Month: March 2015

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

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

Bitcoin and General Ledger Treatment

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

1. Payment Method
2. Foreign Currency
3. Base Currency

Bitcoin as a type of “Payment Method”

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

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

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

Bitcoin as a type of “Foreign Currency”

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

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

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

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

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

Bitcoin as a type of “Base Currency”

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

Is Bitcoin integrated with the General Ledger today?

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

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

The goal is to protect the integrity of evidence.

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

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

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

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

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

The value of decentralized storage

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

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

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

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

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

What if the officer takes the phone?

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

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

Stage of development

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Editor’s Note: In interest of full disclosure, CoinDesk is a competitor of Bitcoin Magazine. This article is a guest submission by Tom Hashemi, an experienced professional who has conducted market research for Shell, PayPal, Toyota, KPMG, and the Digital Currency Council. The same observations he makes about CoinDesk’s representation of the entire Bitcoin community apply equally to Bitcoin Magazine.

“Making assumptions simply means believing things are a certain way with little or no evidence that shows you are correct, and you can see at once how this can lead to terrible trouble.” – Lemony Snicket

CoinDesk, one of the premier outlets for news and analysis on digital currencies, has made a request of its readers.

Fill in this survey, they asked, and we can finally put to rest whether the statement “the bitcoin community largely consists of young, white males” is true.

But will their survey give us such an answer?

The contribution CoinDesk has made to the bitcoin community is unquestionable.

The team has worked to legitimize digital currencies in the eyes of journalists in the mainstream media by providing a consistently reliable source of information.

But their market research skills leave much to be desired and threaten to damage their otherwise healthy reputation for quality information.

CoinDesk’s survey error lies in their assumption that their readers mirror the demographics of the wider Bitcoin community.

This is highly unlikely to be the case for two predominant reasons.

One: CoinDesk is an English-Only Outlet

On the one hand we have the huge amount of Bitcoin trade in China.

On the other, according to CoinDesk’s “State of Bitcoin 2015” report, we saw new Bitcoin-related venture capital investment in 2014 in Japan, the Netherlands, Panama, Denmark, Luxembourg, Sweden, Germany, India, Mexico and Argentina.

All of those countries have (at least) one thing in common: English is not the mother tongue.

Many of those countries are precisely the countries that will disprove the theory that bitcoiners are white American guys.

Why would non-English speakers visit CoinDesk to take a survey if they cannot read the language that it publishes its content in?

To put it another way, I am very interested in Middle Eastern politics but I have no idea when Al Hayat last ran a survey. Why? Because I don’t speak Arabic and so I never visit the site.

I also had no idea Al Hayat even existed until I Googled “top newspapers in Arabic.”

Two: Media Consumption Habits Vary

There is a second methodological fail: CoinDesk has assumed that the diversity of bitcoiners is fully and accurately represented by CoinDesk readers.

CoinDesk, as with every other media title, will have an appeal to a specific demographic.

Google can build a monopoly in the online search market because, to a large degree, we all want the same thing from a search provider: Give us what we’re looking for and do it quickly.

But no single media title can cater for everyone’s different tastes. We all want something different, whether that is political affiliation, content type or publication format.

As a case in point, despite all four being hubs of the bitcoin community, it is unlikely that Bitcointalk.org, Zapchain, the Digital Currency Council and CoinDesk all have the same user demographics.

If CoinDesk’s readers are weighted towards a specific demographic, then how can interviewing their readers give us an accurate picture of the broader Bitcoin community?

(And if you wanted to be really picky, how can you be sure that specific demographics aren’t more inclined to actually take the survey rather than ignoring it?)

The Changing Nature of Bitcoiners

In his blog of March 4^th 2015, Ryan Selkis/TBI discusses the possibility of Abra being Bitcoin’s first killer app.

Selkis calls out the fact that the Abra CEO doesn’t mention Bitcoin once in his presentation to the Launch Festival 2015 (which Abra went on to win).

This is a clever move on Abra’s part given Bitcoin’s toxic reputation. But importantly for us, it tells us that there may be a large number of bitcoiners who don’t even know that they are bitcoiners.

If they don’t even know that they are bitcoiners, will a survey on CoinDesk help us figure out who they are?

 

Houston, we have a problem. We need more cutting edge tech entrepreneurs.

Luckily there’s a new space in Houston, Texas, built just for that, provided by Cryptospaces, which is backed by bitcoin consulting company, FinalHash. Located at 6907 Almeda Rd., the Houston Bitcoin Embassy is an incubator/ coworking space dedicated to tech startups. There are also plans to install a bitcoin ATM in the facility by the end of April.

The Embassy is home to the Texas Coinitiative, a non-profit organization that promotes the use of Bitcoin in Texas.

The Coinitiative mission statement reads:

“We believe that our growing community will help to shape progress in this field. Come network with traders, entrepreneurs and innovators working in one of the most interesting sociological and technological innovations in recent times.”

The Texas Coinitiative hosts several meetups — at least one meet-up each week — including the Houston Bitcoin meetup, an Ethereum meetup and an upcoming Houston Bit Business meetup: a meeting place specifically designed for Bitcoin entrepreneurs.

The Texas Coinitiative invites speakers once or twice a month and is always looking for new speakers. Some of the speakers they’ve recently hosted include Bitcoin Core developer, Peter Todd; Changetip CEO, Nick Sullivan; and Ziftr CEO, Bob Wilkins.

“The city of Houston is still very early in adoption phases in terms of Bitcoin,” says Adam Richard, president and co-founder of the Texas Coinitiative. “There aren’t many merchants that accept bitcoin here. We want to help grow that.”

The Embassy is also spearheading an educational project led by Jay Campuzano of Yo Soy Bitcoin, a series of educational video courses on Bitcoin for beginners in both English and Spanish.

In order to grow, the Texas Coinitiative is looking for sponsors.

“The help from sponsors,” says Richard, “will be used for anything from food and drinks for events to printing of educational materials; all for the purpose of education and inspiring others to become more involved in the Houston Bitcoin ecosystem.”

The Houston Bitcoin Embassy currently has vacancies for anyone interested in an incubation/ coworking space.

The Texas Coinitiative will have a booth at tomorrow’s upcoming Texas Bitcoin Conference. It encourages attendees to visit the booth and talk to any of its representatives there.

“We want to put Houston on the map in the Bitcoin space,” says Richard. “Houston has a lot going on that people don’t realize. There are currently 12 local Bitcoin startups in the city.”

The Houston Bitcoin Embassy is open Monday through Friday, from 9 a.m. to 5 p.m.

For more information about the Houston Bitcoin Embassy, visit their website, send them an email, or sign up to attend the Houston Bitcoin meetup at meetup.com.

A few weeks ago Bitcoin Magazine reported that the Bitcoin Investment Trust (BIT) was about to become the first publicly traded Bitcoin fund. On Thursday, the BIT received formal approval for listing on the OTC Markets Group’s OTCQX exchange. The fund is listed with the symbol GBTC, and trading is expected to begin early next week.

Barry Silbert announced on Twitter that the BIT fund is live and waiting for eligible shareholders to deposit their shares and sell.

The BIT is the first product from Silbert’s new Grayscale Investments, a digital-asset management firm being launched concurrently by his Digital Currency Group. The Wall Street Journal notes that the BIT is the latest addition to the growing number of bitcoin trading platforms that aim to expand bitcoin investments beyond the volatile spot exchanges and attract a new class of investors.

Each share of BIT is worth approximately one-tenth of a bitcoin. Holders of BIT shares won’t hold bitcoin in their names, but they will hold shares of the fund, which itself holds bitcoin. Since the value of BIT shares will fluctuate with the exchange rate of bitcoin, the fund will be a convenient investment vehicle linked to bitcoin – in particular, investors will be able to short the fund and profit from drops in the price of bitcoin. The availability of traded funds linked to bitcoin and investment vehicles such as options, futures and other derivatives is expected to contribute to stabilizing the value of bitcoin.

The BIT skipped the lengthy SEC registration process by taking a shortcut approved by the Financial Industry Regulatory Authority (FINRA). Without SEC registration, the BIT can’t formally be considered as an Exchange Traded Fund (ETF), but other funds are seeking SEC approval for listing on the NYSE or Nasdaq. The Winklevoss twins are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to investors on NASDAQ with the ticker COIN.

The BIT will open bitcoin investing up to the wider world of capital markets and traditional investors who prefer not to trade bitcoin as currency because they are scared by bitcoin’s wild price swings.

“Over the past three or four months, a handful of banks have started to experiment,” said Silbert. “Some of them are experimenting around trading, some around using the blockchain for settlement, and some are interested in deploying capital as investors.”

The Grayscale website notes that digital currencies are poised to radically transform our financial system, but it won’t happen overnight.

“At Grayscale, we believe investors deserve an established, trusted, and accountable partner that can help them navigate the gray areas of digital currency investing,” the website says. “That’s why we are building transparent, familiar investment products that facilitate access to this burgeoning asset class, and provide the springboard to invest in the new digital currency-powered ‘internet of money.’”

“The hope within the bitcoin community is that BIT and future publicly traded bitcoin investment vehicles will improve liquidity and thus help smooth out some of the price volatility that has plagued bitcoin in its early years,” notes PandoDaily. “The fact that BIT is also now a regulated entity should help calm the (justified) fears of many prospective bitcoin investors. A more stable bitcoin market is seen as being a necessary pre-condition for widespread adoption as a payment vehicle.”

 

Image via Grayscale Investments.

In a surprise move, e-wallet provider and payment processor Neteller quietly started to accept bitcoin deposits at zero fees via BitPay. Neteller customers will now be able to top up their accounts by exchanging Bitcoin via Bitpay which enables Bitcoin conversion into e-currency, the e-currency is then deposited into the Neteller stored value account into one of the currencies offered by Neteller.

Neteller, owned and operated by publicly traded British global payments company Optimal Payments PLC, is used by millions of consumers in more than 200 countries and especially popular in the foreign exhange and online gambling sectors.

This announcement follows the entering into of an agreement between Optimal Payments and Bitcoin payment processor BitPay.

“We recognize the important role that cryptocurrencies play in the future of payments,” said Optimal Payments President and CEO Joel Leonoff, “and we look forward to working with BitPay as the acceptance rate grows.”

“Neteller has recognized the growing strategic importance of bitcoin,” notes the BitPay website, “and we will be working with them to help further drive mainstream adoption of bitcoin.” Sonny Singh, BitPay’s chief operating officer, added that the relationship with Optimal Payments will help BitPay to drive merchant acceptance on a global scale.

A few days ago, Optimal Payments announced the forthcoming acquisition of the biggest Neteller competitor Skrill (formerly Moneybookers.) It seems therefore likely that bitcoin deposit options may be added to Skrill as well in the coming months.

Neteller, which is listed as an “Authorised Electronic Money Institution” with the U.K. government’s Financial Conduct Authority (FCA), is headquartered in the Isle of Man, a leading Bitcoin hub poised to attract digital fintech businesses, entrepreneurs and developers. The recent announcement of new Bitcoin-friendly regulations in the Isle of Man may have contributed to Neteller reversing its previous choice to block digital currency activities.

Neteller is accepted by nearly all online gambling operators. Therefore, nearly all online gambling operators are able to accept bitcoin payments via Neteller. Unfortunately for gamblers based in America, current U.S. regulations against online gambling prevent Neteller from offering the service to customers based in the United States.

“All serviced countries except the United States can deposit with Bitcoin,” notes the Neteller website.

With the acquisition of Skrill, Neteller will be the biggest competitor of leading payment processor PayPal, which has already begun experimenting with Bitcoin.

This article has been updated to show that Neteller MasterCard/Net+ is not currently integrated with the new Bitcoin funding option.

Staying on the right side of the taxman just got a bit easier for businesses dealing with bitcoin and other digital currencies. On Tuesday, Libra, makers of LibraTax accounting service, introduced two new products in their suite of tax-reporting services. They also announced a new partnership with Bitpay, the world’s largest bitcoin payment processor, designed to help merchants stay on top of their bitcoin-related payment transactions.

Libra Business and Libra Pro

LibraTax has been offering tax-reporting solutions and helping to educate accountants and tax professionals with digital currencies since early in 2014. With the addition of Libra Business and Libra Pro, both businesses and tax professionals alike can keep track of all their digital currency transactions.

With regulatory bodies in the US and elsewhere classifying virtual currencies as capital assets and taxable as property (rather than currencies), it has become increasingly important for individuals and businesses to track every transaction event.

“Essentially, any transaction involving Bitcoin is a realization event that triggers a reportable gain or loss,” says Jake Benson , founder and CEO of LibraTax.

LibraTax interfaces with the blockchain  — Bitcoin’s public ledger — to provide accurate capital gain/loss reporting and reconciliation. Plans to integrate with traditional accounting platforms like Xero and QuickBooks are in the works.

Bitpay + Libra

BitPay will be offering Libra Business to merchants who use BitPay to accept bitcoin. Offering Libra Business will enable merchants “to keep track of transactions efficiently, as well as [encourage] wider public adoption of the platform by simplifying the process of Bitcoin accounting,” said Bryan Krohn, BitPay’s Chief Financial Officer, in a blog post on the Libra website.

Both BitPay and Libra have been active advocates of mainstream adoption in their respective fields: Libra has partnered with Danetha Doe to produce the #FutureofMoney, a weekly video chat designed to demystify digital currencies for accounting and tax professionals; BitPay has sponsored many events including the recent St. Petersburg Bitcoin Bowl football game to spread the word about Bitcoin to merchants and mainstream consumers alike.

“Digital currency tax reporting can be a daunting task. As property, digital currencies (the IRS calls them “virtual currencies”) are treated in much the same way as stocks and bonds: every purchase and sale/exchange must be recorded and taken into account at tax time.

Where a casual user could have dozens, if not hundreds, of taxable events to report in a given year, imagine how many events a business accepting bitcoin would have.” – Libra

By offering Libra Business to its customers, BitPay hopes to make the task of reporting bitcoin “events” less daunting for merchants, and thus, less of a barrier to adoption. Similarly, Libra Tax expects that Libra Pro will encourage tax and accounting professionals to help their clients see that using Bitcoin will not result in a reporting nightmare.

“A huge step forward for the legitimacy of this world changing technology will be the day when it earns respect among professional accountants and auditors,” says Benson. “My mission is take us there.”

Over the past three days, Bitcoin Magazine has featured stories about the BitGive Foundation; how it began and the work that it has done with charities including Save the Children, The Water Project and Medic Mobile. Its founder and sole full-time staffer, Connie Gallippi, has helped the organization grow to become the first registered tax-exempt bitcoin charity, spreading the word about Bitcoin’s potential for positive change in the world.

“We’ve continuously put out great efforts,” says Gallippi, “and we have a lot of supporters who like our work. The community has been looking for ways to improve its image and reach a mainstream audience. It would be great if we could leverage what we are already doing to accomplish this goal. Our work is making a direct impact today in ways that a mainstream audience can appreciate and relate to.”

Looking forward, the BitGive Foundation has two immediate fundraising goals: its current campaign with Medic Mobile, and support for the Foundation’s own long-term viability.

Medic Mobile is an open-source platform that supports health workers in remote communities of the developing world, using mobile technology.

“Medic Mobile has a mission that connects with our Bitcoin audience,” says Gallippi. “They are giving out thousands of mobile phones in 21 developing and Third World countries to support healthcare.”

Each phone is given to a community health worker who volunteers to take care of approximately 30-50 people in a remote village. It takes hours and days for some to walk to and from the closest doctor or hospital to exchange information.

Using the phones, along with Medic Mobile’s free, open-source platforms, health workers can communicate directly with doctors, saving them from having to walk for days and the dangers that come with it. They can also register pregnancies, track disease, keep vital supplies stocked and literally save lives in the case of emergencies.

Aside from the obvious importance of Medic Mobile’s work in health care, Gallippi saw the potential for building a network of cell phones in remote parts of the world. Early conversations were about hopes that the long-term effect of the phone distribution might also allow for the creation of hubs for bitcoin transactions, bringing financial and remittance services to the unbanked populations as well.

The foundation’s second — and perhaps most pressing — campaign is to raise enough money to keep itself going so that it can continue to take on more projects in the future.

“Right now, I’m the only employee,” says Gallippi, “and the runway is very short for me to be able to stay on full-time.”

Since the inception of the BitGive Foundation in 2013, there has been support from some key founding donors, including BitPay, Perkins Coie, Jeff Garzik, and Roger Ver, to name a few. As the two-year anniversary of BitGive approaches this June, Gallippi will be wrapping up the Founding Donors campaign.

“At the beginning, there was great support,” says Gallippi. “Then the price of bitcoin dropped and things have been pretty slow.”

She is hoping that more companies and individuals will want to take advantage of the opportunity to become founding donors, who will be recognized in perpetuity for their contributions to build the first Bitcoin philanthropic organization, before the end of the campaign.

Besides becoming a founding donor, there are plenty of ways for members of the Bitcoin community contribute to the BitGive Foundation.

1. Become a member. You’ll support the BitGive Foundation’s efforts to offer charitable gifts and campaigns to organizations around the world on behalf of the Bitcoin community. You’ll also receive a T-shirt, discounts on events and a tax receipt.
2. Direct your tips to BitGive. If you have an account with ChangeTip, you have the option to automatically redirect your tips to one of several charitable organizations.
3. Engage in the Amazon Smile program when you shop on Purse.io. A donation of 0.5% of your purchase amount will be directed to the charity of your choice (at no extra cost to the purchaser), and BitGive is registered with Amazon Smile. In addition, BitGive has also secured matching donations from Bitcoin organizations. For the next few weeks, all Smile donations through Purse.io will be matched by Chain.com; those matching amounts will be directed to BitGive.
4. Make a tax-deductible donation. Companies and individuals can offset taxable gains by making a tax-deductible donation to BitGive, a registered 501c3, using LibraTax to help optimize gains/losses and make donations go further.
5. Buy a T-shirt or make a one-time donation through the BitGive Foundation website.

Gallippi’s long-term goal is for the foundation to establish an endowment that will protect the organization’s ability to operate to its full potential.

“Right now, we can only support one campaign at a time,” says Gallippi. “But there is potential for things to grow if we have the resources. For now, we have to make our choices very strategically.”

“Our goal has been to establish a global presence, and we’re doing that,” she adds. “Our stated mission is to improve public health and the environment, and we’re providing a way for companies in the Bitcoin space to give back.”

A few weeks ago Bitcoin Magazine reported that Tera Group, which operates the first regulated U.S. Bitcoin derivatives exchange, will take a controlling stake in public company MGT Capital Investment to create the first publicly traded U.S. Bitcoin derivatives exchange.

On Monday, Tera Group announced the appointment of former New York Stock Exchange (NYSE) CEO Duncan Niederauer as an advisory director. Before joining NYSE in 2007, Niederauer was managing director and co-head of the Equities Division Execution Services franchise at Goldman Sachs.

“This is an excellent opportunity to contribute to the growing Tera footprint. They are a young derivatives exchange with a great management team and a strong product and sales pipeline,” said Niederauer. “I have already begun advising them on how to approach and capture the opportunities that are emerging in the rapidly evolving global financial landscape for traditional and emerging financial products, such as bitcoin.”

“We’re delighted that Duncan has chosen to join Tera at this exciting time for our business,” said Christian Martin, chairman and CEO of Tera. “Our firm operates with the same client-first approach Duncan has shown throughout his impressive career. By providing the management team and clients with his unique global perspective, he will greatly add to the knowledge and experience of our firm.”

Bitcoin derivatives such as Tera’s forwards are the simplest way to expose investors to Bitcoin, especially those investors who prefer not to trade the digital currency itself – and are the easiest way to profit from the ups and downs of the bitcoin-dollar exchange rate. That’s why the Bitcoin derivatives market is exploding worldwide.

In the United Kingdom, former Goldman Sachs Executive Director Timo Schlaefer recently announced the launch of Bitcoin derivatives broker Crypto Facilities, which confirms the growing interest of institutional investors in the Bitcoin economy.

NYSE itself is warming up to Bitcoin: In January, in a joint investment with the participation of a subsidiary of USAA and BBVA Ventures, NYSE invested $75 million in the Bitcoin service provider Coinbase, bringing its total capital to $106 million.

Nasdaq, the second U.S. stock exchange, announced that Noble Markets will implement Nasdaq’s X-stream trading technology for the company’s soon to be launched digital currency marketplace.

“As one of the world’s leading providers of technology to the capital markets, Nasdaq is dedicated to discovering and supporting new and emerging technologies and marketplaces,” said Nasdaq Executive VP Lars Ottersgård. “We are thrilled to work with the experienced industry veterans at Noble Markets and look forward to supporting their cutting-edge, new endeavor for the long-term in addressing the needs of the digital currency space.”

“Noble was founded on the principal of bringing credible market structure and institutional trading expertise to the cryptocurrency marketplace,” added John Betts, founder and CEO of Noble Markets. “We are excited that Nasdaq shares our vision and commitment to support the development of this ground-breaking market.”

Before founding Noble Markets, which is backed by venture-capital firms Blockchain Capital of San Francisco and Tally Capital of Chicago, Betts led the development of electronic trading platforms at Goldman Sachs, Morgan Stanley and UBS.

The Wall Street Journal notes that the agreement follows other Wall Street initiatives, such as the appointment of Niederauer at NYSE, which could pave the way for financial institutions to own and trade digital currencies.

New sophisticated trading infrastructures could instill more confidence in Bitcoin, despite the negative headlines focused on illicit activities, scams and extreme volatility, and attract hedge funds and other institutional investors that could bring stability to the cryptocurrency.

Major financial players are warming to the idea that the technology behind Bitcoin, if not the currency itself, could slash costs from the global financial system.

 

Niederauer Photo by Friends of Europe / CC BY 2.0; NYSE Photo by Vincent Desjardins / CC BY 2.0 

Bitcoin bank Bitreserve , founded by CNET founder Halsey Minor in 2013, shields its customers from the volatility of bitcoin by instantly locking deposits to a fiat currency selected by the customer, for example the US dollar. If you make a deposit in bitcoin to Bitreserve, you don’t have to worry about volatility, because your bitcoin can be converted to dollars on-the-fly and appear as dollars in your balance. So Bitreserve users don’t lose money if the exchange rate of bitcoin goes down – if they have chosen to convert part of their holdings to, say, $1,000 USD, they will continue to have $1,000 USD in their account regardless of any fluctuations of bitcoin value.

Of course, the reverse is also true: if the exchange rate of bitcoin goes up, you don’t make money. But today risk-averse bitcoin users are scared of volatility and many fear that bitcoin will continue to dive as it has done in 2014. In the harsh reality of today’s economy, most individuals and small businesses must carefully manage their finances, and are unable to tolerate even a small degree of volatility.

“Bitreserve is on a mission to democratize the use of digital currency by protecting businesses and consumers from the risks inherent in the bitcoin model,” notes a Forbes review quoted on the Bitreserve website.

Bitreserve users can fund their accounts with bitcoin, and can choose to hold their funds as bitcoin or “bitcurrencies” permanently pegged to gold or to a growing list of fiat currencies, including dollars, euros, pounds, yen, and yuan. Users who choose to convert their bitcoin are still able to send bitcoin payments to other Bitreserve users or external bitcoin addresses, but their bitcoin holdings fluctuate with exchange rates, whereas their converted holdings stay stable.

Recently Bitreserve announced the launch of two new bitcurrencies: the bitrupee (BitINR) and bitpeso (BitMXN), pegged to two key developing world currencies – the Indian rupia and the Mexican peso – now supported by Bitreserve’s cloud money system. Mexican Bitreserve customers will be able to hold their funds in Mexican pesos.

The most interesting part of the Bitreserve announcement is:

“The bitpeso is key to realizing the potential of our partnership with Bitreserve’s largest investor, Ricardo Salinas-Pliego, one of Mexico’s most admired entrepreneurs and the Chairman and CEO of Grupo Salinas, one of Latin America’s largest and fastest-growing business groups.”

Salinas-Pliego is the fourth richest person in Mexico behind Carlos Slim and the 168th richest person in the world, with an estimated net worth of US $8 billion in March 2015.

Grupo Salinas, a group of companies with interests in telecommunications, media, financial services, and retail stores, is a pioneer in bringing basic financial services to the poor and working class through its retail and banking arm Grupo Elektra. According to the official website, Grupo Elektra, Latin America’s leading financial services company, is “focused on the base of the pyramid” – the large mass of Latin American financially disadvantaged citizens and migrant workers in the US. The Bitreserve announcement notes that:

“With over 2,600 retail outlets and bank branches throughout Latin America, Grupo Salinas will be a key partner in bringing the benefits of Bitreserve’s cloud money system to millions of Mexicans working in the US and hundreds of millions of consumers and businesses throughout Latin America.”

The wording of the announcement and the business model of Grupo Elektra imply that Bitreserve wants to grab a slice of the large market for remittances sent from migrant Mexican workers in the US back to their families in Mexico, in partnership with a major financial services company and community bank. The plan combines the faster and cheaper remittances permitted by Bitcoin with the convenience of using the national currency.

The announcement also reveals that Salinas-Pliego is now the main investor in Bitreserve, but the amount of his investment hasn’t been disclosed.

This is part 3 in a series about the BitGive Foundation’s work in Kenya. Read an introduction or a photo essay about this project.

In 2014, the BitGive Foundation led a campaign in the Bitcoin community to raise $10,000 in Bitcoin to fund a water well in sub-Saharan Africa with The Water Project. The Bitcoin community rallied and surpassed the goal, raising more than $11,000.  The water well recently was completed in the western region of Kakamega, Kenya, and the BitGive Foundation was there to witness the community celebration. They wanted to capture the magic on film, and this short video serves as an initial introduction to a longer video story coming out later this year.  See how Bitcoin helped bring clean, safe water to the Shisango Girls School and more than 500 people. Many thanks to all the donors who participated in the fundraising campaign and to BitPesa and LibraTax for sponsoring the visit to Kenya and the video production.

As decentral.tv continues to renovate its new studio, it will revisit some earlier episodes about topics and people who are still making news today.

Every week, new bitcoin ATMs are popping up around the world, making it easier for the general population to acquire bitcoin. On Monday, Decentral Talk Live’s featured interview will be with Zach Harvey, co-founder of Lamassu, one of the dominant players in the BTM industry.

On Tuesday, Sunny Ray of UNOcoin will focus on the growth of bitcoin in India — a territory that has been in the headlines recently. UNOcoin is India’s most popular Bitcoin wallet. Even before its launch in 2013, UNOcoin’s team, including Sunny Ray, was part of the grass roots Bitcoin community, spreading the word about digital currencies in Bangalore. Sunny Ray spoke with Ethan Wilding of DTL at TNABC in Miami.

Purse.io has been integrating more features into their platform recently. In Wednesday’s featured episode, co-hosts Anthony Di Iorio and Ethan Wilding chat with Andrew Lee, the CEO of Purse.io. Purse.io buys and sells Amazon gift cards for bitcoin. It also facilitates purchases through Amazon at a discount for people who want to shop with bitcoin. Since this interview took place, Purse has also integrated with the Amazon Smile program, allowing customers to direct a percentage of their purchase prices to charity.

Similarly, viewers can meet Nick Sullivan, founder and CEO of the ubiquitous ChangeTip, also known as “The Love Button for the Internet.” This episode serves as a great introduction to the culture of tipping, and explains how sharing the love of bitcoin can help spread adoption. Want to spread the love even further? Consider automatically redirecting the tips you receive into your ChangeTip wallet to one of several participating charities.

 

Finally, Amber Scott, Chief AML Ninja at Outlier Solutions, gives an in-depth look at compliance and regulation practices. In light of the continuous changes happening in terms of tax law, AML compliance, and other directives coming down from various regulatory bodies, Friday’s featured DTL episode is both timely and interesting.

 

Decentral Talk Live airs featured episodes Monday-Friday at 3 p.m. EDT on decentral.tv. Past episodes are also available on its playlist.

The Texas Bitcoin Association will present the Texas Bitcoin Conference March 27-29, a technological summit to showcase new developments that support Bitcoin, cryptocurrency and its proliferation.

The event will be held at Moody Theater, Home of “Austin City Limits Live,” in Texas’ capital city, and will spotlight the diversity of the Bitcoin community worldwide.

“The Texas Bitcoin Conference is focusing on the blockchain and the many ways Bitcoin can impact finance, business and government beyond just by being a better payment rail,” said Paul Snow, chairman of the Texas Bitcoin Conference.

Conference organizers are working with the College Crypto Network, Bitcoincollege.info, and BitcoinU to make the event appeal to students as well as seasoned developers, entrepreneurs, investors, industry leaders and enthusiasts.

“We are bringing voices new to the Bitcoin Community, like George Gilder author of ‘Wealth and Poverty;’ John Allen, adviser for the Festival of HOPE’ and IBM’s Sumabala P Nair, the architect of IBM’s Internet of Things architecture ADEPT,” said Steven Wilkinson, manager of the Texas Bitcoin Association.

Other prominent leaders in the Bitcoin community who will be speaking include James D’Angelo, founder and host of World Bitcoin Network; Bruce Fenton, founder of Bitcoin Association; former Texas Republican Rep. Steve Stockman’ Shawn Wilkinson, founder and lead developer of the Storj Project’ Steven Sprague, CEO of Rivetz; Charlie Shrem, co-founder and CEO of BitInstant; and Paul Snow, president of the Texas Bitcoin Association.

The conference will include the Bitcoin 2.0 Million Dollar Hackathon, where teams will compete for more than $1 million in prizes and contracts. Organizers will also release their call for papers that focus on greater technological information about Bitcoin.

“The 1st Texas Bitcoin Hackathon led the charge for developer participation in Bitcoin conferences, and served as a launching point for our platform. We look forward to the next one!” said Shawn Wilkinson, founder of Storj.

“The Texas Crypto 2.0 Hackathon is designed to empower the next generation of decentralized applications using blockchain technology to become reality,” added David Johnston, managing director of the Dapps Venture Fund.

Conference sponsors are Rivetz, GoCoin, Cryptocurrency Partners, Decentralized Applications Fund, Lighthouse Partners, Tally Capital, Digital Currency Council, Uber and Lyft.

Tickets and registration information can be found at http://texasbitcoinconference.com.

Editor’s note: To celebrate World Water Day, Bitcoin Magazine asked Connie Gallippi of the BitGive Foundation to write about a project the Foundation did in Kenya in partnership with The Water Project. To learn more about the BitGive Foundation, see part one of the series. Enjoy this story in Connie’s own words and photos.

 

 

After a long journey from the US to Nairobi, a short in-country flight, and about 2.5 hours of driving on unpaved and challenging roads, we arrived at the Shisango Girls Secondary School near Kakamega, Kenya. We traveled with The Water Project team and were also joined by BitPesa in the field.  What a surprising and pleasant welcome to see “Together We Succeed” on the sign when we arrived!

 

Within moments, dozens of beautiful girls were surrounding us and excited to meet these strangers who had helped bring them clean, safe water! At first, they were a bit shy, giggling and smiling to themselves, but pretty shortly after they broke into a traditional Kenyan song to welcome us!  It was quite surreal; I really opened up to take it all in.

 

During our visit over the course of a few days, we had the honor and pleasure of spending time with the girls at the school.  We shared in their classroom studies, enjoyed a meal with the administrators, and had a very special experience just casually sharing about our different cultures under the shade of a tree. These young girls are bright, committed, and aspiring to do great things!  They absolutely inspired me and captured my heart!

 

The principal of the school, Juliet Washa, is a true treasure!  She is very dedicated and knowledgeable and truly gives her life to this school.  She perseveres through so many challenges, including lack of basic things that we take for granted in the Western world, to provide a quality and safe learning environment for the students.  We were gifted with the opportunity to spend time with Juliet and learn the story of the school and her endeavor to bring clean, safe water to her students.  Juliet and I have become friends and she, along with the girls, forever hold a special place in my heart.

 

We visited the community water source where the girls gathered water before the well.  In the morning, the girls would carry water from home, some of them walking up to 6 km in one direction.  This water from the morning trip was not enough to last through the day for cooking, drinking, washing, etc., so they would walk to the river midday for more water.  This river is about 2 km from the school and the water is far from clean.  We witnessed people driving their cars and motorbikes directly into the river and washing them, saw cows coming for a drink, and learned of a 12-foot long black snake (likely a python in that area) that made this river its home.  This is where young girls, and the entire community, gather their drinking water.  Can you imagine?

 

Back at the school, I had a truly precious and unique time just being silly with the girls for a bit.  It was the end of the day, and they were so happy! They wanted to take pictures and dance around; they braided my hair and took turns wearing my sunglasses.  This time just enjoying them being teenagers was definitely a highlight of this whole experience.  They are truly shining stars!

 

When the water began to flow, it was a truly magical moment.  The Water Project and their local partners from Bridge Water Project worked hard to plan this well, work with community, and build a reliable water source that will last for a long time.  When they completed the well, clean water began to flow just meters from the school!

 

Next door is also a primary school and surrounding the area for several kilometers is an entire community.  Adults and children came flooding in from every direction to see the water begin to flow.  Dozens of people joined in to be a part of this momentous occasion!

 

A huge celebration unfolded before our eyes; it was not expected and we were quite taken aback.  The girls were singing and dancing around the field for hours, people were flooding in, and a whole ceremony ensued.  There were speeches from school administrators and dignitaries, song and dance, gifts, and celebration!

 

We hope these photos and video tell the story as best as we can tell it now.  It is next to impossible to share this story in a way that truly honors the experience and gives justice to all the absolutely amazing people we met.

Improved health and sanitation, safety from animal and human predators, and more time for studies are just a few gifts this water well has brought to this community in western Kenya. They were so incredibly grateful for the Bitcoin community’s gift of water.

The true potential of these girls, the community, and of students yet to come, has been unlocked with this new well bringing clean, safe water!

For more information about the project, please visit The Water Project – Shisango Girls School.

 

This is part 2 of a 3-piece series highlighting charitable work by the Bitcoin community for World Water Day. Read part 1 here.

All photos courtesy of Connie Gallippi / the BitGive Foundation and Stan Patyrak / The Water Project.

Bitcoin conferences have been the birthing grounds for many a successful startup. They have attracted some of the best business minds and biggest VC investors. But when Connie Gallippi went to San Jose for her first conference in back in 2013, she saw a different sort of opportunity altogether; the opportunity to create a philanthropic organization that would use the power of bitcoin to help the disadvantaged citizens of the world.

It’s been a whirlwind journey for Gallippi since the idea of the BitGive Foundation first took root back in San Jose. Over the past year and a half, the Foundation has attained status as the first bitcoin 501(c)(3) nonprofit organization, and has funded projects on behalf of half a dozen charitable campaigns. Most recently, Gallippi visited Kenya to witness the completion of a bitcoin-funded well in conjunction with The Water Project.

This Sunday marks World Water Day. Bitcoin Magazine caught up with Connie Gallippi to talk about BitGive and to find out more about BitGive’s involvement with The Water Project.

Back in February of 2014, Gallippi was looking to fund a water-related project based in Africa when she saw an announcement from Peter Chasse, founder of The Water Project, announcing that his organization was accepting cryptocurrency donations.

“…emerging cryptocurrencies are extremely low cost and in some cases nearly free to exchange and transfer. The cryptocurrency movement is based on transparency, openness and de-centralization in its design and implementation. At the same time, users enjoy an anonymity more akin to cash-based transactions. The critical difference being that underlying valuations are not decided by a central authority and the movement of that value is unencumbered.” — Peter Chasse

“It was serendipity,” says Gallippi. With a fifteen-year career background in the environmental not-for-profit industry, Gallippi was already keenly interested in water-based issues. Finding a company that understood and was enthusiastic about the potential of bitcoin seemed to be the perfect fit for BitGive. After a thorough investigation of the charity, BitGive was ready to move forward.

Gallippi set a fundraising goal of $10,000 — the full amount required to complete one well. It was a huge task, but Gallippi wanted the project to be entirely funded by the Bitcoin community. “There was lots of money floating around at the time,” says Gallippi, so she was optimistic. And while it took longer than Gallippi initially expected, by the fall of 2014, BitGive had surpassed its goal, raising in excess of $11,000.

From that point on, the project proved to be worth all the effort. “It was an amazing experience to walk hand-in-hand with them through the whole thing” says Gallippi of her relationship with The Water Project. She explains that it was a completely in-depth endeavor; the charity works not only to build the well, but to involve and educate the community regarding the well and its maintenance, as well as sanitation and health.

“They really do quality work,” says Gallippi. “And they are also really excited about Bitcoin!”

As the date of the well’s completion approached, Gallippi began to consider the possibility of visiting the Kenyan village where it was being dug. Wouldn’t it be amazing if she could tell the Bitcoin community the story of how their donations made this project possible?

When she reached out to the Water Project to see if they could help her locate the project and approach the community, serendipity struck again. Peter Chasse told her about a film crew that was going to be visiting a few of their completed projects and he agreed to include the BitGive well. He also invited her to join the team in the field in Kenya. Gallippi put together a funding proposal that would cover the cost of her trip and a bitcoin-oriented film for the BitGive project; and within a few days, BitPesa stepped in to cover the costs.

“It was amazing,” said Gallippi. “We got the whole film project settled in about four days.”

The Water Project wasn’t the first of BitGive’s campaigns. It kicked off its efforts back in 2013 by spearheading the first Bitcoin Black Friday charity drive, raising funds for Save the Children following the Philippines’ typhoon disaster. It has since supported campaigns to provide tornado relief to the US midwestern states, to stop the spread of the ebola virus, and support TECHO building homes in the favelas of Brazil. Most recently, BitGive has become involved with Medic Mobile, a platform that supports health-care workers in remote communities of the developing world using mobile technology.

“Magical things have happened”

Although the BitGive Foundation is largely a one-woman operation — Gallippi is the only person working full-time at the moment — it is not without a support system. Since its inception in 2013, Gallippi has had the support of BitPay co-founders Stephen Pair and Tony Gallippi, Connie Gallippi’s brother.

“Tony and Stephen really helped to pull in key players from Day One,” said Gallippi. For example, they helped her to connect with Patrick Murck, who now sits on the Board of the BitGive Foundation. Through Murck, Gallippi was able to secure pro bono legal work from Perkins Coie, who took care of securing the charity’s status as a 501(c)(3) nonprofit.

To date, BitPay is a Platinum founding donor to BitGive. “We would never be here without them,” says Gallippi.

The BitGive Foundation has also received support from other companies and individuals in the community. Most recently, they teamed with both ChangeTip and Purse.io in its efforts to make donation collection from the bitcoin community easier. Anyone collecting tips through ChangeTip has the option to redirect their tips directly to BitGive. All people have to do is log into their ChangeTip accounts and click on “Redirect your tips to a Cause.”.

Similarly, shoppers at Purse.io have the option to participate in the Amazon Smile program. Purse.io enables bitcoin users to shop on Amazon.com for a discount. When shoppers choose to participate in the Amazon Smile program, 0.5% of their purchase amount is donated to the charity of their choice. BitGive has enlisted bitcoin companies to match all Purse.io Smile donations over the next few months.

“Right now,” says Gallippi, “Chain.com will match all donations,” with the matching amounts going directly to the BitGive Foundation, regardless of where the original charitable donation is directed. For example, even if a user chooses to direct the 0.5% donation to the Red Cross, Chain.com will send an equivalent amount to BitGive.

To find out more about the BitGive Foundation, or to become member or make a donation, visit their website at bitgivefoundation.org. An in-depth interview with Connie Gallippi is also available on decentral.tv.

 

This is part 1 of a 4-piece series highlighting charitable work by the Bitcoin community for World Water Day.

Photo courtesy of Stan Patyrak / The Water Project.

 

Mainstream banks and financial institutions are warming up to Bitcoin and digital blockchain-based fintech, often with a surprisingly positive and open-minded attitude.

In a recent research paper titled “One Bank Research Agenda,” the Bank of England said that Bitcoin could reshape the financial industry and called for further research to devise a system that could use distributed ledger technology without compromising a central bank’s ability to control its currency.

A recent Goldman Sachs report titled “The Future of Finance: Redefining the Way We Pay in the Next Decade” states that Bitcoin is a megatrend that could shape the future of finance. “Innovations in network technology and cryptography could change the speed and mechanics of moving money,” the report says.

A Wall Street Bitcoin Alliance has formed to cater for the growing interest in digital fintech shown by Wall Street operators, and innovative financial institutions such as German Fidor Bank are openly embracing Bitcoin as part of their operations.

Credit Suisse, the large Switzerland-based multinational financial services holding company that operates the Credit Suisse Bank and other financial services investments, has published an article titled “Bitcoins – Money Without Physical Form.” The article takes a lukewarm position on Bitcoin, which, according to the company, should be combined with the traditional financial system.

After providing a short and simplified introduction to Bitcoin and cryptocurrencies, the article analyzes the advantages and shortcomings of Bitcoin as both a security and a currency. The low transaction costs and easy transfer around the globe indicate that Bitcoin should be considered a legitimate currency, as does the fact that many online providers accept bitcoin. The Credit Suisse analyst wonders whether Bitcoin has the potential to become commonplace and to dislodge the money monopoly from the central banks.

But the author thinks the advantage of Bitcoin over traditional currencies – decentralization – is also its biggest drawback, because there is no authority that guarantees the value of the currency.

“A currency is only worth what you believe you will be able to purchase with it tomorrow,” notes the analyst, who considers the huge fluctuations in the exchange value of bitcoin a result of the absence of a central bank able to stabilize the currency and provide confidence.

“If this confidence is removed, the value of the currency can decline rapidly, which is what happened with bitcoins at the beginning of 2014. The opposite is also harmful: The increase in value bitcoins experienced in 2013 would have corresponded to an economically crippling deflation if they had been the general means of payment. These fluctuations in value are what is stopping bitcoins from becoming more widespread as a means of payment.”

These considerations seem to point to the desirability of new implementations of digital currencies controlled by governments and central banks, similar to the FedCoin proposal by the U.S. Federal Reserve and the digital currency framework that IBM is rumored to be developing for use by central authorities.

Such a centrally controlled cryptocurrency would combine the advantages of Bitcoin – cheaper and faster transactions, permanently recorded in a tamper-proof ledger – with the value stabilization and user monitoring that a central bank can provide.

“Who do you trust more, your own central bank or an anonymous online network?” asks the author.

“Nevertheless, bitcoins have a future in certain areas and countries,” states the Credit Suisse article. “When combined with the traditional financial system, bitcoins could have cost advantages over credit cards or providers such as Western Union when used as a transaction system.”

Echoing opinions expressed by Finance Minister of Greece Yanis Varoufakis, the article concludes that “In countries such as Argentina and Zimbabwe, where confidence in the country’s own currency retaining its value is very low, bitcoins are an alternative that is being used with increasing success.”

Last week Bitcoin Magazine reported that IBM is considering adopting the blockchain technology behind Bitcoin to create a digital cash and payment system for government and central banks. Now another technology giant is joining the digital fintech technology race: Intel is planning to investigate the potential of blockchain technology.

Intel has posted a job announcement for a new researcher to join its special innovation projects group to “investigate hardware and software capabilities that advance the performance, robustness, and scalability of open, decentralized ledgers.”

Working with a team of distributed systems, operating systems, and security technologists, the selected applicant will focus on the development of cutting-edge, cryptographic algorithms for improving the robustness and assurance of transaction verification within an open, decentralized ledger, according to Intel.

Applicants must be qualified in the areas of crypto algorithms, access control models and security/privacy protocols, proficient in the development of system and application software and familiar with relevant security and cryptographic standards.

“These two tech giants [IBM and Intel], whose technology powers many of today’s most loved products want to get in on the technology behind bitcoin,” notes Upstart Business Journal.

“The jury may remain out on the value of bitcoin as a currency, but the underlying blockchain technology has attracted interest from central banks, the financial services establishment and tech titans,” reports Finextra, commenting on possible blockchain fintech developments at IBM and Intel. “Chip giant Intel is also dipping its toes.”

“Digital currencies like Bitcoin have captured the imagination of the press,” notes the Intel post. “Related startups are generating a great deal of VC [venture capitalist] interest and investment because of the potential significance of any disruption of the financial payment industry. Its fundamental technical innovation is the decentralized transaction ledger called the ‘block-chain.’ It allows bitcoin to prevent double-spending of currency by recording all transactions in an open ledger without the need for a central authority. Such a distributed, public, secure, peer-to-peer transaction record enables not just the exchange of bitcoins but many secondary uses that the research and startup community are exploring such as digital marketplaces.”

Reading between the lines of the Intel job announcement and speculating on the possible future involvement of Intel in blockchain-based fintech products, it appears that the chipmaker intends to focus on the security-related aspects of blockchain algorithms, possibly in view of the implementation of appropriate security frameworks in future Intel chips. The possibility of secure “Intel Inside” hardware wallets comes to mind, as well as noncurrency applications such as authentication and voting systems.

The cryptographic researcher will be based at Hillsboro, Oregon. The site hosts a Research and Pathfinding Laboratory where employees develop silicon technologies that are two to three generations ahead of Intel’s current manufacturing processes, and develop new ways to make digital technologies faster and easier to use.

The site also is home to Logic Technology Development, Components Research, and Design and Technology Solutions groups, responsible for developing advanced integrated circuit technologies and designing key components of microprocessor products.

UK Government Funds Research in Digital Fintech and Promotes Firm Regulations

In November, the U.K. government launched a call for information on digital currencies, with a focus on their function as a payment method rather than as a speculative investment.

After receiving more than 120 responses, the government released a Treasury document titled “Digital Currencies: Response to the Call for Information,” which summarizes the submissions received and outlines the government’s views and proposed next steps:

• The government intends to apply anti-money laundering regulation to digital currency exchanges in the United Kingdom, to support innovation and prevent criminal use. The government will formally consult on the proposed regulatory approach early in the next Parliament.
• The government will work with BSI (British Standards Institution) and the digital currency industry to develop voluntary standards for consumer protection.
• The government is launching a new research initiative that will bring together the Research Councils, Alan Turing Institute and Digital Catapult with industry in order to address the research opportunities and challenges for digital currency technology, and will increase research funding in this area by £10 million (U.S. $14.6 million) to support this.

The Digital Catapult is a national center whose mission is to rapidly accelerate the United Kingdom’s best digital ideas to market to create new products, services, jobs and value for the U.K. economy. Their focus is on data and metadata – on the data value chain.

The Alan Turing Institute will promote the development and use of advanced mathematics, computer science, algorithms and big data for human benefit. The Institute will encompass a wide range of scientific disciplines and be relevant to a wide range of business sectors.

Allocating the grant to these organizations indicates that the U.K. government is interested in supporting and understanding the underlying technology – the blockchain – and understands the potential benefits it could bring to society.

The first two points indicate that, similar to progressive jurisdictions such as the Isle of Man, the U.K. government intends to offer a friendly and agile regulatory environment to digital fintech firms while providing strong consumer protection and strictly applying money-laundering regulations. This approach, agile but firm, suggests that cryptocurrencies are poised to be integrated with the regulated framework of mainstream fintech.

The Treasury document recognizes that, in addition to reducing the costs involved in moving money around the economy, digital currencies can speed up transaction processing times, the cost and time advantages of digital currencies being most notable in the context of cross-border transactions.

While digital currencies offer greater privacy in some respects, they also create greater transparency, because all transactions are published on the public blockchain. This consideration shows that, similar to other governments, the United Kingdom is now persuaded that digital fintech based on cryptocurrencies can provide more – not less – transparency and control.

Elliptic, a secure Bitcoin vault based in London, stated that the U.K. government action plan represents encouraging progress in several key areas: anti-money laundering (AML), consumer protection and technical standardization.

“Prioritizing AML will bring much-needed legitimacy and clarity to the industry and hopefully encourage banks to engage more with digital currency businesses,” reads Elliptic’s statement.

“Furthermore, allowing the industry to develop its own consumer protection and technical standards will promote collaboration and innovation much more efficiently than top-down regulation. This response is important for cryptocurrency companies in the U.K. because it demonstrates a pragmatic, collaborative and priority-driven approach to regulation,” the statement reads. “The Treasury’s willingness to work alongside entrepreneurs to promote financial innovation while working tirelessly to protect consumers is a main reason the U.K. holds its place at the forefront of fintech innovation globally.”

The 2015 South by Southwest Interactive, held March 13-17, offered an exciting glimpse into the future for cryptocurrency users. Products that generated the most buzz focused on security for bitcoin users and the general public. Here are the top five products that caught the attention of the judges, experts and the media.

 

Fitcoin

Fitcoin, an iOS app from Chaotic Moon Studios in Austin, Texas, allows users to receive bitcoin for workouts. Simply pair it with Mio Fuse, Jawbone UP3 or Atlas wearable technology. The app tracks the duration, distance and intensity of a workout in real-time. By calculating the energy spent working out into CPU time on a Bitcoin mining rig, users earn slivers of bitcoin. The company does not specify the source of the payment.

“At Chaotic Moon we are interested in crypto-tech computing and decentralized services, and wanted to explore them through a prototype that leverages the block chain as application, service layer and platform,” said Ben Lamm, CEO of Chaotic Moon Studios in a press release. “It was important for us to make this experience compelling, useful and obvious for users by bundling the block chain with the quantified self: translating sweat into equity.”

The company hopes this app will appeal to the general public, possibly making digital currencies more popular. They also hope to collaborate with sports apparel companies such as Adidas to offer a discount to app users.

“We are excited to see how cryptocurrency can motivate people to make their exercise and fitness routines a long-term habit,” said Jon Werner of Adidas Digital Sports.

It is still in an early alpha release phase but generated much buzz at SXSW 2015.

 

CoinPip

The public might be familiar with CoinPip, the bitcoin payment option. Last year, CoinPip Pte Ltd. updated their system so transactions could be converted into 70 regional currencies. At SXSW 2015, the company launched an expansion of their SMS wallet. Users in the United States, Singapore, Hong Kong and Indonesia can now transfer money online to workers living in remote areas in Indonesia.

“Bitcoin is moving on. The power is not just in the currency, but in the technology,” says Anson Zeall, co-founder/CEO of CoinPip in a press release.

Along with this latest expansion, the CoinPro is partnering with Melotic, a Bitcoin company based in China to bring a payment service to China.

Looking ahead, the company will also add the United Kingdom, Malaysia, Turkey, Kenya and the Philippines to their service areas.

 

Ledger Wallet

In a promotional video filmed at SXSW 2015, Eric Larchevêque the CEO of Ledger, tells viewers that his company wanted to bring the best of the Smartcard technology to Bitcoin. The latest innovation is the hardware wallet, which provides protection against hackers and thieves. The device fits in the USB port of any computer. In fact, it resembles a memory stick.

As Bitcoin Magazine noted in February, the Ledger Wallet stores transaction keys inside the wallet so it is never stored in the memory of a computer. He claims that even if the computer is compromised by hackers or viruses, the bitcoin will be safe and users will still have full access to their Bitcoin account.

“If we want to have mass market adoption, we need to have very secure and simple solutions so that people don’t get their bitcoin hacked or stolen by malware,” Larchevêque says.

Ledger Wallet was one of the featured start-ups in the SXSW 2015 Accelerator Pitch-off. The event is designed to allow technology start-ups in the early stage to pitch their products to investors, media and experts. It was a finalist in the Innovative World Technologies Category.

It is available for sale on their website.

 

AnchorID

AnchorID was selected as an alternate in the Innovative World Technologies category at 2015 SXSW Accelerator pitch competition. This platform helps users create a universal login to access sites across the web. Thus, it eliminates the need to remember their usernames and passwords. Users can choose to use Smartphone authentication or biometric technology, such as fingerprint or voice recognition.

This patent-pending platform is limited to sites and apps that accept it. With the ever-increasing possibility of mobile malware infecting payment systems, AnchorID claims to offer a secure enterprise authentication.

 

Digify

Digify allows users to maintain control over shared content. Through this multi-platform file sharing service, it can notify users if someone is viewing their files or if the files are being forwarded. Users can set their shared content to self-destruct once opened. There are also other options for users, such as view-only and unshared. Through Digify, users can protect their files or calculate how often the file has been viewed by recipients.

“In a world of constant digital messaging and sharing where sensitive information can be read by anyone and is out there forever, people need to secure their files or face a very real risk of losing control of their confidential information,” said Augustine Lim, co-founder and CEO of Digify in a press release.

Chosen as the finalist in SXSW’s Interactive Innovation Awards competition in the privacy and security category. Digify is available through Google Play, Apple App Store or the Digify website.

 

 

The prestigious MIT Technology Review has published a Business Report on “The Future of Money.”

The report surveys emerging digital money and online payment technologies, including Apple Pay, Alibaba’s Alipay and Bitcoin, and concludes that promising advances will be integrated with mainstream fintech and controlled by large players.

“As technology-driven payment ideas give cash a run for its money, the big winners could be established banks and credit card companies,” the report begins, and goes on to describe fintech advances such as digital wallets, cryptocurrencies and mobile peer-to-peer payments.

“Which technologies and companies are likely to lead this transformation is the big question for this Business Report,” the report reads.

The MIT Technology Review report missed by a few days the announcement, reported by TechCrunch and also covered by The New York Times, that Facebook unveiled a new payments feature for Facebook Messenger.

The new Facebook payment features allows users to connect their Visa or Mastercard debit cards and send friends money on iOS, Android and desktop with zero fees. Facebook Messenger payments will roll out first in the United States over the coming months.

“We use secure systems that encrypt the connection between you and Facebook as well as your card information when you ask us to store it for you,” says the Facebook announcement. “We use layers of software and hardware protection that meet the highest industry standards. These payment systems are kept in a secured environment that is separate from other parts of the Facebook network and that receive additional monitoring and control. A team of anti-fraud specialists monitor for suspicious purchase activity to help keep accounts safe.”

Facebook doesn’t charge payment fees because it doesn’t have to monetize payments. For Facebook, it’s enough to keep users locked in the hugely popular Messenger app instead of switching to a dedicated payment service such as PayPal or Google Wallet to send money to friends.

Messenger is one of the largest platforms in the world, with more than 500 million monthly users. And last year Facebook spent nearly $22 billion to buy WhatsApp, a separate messaging platform that now counts more than 700 million active users globally.

The new integrated payment features, which are fast, easy to use and secured by solid technology and operating practices, could make digital friend-to-friend payments and micropayments commonplace.

“[C]onversations about money are already happening on Messenger,” as people chat about bar tabs, splitting dinner bills, and sharing the cost of an Uber, Facebook’s product manager Steve Davis told TechCrunch. “What we want to do is make it easy to finish the conversation in the same place you started. You don’t have to switch to another app.”

Given Facebook’s huge size and reach, the introduction of its payments feature is likely to disrupt the emerging market for instant P2P payments, notes The New York Times. And analysts said that if the payment system succeeded, Facebook would extend it to other types of purchases, such as consumers’ buying of products directly from advertisers.

With this announcement, the social networking giant seems to be claiming a place among the large companies that, according to the MIT Technology Review report, will be the big winners in the digital fintech arena.

The Facebook announcement doesn’t mention Bitcoin. But it would be technically easy to add a Bitcoin wallet besides a credit card, and send bitcoin payments to the wallet of the recipient. That leaves open the option for Facebook to integrate bitcoin payments.

Blogger Jimmy Song suspects that bitcoin payments may indeed be part of Facebook’s long-term plan. He notes that David Marcus, the former PayPal president who now runs Facebook’s Messenger division, has been a fan of bitcoin for a long time.

Rakuten announced that it plans to enable customers to choose bitcoin as a payment option by integrating Bitnet’s payment processing platform on a number of its marketplaces.

The Internet services giant will begin accepting the new payment method first in the United States, then in Germany and Austria. The integration with Bitnet’s platform will make Rakuten one of the largest e-commerce companies in the world to accept bitcoin payments.

“Rakuten’s mission is to empower the world through the Internet,” said Yaz Iida, President of Rakuten USA. “Not only can bitcoin support this vision by helping our merchants better compete globally, but it also has the potential to benefit society by enhancing the security, privacy and convenience of financial transactions. This is one of the reasons why we invested in Bitnet last year and we look forward to working with them on our U.S. marketplace.”

Rakuten, a Japanese e-commerce company founded in 1997 by current CEO Hiroshi Mikitani, operates the largest e-commerce site in Japan and one of the world’s largest by sales, immediately behind Amazon, eBay and Alibaba. The company provides a variety of products and services for consumers and businesses, with a focus on e-commerce, finance and digital content.

Since 2012, Rakuten has been ranked among the world’s “Top 20 Most Innovative Companies” in Forbes magazine’s annual list. Rakuten is expanding worldwide and currently operates throughout Asia, Europe, the Americas and Oceania.

Rakuten sells basically everything online – electronics, computers, fashion and beauty products, books, movies, music, household items, toys, health products, etc. – so the Rakuten online shop can provide a one-stop destination for all needs besides food and rent. That will facilitate the global adoption of bitcoin as an Internet currency that can be used to pay for all sorts of useful things online.

Rakuten has been open and passionate about bitcoin’s potential use, hosting several panel talks dedicated to the subject at a recent financial conference hosted by the company, The Wall Street Journal reports.

Bitcoin payments will be launched first in the United States, Germany and Austria, but Rakuten’s biggest sales are in the Japanese e-commerce site, which isn’t open to bitcoin yet. Mikitani said last month that he plans to roll out the bitcoin function to the Japanese market as well, but didn’t specify a target date.

In October, Rakuten participated in a $14.5 million Series A funding round for Bitcoin payment processor Bitnet, led by Highland Capital Partners. TechCrunch notes that, with this development, Rakuten is putting its investment in Bitnet to work. This news is notable because it not only continues the trend toward bitcoin acceptance among retailers, but it could help position Bitnet as a credible alternative to leading bitcoin payment processors Coinbase and BitPay.

Another possible and important consequence of this development is that it could stimulate the adoption of bitcoin payments by the three global e-commerce operators bigger than Rakuten: Amazon, eBay, and Alibaba. EBay is considering taking bitcoin payments, and its subsidiary PayPal, the main online payments provider accepted by all e-commerce sites, is taking steps toward accepting bitcoin payments.

 

Image of Yaz Iida via LinkedIn.

The Bitnodes project issued its first incentive last week and will continue to do so until the end of 2015 or until 10,000 nodes are running.

The program uses an incentive program started as an experimental process to reward those who run a node. Rewards for running full nodes are being paid in bitcoin.

A Bitcoin node is a part of the network that allows Bitcoin to operate the way it does. It increases security and improves reliability by validating transactions and blocks and then relaying that information to other full nodes.

Any individual can run a full node by using the Core client (Bitcoin Core).

Miners, the ledger clerks of the Bitcoin sector, are incentivized by rewarding them for solving blocks. These blocks contain information about recent transactions and the reward (at the moment) is 25 bitcoin, which can be spread among those contributing toward the mining.

But there are no similar incentives for individuals or businesses running full nodes. They have only the gratification that they are supporting the network. And if they are not mining, others are being rewarded for it. This is a problem, as nodes are arguably as important as mining.

Another problem: Keeping a full node running for an extensive period entails cost. The hardware being used may be out of play for anything else, or the cost of electricity is significant after an extended time.

The Bitnodes project introduces the Peer Index (PIX) as a way to measure nodes in the network. It is based on 11 properties that can be found in greater detail here. Then nodes are listed on the leader board for all to view.

“If your node is not already up on the leader board, make sure that it is reachable by other peers in the network and activate its node status from https://getaddr.bitnodes.io/nodes/,” said Addy Yeow of Bitnodes.

There are currently 4,006 active nodes. IP, ISP, client, country and more information is available via Bitnodes.

Yeow accedes that the incentives program is not an ideal solution to completely remedy the growth, or lack, of Bitcoin nodes. Further discussion is needed from the community for problem-solving and figuring out a more long-term solution to encourage individuals and businesses to run long-term nodes.

Recent updates have extended the 60 day charts to 90 days, a full quarter of a year. This has been done to give a clearer picture of Bitcoin Core version adoption. Also, a STALLED alert has been introduced to notify node operators when their node has not downloaded a newer block from its peers for some time.

One of the long-term potentials of Bitnodes is that it could be used to estimate the size of the Bitcoin network that uses newer versions of Bitcoin Core (version 0.8.x or newer). A full list of the Q1 updates for Bitnodes can be found here on Github.

The potential for rewarding node administrators exists. Further incentive applications are probably needed, but there is scope for this future development. Involvement from the public is sought since the next gem of an idea can come from anyone.

Getting Involved

If you want to get involved in the programming or the discussion, do so via Github here. The crawler implementation (in Python) is also available from Github and can be found here.

Even if you are not a programmer or you do not think you can contribute to the discussion on development, you can always be part of the solution by running a node (bitcoin core) and leaving it running on an old computer in a spare room.

If you plan to run a node, you should have 50 gigabytes of free disk space, 2 gigabytes of RAM and an Internet connection with uploads of at least 400 kilobits (0.4 mb). Check regularly to ensure you do not exceed your upload limit (if relevant), and that you leave your node running for at least 6 hours a day.

Bitcoin nodes map via bitnodes.io

The Isle of Man wants to become a leading Bitcoin hub and attract digital fintech businesses, entrepreneurs and developers, Business Insider reports. The government of the tiny island is about to pass a new regulatory framework to create a true paradise for digital currencies.

The Isle of Man is a self-governing British Crown dependency located in the Irish Sea between the islands of Great Britain and Ireland.

While the United Kingdom is responsible for the island’s defense and foreign policy, the local parliament and government have power over all domestic matters. Business regulations and tax incentives are domestic matters, so the island has the freedom to pass innovative legislation and tax incentives to attract digital fintech firms and professionals.

In fact, the Isle of Man has long been a favorite location for online businesses that need a permissive regulatory climate. For example, it has a world-class reputation as an online gaming and sports betting hub that offers a friendly and agile regulatory environment to the operators and at the same time provides strong legal protection to their customers worldwide.

The new regulatory framework for digital fintech will be informed by the same principles, and may permit restoring the support of the leading U.K. banks that in 2014, scared by the high volatility of bitcoin, stopped working with the digital currency industry on the island.

Brian Donegan, the Isle of Man’s head of operations for digital development and e-business, told CoinDesk that the government is moving aggressively to put key measures in place that would help the region’s budding digital currency industry thrive.

The Proceeds of Crime Act, which has been altered to account for digital currencies, is expected to come into force at the start of April. A new legislation, the Designated Businesses Bill, will regulate the activities of businesses responsible for holding sums of money, including Bitcoin exchanges.

Peter Greenhill , head of e-commerce for the Isle of Man, told Business Insider that the aim is to be the most attractive place in the world for cryptocurrency companies to work from, with “friendly but firm legislation” for digital currency startups.

“We have the regulations and infrastructure in place to become a world leader in digital currencies,” he said. “We already have companies coming in and setting up. We see this as the future and we want to be at the center of development in this area.”

It may seem odd that firmly enforced regulations are presented as an advantage for companies operating in a frontier industry that is often threatened by regulators, but Greenhill considers it a necessary step to foster trust in the use of digital currencies.

“These companies will be listed on a register that will be strictly controlled by the island’s Financial Supervision Commission,” he told Computer Weekly. “They will hold their records, have them audited, looked at, and if they see something untoward they’ll take those people off that register and make sure the world knows about it. We set the bar high, and if people don’t meet [our requirements], they can go somewhere else.”

It appears that the Isle of Man is aligning with the current trend of fostering the emerging Bitcoin economy and taking it mainstream, but under a firm regulatory framework.

Isle of Man image via Flickr.

Decentral has recently moved its offices. As a result, decentral.tv is in the process of creating a new and improved studio. So this week, we revisit some of our best episodes that also aim to shed some light on topics that you’ll see in the news this week.

We start off with an episode from December 2014 when Dmitry Murashchik of Mycelium was our guest. This week, Mycelium will be shipping out their first, sold-out batch of brand new Entropy devices. Entropy is a small USB device that uses hardware-based entropy to generate printable Bitcoin paper wallets. Find out more about Mycelium and Entropy on Monday’s featured episode of Decentral Talk Live.

On Tuesday, we go back to TNABC Las Vegas for an interview with Patrick Cines of the College Crypto Network. CCN is involved in plenty of projects these days, including a Bitcoin Charity Summit at USC. Find out more about how young Bitcoiners are spreading the word about digital currencies in their colleges and communities.

Every day on various community chat boards, people ask, “How do I know which wallet is best for me and how do I make sure it’s secure?” CryptoCurrency Certification Consortium (C4) president, Michael Perklin, sat down with co-hosts Anthony Di Iorio and Ethan Wilding to break down the various types of wallets and important steps that users need to take to secure their funds.

It’s tax season, so figuring out how to include bitcoin on a tax return is on people’s minds these days. On Thursday, decentral.tv will try to shed some light on a complex issue by highlighting an interview with Jake Benson of LibraTax. Find out more about keeping more of your money while staying on the right side of tax legislation on this featured episode of Decentral Talk Live.

Ending the week on a positive note, DTL brings back its popular interview with Connie Gallippi, founder of the BitGive Foundation. Gallippi has worked tirelessly to enable the Bitcoin community to support charitable work by organizations such as Save the Children and the Water Project. BitGive is the first registered Bitcoin charity in the space. It recently formed a partnership with ChangeTip that allows users to automatically redirect their tips to BitGive. BitGive is also part of the 1% Initiative with Purse.io and Chain to save customers money and donate 1 percent to charity.

Past episodes of Decentral Talk Live can be found on the decentral.tv playlist. Featured episodes will be showcased at 3 pm EDT, Monday-Friday on decentral.tv.

On Friday, March 13, the CryptoCurrency Certification Consortium (C4) announced that Andreas M. Antonopoulos, Mike Belshe of BitGo, Eric Lombrozo of Ciphrex, Joshua McDougall and Michael Perklin of C4, Sean Neville of Circle and John Velissarios of Armory Enterprise have agreed to form the steering committee for C4’s CryptoCurrency Security Standard (CCSS).

The mission of the steering committee is to “ensure the CCSS remains up-to-date, neutral and relevant in establishing security standards in the fast changing world of cryptocurrencies.”

John Velissarios, co-founder and CISO of Armory, commented on the newly formed steering committee., “Keep in mind, the wider security world in financial services, telecoms and public sector have been solving similar problems for many years and the experiences gained in these industries are equally, if not even more applicable to the problems facing cryptocurrency companies. The CCSS, supported by C4 Steering Committee members, has a mix of skills, that together provide very wide and deep coverage and I’m confident we can tackle all the challenges that will come our way.

In the same post on its website blog, C4 issued an open invitation to the community to contribute to the CCSS.

What is the CCSS?

The CryptoCurrency Security Standard is an open standard repository for a set of requirements for any information system that utilizes cryptocurrencies. It’s mission is to enable people and companies using cryptocurrencies to employ best practices that will protect them from security attacks and minimize risk.

“CCSS is a set of guidelines to help two sets of people,” says Michael Perklin, President of C4. “Newcomers find it immensely valuable because it pulls all of the things you need to do into a single checklist. It makes it easier for them to benefit from the experience/knowledge of the many peers that came before them.”

“Established services will benefit from it when the standard is ratified in Q4 2015 by being able to post completed assessments against the standard so their customers know without a doubt that they are a Level I, II, or III system.”

“Bitcoin started out as an experiment,” says Eric Lombrozo, co-CEO & CTO of Ciphrex. “Initially, the most significant concerns were pertaining to the protocol and the ability for the network to achieve consensus, not scaling it to manage accounts worth millions or hundreds of millions of dollars. Moreover, Bitcoin was from the start a disruptive concept for the existing financial industry – as such, not many early Bitcoiners had had much experience in existing financial security practices.”

A Call for Collaboration

Both Lombrozo and Perklin emphasize the importance of community involvement in the development of the CCSS. “CCSS is a collaborative effort,” says Perklin. “ It’s not some decree written by a centralized committee that the world must follow.”

Velissarios agrees. “The wider community can bring a multidisciplinary approach to the crypto currency world and bring decades of experience, which will be immensely helpful to crypto currency startups.”

“I’ve been working on enterprise security software for nearly 20 years,” says Lombrozo of his own involvement in CCSS. “While cryptocurrencies bring many additional challenges to security, many basic concepts carry over from earlier projects. I hope to bring some of that experience into this space.”

Anyone with an interest in cryptocurrencies is encouraged to participate in the project. The post lays out a number of ways that people can contribute.

“While security experts have an obvious avenue for contributing, the standard also needs help from graphic designers, language translators, and proofreaders too, just to name a few.”

Access to the project can be found on its Github repository as well as via the C4 Slack site #ccss-discussion channel. Interested participants can join the channel by emailing a request.

 

Image via Freepik

One of Bitcoin’s best features is its openness. Any person (or group of people) can build products that use the open-source network without needing someone else’s permission. This has lead to an explosion of companies looking for new and exciting ways to do just that.

 Among them, the people behind Mycelium have stood out as consistent creators of quality products. Their Bitcoin Wallet is one of the most widely used mobile wallets and its built-in Local Trader system has been operating for almost a year now, offering users a reliable alternative to LocalBitcoins. Entropy, their newest product, has generated buzz in the community by promising users a cost-effective way to generate secure paper wallets.

Beyond these ventures, what might be Mycelium’s most exciting product yet is also their oldest. The company actually dates back to 2008 and initially had nothing to do with Bitcoin. At the time they were working on a way to use mesh networking to create an infrastructure-independent, self-powered, text-messaging system. When Bitcoin showed up in 2009, they decided to refocus on finding a way to use the same networking to create an ad-hoc crypto economy. Today that work has manifested itself in the Bitcoincard project.

More recently Mycelium has undergone some scrutiny due to connections between their Chief Technology Consultant, Jan Møller, and a company called Chainalysis. That company was founded by Møller and “offers a service that provides financial institutions with the means to obtain regulatory compliance through real-time analysis of the blockchain.” The discovery of this via a BitcoinTalk thread sparked a swift backlash on Reddit.

 Mycelium was just as quick to respond with an explanation that Møller hasn’t had access to their nodes since he left his position as Lead Developer to focus on Chainalysis. They went on to say that they “are not fans” of deanonymization of transactions via blockchain analysis and further clarified a commitment to user privacy saying “Our goal was to have Mycelium Wallet be as anonymous as Dark Wallet, and that has not changed.”

I wanted to learn more about Mycelium so I reached out to their community manager, Dmitry Murashchik (/u/Rassah and the author of their Reddit response). He was kind enough to answer some questions of mine concerning the company’s mission, the development process for Entropy, Bitcoin consumer adoption, and more. You can find the transcript below.

1. Mycelium’s stated mission is “to make bitcoin penetration as prevalent in the lives of people as Internet is today.” Why do you think people need Bitcoin?

Bitcoin offers people a choice of currency that is not at the mercy of a few politicians or bankers, is much more efficient and cheaper to transfer over long distances than any other currency, is the only currency that allows for almost immediate settlement of asset transfers, and is not restricted by political borders like everything else on the Internet. It is really the first currency of the Internet. It also allows for a whole lot of use cases that are simply not possible to do with anything else but bitcoin. In much the same way that telephones and fax machines could not have predicted the rise of things like email, Amazon, Reddit, and YouTube, despite those being based on the same send-data-through-wires technology, there are going to be a lot of Bitcoin-related inventions that we would not even be able to imagine right now.

2. Are there any other Bitcoin companies (or companies in any field, for that matter) that Mycelium looks to as an example of the “right way” of doing business?

We generally look at other Bitcoin wallet and hardware developers, and our community as a whole, to figure out what is best, and what things we should avoid. No one specific, though.

3. You’ve become a highly regarded institution in the Bitcoin world based on your quality products. Unfortunately, you seem to be the exception. Every day it seems a new Bitcoin-related, scam company is revealed. Why do you think this industry attracts so many criminal actors?

It’s the people involved. All of us here are aware that the future economy will depend on reputation more than anything else, and all of us follow voluntaryist philosophy where high ethical standards are extremely important. We also all keep each other honest, and delegate various duties so as not to have one person have enough power to really screw things up. However, despite a large number of scams out there, there are still plenty of companies that have existed since the beginning who are still around and just as honest (BitPay, Armory, and Blockchain.info come to mind). The scam ones are probably just the most sensationalist, especially with them advertising so much to drum up sales.

4. Bitcoin has obviously seen a ton of price volatility over the past few years going from being worth $2 to $1,000, then all the way back to $200. Do you think this sort of volatility keeps people from using it in the sort of everyday manner Mycelium wants to promote? What can be done to reduce volatility?

Any volatility like that will keep most people from using a currency. It’s why countries like Argentina, Ukraine, and others who experienced it have to use currency controls to force people to continue to use theirs. But there are still huge benefits of using bitcoin, such as more privacy, the money transfer mechanism, and many others, so people are continuing to use it without being forced to. I don’t think anything can, or should be done to reduce volatility, besides just offering ways for people to hedge their value using options contracts while the currency usage grows. We plan to offer that service soon through Coinapult Locks, directly within our wallets. But I believe bitcoin’s overall volatility will diminish and eventually go away as it gets adopted more widely around the world, just as stock values of large companies become less volatile as companies grow.

5. The release of your paper-wallet generator Entropy has been delayed for a few months now due to production issues (latest update here). What lessons have you learned from this experience that you will apply to future products?

Try to do as much in-house as possible, and expect that every little delay would add a week instead of a day or two, since it takes so long to communicate and get feedback from factories. Also, these delays would not even have been an issue if we didn’t need to raise money to make the devices in the first place. Our Bitcoincard has been in development for over three years, and it’s not an issue because we don’t owe that product to anyone yet. So, basically, preorders should be avoided if they can be. But that’s the same lesson that BFL and Trezor has taught before us, which we were very aware and concerned about when we took this route, and turns out for good reasons.

6. When working with hardware manufacturers, what is their initial reaction when you tell them that you are a Bitcoin company? Are they knowledgeable about the community?

They don’t really need to know that we are a Bitcoin company. Actually, the manufacturers for Entropy didn’t even know what they were making. We sent them hardware schematics, paid for and shipped them the electronic components they will need, and paid them to assemble and test it using test software we wrote. That’s it. To them, as long as the software tests correctly on the hardware they made, and as long as the payment cleared, that’s all that matters.

7. You have a unique view of Bitcoin adoption as one of the premier mobile-wallet providers. What kind of growth have you seen over the past year?

We don’t actually get to see a lot of growth through our wallet. Besides Google Play store, we also allow people to download our app directly, and have it on a slew of other app stores, including a bunch of them in China. Most of those we have no way of tracking download numbers from. But in general, based on feedback from our users and fans, the growth has been pretty good, considering the dreadful slide of the price throughout the entire year. It actually seems that our growth has increased a lot just in the last few months, compared to all of last year, so we expect it will increase even more once the price starts going up again.

8. In an interview with Bitcoinomics you said “(Mycelium’s) main challenge has been trying to keep up with innovation in the Bitcoin space.” What recent innovation are you most excited about?

For our wallet, the things we most want to bring out as soon as we can is Coinapult Locks to let people lock in value and avoid volatility, CoinShuffle to allow for complete financial privacy, and BIP70 merchant protocol, which has been out for quite some time, but has taken us way too long to implement into our wallet. We are also excited about the new hardware wallet options, including support for hardware already built into Android phones that Rivetz and Ledger are developing APIs for, multi-signature accounts, and microtransaction channels. So, we have quite a lot of things to add still, all of them huge features that will make Bitcoin either more secure or easier to use.

9. What is Bitcoin’s greatest strength?

I would say third-party independence. That means political (you can use it without caring which country issued it or which it’s being sent to), regulatory (you can send it wherever you want without needing your government’s permission), and financial (you can always send or receive it without having to get your bank’s approval, or even depending on your bank actually having your money). For a global economy, where everything else is already on a borderless apolitical Internet, that’s huge.

 10. What is Bitcoin’s greatest weakness?

At the moment, the only one I can think of is slow development progress. All the issues that people are worried about already have solutions on paper, but it is taking a very long time for people to actually code, test and implement them. But that’s pretty much the case in any technology, whether software, hardware, biotech, space travel or whatever else: Awesome things are coming, and we all can’t wait for them to get here. So, I guess Bitcoin’s greatest weakness is it existing in an instant-gratification culture.

On Friday, Star Xu, CEO of trading platform OKCoin, published his company’s security policy in a Reddit thread.

“OKCoin has decided to openly share [its] cold wallet security information. Through this transparency, OKCoin aims to assure users of the security of their funds,” the post stated.

Xu then encouraged members of the community to contribute feedback.

He began by outlining the company’s security design philosophy, focusing on key vulnerabilities inherent in Internet connections, USB drives and reliance on centralized management.

He went on to explain how the company’s security design protocol addressed concerns surrounding private key generation and backup, depositing bitcoin from an online hot wallet to an offline cold wallet, and retrieving bitcoin from an offline cold wallet.

The post listed key highlights of the OKCoin security protocol:

1. The cold wallet addresses can only hold a limited amount of bitcoin.

2. Private keys are stored on completely offline computers.

3. Certainty that the private key never had any contact with the Internet or USBs.

4. Encrypted private key paper document requires offsite backup, and is controlled by different people in different places.

5. AES private key password shall also be controlled by different people in different places, and shall not be the same person with the master of the private key.

6. Holders of the AES private key password and those with the ability to retrieve the encrypted private key are different people and in different places.

7. Once a private key has been used to transfer bitcoin out of the address, the address is no longer to be used again for deposits.

In an interview with Bitcoin Magazine, Michael Perklin, president of the CryptoCurrency Certification Consortium (C4) and president of Bitcoinsultants Inc., commended Xu.

“Having a strong security policy is one of five things that every cryptocurrency storage solution should have,” Perklin said, adding that the other four pillars include “procedures, trained personnel, secure hardware and secure software.”

According to C4’s Cryptocurrency Security Standard matrix, it appears that OKCoin’s manifesto covers many, though not all, of the points companies need to include in their security policies to earn Level II and Level III ratings.

Perklin added that by publishing its security policy, OKCoin doesn’t lose anything in terms of security. The move should, in fact, give their clients a degree of confidence.

“Kudos to OKCoin for doing this,” Perklin said.

IBM is considering adopting the blockchain technology behind Bitcoin to create a digital cash and payment system for major currencies, Reuters reports.

The rumor is attributed to “a person familiar with the matter.” So far, official media representatives at IBM and other possibly involved parties, such as the U.S. Federal Reserve, did not respond to Reuters emails about the story.

“It’s sort of a Bitcoin but without the bitcoin,” the unnamed source said. “These coins will be part of the money supply. It’s the same money, just not a dollar bill with a serial number on it, but a token that sits on this blockchain. We are at a tipping point right now. It’s making a lot more sense for some type of digital cash in the system, that not only saves our government money, but also is a lot more convenient and secure for individuals to use.”

Unlike Bitcoin, where the network is decentralized and there is no overseer, IBMCoin would be controlled by central banks and linked to users’ bank accounts, using wallet software that integrates the banking system with IBMCoin. The unnamed source said that IBM has been talking with a number of central banks, including the Federal Reserve. If central banks approve the concept, IBM will build the secure and scalable infrastructure for the project.

IBM has been doing research on blockchain technology for some time – at CES 2015 it unveiled ADEPT, a system developed in partnership with Samsung that leverages elements of Bitcoin technology to coordinate a decentralized Internet of Things.

If the IBMCoin rumors are true, IBM has chosen the right moment to ride the wave of enthusiasm for Bitcoin fintech in the mainstream financial establishment. From the point of view of states and central banks, the value of Bitcoin lies in its ability to implement cheaper and faster transactions, permanently recorded in a distributed, tamper-proof public ledger.

“We don’t think of bitcoin as being a store of value or an alternative currency or an investment,” said former JP Morgan superstar Blythe Masters, now CEO of digital economy startup Digital Asset Holdings. “We think of it as a medium for exchange and a mechanism for recording information.”

Governments also are warming up to the digital economy, with rumors of “Fedcoin” in the United States and some kind of “Eurocoin” in Europe, especially in financially troubled economies such as Greece’s. In a recent research paper titled “One Bank Research Agenda,” the Bank of England said that Bitcoin could reshape the financial industry and called for further research to devise a system that could use distributed ledger technology without compromising a central bank’s ability to control its currency.

If IBM becomes the preferred partner of governments for next-generation fintech based on blockchain technology, the payoff might be huge. It’s worth noting again that this is not an official announcement, but an unconfirmed rumor.

Speculating on the possible identity of the IBM source, a participant in a Reddit discussion thread suggests that he might be Richard Gendal Brown, Executive Architect for Banking Innovation at IBM UK. Brown edits a personal blog on the future of finance and recently posted several articles highly relevant to the IBMCoin space.

Commenting on the Bank of England research paper, he recently noted that “[T]he identity of the issuer really matters. And this is where I think a central bank digital currency could make sense on a distributed ledger.”

Images via “ulifunke.com / bitcoin.de“, Freepik

The newly rebuilt Bter.com, one of the world’s largest altcoin trading platforms, has announced that it has joined forces with JUA.com and is stepping up its security system. It has also set forth a plan for repaying all users who lost funds due to a recent theft.

On the security side, JUA.com will provide 100 percent cold wallet escrow storage of users’ funds, and will gradually take on hot wallet security for deposits and withdrawals as well. Bter has already worked with JUA.com since the hack to review all security-related code, and has completely rebuilt the trading platform’s back end.

JUA.com will also front a 1,000 bitcoin interest-free loan to Bter in exchange for shares, for the purpose of repaying losses to clients. In turn, Bter also has pledged to seek further financing from other sources to help speed up the repayment timeline.

Bter and JUA.com have indicated that they will be working together in the coming months to bring a “new profit model and more services to Bter’s users.”

Bter said that “all Bter’s future profit shall be used to pay [back] the BTC loss [to] users first until all the lost BTC is paid up.” At the same time, it is offering users one month of free trading on the site “as our thanks for your trust and support.”

The History of the Hack

On February 14, 2015, 7,170 bitcoin was reported stolen from Bter in one of the largest hacks in cryptocurrency history. Bter claims to have traced the stolen funds to the bitcoin mixer Bitcoin Fog, thanks to the efforts of security teams and the crypto community. It has been unable to do anything substantial with this information to date.

Since the first days of the breach, Bter has accepted full responsibility for the loss and has pledged to repay all missing funds; at one point, it even considered selling all its assets to fulfill that commitment. The new partnership with JUA.com is designed to ensure that Bter can move forward with some hope of future growth.

Besides being a specialist in digital currency financial services, security and storage, JUA.com also is also affiliated with BW.com, one of the largest mining farms and mining pools in the world, accounting for 20 percent of global hashing power.

Coinbase, one of the largest and fastest growing companies in the Bitcoin space, recently received a $75 million investment from high-profile backers and launched an exchange.

In addition to recently announcing their Series C funding and launching the first licensed exchange in the United States, Coinbase is focusing on continued international expansion and promoting their developer platform.

Adam White, head of business development and strategy at Coinbase, tells Bitcoin Magazine that Coinbase Exchange has been live for about a month, and it’s already one of top five exchanges in the world in terms of USD trading volume.

“The idea for our exchange came from the fact that there were exchanges around the world providing great service, but few operating in a compliant manner,” White said. “We wanted to be the first in the U.S. to do so.”

The exchange currently is available in 26 states and Puerto Rico, with licenses in 16 of those states. Coinbase is working to be licensed and able to work in all 50 states.

Coinbase is registered as a Money Service Business with the Federal Government through the Financial Crimes Enforcement Network (FinCEN,) but is required to obtain a money transmitter license for most states in which they open the exchange.

Each state has different prerequisites, and Coinbase is working with regulators to get the exchange open in more states.

It plans to eventually launch internationally with a priority of opening an exchange in Europe.

White made it clear, however, that Coinbase doesn’t plan on launching exchanges everywhere.

“Coinbase can’t be in every country,” he said. “That would require us to have a banking relationship in each country we wish to start an exchange in. In some cases we would rather provide the tools that help other businesses spread bitcoins across national boundaries.”

Some new potential ways people can use bitcoin include remittances, microtransactions and cross-border payments.

“With Bitcoin, international transactions can be made essentially free. We have always encouraged other services to use our APIs; we want to provide the infrastructure necessary to help push the industry forward,” White said.

“Finding new use cases for Bitcoin is a priority for us,” he said. “Coinbase is aiming to be the trusted brand in the space, providing a safe, secure and trusted platform focused on customer satisfaction.”

 

Image via Coinbase.com

The Wall Street Bitcoin Alliance (WSBA) is a new organization formed by business and technology executives and leaders within the financial industry, including banks, broker-dealers, institutional investors and hedge funds.

The announcement states that the mission of the WSBA is to guide and promote comprehensive adoption of digital currency and blockchain technology across financial markets. The member-driven WSBA will interface with national and international government agencies and regulators, as well as technology innovators.

“Bitcoin and blockchain technology and protocols represent a seismic shift in how financial markets, and all aspects of the global economy, will operate in the future,” said Ron Quaranta, executive director of WSBA.

“As we work to incorporate and adapt these powerful technological advances to the world of ‘Finance 2.0’, having an organized, strategic approach will aid all participants understand and embrace the Bitcoin ecosystem,” he said. “We believe that the long-term result will be more efficient markets, more cost-effective solutions for equity ownership, investment and trading and, ultimately, greater value and wealth creation for all participants in the world of finance and trading.”

Quaranta is the CEO of Digital Currency Labs, a financial technology and strategic advisory company whose mission is to bridge the gap between the emerging world of digital currencies and Wall Street.

The executive committee of WSBA also includes James Jalil, senior partner and head of the cryptocurrency practice at the law firm of Thompson Hine; Gil Luria, managing director at Wedbush Securities’ and Christian Martin, chief executive officer of TeraExchange, which operates the first regulated U.S. Bitcoin derivatives exchange.

By reverse-merging with publicly traded company MGT Capital Investments, TeraExchange recently created the first publicly traded U.S. Bitcoin derivatives exchange.

Full WSBA membership is limited to existing financial market-based firms, including U.S.-registered broker dealers, banks, institutional investment firms and hedge funds.

While full membership criteria are quite strict, an associate membership option is open to individuals and companies providing services and capabilities within the Bitcoin and blockchain ecosystem. Bitcoin technology developers, vendors and consultants will be able to participate in the WSBA as associate members.

“Bitcoin and the blockchain represent a seismic shift in how financial markets, and all aspects of the global economy, operate. In the same way that the Internet gave us a powerful way to share and access information, Bitcoin and blockchain technology now gives us a powerful way to share and access value,” notes the WSBA website. “The long-term result will be more efficient markets, more cost-effective solutions for equity ownership, investment and trading and, ultimately, greater value and wealth creation for all participants in the world of finance and trading.”

Initially, the WSBA will focus on Bitcoin regulatory frameworks such as BitLicense, tax-related aspects of digital currencies, and technological innovation in the Bitcoin ecosystem. The last category is very wide, but it seems likely that the WSBA intends to investigate interfaces and bridges between the emerging digital economy and the mainstream financial system.

The WSBA will have a strategic partnership with the Digital Currency Council (DCC), a Bitcoin consultancy and education center that offers training, certification, referrals and networking opportunities to fintech professionals.

Digital economy startup Digital Asset Holdings will allow its clients to trade financial assets using bitcoin as operating currency for cheaper, faster and fully traceable transactions, Financial Times reports. Former JPMorgan Chase & Co. executive Blythe Masters will be the CEO of the new company, overseeing employees in New York, Chicago and Tel Aviv.

This latest episode of the ongoing love story between Bitcoin and Wall Street follows a wave of announcements of new publicly traded Bitcoin financial products.

Recently, Barry Silbert’s Bitcoin Investment Trust became the first publicly traded Bitcoin fund, beating the Winklevoss Bitcoin Trust exchange-traded fund (ETF) to the finish line. MGT Capital Investments announced a reverse merger with Tera Group, which will create the first publicly traded U.S. Bitcoin derivatives exchange. Outside the United States, Crypto Facilities Ltd., a London-based broker founded by former Goldman Sachs Executive Director Timo Schlaefer, announced the launch of its Bitcoin derivatives trading platform. QuadrigaCX, Canada’s largest Bitcoin exchange, is poised to become the world’s first publicly traded bitcoin exchange.

Masters is a heavyweight in the financial world. Responsible for credit derivative products at JPMorgan, she became a managing director at 28, the youngest person to achieve that status in the firm’s history. Masters is credited with creating the modern credit default swap, a derivative used to trade credit risks.

Many observers view a seasoned financial professional such as Masters as someone who can see clearly the real value of Bitcoin and blockchain technologies to the financial establishment: cheaper transactions executed faster than traditional means and permanently recorded in a tamper-proof ledger.

“We don’t think of bitcoin as being a store of value or an alternative currency or an investment,” Masters said in an interview reported by The Wall Street Journal. “We think of it as a medium for exchange and a mechanism for recording information.”

Masters doesn’t much care for the anarchist, DIY spirit of Bitcoin early adopters. “There is a school of libertarian ‘visionaries’ who want to imagine a world without big banks, big governments,” she said. “That’s nice, but completely irrelevant to this business model. We don’t imagine a world in which big banks and big governments don’t exist.”

In fact, big governments are also warming up to the digital economy, with rumors of “Fedcoin” in the United States and some kind of “Eurocoin” in Europe, especially in financially troubled economies such as Greece’s.

Bills to allow citizens to pay taxes in bitcoin have been proposed, leading to a possible surreal transition of Bitcoin from a tax-avoidance scheme to a tamper-proof means to force citizens to pay taxes. In the meantime, the government of Ecuador is rolling out its national digital currency.

Digital Asset Holdings, founded last year by Don Wilson, the CEO of proprietary trading firm DRW Trading and Sunil Hirani, the CEO of trueEX LLC, will create bridges between the emerging Bitcoin fintech and Wall Street, and build a software platform for sophisticated financial institutions to settle trades with digital currencies and digitized versions of more traditional financial assets.

“If you can find a way to bridge the two of them then you have something that is truly revolutionary,” Masters said, calling it “the financial challenge of our time.”

Image via Sarath Kuchi.

An earlier version of this article incorrectly referred to Digital Asset Holding’s software product as a trading platform rather than a settlement platform.

Counterparty founders have joined with MathMoney f(x) and its founder Mark Smith as co-founders of the new fintech company Symbiont. Symbiont will focus on fostering the symbiotic relationship between traditional financial markets and cryptographic blockchain technology.

“Since we founded Counterparty over a year ago, our focus has consistently been on the creation and positioning of this technology as a solution for structural issues in the larger financial markets,” said Robby Dermody, co-founder of Counterparty and now President of Symbiont.

“Symbiont is the next step in achieving that goal,” Dermody said.

“We’re excited about the positive impacts blockchain adoption will have in the systems that power modern finance, and we look forward to seeing this technology put into use in a way that increases transparency, liquidity and the overall functioning of capital markets,” added Evan Wagner, co-founder of Counterparty and now Managing Director of Operations at Symbiont.

“I founded MathMoney f(x) (a SenaHill Partners portfolio company) to address the severe infrastructural problems associated with the emerging math-based currency trading ecosystem,” said Smith, CEO of Symbiont. “After studying the intricacies of [the blockchain] it became clear that blockchains in general, and Counterparty specifically, could solve long-standing, previously intractable problems that exist in modern financial markets. This epiphany made the decision to join forces with the Counterparty team a logical one.”

“Mark has over twenty years of experience in finance, and was one of the core people behind the creation of several large-scale trading platforms,” say the Counterparty founders on their website. “We’re all very excited about the potential positive impacts not only to Counterparty, but to the blockchain’s adoption in the systems that power modern finance.”

Symbiont will be using Counterparty and other blockchain-based technologies to solve specific, identified issues in several segments of the multi-trillion dollar securities market.

Symbiont’s technology platform will be based on Counterparty, but the Counterparty technology itself will remain open source. The Counterparty Foundation will remain unchanged, with both community and third-party industry voices being represented, and Counterparty co-founder Adam Krellenstein will continue to serve as chief scientist of the foundation besides his new role of Symbiont chief technology officer.

Counterparty made multiple headlines in 2014. Its technology was selected as the main software backbone for a new independent stock exchange operating in bitcoin and powered by Bitcoin technology.

The new stock exchange, developed by Overstock and codenamed Medici, could sidestep traditional stock exchanges such as NYSE and NASDAQ and issue corporate stock directly over the Internet.

It was later revealed, however, that the Medici project will include a wider variety of Bitcoin technologies, protocols and blockchains.

In November, Counterparty announced the implementation of Ethereum’s programming language on the Counterparty platform, enabling users to save and execute Turing Complete Ethereum code on the Bitcoin blockchain, without having to go through external blockchains and altcoins. In the near future, Symbiont’s team plans to upgrade Counterparty’s port of Ethereum, and make it ready for operational production.

The Counterparty software suite has matured rapidly with more than 180,000 Counterparty transactions made, often constituting a significant fraction of daily bitcoin transactions. In addition, there have been three comprehensive security audits performed on the codebase.

Symbiont already has raised significant interim funding, which will be followed by a formal Series A round investment of preferred stock.

Abine announced the release of Bitcoin Anywhere, a new service that lets users spend bitcoin at all online merchants that accept MasterCard. The service, currently in an invite-only beta, permits funding of a Blur “Masked Card” from a Coinbase wallet.

Currently, Bitcoin Anywhere is available only to invited users of Abine’s Blur premium service.

Blur Masked Cards are one-time MasterCards created on-the-fly by Abine, which can be used at all online merchants that accept MasterCard, which, in practice, means all online merchants. Masked cards don’t compromise the user’s real name and address and have a built-in limit to avoid hidden charges.

“When a user makes a Masked Card, we are issuing a limited-balance, limited-duration credit card for that transaction. When you generate a masked card we charge your funding source,” said Andrew Sudbury, Abine co-founder and CTO.

Bitcoin Anywhere aims to make bitcoin payments widespread by automatically signing up all online merchants. Only the users know that they are paying with bitcoin, whereas the merchants continue to use their credit card payment systems.

The Abine announcement notes that leading venture capitalists invest in the Bitcoin ecosystem because they are persuaded that more consumers will use Bitcoin if it is accepted more broadly, while Bitcoin companies bet on wide acceptance catalyzing mainstream use.

“What we aim to achieve is to assess consumer demand for a purchasing experience that balances innovation, convenience, compliance and security,” said Sudbury. Abine plans to share the results of the beta program with other Bitcoin companies and interest groups.

Abine is a Boston-based company founded by Rob Shavell, Andrew Sudbury and Eugene Kuznetsov, focused on developing easy-to-use privacy solutions for consumers. Blur, the flagship service of Abine, is an integrated solution for privacy and online life management.

Besides masked cards, Blur offers password management, online forms auto-fill, and one-time disposable email addresses. The premium service costs $39 per year (with discounts for multi-year subscriptions), and includes extra features such as data synchronization across multiple devices, secure backup and a masked phone number.

With Bitcoin Anywhere, Abine enters the Bitcoin ecosystem with the same emphasis on privacy and ease-of-use.

In related news, Australian Bitcoin company CoinJar announced the public launch of the Bitcoin debit card CoinJar Swipe. The card permits spending bitcoin anywhere that accepts EFTPOS. That means just about anywhere since the EFTPOS (Electronic Funds Transfer at Point of Sale) payment network is widespread in Australia and New Zealand. The CoinJar announcement is titled “Now every Australian business accepts Bitcoin.”

The card also permits withdrawing bitcoin as cash at any ATM in Australia.

Abine and CoinJar are betting on expanding the adoption of Bitcoin by making the digital currency completely transparent to merchants. That seems to make sense, because acceptance by merchants is one of the critical bottlenecks in the Bitcoin ecosystem. Once consumers can spend their bitcoin anywhere, more people will participate in the emerging Bitcoin economy.

Images via Abine.com

London, UK March 10th, 2015

Today, Serica and Factom jointly announced a collaboration wherein Serica will leverage the Factom technology to enhance their transparency & auditing strategy, and the Factom Foundation will use Serica as an important part of its asset allocation model.

Serica Proof of Audit

Serica uses Factom for global custodian auditing

Serica’s token transaction transparency strategy focuses on eliminating trust through cryptography. The Factom technology uses the same cryptography behind Bitcoin to mathematically prove the existence of any data it receives by hashing that data and embedding the resultant traces into the Bitcoin blockchain. This creates a provably time-stamped record keeping system capable of maintaining a near real-time, unforgeable audit trail of Serica’s asset inventory reports, published by its custodian partners.

“With Factom integration, Serica wallet users can take comfort knowing that their assets and the published custodian records, surrounding the chain of ownership will be forever secured by Bitcoin’s blockchain in a way that doesn’t bloat the system” said Taariq Lewis CEO of Serica.

Factom Hedging Plan

Factom selects Serica as part of its asset allocation strategy

Factom has selected Serica to be one of its partners on its asset allocation model. More details will be announced in the coming weeks, along with a breakdown of the best practices Factom will employ in its software sale. Since Serica can offer digital tokens tied to the value of physical Gold and Platinum coins that have massive liquid markets and historically stable prices, this shields the value the Factom Foundation collects from the volatility associated with market price swings and preserves the value contributed by Factoid purchasers.

Peter Kirby, Factom Foundation’s President, stated “It’s important that Factom is able to preserve the value users contribute to our token sale and precious metals are a proven way to achieving that type of stability”.

 

Who is Factom?

Factom is a generalized data layer for the blockchain that allows users to publish and verify any kind of digital information. The Factom technology is especially compelling for those who want to build trust with users by providing complete transparency and real time audit ability of their systems of record, while at the same time maintaining user privacy. Blockchain based authenticity verification and auditing of document and offers significant value for any business process one wants to make honest and accountable. Check out examples and videos that explain how different companies can use this new platform: Factom.org

 

Who is Serica?

Serica is disrupting the legacy financial system’s approach to asset management by offering a more modern approach physical asset acquisition and trading that no longer requires a trusted 3rd party or intermediary. Serica created the world’s first blockchain-enabled platform that creates digital tokens representing real world assets fully reserved, 1-to-1 backed by physical commodities including precious metals, soft commodities, and real estate. Serica’s mission is to allow all Bitcoin companies and individuals to trade any physical asset as if it were digital money. With a commitment to full transparency, audits, and compliance, Serica is the most secure, fast, and low-cost way to buy, sell and trade precious metals, anywhere in the world using bitcoin. Serica digital tokens can be obtained at Sericatrading.com.

The Bitcoin Foundation has faced scrutiny in the past for multiple reasons. As of now, however, it seems the Foundation is a taking sharp turn to redirect the operation.

Some of their self-admitted challenges include reputation struggles, lack of focus, declining membership revenue, falling bitcoin price and a weak balance sheet.

In its latest press release, the Foundation says it is refocusing its efforts “to instill some organizational discipline around reducing expenses, eliminating distractions and focusing on revenue-generating activities.”

Additionally, the Foundation has announced that over the last two months it has been focusing on core development and other ways of producing revenue.

Staff reduction and other cost-cutting measures also have been put in place to further support Bitcoin research and development.

The Bitcoin Foundation has released a chart showing the results of their performance four months into their new plan.

Patrick Murck, executive director of Bitcoin Foundation, says “We made $60/attendee for our proof of concept in Boston and we are shooting to increase both the number of attendees and the profit per attendee for London. We’re able to keep ticket prices low by creating compelling sponsorship packages.”

According to their data, the trends reversed primarily due to the success of its DevCore event series and “the grit and determination of [their] staff.”

Patrick concludes, “The staff is busy on DevCore and diversifying the membership base. Additionally, we are rebuilding the website in a way that our members will have more input and control over the content.”

There are still many improvements needed for the foundation to be working at optimal levels, but their team is hard at work.

This week on Decentral Talk Live, hosts Ethan Wilding and Anthony Di Iorio have a new slate of guests covering topics like tipping, the ways companies get financing and pay employees in the bitcoin space, and the latest developments at Kraken.

We’ll start with Justin Maxwell of Tibdit who will answer the questions: What’s a “tib” and what’s a “dit”? And how will Tibdit help to level the playing field, by making the internet more of a meritocracy for content providers?

Similarly, Toronto-based http://cryptiv.com/ seeks to make tipping and microtransactions through its online wallet simple and fun. This crypto-agnostic system is designed to work across various social media platforms. Founder Mat Cybula drops in to Decentral Talk Live to chat about the potential cultural impact that social tipping could play in supporting content creators.

Finding the right system for paying employees is a challenge for all companies from the smallest start-up to the largest multinational. Adding digital currencies into the mix might seem like just one more headache. But is it really? David Shin from Paywise tackles the ins and outs of salary packaging and outsourced administration services on this episode of Decentral Talk Live.

Getting the money to start your new business venture is another financial challenge for new companies. Seedcoin is the world’s first seed-stage Bitcoin and Blockchain start-up virtual incubator. Eddy Travia discusses the ways that new Bitcoin and blockchain businesses can get the support they need to get off the ground. The objective of Seedcoin is “to invest in the creative entrepreneurs of the Bitcoin and Blockchain space and help them develop future services, products and applications” that will re-shape the way people manage and exchange financial and intellectual assets.

Jesse Powell, CEO of Kraken, will also stop by to talk about the latest news from Kraken, the cryptocurrency exchange based in Japan. Last November, Kraken was tasked with assisting authorities in their investigation of Mt.Gox and with helping to redistribute recovered assets to its creditors.

Decentral Talk Live is a daily talk show hosted by Anthony Di Iorio and Ethan Wilding, along with a rotating panel of guest hosts. It airs on decentral.tv, Monday through Friday, at 3:00 pm, EST.

HONG KONG and London, UK March 9th, 2015.

Today, Tether and Factom jointly announced a partnership wherein Tether will leverage the Factom technology to enhance their transparency and audit strategy, and the Factom Foundation will use Tether as an important part of its asset allocation strategy.

 

Tether.to Wallet Transparency

Tether.to uses Factom for time-stamping and replication of its wallet database

Tether.to’s wallet transparency strategy focuses on eliminating trust through decentralization and cryptography. The Factom technology uses the same cryptography behind Bitcoin to mathematically prove the existence of any data it receives by hashing that data and embedding the resultant traces into the Bitcoin blockchain. This creates a provably time-stamped record keeping system capable of maintaining a near real-time, unforgeable audit trail of Tether.to’s wallet database.

“With Factom integration, Tether.to wallet users can take comfort knowing that transactions will be forever etched into Bitcoin’s rock-solid blockchain for public inspection” said Reeve Collins, Co-Founder and CEO of Tether.

 

Factom Hedging Plan

Factom uses Tether as part of its asset allocation strategy

Factom has selected Tether to be one of its partners on its asset allocation strategy. More details will be announced in the coming weeks, along with a breakdown of the best practices Factom will employ in its software sale. Since 1 tether USD token (USD₮) is always equivalent to $1.00 USD, this shields both the user and Factom from the volatility associated with market price swings and preserves the value contributed by Factoid purchasers.

Paul Snow, Factom Foundation’s CEO, stated “It’s important to us that the community be confident that the value contributed during the token sale will be preserved and Tether plays an important role in how we accomplish that goal.”

 

Who is Tether?

Tether is disrupting the legacy financial system by offering a more modern approach to money. Tether created the world’s first blockchain-enabled platform that converts fiat currency into a fully reserved, 1-to-1 backed digital currency. Tether’s mission is to allow all Bitcoin companies and individuals to transact with real-world currency as if it were bitcoin. With a commitment to full transparency, audits, and compliance, Tether is the most secure, fast, and low-cost way to store and transact with money. Tethers can be obtained at Tether.to, Bitfinex, Poloniex, Expresscoin, and Crypto Next, with more exchanges and wallets coming soon.

 

Who is Factom?

Factom is a data layer for the blockchain that allows users to secure and forever timestamp documents and even whole business processes. The Factom technology is especially compelling for those who want to build trust with users by providing complete transparency and real time audit ability of their systems, while at the same time maintaining user privacy.

A group of researchers from Princeton University, Stanford University and the City University of New York, have announced a new ECDSA threshold signature scheme that is particularly well-suited for securing Bitcoin wallets.

Threshold signatures can be thought of as “stealth multi-signatures.” The new Bitcoin security scheme is detailed in a research paper titled “Securing Bitcoin wallets via a new DSA/ECDSA threshold signature scheme.”

The announcement follows three previous posts by Steven Goldfeder on the Freedom to Tinker blog, hosted by Princeton’s Center for Information Technology Policy, a research center that studies digital technologies in public life. Goldfeder is a second-year doctoral student in the Department of Computer Science at Princeton, interested in cryptography, security, privacy and decentralized digital currencies.

Bitcoin wallets often are attacked by increasingly sophisticated cyber thieves. Coupled with the irreversibility of bitcoin transactions, that poses important security problems that decrease user confidence in Bitcoin and could prevent the digital currency from going mainstream if no robust and simple solution is found.

The researchers note that the Bitcoin ecosystem needs a breakthrough in security.

Banks use two or multi-factor authentication schemes: the user’s password – which may have been compromised by hackers – isn’t enough to initiate a transaction, but the user must provide at least one more authentication, often by replying to an email or using a smartphone authentication app or equivalent stand-alone device. Today, reputable Bitcoin services such as Circle and Bitstamp use two-factor authentication to provide security, but users must say goodbye to anonymity and provide proof of identity.

Even more secure three-factor authentication methods that include biometrics are emerging.

DIY-minded and privacy-conscious Bitcoin users can run their own wallet and “be their own bank,” but running a wallet has proved to be too much of a security risk. As soon as hackers gain access to the wallet, they can instantly and irreversibly take the money and run.

Cold storage – keeping the main bitcoin wallet on a device that is not connected to the Internet, and moving only the funds needed for daily expenses to online storage – often is seen as too much of a hassle.

Therefore, most security-conscious bitcoin users rely on external services, at the cost of compromising their anonymity and the “DIY spirit” of Bitcoin.

Multi-signature (multisig) wallets offer a solution. A multisig transaction, for example a 2-of-3 transaction, requires the agreement of the required number of authorized signatories, in this case two out of three. However, the paper shows that multisig transactions present significant usability problems, and serious anonymity and confidentiality drawbacks.

“Bitcoin currently lacks support for the sophisticated internal control systems deployed by modern businesses to deter fraud,” say the authors of the paper. “To address this problem, we present the first threshold signature scheme compatible with Bitcoin’s ECDSA signatures and show how distributed Bitcoin wallets can be built using this primitive.”

In a threshold signature scheme, the ability to construct a signature is distributed among different devices (for example a computer and a smartphone), and each device receives a share of the private signing key. For individuals, threshold signatures allow for two-factor security, or splitting the ability to sign between two devices so that a single compromised device won’t put the money at risk. For businesses, threshold signatures allow for the realization of access control policies that prevent both insiders and outsiders from stealing corporate funds.

The researchers built a prototype implementation of a two-factor secure wallet, a desktop client and an Android app, and released open source code on Github. A video shows how the system works: a user initiates a transaction on the computer, and the computer then begins the threshold signing protocol with the phone. The phone will show the user the transaction details and will proceed with the transaction only with the user’s explicit approval. The computer and phone use QR codes to initially pair, and for all subsequent sessions they communicate over the local Wifi network.

If threshold signature schemes become common, private bitcoin wallets will support the same multi-factor authentication offered by major wallet providers, while continuing to offer a high degree of anonymity.

Sunday was International Women’s Day, when the Bitcoin community is joined with others around the world to promote awareness of women’s issues by launching its first Bitcoin Women’s Day.

Like International Women’s Day, “Bitcoin Women’s Day is not just for women,” says Sarah Boone Martin of the Digital Currency Council. The issues that women are concerned about – equal access to healthcare, to financial systems, to the world economy, to employment, to education; a sustainable environment, personal safety, security and autonomy – these are all issues that are important to the Bitcoin community as a whole.

The purpose of Bitcoin Women’s Day can be broken down into three key goals: first, to celebrate the accomplishments of women in the space; second, to raise awareness of issues and barriers they face both within and outside of that space; and third, to promote Bitcoin as a means of addressing some of the issues that women face around the world.

Leading up to Bitcoin Women’s Day, decentral.tv aired episodes that addressed some of these concerns.

On Tuesday’s episode, Tatiana Moroz discussed her role in helping to found the Women’s Crypto Association. She noted that there are few women in venture capital, which influences how projects are funded.

“Men value things differently than women. More diversity in the venture capital space will lead to more diversity in the products that are created and the companies that are born,” she said. Moroz encouraged more women to join the Women’s Crypto Association.

“There are a lot of great women in the space,” she said, but noted that they don’t necessarily get the invitations to speak at events. “We’d like to have more of a ‘best practices’ for conferences,” Moroz said. “We don’t want anything particularly special. We want it to be noticed that we are also contributing.”

She objected to the way that many conferences relegate women speakers to a “Women in Bitcoin” type of panel.

“That’s not enough,” says Moroz. “Lots of women have experience in a variety of different topics. Offering them actual speaking engagements rather than just a panel on women is a better direction for us to go in.”

Decentral Talk Live also featured a conversation with Connie Gallippi, whose BitGive Foundation is the first charity to receive 501(c)(3) nonprofit status. The type of projects that BitGive work on include Save the Children, which now accepts bitcoin directly; the Water Project, which brings clean and safe water to sub-Saharan Africa; and Medic Mobile, which uses mobile phones and open source software to improve healthcare in the developing world.

Gallippi recently has been to Africa to see a well that BitGive funded entirely through bitcoin donations. In co-operation with BitPesa, a short video is being produced that chronicles the Water Projects’ bitcoin-funded well and looks at the future social impact of bitcoin in developing countries.

“The technology is there but we just need to build out the infrastructure and user base,” says Gallippi.

The week ended with an interview with Anne Connelly, director of marketing and fundraising for Dignitas International, a charity that aims to transform healthcare for the most vulnerable. Dignitas delivers frontline care in Malawi, conducts research and develops practical solutions and advocates for better health policy and practice.

Connelly recently succeeded in convincing her boss that bitcoin could be a valuable addition to their fundraising goals.

It wasn’t easy. She had to overcome the organization’s fears of the unknown, not to mention bitcoin’s notorious volatility.

Connelly had to “come up with a better way of thinking about it,” and finally, through her repeated efforts, she was able to convince Dignitas to accept bitcoin donations in the same way that it accepts stock donations.

“It’s about sharing the knowledge about what we do in the Bitcoin community now” she says, “and hopefully in the future there will be some more donations.”

Donations help the foundation keep babies HIV-free, keep young people with HIV/AIDS on treatment and boost maternal health.

All three of these women have been instrumental in raising awareness about bitcoin and the way it can have a positive impact on society – as well as the ways in which women are making a difference in the Bitcoin space.

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

CheapAir, the first mainstream online travel agency to offer customers the option to pay in bitcoin, litecoin and dogecoin, is now first U.S. company to provide its customers the opportunity to fly to Cuba.

Although recent changes have lifted many travel restrictions to Cuba, there are still limitations.

CheapAir’s website reads:

“U.S. citizens and residents are only permitted to travel to Cuba for one of 12 authorized reasons. They are:

1. family visits
2. official business of the U.S. government, foreign governments, and certain intergovernmental organizations
3. journalistic activity
4. professional research and professional meetings
5. educational activities
6. religious activities
7. public performances, clinics, workshops, athletic and other competitions, and exhibitions
8. support for the Cuban people
9. humanitarian projects
10. activities of private foundations or research or educational institutes
11. exportation, importation, or transmission of information or information materials
12. certain authorized export transactions

You can book your flight on CheapAir.com and, before you complete your purchase, we’ll ask you to specify which of the 12 reasons applies.”

Direct flights between the United States and Cuba still aren’t legal, so flying to Cuba requires a connecting flight to a third country.

The CheapAir website says it offers flights to Cuba through Mexico. Though the traveler would have to buy a flight from the United States to Mexico, then buy a separate flight from Mexico to Cuba, CheapAir packages the flights for the traveler.

Additionally, traveling to Cuba does require a visa, but acquiring one is a simple process. It costs the equivalent of $25-$30 USD (0.08791- 0.1053 bitcoin as of 3/3/15). They’re available at any gateway airports that offer flights to Cuba.

Don’t expect to easily use your bitcoin in Cuba, though, as there isn’t even infrastructure yet in place for the use of foreign credit cards.

Cheapair’s website reads:

“Most U.S. citizens who travel abroad are used to easy access to ATMs (even in very remote locations). At the moment, ATMs are not available in Cuba, though banking relationships are in the beginning stages. In theory, Cuban ATMs could work for Americans traveling abroad in the near future. For now, you’re going to need to bring cash with you and convert to the Cuban Peso at local banks. If your stopover in Mexico City is for more than a few hours, you can also pull money out in Mexican Pesos. But be warned, the Mexican Peso to Cuban Peso exchange rate is notoriously bad. You’re better off exchanging USD, EUR or CAD for Cuban Pesos. Euros and Canadian dollars historically get a more favorable exchange rate on the ground in Cuba. Master Card has been given the go-ahead to accept transactions from Cuban businesses and will be operational by March 1, 2015.”

There is possible future opportunity for a remittance market in Cuba. In 2012, Cuba reported $2.6 billion in remittances. Through technology such as Bitcoin, Cubans living in the United States could send money to their families back home for a lower rate than any remittance company. It would also allow individuals to send smaller amounts than ever before.

An impediment to this market’s creation, however, is the lack of widespread Internet across the country. If Cubans do acquire wider Internet access, they have an opportunity to skip ATM technology, and “leapfrog” to modern payment systems.

A few hotels in Cuba currently have Internet service for guests at a premium, but connection speeds are slow and there are time limits on its use.

CheapAir has uniquely positioned itself to be the only U.S. travel agency to allow people to go to Cuba, and allow them use new forms of money to do so.

Decentral and MaRS today announced the first ever Decentralized Technology (DEC_TECH) event will be held at MaRS Discovery District on March 17, 2015. The keynote speaker will be Andreas M. Antonopoulos (@aantonop, antonopoulos.com) Bitcoin evangelist and author of Mastering Bitcoin, on the event’s theme: “Bitcoin and the Future of Payments.”

“As one of the most recognizable names in the cryptocurrency space, we’re thrilled to feature Andreas M. Antonopoulos at our inaugural DEC_TECH event,” said Anthony Di lorio, CEO and Founder of Decentral and host of DEC_TECH. “Antonopoulos has spoken at events around the world and is a highly sought-after consulting authority.”

Last year, Antonopoulos addressed the Canadian Senate and recently helped make the case for Bitcoin before the Australian Senate. His book, Mastering Bitcoin is considered to be the authoritative resource on Bitcoin and blockchain technology.

DEC_TECH will begin at 6:30p.m. with an introduction by host Anthony Di Iorio. Presenters include Amber Scott, chief AML Ninja at Outlier Solutions, on the topic of the current state of digital currency regulation in Canada, and Gerald Cotten, CEO of QuadrigaCX, which recently announced that it is set to become the first publicly traded Bitcoin exchange in the world.

In addition to the presentations, DEC_TECH will showcase select Toronto based Bitcoin companies including Coinkite, QuadrigaCX, and Cryptiv.

“As Toronto’s fintech community continues to grow, MaRS is excited to connect the startups, entrepreneurs, investors and industry experts who are passionate about decentralized tech, cryptocurrencies and fintech advancement,” said Adam Nanjee, lead, MaRS FinTech.

See a full list of participating startups and speakers at the DEC_TECH event page.

Space for this free event is limited and guests are asked to register in advance. Doors open at 6:00p.m., with presentations from 6:30p.m. until 8:00p.m. and networking opportunities and refreshments to follow until 8:30p.m.

About DEC_TECH
Formerly known as the Toronto Bitcoin Meetup, DEC_TECH is organized by Decentral in Toronto in partnership with MaRS Discovery District to provide a hub for people with a passion for decentralized tech, cryptocurrencies and fintech advancement. Join the DEC_TECH community here.

About MaRS Discovery District
MaRS Discovery District (@MaRSDD) in Toronto is one of the world’s largest urban innovation hubs. MaRS cultivates high-impact ventures and equips innovators to drive economic and societal prosperity. MaRS provides expert advice and market research, and makes connections to talent, customers and capital. MaRS startup ventures have created 6,500 jobs and, in the last three years alone, they have raised $1 billion in capital and generated $500 million in revenue.

For more information, please contact:

Anthony Di lorio
CEO and Founder
Decentral
416.831.9593
anthony@decentral.ca

Lara Torvi
Manager, Media & Community
MaRS Discovery District
416.673.8152
ltorvi@marsdd.com

A stone’s throw from the New York Stock Exchange, in the heart of New York’s financial district, is a 6,000-square-foot facility called the New York Bitcoin Center.

The Bitcoin Center is known for educating the public on Bitcoin and crypto-economics at their events and inviting high-profile speakers. It has become a central part of the global Bitcoin movement in it’s own right and was recently featured on CNN in Morgan Spurlock’s Inside Man.

This year, they are working on their new incubator.

John Lilic, the Head of Investor Relations and Operations at the Bitcoin Center, spoke to me about the Bitcoin Center’s new direction.

“We are very busy with our incubator and seed accelerator,” Lilic said. The Bitcoin Center has invested in a number of “exciting and compelling” tech startups working on blockchain innovations, he said.

“We are uniquely positioned to observe the incredibly rapid growth of this sector. Smart money venture capital and Wall Street has already moved in to the tune of hundreds of millions of dollar, and this is just the very beginning,” Lilic said. “We are positioning ourselves by investing in our companies.”

The Bitcoin Center is striving to be an industrious place with industrious developers, he said, adding that the Center has pivoted toward a more developer-centric space with a strong focus on its tech incubator.

“We feel very good about the portfolio of companies we’ve got at the moment,” he said.

Some of the startups Bitcoin Center has invested in include:

• Cryptos – A U.S.-based digital currency exchange powered by the AlphaPoint trading engine. It offers users access to deep liquidity and volume, leading-edge security and maximum performance.
• LiveryCab – LiveryCab’s system connects passengers to drivers by allowing passengers to enter their destination and drivers to bid on rides.
• Digital Asset Vending Enterprises (D.A.V.E) – A Bitcoin ATM, lightweight, secure, modular, open source and running as an Android app.
• Blockchain Apparatus – An incorruptible voting system designed on blockchain technology.

An adage in the Bitcoin world is that innovation occurs at a much faster rate than in other industries. This holds true for the Bitcoin Center, as they begin kick-starting new businesses.

In its first year, the Bitcoin Exchange hosted “every single important group or person in the Bitcoin world,” ranging from developers, corporate innovators and politicians to prominent nonprofit leaders, Lilic said. In its second year, it plans to expand operations by developing its portfolio of companies and “offering the market exciting opportunities.”

“Our objective,” Lilic says, “is to continue to be a force for positive change and innovation in the new blockchain paradigm.”

The doors at the Bitcoin Center are always open. Just go to 40 Broad Street.

 

All photos courtesy of the Bitcoin Center.

Commentary by Giulio Prisco.

Google has announced an upcoming mobile payments framework called Android Pay, Forbes reports. Android Pay will not be a separate payment app, but a platform that enables developers to integrate mobile payments into their apps using an API layer.

Google’s senior vice president of Android, Chrome and Google Apps Sundar Pichai announced the upcoming payment platform at the Mobile World Congress in Barcelona.

“We are doing it in a way so that anybody else can build a payments service on top of Android,” he said at a press event. “In places like China and Africa, we hope that people will use Android Pay to build innovative services.”

Android Pay will be an Android service that developers can use, through an API, within their own mobile payment applications. Google Wallet, the native Google payment service that was launched in 2011 but didn’t gain as much traction as Apple Pay, will continue to exist but it will become one more application built on the Android Pay framework.

Initially, Android Pay will use near-field communication (NFC). Later, it’s expected that Google will enable Android Pay to use biometric devices such as fingerprint scanners. The data of Android Pay users will be stored locally so that payments can be made even without a data connection. To improve security, Android Pay will generate a one-time credit card number, or token, for each transaction.

“Android Pay will allow companies to add a mobile payments option to their app, to which users can upload credit card or debit card information, so that payments become single-tap transactions within the app,” a source close to Google told Ars Technica. “In addition, a company adopting the Android Pay API will be able to allow tap-to-pay transactions in brick-and-mortar stores. This function will rely on Google’s Host Card Emulation (HCE), which makes it easier for third-party apps to take advantage of Android phones’ Near Field Communications (NFC) chips.” Further details are likely to be revealed by Google at the Google I/O conference in May.

Another secure payment solution for Android developed by Rivetz, Trustonic, Intercede and bitcoin payment processors Coinapult and BitPay is being demonstrated at the Mobile World Congress in Barcelona and will be available in the second quarter of 2015. It will offer full support for bitcoin payments and integration options with external bitcoin wallets.

Will the new Android Pay framework will support bitcoin payments? Pichai’s words, “We are doing it in a way so that anybody else can build a payments service on top of Android,” seem to clearly imply that any external Bitcoin payment service will be able to channel bitcoin payments through the Android Pay platform.

Fast Company notes that once Android Pay is up and running it will open the door to partnerships with other companies that streamline payments for mobile users, including companies such as Stripe that let clients accept bitcoin payments.

A Reddit post notes that “apps like Circle or Coinbase [could] use Android Pay APIs to pay for purchases in stores using NFC, instantly converting Bitcoin to fiat.” Some participants in the ensuing discussion thread express frustration at the ongoing mainstreaming of the Bitcoin space and fears that it will be controlled by the usual suspects, the financial establishment and corporate giants.

It seems certain, however, that the availability of easy and secure bitcoin payments is needed to achieve widespread adoption.

Image via HLundgaard.

QuadrigaCX, Canada’s largest bitcoin exchange, is poised to become the world’s first publicly traded bitcoin exchange. It is set to trade under the public company name of “Quadriga Fintech Solutions” and its listing has been submitted and approved. Public trading is expected to commence with the Canadian Securities Exchange (CSE/CNSX) ticker symbol “XBT” by early April.

Last month, the company completed its financing and raised nearly $850,000 CAD — more than double their original pre-listing goal of $380,000. Four of Vancouver’s top brokerage houses, Haywood Securities, Jordan Capital Markets, PI Financial and Wolverton Securities, were involved in financing the deal.

Since the company will have to undergo a full financial audit, QuadrigaCX also is hoping to earn the title of the world’s most-trusted bitcoin exchange.

“We’re excited to be able to provide an unparalleled level of transparency by merging legacy financial audits with innovative blockchain technology,” said Gerald Cotten, CEO of Quadriga Fintech and co-founder of QuadrigaCX.

What does all this mean to the average Bitcoin investor?

“Many people purchase bitcoins in an effort to invest in the blockchain technology,” said Michael Patryn, co-founder of QuadrigaCX and now adviser for Quadriga Fintech Solutions. “The value of a bitcoin, however, is not tied to the value of the infrastructure of the blockchain.”

He went on to point out that while the value of a bitcoin dropped dramatically over the last year, $314.7 million USD in venture capital was being invested in the Bitcoin space.

With the advent of Quadriga Fintech’s digital currency exchange, investors can purchase shares of its stock on the free market. Quadriga Fintech, in turn, supports the Bitcoin infrastructure.

“People investing in Quadriga Fintech Solutions are investing in our trading platform, merchant processing system, and remittance platform. They are investing in a team which has demonstrated growth, dedication, and the expertise to excel while others have collapsed,” said Patryn.

In the early months of 2015, Canadian exchanges CAVIRTEX and Vault of Satoshi both announced that they would be closing down. Since then, QuadrigaCX has enjoyed a surge in new clients and activity, coinciding with a recent marketing push into international markets.

Patryn said that Quadriga Fintech plans on dual listing in Frankfurt, Germany, at some point in April. It will not, however, be trading in the United States, nor will it accept American investors at this time. The company is adopting a wait-and-see attitude for the moment until there is further regulation clarity south of the border.

Images via QuadrigaCX and www.vpsi.org.

MGT Capital Investments announced a planned merger with Tera Group, which operates the first regulated U.S. Bitcoin derivatives exchange. The merger will create the first publicly traded U.S. Bitcoin derivatives exchange.

As observed by The Wall Street Journal, this is a reverse merger where Tera will take a controlling stake in MGT. Tera doesn’t seem too interested in MGT’s gaming operations, so the operation is primarily a way for Tera to go public. In other words, Tera is buying a public listing on the stock market for its Bitcoin operations.

Tera has played a leading role in the development of Bitcoin derivatives. In September 2014, Tera launched TeraExchange, the first regulated U.S. Bitcoin derivatives exchange, and TeraBit, a spot Bitcoin price index based on real-time data from a number of Bitcoin exchanges. The TeraBit price index is used as the settlement rate for USD/Bitcoin derivatives transactions.

Tera is active in the Bitcoin space, which is booming. Forget the highly volatile dollar exchange rate of Bitcoin, the important parameters are the number/volume of Bitcoin transactions and the venture capital investments in the emerging Bitcoin industry, both of which are skyrocketing. Consumers spend bitcoin online, and investors bet on the innovative potential of Bitcoin and its underlying blockchain technology. Technology expert Peter Diamandis said Bitcoin is going from deceptive to disruptive, and listed Bitcoin among his top tech picks for 2015.

That should be interesting for investors, but currently only a few publicly traded companies and funds – including Overstock, Bitcoin Shop and the forthcoming Winklevoss Bitcoin Trust ETF – are active in the Bitcoin space. With this announcement, the new Tera-controlled MGT joins the select Bitcoin club.

Derivatives such as Tera’s forwards are the simplest way to expose investors to Bitcoin, especially those investors who prefer not to trade the digital currency itself – and are the easiest way to profit from the ups and downs of the bitcoin-dollar exchange rate.

In related news, former Goldman Sachs Executive Director Timo Schlaefer announced the launch of Crypto Facilities, a U.K. Bitcoin derivatives broker. This confirms the growing interest of institutional investors in the Bitcoin economy.

“The proposed merger with Tera gives immediate and future value to our stockholders, while creating a robust platform for the growth of the industry’s first publicly listed bitcoin derivatives exchange,” said H. Robert Holmes, Chairman of MGT’s board of directors. “The Bitcoin industry attracted over $400 million of investment capital from some of the world’s most prominent investors over the past 12 months; we see our move today as further progress in the broader adoption of the industry.”

“Growing consumer and merchant adoption of bitcoin is driving demand for regulated capital markets solutions,” said Christian D. Martin, chairman, CEO and co-founder of Tera Group.

“By combining with MGT, Tera will create a unique public offering to support the essential infrastructure needed for a vibrant global bitcoin ecosystem,” Martin said.

In an interview with CoinDesk, Martin added:

“Bitcoin consumes the majority of our mindshare here in our firm. It’s our bitcoin listing and subsequent certification that has the most commercial possibilities for us right now, and it’s a business we’re very keen to cultivate and nurture along.”

MGT and Tera plan to finalize and execute a definitive agreement by March 16, 2015.

Images via Tera and MGT.

The Wall Street Journal reports that Barry Silbert’s Bitcoin Investment Trust (BIT) is about to become the first publicly traded Bitcoin fund. The BIT will be an interesting option for traditional investors looking for exposure to Bitcoin who prefer not to trade Bitcoin as currency. The BIT is sponsored by Grayscale Investments, a part of Silbert’s Digital Currency Group.

Currently, the BIT, launched in 2013, is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables accredited investors, with annual incomes greater than $200,000 or assets of more than $1 million, to gain exposure to the price movement of bitcoin for a minimum investment of $25,000 without the challenges of buying and securely storing bitcoin. BIT-accredited investors are shielded from hacking attacks and unregulated entities, which would be appealing for small investors as well. But the BIT hasn’t been publicly available to small investors so far.

The Winklevoss twins also 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 Cameron and Tyler Winklevoss say that everything is proceeding according to plan. According to their Securities and Exchange Commission (SEC) filing, the value of COIN shares will reflect the dollar exchange rate of Bitcoin on Winkdex.

The Winklevoss ETF is still going through the lengthy ETF registration process with the SEC. But BIT is taking a shortcut, permitted by a rule that that allows holders of a private fund to sell their shares publicly after a 12-month lockup period and completing a less arduous approval process with the Financial Industry Regulatory Authority (FINRA). Without SEC registration, the BIT can’t formally be considered as an ETF, but once existing shares are offered publicly it will be equivalent to an ETF in practice.

Silbert said that FINRA granted BIT’s request for a permanent ticker symbol, GBTC, which “is expected to be effective shortly.”

In a statement, the Digital Currency Group said, “Although we have been assigned a ticker symbol, no assurances can be given as to when or if such trading will commence, or that an active public secondary market for BIT shares will develop or be maintained.”

Each share of BIT is worth approximately one-tenth of a bitcoin. As of Friday, the trust’s net asset value stood at $24.43 per share. The Wall Street Journal article notes that many investors purchased their BIT shares in 2013 when the dollar exchange rate of bitcoin was about $100, so they would make a profit selling now. New investors, including small investors, will be able to buy BIT shares soon.

Bitcoin space and the traditional stock market are increasingly converging, and the Bitcoin economy as a whole will continue to have DiY and “underground” aspects. But it is evident that regulated, professional Bitcoin services will become more common, and take Bitcoin closer to mainstream.

A common theme among bitcoiners is the desire to make the world a better place. This week, Decentral Talk Live focuses on a couple of organizations that are trying to do just that.

Connie Gallippi is the Founder and Executive Director of the BitGive Foundation and a founding member of the Women’s Crypto Association. This week on DTL, Connie describes some of the many projects that the BitGive Foundation has been involved in, especially in Africa. They include Medic Mobile, Save the Children and the Water Project. She also discusses the role she played in getting ChangeTip to add the charitable donation option to their service.

Connie then addresses the issue of inclusion and how the Women’s Crypto Association is ensuring that women’s viewpoints are being well represented in the crypto space.

Another woman making a point of incorporating bitcoin into charitable giving is Anne Connelly, director of fundraising and marketing at Dignitas International; and former fundraising manager at Médecins Sans Frontières/Doctors Without Borders Ireland. Through her work with Dignitas International, she has helped to raise funds for the Tisungane HIV/AIDS Clinic in Malawi. Anne also addresses the increasingly important role of bitcoin in Somalia, a country with a huge remittance market.

Other guests this week include Flavien Charlon, Founder and CEO of Coinprism, who introduces viewers to the world of colored coins; Radislav Albreicht of BitBond, a peer-to-peer lending platform that allows borrowers to access affordable funding without needing a bank, while lenders earn higher interest rates on their savings; and finally, the always entertaining Tatiana Moroz, bitcoin evangelist, singer/songwriter and author.

Decentral Talk Live airs new episodes on decentral.tv at 3:00 pm EST, Monday – Friday.

If you operate an exchange, bitcoin automated teller machine or any other money services operation that does business with Quebec residents, you will need to comply with its updated Money Services Businesses Act regardless of where in the world you are based.

This new policy document was first made public on February 1, 2015 (updated to March 1, 2015), and experts have been trying to determine what it means for bitcoin businesses both within Quebec and outside its borders.

The document says that anyone offering money services (that is, currency exchange; funds transfer; issue or redemption of traveler’s checks, money orders or bank drafts; check cashing; and operation of an automated teller machine) must be licensed by Quebec’s Autorité des marchés financiers (AMF), or the Authority of Financial Merchants, in order to do business with clients in Quebec.

For companies not based in Quebec, that means hiring a local representative in the province, usually a lawyer or law firm, to handle the paperwork and act on their behalf in any dealings with the AMF.

In a recent clarification email received by the Bitcoin Embassy on February 26, the AMF confirmed that certain digital currency businesses, such as exchanges (online or in person), need to possess a funds transmitter license to operate. But the details surrounding what type of business models are subject to this license category still needs further clarification, says Jillian Friedman, legal counsel for the Bitcoin Embassy in Montreal.

The email also states that the new interpretation of the MSB law will take effect immediately: There is no grace period. The AMF representative said, however, that those businesses that submit requests for a license within a reasonable time and who cooperate with the AMF will normally be allowed to continue their business activities while their license request is being processed.

Amber Scott, founder and Chief AML Ninja at Outlier Solutions Inc. broke down the policy document in a recent Decentral Talk Live episode, as well as in a follow-up interview for Bitcoin Magazine. (Watch the full Decentral Talk Live episode on decentral.tv here.)

“There are no special circumstances for small businesses who might have one or two interactions with clients in Quebec,” she said. Scott said that companies who do business with Quebecois clients have two practical options at the moment: Register with the Quebec Autorité or stop doing business in the province. For online money services businesses, that would mean filtering and blocking all traffic originating from a Quebec IP address.

As for ensuring compliance, Scott expects that the AMF likely will begin by focusing on companies doing a significant amount of business in Quebec. Anyone found not to be registered would probably receive a letter requesting compliance with the policy, followed by further enforcement measures.

The Bitcoin Embassy in Montreal, home to its own bitcoin ATM, came out with the following response shortly after learning about the new policy statement:

“While we welcome the intention of the Province of Quebec’s financial regulator … to clarify the regulation of bitcoin ATMs, we are surprised by the lack of transparency and involvement of the Bitcoin community in this decision. However, this development had been expected by the community, and the Bitcoin Embassy views this decision as an implicit recognition that Bitcoin is indeed a legitimate monetary alternative to fiat currencies.”

The Bitcoin Embassy also expressed surprise that the AMF did not wait to see what regulations its federal counterpart, FINTRAC, is currently drafting. The Embassy statement noted that Quebec is now the only province that imposes these requirements on Bitcoin ATM operators.

The process was “messy” but the results are in.

The new board members for the Bitcoin Foundation are Olivier Janssens and Jim Harper with 63 percent and 60 percent approval respectively. Michael Perklin finished third with 52 percent approval followed by Bruce Fenton with 50 percent.

Out of  595 confirmed voters, 440 votes were cast (74 percent). In order to be elected, candidates had to be approved by at least 50 percent of eligible voters. In the first round of voting, none of the 13 candidates met that 50 percent approval threshold, so a run-off election among the top 4 candidates was held.

Olivier Janssens, a libertarian and voluntaryist, ran on a platform of decentralizing core development, bringing full transparency to the Foundation, and focusing on widespread adoption of bitcoin around the world.

Jim Harper brings an extensive breadth of knowledge and experience to the position. He is a senior fellow at the Cato Institute, where he focuses on privacy, telecommunications, intellectual property, security, government transparency, and digital currency. In 2014, Harris served as Global Policy Counsel for the Bitcoin Foundation.

Janssens and Harper will begin their two-year term officially on March 15, 2015.

In statements released to members and posted on the Bitcoin Foundation blog, Brian Goss, Elections Committee Chairman thanked members for their participation. “From members to bystanders, we appreciate all the feedback and suggestions for improvement along the way.”

Patrick Murck, Executive Director of the Bitcoin Foundation added, “I look forward to working with our newly elected board members, and congratulations to every candidate for your active participation.”

The run-off election began on February 25, accompanied by confusion and outrage from its members. While the first round of voting had been held using the Helios voting platform, at the eleventh hour, a new on-blockchain platform run by Swarm was suddenly introduced. Amidst concerns over security, lack of clarity and transparency, system integrity, and voter disenfranchisement, the Foundation heeded the candidates’ unanimous request for a restart. Votes cast on the Swarm platform were discarded and the process began again the next day, using the former Helios system. The voting period was extended by a day and concluded on Saturday.

In response to the decision to move the election back to the Helios platform, 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.”

The majority of the criticism on the Bitcoin Foundation forum, however, focused on the poorly managed process rather than on the concept of on-blockchain voting itself.

Not that there wasn’t concern over the principle idea. Core developer Peter Todd was critical of the on-blockchain concept from the start. As he stated in an email to Bitcoin Magazine, “The big picture is that voting generally already involves a central entity — the organization — so the decentralisation that the blockchain gives you isn’t needed. What you do need is strong auditing of the honesty of that central entity, which is a problem that’s already well studied, and has some really nice solutions that are only available in systems with a central entity.”

Todd also raised concerns about the inherently public nature of the blockchain and the difficulty that poses in maintaining secret ballots, as well as the potential for miners to reject ballots that they don’t agree with.

“While there are ways around this problem,” he concluded, “ why bother when better non-blockchain voting schemes like Helios already exist and have undergone peer review?”