miners fade away while the highly efficient and those with cheap power thrive.

For the most part, the conference was very informal, with many casual conversations and much information shared about the health and growth of individual entrepreneur’s businesses. Bitcoin Magazine will continue to release news and information from the conference as it becomes available.

Images via satoshiroundable.org

Impressed, are you, with how fast Bitcoin has zoomed into public consciousness over the past couple of years? Well, there’s fast, and then there’s Justin Boston fast. That’s the kind of fast that involves driving a motorized vehicle that is not a plane up to 201 miles per hour on a race track, around which he usually averages somewhere between 173-177 miles an hour over grueling 200- or 250- mile races.

Boston is a Maryland native and NASCAR Camping World Truck Series driver affiliated with the Kyle Busch Motorsports (KBM) group based in the racing hub of Charlotte, North Carolina. Having recently picked up his chief sponsor in BitPay, the world’s leading Bitcoin payment processor, he and his BitPay logo-adorned Toyota Tundra pickup will be lining up Friday night, February 20 at the fabled Daytona International Speedway in Florida for the NextEra Energy Resources 250. The event will be carried live on Fox Sports 1 beginning at 7:30 p.m. ET.

Boston is a personable and articulate 25-year-old who has been moving very fast on things with wheels ever since his parents gifted him with a tiny motocross bike for his fifth birthday. That innocent-seeming gesture for what they figured would be their son’s occasional amusement triggered a lifelong passion that Boston has since modified but never relinquished.

“My dad took to hiding the bike in the back of his truck because they couldn’t get me off it,” Boston remembers. “It just intrigued me and turned into something way more than my family ever dreamed it could be.”

Though his parents weren’t racing fans at the time, Boston quickly got on a youth motocross circuit that involved racing weekends all over the region.

“I loved motocross and did it from the time I was 7 up till nearly 13,” he says. “Sometimes we’d drive 12 or 13 hours and I’d be doing my homework in the back seat. Racing always brought our family together, and there’s a great community involved. It was never something I did to get away from people, but to get closer to them. And it also let me push my own boundaries.”

Those boundaries were sorely tested over the years as Boston suffered the almost inevitable nasty spills in what he describes as a “gladiator sport.”

After covering their eyes at one too many accidents playing out in front of them, his parents asked for a family pow-wow to discuss their sub-teenage son’s career choice. “They couldn’t stand to see me get injured all the time,” he says. “I understood. But I really loved it, so I got desperate to find something else.”

After taking up serious wakeboarding for a time, he discovered the glories of stock car racing at age 16 after watching a NASCAR race in Delaware. That prompted enrollment in a racing school in Charlotte and the long (most always oval-shaped) roads that have taken him through various racing classes leading up to his coveted affiliation with KBM. The BitPay sponsorship and lining up for the legendary Daytona series next week followed.

“In racing, they say, ‘All roads lead to Daytona,’” Boston notes. “If you win there, you remember it the rest of your life.”

How likely is that win? “If everyone knew how races played out, there would be no reason to race,” he says, sounding as confident and intense as one would expect from someone whose parents had to hide his bike from him not all that many years ago.

Ironically to mere mortals who look at cars nearing 200 mph and can only think, “Danger! Danger!”, Boston sees NASCAR driving as far safer than the motocross of his youth. “It’s definitely a rush driving that fast, but it’s a relative speed, too, because your competitors are right there doing the same. It’s a very mental sport, and you train yourself to stay focused when you’re tired and hot.”

Temperatures in the cockpit, he says, can run 30 degrees above ambient temperature, meaning that a balmy 80-degree Florida day can mean 110 degrees in the cockpit, where ingesting copious doses of fluids is also part of the focus drivers must keep.

“I was pretty much self-taught in stock car racing until I hooked up with my race team KBM last year,” Boston says. “That really launched my career to a new level, and the good thing is, stock car racers can have long careers. It’s really fun driving these things, and I’m looking forward to seeing what I can do.”

Boston figures to make it fun and profitable for Bitcoin enthusiasts next week by promoting the Twitter hashtag #jbossbitcoin, to which people can post thoughts, reflections, witticisms, photos, and other creative gestures of support. Winning posts will earn ChangeTips in Bitcoin from the cryptocurrency-savvy Boston Racing team.

“I’ve been following digital currency for a long time now, so when I heard from BitPay a few months ago and we started discussing sponsorship possibilities, I got pretty excited,” Boston says. “It’s a great group, and we are going to have big fun with ChangeTip during the race. It’s a very cool way of showing support for my team, and for us to show our appreciation right back.”

The Central Bank of Italy (Banca d’Italia) is that country’s first governmental authority to issue a statement on virtual currencies. It recently published three directives:

1. Warnings on use of virtual currencies (30 Jan 2015);
2. Notice on virtual currencies (30 Jan 2015);
3. Notice of Central Authority for Reporting on virtual currencies (2nd Feb 2015).

The “Notice About the use of virtual currencies” (published on the Supervisory Bulletin No. 1, January 2015) is a summary of guidance previously issued by the European Central Bank (ECB), the European Banking Authority (EBA), and the Financial Action Task Force. The Central Bank of Italy is the first to release any statements based on the ECB’s comments. The Notice clarifies the legal status of virtual currencies in Italy with this important statement:

“In Italy the purchase, use and acceptance of virtual currency must be considered lawful activity: the parties are free to transact in amounts not expressed in legal tender.”

The January 30 Notice on virtual currencies also contains an analysis of the guidance published by the EBA, and agrees with the EBA’s recommendation that financial institutions should avoid buying or investing in virtual currencies until a formal legal framework has been established. This means the Central Bank will not ban regulated institutions from dealing in Bitcoin and other virtual currencies, but advises them to wait until formal regulations are announced.

The Notice allows financial institutions regulated by the Bank of Italy to do business with any virtual currency companies, provided that they respect existing AML/KYC requirements for account holders and warn them about the risks involved.

The Notice of Central Authority for Reporting on virtual currencies of Financial Intelligence Unit (FIU) warns that using virtual currencies may enable money laundering and terrorist financing, as previously discussed by the ECB and other European authorities. The FIU states that businesses dealing in virtual currencies, including holding them and exchanging them for fiat currencies, are not required to comply with any AML/KYC regulations.

A reading of the documents released by both the Central Bank of Italy and the FIU indicates that a business that transacts in virtual currencies is not subject to any regulation at this time. However, the owners of such businesses would be subject to existing AML/KYC requirements when setting up a bank account or dealing with a regulated financial institution. In that case, virtual currency activities are not subject to any unique regulations; instead the activities are regulated where they intersect with the existing AML requirements of the Italian financial system.

Italy is the first country to declare that virtual currency exchanges are not subject to any AML requirements. This is in contrast to the United States, where exchanges are required to register with the Financial Crimes Enforcement Network (FinCEN) as Money Services Businesses.

The FIU concludes with a recommendation that regulated financial institutions evaluate their own clients to screen for suspicious transactions. It also recommends that financial institutions educate their staff about virtual currencies and how to identify suspicious transactions, with a particular focus on gaming operators.

One of the great things about Bitcoin is that is opens up a reason to learn about things I am not normally exposed to.  I have never tried investing beyond buying bitcoin, but I have been hearing about trading for a while.  When I got the chance to learn about it firsthand with Jeremy from Coinarch, I was pretty surprised at how easy it was.  I definitely don’t trade much, just $20 or so every few days, but it has been an interesting exercise, and I now enjoy asking trader friends for tips.  No one has really given me anything golden, and I am not leaving music to take up a career on Wall Street, but it’s fun nonetheless!  Maybe one day I will learn what those candles mean, but this is good for now.  Check it out in the video for a step-by-step of how to long, short, and hold bitcoin to make a profit (or a loss!) in this volatile market.

While many companies in the Bitcoin space are working on the “killer app” that will drive mainstream consumer adoption, at Armory we are working on the “killer app” for institutional adoption: insurance. There are few investments that financial institutions can make that have the all-or-nothing security properties of a Bitcoin wallet.

Many proponents tout the benefits of irreversible Bitcoin transactions for consumers and merchants, but at the enterprise level irreversibility can actually be quite scary. Business-to-business transactions are rarely anonymous, and the legal system provides sufficient pressure for parties to behave.

However, the legal system will not be of much help if those coins disappear due to accidental destruction or an anonymous security breach. In our experience with institutions, this is a critical barrier to entry. And getting institutions involved is a critical milestone for mainstream Bitcoin adoption.

Insurance can solve these problems, and a strong backbone of insured storage options could be a catalyst for both consumers and businesses to take Bitcoin more seriously. But getting insured is no easy task in such a new and high-stakes technology field.

Imagine you are an insurance underwriter being asked to price a policy for full coverage of a $100 million bitcoin wallet held by a company whose name you don’t recognize. In your first meeting with them they claim, “We are using all the most advanced technology to store our coins!” They use all the Bitcoin security buzzwords: “cold storage,” “multi-sig,” and “fragmented backups.”

Would that alone comfort you enough to risk $100 million for a small premium?

How do you know that they are actually using cold storage and multi-sig in their setup?

How do you know backups are created and secured properly (and not on Dropbox)?

How do you know an employee or executive did not rig the software or hardware to essentially steal the wallet before it was even created?

Cold storage and multi-sig are important concepts in Bitcoin security, but conceptual security alone is not enough. We want operationally transparent, auditable security. And it all starts with the “Key Ceremony.”

Key Ceremonies are not new. They have actually been used for 20 years to ensure integrity of some of the most valuable cryptographic key material in the world. This includes keys that protect the backbone of the Internet, and keys held by governments used to issue and verify passports. Our goal at Armory has been to bring these established, high-integrity processes into the Bitcoin space. This is important in so that organizations can manage their own risk, but especially important to the insurance companies whom we believe will help enable traditional institutions to become Bitcoin holders.

Key ceremonies are typically tailored to the organization and the value of the key material. However, in the most extreme cases, they are performed in a secure room with video cameras, witnesses, lawyers, notaries, and company executives.

The goal is not to only create the sensitive key material, but to reach an overwhelming consensus that they are generated in a cryptographically secure manner, and that no one could have made unauthorized copies. The process can ultimately include the following:

• Those who ultimately manage the keys and key backups are identified, documented, and their responsibilities are made clear.

• The authenticity of all hardware and software is verified before it is used for secure operation.

• Tamper seals are applied to all secure devices, and tamper-evident bags are used to detect any tampering or copying of sensitive backup data after they leave the ceremony room.

• The display of the secure computer is mirrored on large monitors for all witnesses and video cameras to observe every keystroke and mouse click during the key ceremony.

• The videos from the ceremony are archived to be reviewed/audited by third-parties, and possibly as part of an investigation if funds go missing unexplained.

Keep in mind, that in a cold-multisig wallet arrangement, each site will have to independently carry out its own key ceremony. In our conversations with insurance representatives, the best way to decentralize the security model is to have different independent companies managing the coins.

The company that owns the coins would not even have the ability to move the coins by themselves. Nor would any other company. Authorizing transactions would require other signers to get recorded video confirmation from executives with authority over the wallet, enabling traceability and auditability of the ongoing operation.

Not all companies need this level of rigor. But a “full-paranoid” solution needs to exist if Bitcoin is going to see the entrance of global corporations who would be managing billions of dollars worth of bitcoins. A strong key ceremony as outlined above is only the start of an enterprise end-to-end security solution.

Bitsquare is an open source, completely decentralized bitcoin exchange. Founder and developer, Manfred Karrer, discusses his project and his ideals with Ethan Wilding and guest host, Hai Nguyen. Bitsquare is based on the concept of “no single point of failure” and decentralization. Karrer also discusses the concept of peer-to-peer arbitration.

Andrew Lee of purse.io answers questions partially sourced from the bitcoin community. Purse.io’s model of selling Amazon giftcards for bitcoins is both controversial and exciting for people who want to buy bitcoins without going through the lengthy verification processes associated with exchanges. It also facilitates purchases through Amazon at a discount for people who want to shop with bitcoin. The DTL audience sent in some hard-hitting questions, and Andrew Lee has promised to answer them “head-on.”

Other guests this week will include Gerald Cotten of the Canadian exchange, QuadricaCX, as well as Mitchell Callahan, founder of Saucal, a marketing and brand development company that integrates bitcoin into its clients’ growth strategies.

Check out past videos at decentral.tv.