Month: May 2015

New York Times technology and finance reporter Nathaniel Popper’s new book “Digital Gold: Bitcoin and the inside story of the misfits and millionaires trying to reinvent money” has been praised as one of the best Bitcoin books to date. Popper tells the story of Bitcoin from its geeky, libertarian early days to the beginnings of the current phase marked by significant venture capital investments and growing adoption by the financial community.

Popper’s book contributes to the ongoing Bitcoin vs. blockchain debate. Once a bitcoin-like crypto-currency is adopted banks and governments, will it still be recognizable as bitcoin, or rather become a sanitized blockchain controlled by central banks, with all the troublesome features of bitcoin removed?

“A company like Goldman Sachs or JPMorgan is hesitant to rely or work with a financial network in which the people keeping it alive are essentially anonymous,” says Popper in a Forbes interview. “Banks have to know who’s transacting and flag it if someone suspicious is involved in the transaction. But it’s quite easy in Bitcoin to have an identity tied to an address in a way that would make a bank feel comfortable.”

Popper released previously undisclosed information in a section of his book, re-published by American Banker magazine with the title “When Goldman Sachs Began Flirting with Bitcoin.”

Goldman Sachs is one of the most respected financial companies in the world, often considered as epitome of the best – and the worst – of today’s financial system. Therefore, Goldman Sachs’ take on bitcoin can be considered as representative of the financial industry as a whole.

Recently, after stating in a report that Bitcoin could shape the future of finance, Goldman Sachs participated as lead investor in a $50 million funding round for startup “Bitcoin bank” Circle in one of the highest profile investments in a Bitcoin company to date.

Financial operators are attracted by blockchain-based financial networks with no single point of failure, which could keep running even if one of the participating nodes stops working or is taken out. They are also attracted by the relative speed and low cost of blockchain transactions.

It currently takes the bank three or so days to settle stock trades, says Popper. “What if that could happen instantly and be recorded on a blockchain for everyone to see?”

But, according to Popper, Bitcoin remains a thorny issue for Goldman Sachs, JP Morgan and other top financial players. The problems are Bitcoin’s potential for anonymity, and the fact that the Bitcoin blockchain is “powered by thousands of unvetted computers around the world, all of which could stop supporting the blockchain at any moment.”

Popper reports that JPMorgan and other major banks envisaged a new blockchain that would be jointly run by the computers of the largest banks and serve as the backbone for a new, instant payment system without a single point of failure. The new blockchain, decentralized but closed, would offer the benefits of the current Bitcoin network without relying on end-users for its operations.

IBM has recently developed a similar concept for a non-Bitcoin, closed blockchain for central banks. Even governments are warming up to the idea, 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 research paper titled “One Bank Research Agenda,” the Bank of England 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.

It appears that financial institutions, central bank and governments are, indeed, flirting with the blockchain but determined to leave the open, pseudonymous and peer-to-peer (P2P) features of Bitcoin out. If so, Goldman Sachs’ investment in Circle could be seen as an intermediate, preparatory step to test the waters before implementing a non-Bitcoin blockchain.

 

Photo by Laslovarga / CC SA 3.0

Amsterdam-based Bitcoin payment gateway Coinzone, which now positions itself as a full-stack Bitcoin solution with a focus on Europe, announced that it will launch its wallet – the core of its upcoming platform – in early summer.

“Our goal is to assist Europe with all that Bitcoin has to offer the world of commerce,” says the Coinzone website.

According to the company, the Coinzone Wallet will make Bitcoin simple for a growing community of European consumers. The fully-featured personal wallet will support country-specific local currencies for bank deposits and withdrawals, transfers and instant payments.

“Growing European demand for Bitcoin means more and more consumers want a simple and secure way to transact,” says co-founder and CEO Manuel Heilmann. “We’ve developed Coinzone Wallet in response to an overwhelming demand from users seeking a wallet that stores their sensitive information locally in Europe.”

The Coinzone wallet has been specifically developed to address privacy and legal frameworks, such as EU privacy, secure payment and data protection laws in operation across the region. All data will be securely hosted in European locations, giving Coinzone Wallet users the assurance of protection under European privacy laws.

“Our aim is to make it easy for European consumers to do more with bitcoin,” added Heilmann. “The Coinzone Wallet is an important milestone for Coinzone towards a full-stack Bitcoin solution. It is set to literally get bitcoin into the hands of consumers so they can transact as and when they wish.”

In a blog post titled “Why We’re Building a Bitcoin Wallet,” Heilmann noted that Coinzone always had more in mind than just building a payment gateway. Coinzone team members run studies to understand the various needs across Europe, and move from country to country to understand the local requirements of European bitcoin users.

“We also hear over and over from consumers that is it too difficult to find places to spend bitcoin,” notes Heilmann’s post. “In every study we conduct at Coinzone, that is one of the top five questions people have. When you combine the rise in mobile usage with merchant adoption, we have an opportunity to create a new experience for consumers looking to spend their bitcoin. Our initial release of the Coinzone Wallet will make a step in that direction. Over time, we’ll continue to learn from feedback in order to enhance this feature.”

According to Coinzone CMO and Vice President of User Experience Paul Sylling, we are moving into an era of “frictionless” spending based on mobile payments, in which consumers expect an experience that is easier and more convenient. Bitcoin matches perfectly with the rise of mobile and new expectations of how payments should work.

“With the launch of the Coinzone Wallet, coupled with our existing merchant network, we position ourselves to reinvent the commerce experience,” Sylling told Bitcoin Magazine. “By building the full stack, we have the opportunity to offer additional unique services to our customers as well as streamline the user experience.”

Sylling confirmed that according to current expectations, the Coinzone Wallet will be launched in early summer, and consumers can already sign up for early access. The wallet, available for Android, iOS and the Web, will include features deemed important for non-technical Bitcoin users, such as language localization, conversion to local currencies, and withdrawals to local banks.

In order to address the problem mentioned by Heilmann – that it’s difficult to find places to spend bitcoin – the planned release includes map-based local search features. To merchants, Coinzone will offer point-of-sale (PoS) solutions to accept bitcoin payments on tablets and smartphones, and interfaces to existing payment processing systems.

Bitfury’s Allied Control, a company that uses two-phase immersion thermal management for high-performance computing and data centers, received the Green Innovations Award for its potential in saving electricity and “billions of gallons of water” in the future.

Allied Control was recognized by the head of the Hong Kong government for its energy-efficient two-phase immersion cooling system, which submerges electronic components in dielectric heat transfer liquids (better heat conductors than air, water or oil). The liquids vaporized from the chips are condensed and reused.

According to a report, the U.S National Security Agency’s major data center in Utah “consumes up to 6.6 million gallons of water a month.” Apart from the water used to cool the data center, it also embeds water in electricity generation which consumes 1.8 liters of water per kilowatt-hour in the United States.

Allied Control’s third-generation immersion cooling system saves around 99 percent of electricity used for cooling not just in cold regions, but hot and humid parts in Asia, without wasting water or oil. This advantage allows data centers and chip manufacturers to expand their services into countries with cheap power costs and existing infrastructure, such as the Philippines or Vietnam.

In January 2015, Bitfury acquired Allied Contol for the same reason, with a global vision to expand throughout Asia into countries with low power costs for manufacturing chips for bitcoin mining.

“This acquisition will enable us to substantially increase energy efficiency of our data centers and speed up deployment of our new ASIC chip allowing to lower overall capital expenditure,” BitFury CEO Valery Vavilov said. “In addition, it provides an opportunity for us to enter new markets such as HPC, using the experience of the Allied Control team. The use of immersion cooling will provide BitFury with flexibility when choosing locations for our data centers.”

Help Datacenters in Locations like California

Suffering from the same problem as the massive data center in Utah, several major technology companies have moved their data centers from California to other colder states due to high energy and water consumption. However, with the two-phase immersion cooling system, tech giants have the opportunity to move to regions such as California, where infrastructures are pre-set-up and most tech talents are based.

“With California being in its fourth consecutive drought year and regulators proposing mandatory reduction of up to 35 percent in urban water consumption, Allied Control’s immersion cooling technology might offer an effective solution to cool down the many data centers serving the hungry and ever-growing demand of cloud services and other Silicon Valley applications,” said Kar-Wing Lau, vice president of operations at Allied Control, in a press release. “In our standard configuration, the closed-loop cooling units do not use evaporative water towers, and as a result, the water usage effectiveness is close to zero (WUE <0.003 L/kWh).

“Our proprietary technology is highly energy efficient,” added Vavilov. “We are committed to growing our transaction processing infrastructure with the smallest carbon footprint, continuing to rely solely on renewable energy sources.”

Bitcoin Press Release: DNotes is pleased to announce the launch of the world’s first Digital Currency Employee Incentive Benefits Plan – the latest in a family of unprecedented digital currency financial instruments from the DNotes team.

Chicago, Illinois. [May 25, 2015] – DNotes announces the release of their Employee Incentive Benefits Plan, the latest addition to their family of CRISPs (Cryptocurrency Investment Savings Plans) that already provides an investment vehicle for Children, Students, and Retirement funds. The Employee Incentive Benefits Plan combines knowledge of the employer/employee relationship with macro-economic foresight to maximize its users’ long-term potential benefit.

Employee benefits play an important role in the lives of employees as well as their families. Benefits offered by an employer can be a deciding factor for a potential employee’s job decision. The cost of doing business is ever increasing, and with it, employee savings requirements. The traditional idea that pension plans will take care of an employee’s financial needs upon retirement is quickly becoming obsolete. The relationship between employers and employees needs urgent re-examination, and a new mindset of partnership for mutual benefit and survival is necessary.

“Employees are struggling to secure their financial future. This means high stress, increased anxiety, lower productivity, and diminishing loyalty that breeds high staff turnover. High interest credit cards are being used to supplement cash flow. Furthermore, these fraud-prone cards have high transaction costs and shockingly high chargebacks that are paid for by the merchant, anywhere up to 8%, thus impeding business, jobs, and wage growth. I see Digital Currency adoption as a solution to high transaction costs for merchants, and inflated prices for essential consumer goods,” said DNotes Co-founder Alan Yong.

Self-Employment Trending Down

Yong, a pioneer from the early days of mobile computing, pointed out that while small businesses continue to be the main incubator of job creation in the US economy, the U.S Bureau of Labor Statistics data showed that entrepreneurship is in steady decline, with both incorporated and unincorporated self-employment dropping nearly ten percent since 2004. Small business numbers have not recovered in line with economic growth since the 2008 Global Financial Crisis. Yong attributes this in part to small business owners having difficulty meeting costly payroll, healthcare obligations, mounting regulations, and funding their own retirement accounts.

Why is CRISP for Employee Incentive Benefits Plan the Solution? And What are DNotes?

CRISP for Employee Incentive Benefits will facilitate the distribution of digital currency called DNotes – a cryptographically secure digital currency which is the most reliably appreciating and stable currency in its class. DNotes has increased against the US dollar more than 30 fold since its inception in February 2014 and centers its business strategy on creating a stable trustworthy digital currency from the ground up for everyone, whether they are rich or poor. DNotes promotes trust and integrity for the long-term mutual benefit of all as it continues to work towards further capital appreciation. As DNotes positions itself to be the predominant digital currency used for global payments, with instantly cleared payments at near zero transaction costs, multiple strategic plans are systematically executed to ensure that DNotes becomes the foremost digital currency to supplement fiat currency worldwide.

How Will the Program Work?

Director of CRISP for Employee Incentive Benefits, Marc Fortenberry, said that employers will register for the program by completing a simple online form at https://dnotesvault.com/crisp-for-employees.php. Each employer will have a main dashboard which will include a company specific link for their employees to sign up. The employer dashboard will also have a table that shows employee details to facilitate instant balance transfers into their accounts. The employer will then be able to send DNotes to reward their staff as they see fit. Every approved employer registration will receive 1,000 DNotes to get them started.

Employees need to have a DNotesVault account, and sign up with the link given to their employer, which requires only the employee’s e-mail used to register at DNotesVault. When submitted, a new address is created in the employee’s DNotesVault account that is identified with their company name.

About Alan Yong:

DNotes Co-Founder Alan Yong is a well regarded visionary since the early days of personal computers. He founded Dauphin Technology in 1989 and is best known for creating the Dauphin DTR, the most powerful window-based miniature computer that competed head on with Apple’s Newton computer that became the Apple Iphone as we know it today. In 2007, Yong co-founded Smokeys Daylily Gardens, one of the largest daylily growers in the world. Smokeys Daylily Gardens is the first merchant to accept DNotes as payment for daylily purchases. Alan recently shared his thoughts on the disruptive potential of Bitcoin, blockchain technology and DNotes in an interview.

Yong agrees with other industry’s visionaries that digital currency and the Blockchain technology will be the greatest technology revolution since the Internet. However, he passionately believes that to gain mass acceptance, the currency must be built from ground up for everyone with trust and integrity. There must be strong leadership and sufficient self-interest from its community to promote and protect the currency’s stability for the long-term mutual benefits of all participants.

For more information about us, please visit: https://dnotesvault.com/crisp-for-employees.php

To trade Bitcoin with DNotes please go to: http://poloniex.com/exchange#btc_note

Follow DNotes on twitter: http://twitter.com/dnotescoin

Media contact:

Name: Alan Yong

Email: Contact@DNotescoin.com

 

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The Wall Street Journal reports that Benjamin Lawsky, the superintendent of the New York Department of Financial Services (NYDFS) who is expected to issue this month a new regulation for digital currency businesses called BitLicense, which has been widely criticized for being unnecessarily strict, will leave the NYDFS in June.

Lawsky said that he will form a consulting business that will include virtual currency advisory services. “[Lawsky] plans to advise companies on financial matters such as cybersecurity and digital currencies like bitcoin, a new sphere of regulation he helped spearhead in New York,” reports the New York Post.

In a recent Medium post titled “How to Prevent New York from Becoming the Bitcoin Backwater of the U.S.,” MIT Digital Currency Initiative lead Brian Forde issued a clear warning that the current BitLicense text has fundamental flaws. The Bitcoin policy think tank Coin Center expressed similar concerns.

The Wall Street Journal notes that Lawsky’s rules, likely to be released next week, could hinder innovation among small tech startups with limited resources by imposing too-high compliance costs.

In particular, according to the MIT Digital Currency Initiative analysis, Bitcoin companies would be required to get both a money transmitter license and a BitLicense  —  even though the two licenses have substantial overlapping requirements. Furthermore, compliance with BitLicense would be required for operations that don’t control customers’ funds, and even for software development work.

The Cato Institute, a public policy research organization with a libertarian orientation, bluntly denounces Lawsky’s move.

“[If] history is any guide, Ben Lawsky will be able to use the name he made attacking Bitcoin to wend his way into the Bitcoin business world,” notes Cato Senior Fellow Tim Harper. “Because of the contacts he made as a regulator, he can hire himself out to Bitcoin companies wanting to signal to other regulators that they have the approval of the regulatory establishment.”

According to Harper, Lawsky’s office violated New York’s Freedom of Information Law by refusing to release the research and analysis that it claimed to have done to validate the BitLicense regulation, and framed the regulatory discussion in a way that other regulators have felt obliged to copy.

Without speculating on whether Cato’s concerns are applicable in this specific case, it is worth noting that it wouldn’t be the first time that artificial, unnecessary strict restrictions and barriers to new businesses are put in place by regulators who hope to cash in later by helping struggling firms work around their own regulations.

In his commentary to the proposed BitLicense, Harper argues that poorly formed government regulation that impedes Bitcoin’s adoption will thwart badly needed global economic progress.

“The ‘BitLicense’ proposal does not meet those high standards,” says Harper. “The evidence that it will produce net benefits is weak, and the likelihood that it will have greater costs than benefits is high.”

The Cato Institute suggests that the Bitcoin community should refuse to do business with firms that hire Lawsky as a consultant or adviser, and hold regulators to account even after they’ve left office to make sure that regulators don’t thwart financial innovation hoping to profit after they leave office.

On June 3, 2015, Vancouver, British Columbia, will host “Digital Finance 2015,” Canada’s first fintech and banking innovation conference, at the Vancouver Club on West Hastings in the city’s trendy West End.

Digital Finance 2015 will feature two keynote speakers:

• Peter Vander Auwera, co-founder of Innotribe innovation will talk about “Innovation in banking: from tactics to strategy.”

• Sam Maule, emerging payments expert with Carlisle & Gallagher, and one of the “top innovation influencers” will talk about “FinTech’s Disruptive Force in Banking.“

Other speakers include representatives from Canada’s Royal Canadian Mounted Police (RCMP), the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Citi (New York), and Overstock (New York).

White Paper on Women in Fintech will be released

Organizer Christine Duhaime of the Digital Finance Institute is one of the authors of the “White Paper on PowerWomen in FinTech,” a study that highlights women’s contributions to developing financial technologies for financial services.

The Digital Finance Institute partnered with Innotribe and Carlisle & Gallagher Management Consultants to gather data from around the globe on how women are playing a role in the development and adoption of new financial technologies, particularly cryptocurrencies.

Christine Duhaime is a lawyer and an author and speaker in Toronto and Vancouver. She is a counterterrorist financing and anti-money laundering legal specialist with expertise in financial regulation, digital financial services and products, terrorist financing, bribery and money-laundering law.

“The ‘White Paper on PowerWomen in FinTech’ is the culmination of months of research and an important milestone in the industry globally,” Duhaime said. “We wanted to honor many of the incredible and impactful women in fintech by releasing the whitepaper at Digital Finance 2015.”

Ambitious Agenda Covers a Wide Range of Issues

The conference is targeted mainly at venture capital firms, banks, innovation labs, entrepreneurs, financial technology companies, AML-compliance teams, digital currency companies, payment processors and government regulators.

“By launching Canada’s first fintech conference, our aim is to be the catalyst for venture capital and other key investments and partnerships to move the industry forward in Canada and foster growth of fintech and innovation in emerging and disruptive payments,” says Duhaime.

The conference will cover a wide range of topics, including the future of money, new financial models, bank innovation, blockchain technology, Bitcoin, anti-money laundering, and payment solutions for disaster relief.

Digital Finance Institute

Duhaime is executive director and founder of the Digital Finance Institute. It was founded in 2014 as the first Canadian institute devoted to fintech, financial innovation and financial inclusion.

Because there has been so much interest in this conference, the institute will hold a similar conference in Toronto in November 2015 and has already lined up a speaker from The Wall Street Journal.

“The conference is rewarding for me because it’s the culmination of a number of goals I wanted to accomplish in fintech after I was the only woman speaking at my first Bitcoin conference in 2013, which is to highlight women in fintech and to encourage innovation in Canada,” says Duhaime.

This is a guest post by Joe Ciccolo, DCC Member and CEO of BitAML.

Background

 The Ripple Labs settlement agreement, the first civil enforcement action brought against a digital currency exchange, demonstrates the perils of piecemeal AML compliance and delayed implementation. Last week, Ripple Labs, the popular payment system, currency exchange and remittance network, reached a settlement with FinCEN and the US DOJ in which it acknowledged AML compliance violations and agreed to fines in excess of $1.1 million. And that’s just the beginning. (More on the true financial and operational cost to Ripple Labs in a moment.) So what happened? And how can we learn from this enforcement action?

Analysis

When Ripple Labs began blazing its trail in the world of digital currency, there were no true “rules of engagement”, and certainly nothing in the way of the AML compliance requirements that exist today. In fact, its founding predated the March 18, 2013 FinCEN guidance which applied Bank Secrecy Act (BSA) regulations to digital currency exchanges and administrators by defining them as money transmitters, a type of money services business (MSB). As detailed in the settlement agreement, Ripple Labs did not immediately register its already existing business with FinCEN when the guidance was issued. Rather, they ultimately registered a subsidiary later that same year. Thus, the company operated an unregistered money services business (MSB). Simply put, this is one of the easiest violations for a regulator to prove. It is perhaps the lowest of the proverbial low hanging fruit.

Both prior and subsequent to registering as an MSB, regulators determined that Ripple Labs did not implement an effective BSA/AML program. (Note the italicized text added for emphasis.) Lest one think they can simply delay BSA/AML compliance by postponing FinCEN MSB registration, regulators reminded digital currency entities in the settlement agreement that “…regardless of whether they have registered, as required, MSBs are subject to certain additional requirements under the Bank Secrecy Act and its implementing regulations.” So bottom line…if you’re operational, you must have an effective BSA/AML program already in place. Waiting until you reach some predetermined company milestone before building out compliance functionality is not only a regulatory violation, as FinCEN and the US DOJ proved, but a very costly business strategy.

Equally damning is the idea of cobbling together bits and pieces of your compliance program as you grow. Digital currency exchanges and administrators must be strategic and very deliberate about investments in the area of compliance. While it’s a tall order to be sure, especially for a startup or small venture, the single best approach is to lay the foundation of your program using the “four pillars” of BSA/AML compliance (1. Designation of a Compliance Officer; 2. Development of internal policies, procedures and controls; 3. Ongoing, relevant training of employees; and, 4. Independent testing and review). With few exceptions, any investments you make in the area of compliance will fall into one or more of these four buckets. The importance of developing and investing in the vitality of the four pillars cannot be understated. Within the settlement itself, regulators took the opportunity to remind digital currency exchanges and administrators that they are required to implement an AML program that, at minimum, contains each of the four pillars. While investments in compliance – a non-revenue generating function of one’s business – may seem costly, the cost of not developing and effectively implementing a strategic approach from day one is exponentially higher.

Recall earlier in this article, I alluded to the $1.1 million aggregate fine as only the beginning of the true cost. Now the real work begins! In “Attachment B: Remedial Framework”, the settlement agreement provides a detailed list of cumbersome, time-sensitive requirements and deliverables that must be turned over on an extremely tight schedule. Among these, Ripple Labs must create and implement a training program; secure an independent party to review its AML program; enhance its protocol; implement transaction monitoring systems; and, perform a “look back” for potential suspicious activity. Further, not captured in the resource cost of remediating these items is the potential loss of revenue from new or existing customers that may question their faith in the company or losses attributable to engaging regulators rather than the marketplace. Moreover, business will now be conducted on the regulator’s terms, not the company’s terms. As you may well grasp from the partial list of required remedial fixes and indirect costs, the monetary penalty is only the beginning of the financial and operational pain.

The news, however, is not all bad. In fact, regulators devoted several detailed sentences at the very beginning of the settlement agreement to applauding Ripple Labs’ cooperation and commitment to maintaining an effective AML program. This was not by accident, nor should it be overlooked. When determining monetary fines and other forfeitures, regulators generally take into consideration the level of cooperation; self-disclosures made upfront; and, past violations, if any. The acknowledgement of these proactive efforts was just as much a call to shape future interactions with other digital currency exchanges and administrators, as it was a recognition of Ripple Labs’ progress and initiative.

Summary 

The settlement agreement between regulators and Ripple Labs, the first civil enforcement action against any digital currency exchange, offers a valuable learning opportunity. The speed of innovation and marketplace disruption have never met a countering forcing quite like financial regulation. Digital currency exchanges and administrators have had to make changes while in motion. Some have been forced to suspend services (temporarily or indefinitely), while others still have struggled to adapt to a system of regulation that never really seems to fit quite right. Regardless of your past experiences or current circumstances, regulation is here to stay. The Ripple Labs settlement illustrates the importance of executing a comprehensive and cohesive AML compliance strategy that begins on day one of operations. It also teaches us that proactively mending previous regulatory transgressions, owning up to compliance faults, and pursuing a course of action to make thing right can soften the blow. So, if you haven’t already begun to invest time and resources into the build out of your AML compliance program, today is the day to get started. For those that have begun, it’s imperative that you move forward by staying on top of developments in the compliance world and never look back.

The Ripple Labs settlement must be embraced as a learning opportunity. It’s just a shame that this promising venture will be held back from advancing the pace of innovation in our industry due to early AML compliance missteps.

Learn more about Joe Ciccolo, CEO of BitAML at his DCC Member Profile.

Bloomberg Brief has published a Special Report about Bitcoin. Written as an introduction for financial professionals and busy investors with little previous knowledge of Bitcoin, the report gives far too much space to marginal aspects such as price swings, scams and bankruptcies. However, while the depth of the analysis doesn’t match that of recent reports by Goldman Sachs and other top financial institutions, the Bloomberg report offers interesting insights and opinions that highlight current trends and issues in the Bitcoin space.

Barry Silbert, founder and CEO of the Digital Currency Group and creator of the Bitcoin Investment Trust, the first Bitcoin investment vehicle publicly traded in the United States, focuses on the price of bitcoin and hopes it will increase. “People will get excited about bitcoin when they believe its price will rise, which will create a flywheel effect of increased adoption, velocity, trading, etc.,” he says. “Bitcoin can live up to its promise, but it will only be possible if the price and liquidity are a lot higher than they are today.”

Taking the opposite view is Stony Brook University finance professor and Bloomberg columnist Noah Smith, who is persuaded that bitcoin becomes more useful as a currency the more its price drops. Currencies and investment vehicles like stocks and gold are very different, and Smith considers the currency aspects of bitcoin as more promising and important than the investment aspects.

“The sooner people give up the hope that bitcoin will skyrocket in price, the sooner they will be willing to spend bitcoins in everyday life, the way they now spend dollars,” he says, and adds that the quicker bitcoin as an investment dies, the quicker bitcoin as currency can come to life.

Jerry Brito, Executive Director of Coin Center, argues that utility will be the best barometer of success. As examples of useful applications, he mentions both new applications to micropayments and the Internet of Things (IoT) and new, cheaper and more agile business models for existing applications.

Ron Hose, co-founder and CEO of Philippines-headquartered Coins.ph, focuses on the impact of cheap and efficient bitcoin remittances.

“Think of how Skype lowered the cost of calling overseas a decade ago,” he says. “Bitcoin can have the same effect on the remittance market.“

Gil Luria, managing director for financial technology research at Wedbush Securities, mentions cross-border remittances and micropayments as “obvious places where the [bitcoin] technology can radically reduce friction,” and notes that the provision of banking-like services to underbanked populations around the world is likely to have a high impact.

However, Luria thinks that Bitcoin is still a research area, and not ready yet for widespread operational use in mainstream finance. More technical and especially operational development is needed, and traditional payment operators have a role to play, he believes.

“The legacy service providers are not asleep,” notes Luria. “They will undoubtedly come up with their own ways to utilize digital currency and the blockchain.”

In recent news that support Luria’s take, MasterCard Introduced fast bitcoin-like personal payments

The Bloomberg report includes a summary of Goldman Sachs’ recent report on the future of finance, focused on emerging electronic payments. As online and mobile banking evolves, bitcoin and other online currencies could gain more traction.

Most contributors to the Bloomberg report consider regulations in the Bitcoin space a positive trend.

“[Bitcoin] is an experiment being done outside of the controlled environment of a laboratory,” says Boston University’s Mark T. Williams. “As a result, there need to be controls around it, which means stronger regulation. There are many risks still to be addressed.”

Williams is persuaded that the pseudo-anonymous nature of Bitcoin must “go away.” On the other hand, Luria thinks that Bitcoin will actually make it harder for bad actors to hide. “[E]very transaction in bitcoin is tracked and, eventually, traceable,” he says. “It seems counterintuitive, but using bitcoin actually makes it much easier to catch the bad guys.”

 

Image via the Bloomberg Bitcoin Report.

Bringing together more than 40 startup pitches on both the retail and fintech verticals at the consortium, the Plug and Play Tech Center Expo day included three keynotes from the founder of Plug and Play Tech Center Saeed Amidi, Managing Director of Citi Ventures Debra Brackeen and founder of the Lending Club Renaud Laplanche.

Saeed Amidi started the day off with remarks summing up the mission of Plug and Play to bring together software for two industries and create a matchmaking haven where corporations could come to find solutions to their vexing technological problems, understand emerging markets and nurture and mentor the next generation of technological advancement.

Debbie Brackeen was excited to describe Citi Ventures fund as a proving ground for startups for early validation of their models. Startups benefit from Citi’s treasure of data and knowledge every step of their growth while Citi strives to “bring the outside in” in integrated value chains.

Citi Ventures is focusing on being an internal acceleration fund that manages funding alongside the incubator as an integrated network. Her remarks touched on Citi Ventures exploration of blockchain technology in its nascent stages to test the potential for solving problems for their partners.

Citigroup has been focused on financial technology that puts consumer experience first in security, analytics, commerce and payments.

Renaud Laplanche focused on how Lending Club innovated on the existing financial framework by bringing together the lending and the banking side and employing network effects to give investors confidence in their model. Remarkably, he said his company’s biggest turning point was becoming a Facebook app which allowed them to get series A funding and hire top executives: “People are your greatest asset and your founding team has to be top notch.”

Scott Robinson who heads the financial technology vertical for Plug and Play described the marriage between retail and financial software as one born out of necessity as distribution rails turn to mobile and security issues need to be addressed.

Security was the common denominator on both sets of pitches. Notable startups such as Sparkling Logic give actionable advice on fraud prevention, Behaviosec logs and analyzes data such as keystrokes to run real-time authenticity tests, with the U.S. government already as a paying customer, and Debitforward (also known as Pinn) allows users to use a mix of social media data, GPS and the Internet of Things to seamlessly pay for their purchases without ever pulling out a wallet.

Funding is exploding as large companies seek to partner with fledgling startups to innovate in the rapidly changing Fintech atmosphere. Startups along the spectrum of growth face remarkable challenges proving their business model, finding partnerships, proving value to gain funding and getting their big break.

Organizations such as Citi Ventures allow companies to survive in the “lean startup” world by validating the commercial models, consumer pain points and solutions with data and coaching. Plug and Play has produced one “unicorn” with Lending Club and this next wave of startups is looking for their big break, too.

The next round of applications for startups to join Plug and Play are due June 15^th.

The launch of Streamium was announced via Reddit yesterday.

The new application from Manuel Aráoz and company was created to build a direct connection between video streamers and their viewers. Video streaming is dealt with on a peer-to-peer (P2P) basis via WebRTC, and payments for viewing a stream are made possible through the use of bitcoin and payment channels.

A stream of small, off-chain payments are made to the broadcaster every second as the viewer continues to watch a stream, and all of those micropayments are then combined into one larger payment that is made via the bitcoin blockchain.

The P2P nature of the Streamium platform has the potential to disrupt many different types of video streaming businesses currently found on the Internet due to the fact that it is now much easier to broadcast directly to an audience rather than going through a middleman.

Still, there is still plenty of work to be done when it comes to scaling the software up to handle larger audiences. For now, a broadcaster is limited by his or her own available bandwidth. In any case, here are five types of people who could benefit from trying out Streamium for the first time.

1. Cam Girls

The most obvious area where Streamium can be helpful is in the adult entertainment industry, especially when it comes to live cam shows. The adult industry has faced financial censorship from both PayPal and the legacy banking system, which is why many adult entertainment sites have turned to the blockchain for payments.

Live cam sites can sometimes take a large percentage of a performer’s profits, which is why the direct payment from the audience to the entertainer on Streamium could be rather helpful. Of course, it would also make sense if the viewers were able to also tip performers for certain requests.

2. Live Sports Pirates

Bitcoin isn’t necessarily entirely about illegal activity, but those sorts of profit opportunities seem to be where new technologies take off first. Most sports fans are familiar with free online streams that are usually hosted by shady individuals at a rather low resolution.

Viewers are usually bombarded with advertisements when viewing these unlicensed streams, and it also feels like viruses and malware are right around the corner on these kinds of sites. Due to the P2P nature of Streamium, new streaming sports pirates may decide to offer a premium version of sporting events in higher quality without all of the downsides currently found in the black market industry.

3. Doctors, Lawyers, and Other On-Demand Professionals

A variety of “professional-on-demand” services have popped up over the past few years. These are the kinds of websites or apps where you’re able to talk to a doctor (Doctor on Demand), lawyer (LAWfone) or some other professional for a flat fee.

Although these services were a move in the right direction when it comes to cutting costs, they aren’t completely necessary in a world of Streamium and social media. Closely associated with this sort of 1-on-1 streaming activity is also the ability to be a freelance consultant on basically any topic without a middleman. Of course, it should be remembered middlemen still have value in these sorts of freelance operations for marketing purposes.

4. Professional Gamers and Gaming Personalities

The magnitude of online video game streaming may not have become apparent to the general public until Twitch was bought by Amazon for nearly $1 billion, but the large number of young people turning to the video game streaming platform for full-time employment is now becoming hard to ignore. Professional gamers and gaming personalities could use Streamium in a few different ways to improve their overall profits.

Although completely replacing Twitch may not be in the cards, streamers could turn to Streamium as a vehicle for pay-per-view events. Whether it is two famous CS:GO teams playing a friendly game or a training session with one of the best StarCraft players in the world, there are a variety of ways in which pro gamers can use Streamium to their advantage.

5. Teachers

Private teachers already exist, but what if those teachers were also able to livestream their lectures to outsiders at a fixed rate?

“Teacher” is also used as a rather broad term here as it could be anyone who is able to explain a specific topic to someone else. For example, well-known bitcoin evangelist Andreas Antonopoulos could start a class that can be viewed by anyone via Streamium. Perhaps there would also be a small fee for asking a question at the end of a lecture or presentation.

Streamium could allow new students to attend a class without doing anything else besides showing up and opening a payment channel (assuming that they already have some bitcoin.) Perhaps the platform would also be useful for 1-on-1 tutoring sessions between students.

Long Story Short

In reality, no one really knows how people are going to end up using this new platform. Like many other innovative applications, it is up to the users to figure out how to best use this new tool. Perhaps we’ll see bitcoin conferences or video podcasts on Streamium in the future, but the team behind this new project will need to figure out how to scale the technology – perhaps through webtorrent – before there are any mass events streamed with it.

Digital BTC, an Australian Bitcoin company that is publicly traded on the Australian Securities Exchange (ASX) as Digital CC Limited has secured a $3.5 million AUD funding round by a group of institutional and individual investors to launch a remittance-focused product, AirPocket.

CEO and founder Zhenya Tsvetnenko specifically explained that the funds from the “investment will be used accelerate the rollout and commercialization of AirPocket in Latin America and Caribbean.”

The company was originally seeking for a $3 million AUD funding round, until the demand from local investors rose and the company had to enlarge the funding round with another $500,000 AUD. The increased funding round raised the company’s cash to over $6 million.

The product soon to be launched in Latin America and the Caribbean is a smartphone app which “effectively allows anyone to act as a small Western Union outlet.” Users are provided with a map interface which displays other agents called AirAgents in another country who passes the money to the recipient. Every transaction established on AirPocket will be recorded on the bitcoin blockchain, which allows the ledger to be viewed by anyone anywhere. This model is similar to Bitcoin remittance app Abra, which was unveiled earlier this year.

Tsvetnenko explained “Our platform is unique in that it makes remittances easier by leveraging the sharing economy pioneered by Uber and Airbnb.”

According to Proactive Investors Australia, the beta version of AirPocket will be launched in June of 2015 and the commercial version is set to be launched for the fourth quarter of 2015.

DigitalBTC holds a minimum 75 percent interest of AirPocket and the other 25 percent is divided within the investors including William Witenberg, Juan Carlos Barrera and Sanjay Santhanam.

Digital BTC CEO Zhenya Tsvetnenko stated “The quality of the joint venture team provides strong validation of the commercial potential for AirPocket and I’m confident they are the right people to execute the business strategy in Latin America and the Caribbean and capitalize on the huge potential to disrupt the multi-billion dollar remittance market.”

Company’s Loss in 2014

The Australian bitcoin company Digital BTC traded on the Australian Securities Exchange as Digital CC limited reported a total net loss of $2.3 million in the second half of 2014.

After a substantially large loss, digitalBTC still holds net assets worth $6.87 million, in which over $740,000 are bitcoins and the remaining are cash.

As the global adoption of digital currencies including bitcoin is increasing as a system of payment, digital BTC aims to target the remittance markets in regions with poor banking systems and financial infrastructure such as Latin America and the Caribbean.

Elliptic and Gem have announced a new partnership today that will involve Elliptic acting as a trusted and independent third party for the purposes of securely storing the third (backup) private key used on the Gem platform. In the past, multisig wallet users have been in control of their own backup private keys, but this new offering from Gem and Elliptic could offer a higher level of security for individuals who do not wish to take care of their own backup solutions. Up to this point, Elliptic has been an insured bitcoin storage provider for a variety of banks and exchanges who need to protect their private keys, so choosing them as the custodians of backup keys for multisig wallets seems like a wise move by Gem.

An explanation of the third key

Over the past year or two, it has become clear that multisig wallets are the wave of the future. Gem CEO Micah Winkelspecht clearly understands this point, which is why his company has been working to allow developers to create the most secure multisig wallets via Gem’s API. With this new setup involving Elliptic, Gem will not be in control of more than one private key. Instead, one private key each will be held by the user, Gem and Elliptic. Both Gem and Elliptic believe this solution provides a higher level of security than the traditional multi-signature wallets created through a single provider.

Insured third-key storage

Perhaps the most unique feature of Elliptic as a third-key custodian is the fact that they’re able to offer insurance against unauthorized use of that third key. When clarifying exactly what this insurance policy covers, Elliptic Analyst Nathan Jessop told Bitcoin Magazine, “We are insured against losses due to unauthorized use of the third, backup key that we hold – this covers both criminal and accidental loss.”

When speaking to the importance of insurance for the third key in a multi-signature wallet, Elliptic CEO Dr. James Smith explained:

“At Elliptic, our focus is on bringing bitcoin to the enterprise by developing secure and convenient products and processes. By combining Gem’s API platform with our insured and accredited key storage service, a new bar has been set for multi-signature wallet security and usability.”

A new standard for multisig wallets?

It’s clear that both Gem and Elliptic believe this is a huge leap forward for multi-signature wallets and bitcoin in general. As Gem’s Winkelspecht noted:

“Now clients can rest easy knowing that even if they lose their private key, they can rely on two independent parties to secure their assets. Elliptic is the most trusted name in private key storage and our tight integration means that there is no single point of failure for Gem’s multi-signature wallets.”

Elliptic’s Jessop agrees with Winkelspecht’s assessment of the new partnership, and he also added:

“I believe this model will become more common, although it’s important to point out that it’s not just about the multisig scheme – the security and controls of the parties holding keys are still important. Elliptic combines insurance with accreditation by KPMG to the same standards as a custodian bank.”

In the future, Elliptic also plans to provide this sort of private key storage for alternative assets that are tracked via the blockchain. Over the long term, Jessop noted that the company plans to focus on secure storage, asset transfer and an auditable chain of ownership. Jessop also mentioned that the combination of their accreditation from KPMG with their insurance offering has led to “significant institutional interest.”

Photo: DSC02405 / CC BY 2.0

With the current one-megabyte-per-block limit, the Bitcoin network can process only a few transactions per second, which could strongly limit the ability of the network to handle high transaction volumes if the adoption of bitcoin payments grows.

Lead Bitcoin developer Gavin Andresen is persuaded that the best solution to the problem is to increase the maximum block size, and has developed code for a proposed Bitcoin hard fork that would allow any block with a timestamp on or after March 1, 2016 to be up to 20 megabytes. “I believe this is the simplest possible set of changes that will work,” Andresen says.

In a post titled “Why increasing the max block size is urgent,” he argues that if the proposed solution is not urgently implemented the Bitcoin network will become oversaturated, and people might just stop using bitcoin because transaction confirmation would become increasingly unreliable. “Limit the number of transactions that can happen on the Bitcoin blockchain, and instead of paying higher fees people will perform their transactions somewhere else,” Andresen says in another post.

The MIT Technology Review just weighed in on the debate with a review, titled “Leaderless Bitcoin Struggles to Make Its Most Crucial Decision,” of the pros and cons of the proposed hard fork. Author Mike Orcutt notes that not everyone in the community of users of the Bitcoin software – which includes miners, developers, and a growing number of startups – agrees that Andresen’s proposal is the best path forward.

For example, some critics argue that Andresen’s solution could lead to a dangerous “centralization” within the mining community, which would favor bigger, richer mining operations. A counter-argument is that it’s already too late: Bitcoin mining is already centralized and dominated by large, professional mining operations, and totally out of reach of individual miners and grassroots pools. This debate reflects the tension between two increasingly conflicting aspects of Bitcoin – the DIY, grassroots spirit of the early adopters, and the mainstream need for much more streamlined and efficient operations.

Other critics, including Bitcoin core developer Pieter Wuille, argue that right now there are just too many unknowns about the consequences of increasing the block size to 20 megabytes. Wuille hints at “things we don’t even know of that could break,” and says that a smaller increase at first would be less risky.

As for all important choices in technology development, there is no clear-cut ideal solution that fits all needs. On the contrary, different requirements must be prioritized and an optimal trade-off must be found. An interesting issue is who gets to make the decision. Princeton computer science professor Arvind Narayanan observes that the core developers are the only ones with the power to change the code, and therefore they will probably make the decision themselves if they can reach consensus – which is not the case at the moment, since at least one of them is against the proposed hard fork.

The global issue is governance and leadership in Bitcoin technical development, which has been mostly “leaderless” as the title of the MIT Technology Review article emphasizes, with the Bitcoin Foundation unable to provide effective governance. Recently, Andresen and other Bitcoin Core developers joined the MIT Digital Currency Initiative, which is now beginning to assume leadership in the Bitcoin development space.

Brian Forde, director of the MIT Digital Currency Initiative, is offering to co-host an open forum for discussions aimed arriving at a rough consensus, The Wall Street Journal reports. “How this decision is made will be a good example of how the open and active community of developers, entrepreneurs, miners, researchers and users will continue to collaborate on major changes to Bitcoin core,” he said.

 

Photo background by Freepik.

MasterCard has launched MasterCard Send, a personal payments service that enables funds to be sent quickly and securely to consumers domestically and internationally.

Now live for users in the United States, MasterCard Send permits sending secure real-time payments to consumers, both banked and unbanked. The recipients get the funds immediately on their MasterCard or other cards, into mobile money and bank accounts or via cash agent outlets.

“This unique platform will enable disbursements and person-to-person (P2P) payments to and from virtually any U.S. debit card account, including non-MasterCard debit cards,” notes the MasterCard announcement. “MasterCard Send is the only personal payments service that can reach virtually all U.S. debit card accounts and enable funds to be sent and received typically within seconds – far superior to existing solutions that either limit transfers within a closed-loop network or involve ACH [Automated Clearing House], which can take several days for funds to be received.”

MasterCard Send payments are routed through the MasterCard network. Some news outlets quickly remarked that a centralized payment solution can’t be P2P. In fact, MasterCard is using “P2P” in the sense of person-to-person, not peer-to-peer, so the claim seems technically correct. However, MasterCard Send is not P2P in the sense of BitTorrent or Bitcoin.

“Through MasterCard Send, we have enabled a breakthrough solution that takes the pain out of the system, provides faster clearing of payments, and delivers a better user experience for senders and receivers alike,” said MasterCard chief emerging payments officer Ed McLaughlin. “MasterCard Send is addressing a real need that exists in today’s digital world to enable consumers, businesses, governments and more to have a safe, simple and secure way to transfer and receive funds quickly.”

Barb King, a group head in the MasterCard Payment Systems Integrity Group, described the service to PYMNTS as “a breakthrough platform in the industry.” She said that that the service is being marketed to companies and institutions, rather than directly to consumers, and mentioned B2C (business-to-consumer) and G2C (government-to-consumer) use cases. The MasterCard announcement notes that insurance claims, rebates, e-marketplace payouts, social benefits and tax refunds can now be sent in real-time. However, nothing seems to prevent individuals from using the platform to send payments and remittances to other consumers.

MasterCard Send emulates one of the two main advantages of bitcoin payments – fast transactions that take minutes instead of days. Details on the business model and economics were not disclosed, so it isn’t clear if MasterCard plans to emulate the other mainstream advantage of bitcoin payments – cheap transactions.

The MasterCard announcement doesn’t mention Bitcoin, but King told PYMNTS that “consumers are much more comfortable giving their personal details to their financial institution than they are to many other types of entities,” and that is a big reason why she believes MasterCard Send is more appealing than the bitcoin protocol.

It’s clear that traditional payment processors won’t let bitcoin payments eat their lunch without a fight. Currently, MasterCard Send seems a strong competitor to centralized operators such as PayPal and Venmo, but not a competitor to peer-to-peer, decentralized bitcoin payments.

Photo: Credit card of future / CC BY 2.0

Mintsy recently announced a launch of its new cloud mining service as the first digital currency cloud mining company to use proof-of-reserves, accomplished through cryptographic proof-of-hashrate.

Bitcoin Magazine sat down with Marshall Long, who is the CTO of Cryptsy, and more recently CTO and board member at Mintsy, to discuss what he says is unprecedented innovation in the realm of cloud mining.

Mintsy provides users with malleable contracts, which assuages any worries on being locked into a contract they no longer need. Long says users are “able to sell their remaining contract time on the Mintsy marketplace where other folks may want a shorter contract and can bid on contracts that are up for sale by the user.”

Mining the Future

At the time of this post, Mintsy is made up of 20 people, and is the result of a joint venture between Terraboss Inc. and digitalBTC. The development team is spread out between the United States and London, while the majority of the accounting takes place in Australia. DigitalBTC is an Australian company that is publicly traded on the Australian Securities Exchange under the ticker DCC.

With a bitcoin mining pool going strong at more than 5 PH/s, Mintsy offers SHA-256 and Scrypt contracts ranging with flexible three-month and six-month contracts, although “more exotic algorithm contracts will be online soon.”

Thinking Outside The Box: Cryptographic Proof of Hashrate

Long, a serial entrepreneur in the fields of Bitcoin, drones and manufacturing, explains that previously, many cloud-based mining services “got away with lots of bitcoin in the beginning because nobody demanded proof of what they were selling.”

He explains that Mintsy will circumvent all of the problems relating to the auditing that their accounting staff may have to deal with, since all of their hashrate information will be transparent.

Naysayers are given proof that the cloud mining company is not double-selling hashrates, instead running a 100 percent full reserve by having all of their information accessible on the blockchain. Long has been working with Bitcoin core developer Peter Todd to implement the cryptographic proof-of-hashrate for Mintsy. This feature is still in development with a planned release in mid- June.

Another feature that Mintsy will have is the ability for users to use the website’s service and rent out their rigs to other users for a fee, much like Betarigs.

In the meantime, users can limit their luck variance by allowing their customer base to “take their contract and point it to any pool.” When users don’t put all of their eggs in one basket, the choice in picking their mining pools is “not only transparent, it’s more efficient since your [one] pool is not lucky all the time.”

But is Cloud Mining still profitable?

It’s no surprise that conventional mining is not as easy as it used to be.

“If your electricity bill is very high, then there is no way you can make money mining even with the most advanced of chips,” explains Marshall. To him, cloud mining not only helps those who don’t have access to cheap power, but also provides new users with a way to ease into mining for a very small fee. The company’s smallest contract costs a little under $20, and users can always trade contracts on the Mintsy marketplace.

Bitcoin Press Release: With over 18 months of development, The non-profit Nxt Foundation is pleased to announce many disruptive business and financial applications of Nxt’s blockchain technology: including trustless smart contracts, decentralized crowdfunding, a strong open source ethos and more.

Nxt is different. While there are many players in the cryptocurrency 2.0 field, Nxt has several key elements that set it apart from the others.

First and foremost, Nxt is a self-sufficient system. Many other projects depend on a blockchain implemented and maintained by an external party, usually Bitcoin. Nxt is a complete and self-contained system in itself. As any business owner knows, being dependent on a third party for an essential part of their business model introduces unnecessary risk.

This is why Nxt chose not to piggyback on an external blockchain over which it has no control, but has built all of its features onto its own blockchain. This also means that Nxt developers can quickly and easily create new features while maintaining a coherent system, without needing to consult with an external blockchain provider.

Secondly, Nxt has a solid and secure track record. The Nxt blockchain has been in continuous operation and use for 18 months, proving to be a stable system that can scale to handle an increasing load. Additionally, new features have been added on an incremental release basis after thorough evaluation on Nxt’s testnet. Many applications have already been built on top of Nxt, using its diverse features to create decentralised companies and software and to leverage the benefits of its strong community and network.

Thirdly, Nxt is open source and free! Nxt is not under development by a central authority. This may at first appear to be a weakness, but a glance at the extremely successful operating system Linux shows that central development is not needed to create a valuable and working architecture. Nxt has seen fast and dedicated development since its inception and is continuing to evolve with the input of many talented coders. As there is no barrier to entry to the Nxt ecosystem, it is a perfect environment for blue-sky crypto developments.

Just plug it in

The Nxt Cryptocurrency platform is modular by design. Nxt uses a variety of different transaction types that can be combined to perform more complex functions. In order to take full advantage of Nxt’s versatility, its developers have created a plug-in system that allows people to build applications and to share them with other Nxt users.

The plug-in system will go live with the release of version 1.5 of the Nxt Reference Software (NRS), Nxt’s native client. This release will also introduce blockchain Voting and Enhanced Multisignature Transactions (Phasing) to the Nxt core functionality. Developers on the Nxt Testnet are already experimenting with use cases, such as a crowdfunding plug-in, an e-commerce plug-in and several others.

The plug-in system is an example of the philosophy of flexibility and versatility that is at the heart of Nxt.

What it means for Nxt users

Nxt is eminently suitable for both business and non-commercial use. All of Nxt’s features can be accessed separately or in combination, using a simple but comprehensive API structure.

Nxt is fast, with an average block time of around 90 seconds. It is powerful, giving users access to such diverse features as asset creation and trading, separate currencies, data transfer and storage, blockchain voting and multisignature transactions.

Nxt is easy to build for, and those who want more information about how to use Nxt, or who need support on the more technical aspects of the Nxt systems, can contact the Nxt Foundation.

The Nxt Foundation is a non-profit organisation which can answer questions on Nxt, offer support, and connect businesses with the developers and advisors they need to take advantage of the unprecedented opportunities offered by the Nxt platform. Contact Nxt Foundation today atinfo@nxtfoundation.org.

For more information please go to: www.nxt.org

To trade Nxt with Bitcoin please go to: https://poloniex.com/exchange#btc_nxt

Media Contact:

Name: Bas Wisselink, Nxt Foundation Director

Email: bas@nxtfoundation.org

Phone: +31 (0)6 13937762

 

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Bitcoin Press Release: Gaming cryptocurrencies HYPER and GoldPieces (GP) are pleased to announce sponsorship of digital currency crowdfunding platform PICISI, many new cryptocurrency game servers, an exciting partnership with Coin2, and the launch of a worldwide crypto gaming network.

Almost a year old, gaming digital currency HYPER continues to grow in the number of ways people can win HYPER playing games like Counter-Strike, and in the strength of the overall ecosystem.

The HYPER head developer is excited to be involved in a community takeover of gaming cryptocurrency GoldPieces (GP), with plans to bring online many web based RPGs that support GP as the in-game currency in future. Currently, gamers can earn GoldPieces playing online RPG Dragon Knight, and fragging bots and opponents in Counter-Strike: Global Offensive. GoldPieces had no premine and a fair distribution at launch. To learn more about GoldPieces please go to: https://bitcointalk.org/index.php?topic=1053441

PICISI is a new digital currency crowdfunding platform conceived as a competitor to KickStarter and is launching soon. Both HYPER and GoldPieces are proud to be official sponsors of this project. After launch, anyone will be able to crowdfund to raise funds to develop HYPER and GP supported games. When HYPER or GP is the host currency, all other digital currencies will be converted into HYPER and GP; potentially raising the exchange rate as well as expanding the HYPER and GP ecosystems and community.

HYPER also has a new twitch.tv livestream – where anyone can be tipped some free HYPER just for watching the live gaming action on the HYPER CSGO server.

HYPER is also pleased to announce that gamers worldwide are now able to earn HYPER playing Counter-Strike, CSGO, Minecraft and many more games on over 10 game servers. Beyond this, HYPER has also launched a Worldwide Crypto Gaming Network; enabling other cryptocurrencies to be integrated into HYPER’s in-house custom developed digital currency implementations of CSGO and Counter-Strike 1.6 hosted in both EU and US.

Currently supported cryptocurrencies include HYPER, Coin2, GoldPieces, iCash and BURST. Other digital currencies wishing to be integrated into HYPER’s Worldwide Crypto Gaming Network are invited to contact HYPERfuture on the bitcointalk forums.

The Coin2 and HYPER communities recently formed a strategic partnership – HYPER is now fully integrated into the web wallet at http://coinstore.me/wallet. The wallet is designed with online game developers in mind and has a full API for developers to integrate Coin2 and HYPER with ease into their projects. Coin2 is also coding an original FPS game Chain of Conflict that will have full Coin2 and HYPER integration at launch. For more information please see the Coin2 thread on bitcointalk:https://bitcointalk.org/index.php?topic=824499.0

With a number of strategic partnerships and initiatives in the digital currency space, HYPER continues to cement its position as the leading gaming Bitcoin alternative.

Visit HYPER on bitcointalk at: https://bitcointalk.org/index.php?topic=624651

To trade GoldPieces with Bitcoin please go to: https://bittrex.com/Market/Index?MarketName=BTC-GP

To trade HYPER with Bitcoin please go to: https://bittrex.com/Market/Index?MarketName=BTC-HYPER

Follow HYPER on twitter at: https://twitter.com/HyperCrypto

Visit GoldPieces on bitcointalk at: https://bitcointalk.org/index.php?topic=1053441

To learn more about HYPER please go to: http://hypercrypto.com

 

About Bitcoin PR Buzz:

Bitcoin PR Buzz has been proudly serving the PR and marketing needs of Bitcoin and digital currency tech start-ups for over 2 years. Get your own professional Bitcoin and digital currency Press Release. Click here for more information.

The Open Bitcoin Privacy Project (OBPP), has released a report on 10 leading Bitcoin wallets, setting standards for privacy that they argue are much needed in the space. The Bitcoin wallets in the report include Coinbase, Blockchain.info, Mycelium, Darkwallet, Airbitz, Armory, Electrum, Bitcoin Wallet and Multibit Classic.

According to the report, Darkwallet is the most privacy-concerned wallet, while Coinbase falls on the other end of the spectrum.

OBPP is a Bitcoin privacy research organization lead by prominent figures in the Bitcoin community, including Kristov Atlas, a well-known privacy researcher; software designer Justus Ranvier; engineer Daniel Krawisz at Monetas; technical illustrator Samuel Peterson, and others.

The researchers looked at various aspects of wallet software, including where public addresses are generated, whether clients (such as light wallets) need to ask trusted servers for the balance of their accounts, whether users are protected from blockchain observers through the use of coin mixers or stealth addresses.

All off the test results added up to three categories of testing: usability, quality and feedback. These three add up for a total privacy score of up to 100 points. All wallet providers were sent a questionnaire and given a chance to review the research results before publishing. Almost half of the wallet developers did not respond to the questionnaire.

The three lowest ranked wallets for privacy: Coinbase, Multibit, Blockchain.info, 

Coinbase is a leading U.S. Bitcoin company that provides exchange and payment processing services as well as wallet services. Both of these wallets provide custodial services to users and keep control over their private keys, with the exception of Coinbase Vault’s support for multi-signature wallets. OBPP focused on the classic version, which keeps full control over their user’s private keys. It did not fare well under their tests.

“Because of the custodial nature of Coinbase’s wallet, users are afforded low privacy. Private keys are generated and held server-side, and the service retains detailed information about incoming and outgoing transactions. Customers must undergo a stringent identification process in order to use the service. The wallet generates new Bitcoin addresses for change, but employs few other basic controls to protect privacy on the blockchain,” said the authors of the OBPP report.

The authors also point out that Coinbase can improve these privacy vulnerabilities and remain compliant with anti-money-laundering and know-your-customer rules by discouraging address reuse and providing better feedback to users about actions that will degrade their privacy.

The Coinbase wallet scored only 11 out of 100 possible points for privacy. Only a few points above Coinbase was the Blockchain.info wallet. Blockchain.info is one of the oldest companies in the Bitcoin wallet space and were the first to advocate full user control over private keys, a standard that set the bar for all wallet providers.

As early leaders in the Bitcoin wallet race, their web and mobile wallets quickly became the most widely used, with nearly 3.4 million wallets in existence, according to OBPP.

While Blockchain.info has made efforts toward improving user privacy, including the launch of their CoinJoin bitcoin mixing technology, they have fallen behind by not implementing hierarchical deterministic (HD) wallets. This generally means that users must manually create new addresses for each transaction for maximum privacy and continuously update their backups, instead of new addresses being automatically generate for each transaction from a common seed.

According to the OBPP report, Blockchain.info’s web and mobile wallets function so differently that they analyzed each individually, and they received scores of 22 and 14 out of 100 respectively, leaving them at above only Coinbase in the rankings.

Kristov Atlas told Bitcoin Magazine that “The single biggest differentiator for the spring 2015 rankings was whether the wallet was [hierarchical deterministic]”

First place: Darkwallet

At the top of the rankings is Darkwallet, a Google Chrome extension wallet. Darkwallet made international headlines over the past two years as an anonymity and anti-surveillance software initiative founded by activists Amir Taaki and Cody Wilson. Its objective is to make Bitcoin finance “go dark.”

The Darkwallet project has been noticeably absent from the media in the past months but the development build of the wallet put it at the lead as far as total privacy with a score of 54. 

“Darkwallet in the only wallet we’ve considered so far which includes automatic CoinJoin mixing and ECDH stealth addresses. Another notable feature in Darkwallet is an automatic P2P network for messaging between users,” according to the OBPP report.

Darkwallet is indeed the only major Bitcoin wallet with stealth addresses (SA) natively supported for recipients and senders. Some wallets, such as Electrum, support sending, but not receiving, SA transactions. Because of the nature of SA, it is essential that other wallets support the technology to enhance its utility and standardization.

Two of the weaknesses of Darkwallet were its dependence on “Obelisk servers which have the ability to de-anonymize users,” coupled with low user activity, which makes it much harder to find others to mix up your transactions with, particularly with significant amounts of bitcoin.

Since Darkwallet is still in alpha development, future growth of the user base could alleviate the liquidity problems of their mixing process. Nevertheless, the OBPP researchers expressed uncertainty about the future of the project given that has not released a stable build yet and no development activity has occurred since February 2015. The Darkwallet developers did not respond to the OBPP questionnaire.

Desktop wallets: Armory, Electrum, Multibit 

Taking second-place in overall privacy ranking is Armory, the full-node Bitcoin vault that provides wallet security software for the intermediate and advanced Bitcoin users and enterprise customers. Armory is available for Linux, Windows and OSX and is among the more resource-intensive wallets, in part because it’s designed to run a full bitcoin node. It had a total privacy score of 54, tying it for first place with Darkwallet.

Armory was praised for supporting with hierarchical deterministic (HD) address generation and not reusing addresses by default, as well as supporting TOR connections with minimal configuration.

The researchers suggest that Armory can improve privacy protections for users by supporting a mixing protocol such as CoinJoin as well as by informing users when they are making choices that compromise their privacy, a common criticism leveled at most the wallets included in the report.

Electrum followed the desktop wallets with a score of 46, tying it for fifth place with the mobile Bitcoin Wallet. It earned that ranking for its support of HD addresses, using a 12-word seed for a one-time backup, as well as its default generation of new addresses per transaction. But most noticeably, Electrum was praised for being included in the privacy-centric Tails operating system, as well as its easy compatibility with TOR connections.

Electrum’s largest weakness, according to OBPP, was its reliance in a federated network of Electrum servers which connect it to the Bitcoin network. The researcher suggest Electrum could improve its score by adding support for stealth addresses and CoinJoin.

The most private mobile wallets: Mycelium, Bitcoin Wallet, Electrum, AirBitz

 Taking third place with a score of 50 was Mycelium, the Android and iOS Bitcoin wallet which regularly earns praise for its privacy features. Mycelium ranked highly for its use of HD wallets and its easy support for TOR connections.

However, it was criticized for relying on the Mycelium servers rather than Bitcoin peers to connect to the Bitcoin network. This weakness, they argue, allows the company to gather information on users. This weakness was common among most Bitcoin wallets, except those running a full node, such as Armory.

Following Mycelium were Bitcoin Wallet, Electrum and Airbitz, all with scores of 45 or 46 out of 100.

These mid-ranked wallets generally suffered from the same weaknesses: reliance on central servers to connect to the Bitcoin network, no support of stealth addresses, and no graphic user interface warnings informing users about choices that compromise their privacy. Among the four mobile wallets, only Mycelium and Airbitz responded to the questionnaire provided by the OBPP.

Interested parties can read the full report here and contribute to the OBPP efforts at their website.

The Salt Lake City-based online retailer Overstock is working on a revolutionary new development: a new independent stock exchange dubbed Medici, powered by Bitcoin technology. The new stock exchange could sidestep traditional stock exchanges such as NYSE and NASDAQ and issue corporate stock directly over the Internet.

In a prospectus filed with the Securities and Exchange Commission on April 24, Overstock indicated that it may issue up to $500 million in stock or other securities through an alternative trading system built upon blockchain technology that powers bitcoin. Overstock’s CEO Patrick Byrne is confident that the SEC will approve the filing eventually: “I wouldn’t have taken all the time and trouble and expense to do this if I didn’t plan on using it someday soon,” he told Wired.

Now Wired reveals that last fall Overstock purchased a 25 percent stake in government-regulated trading company PRO Securities. The firm, formed in California in 2002 and now based in New Jersey, manages the buying and selling of securities on behalf of its clients, acting as a registered agent between traders and exchanges. In a government filing earlier this year, PRO Securities amended its charter to say it may handle trades in digital securities overseen by technology related to the “blockchain,” the online public ledger that tracks the movement of bitcoin.

According Byrne, his company has built blockchain-related technology atop the electronic system operated by PRO Securities and is ready to demonstrate this technology to regulators.

“The prospect of using a blockchain-like public ledger to hold securities or other assets is quite exciting and one that should be explored,” said Georgetown University professor of finance James Angel. He thinks investors will not immediately adopt new blockchain-based trading systems, preferring instead to continue operating with the traditional systems they are familiar with. However, the inevitable inertia may be overcome if Overstock’s and other similar initiatives gain sufficient momentum.

In fact, momentum is building. On May 11, Nasdaq announced that it would begin to leverage the colored coin protocol Open Assets to expand and enhance the equity management capabilities offered by its Nasdaq Private Market platform.

“Utilizing the blockchain is a natural digital evolution for managing physical securities,” said Nasdaq CEO Bob Greifeld. “Our initial application of Nasdaq’s blockchain technology-enabled offering will modernize, streamline and secure typically cumbersome administrative functions, and will simplify the overwhelming challenges private companies face with manual ledger record-keeping.”

This vote of confidence by Nasdaq, a prestigious stock exchange and leading financial institution, is bound to have a deep impact on the acceptance of blockchain-based technologies by the financial mainstream. According to Overstock’s Director of Communications Judd Bagley, the Nasdaq initiative will help in overcoming the hurdle of market acceptance of Medici.

Other companies expected to play a leading role in developing and deploying blockchain-based security exchanges are Digital Asset Holdings, headed by former JPMorgan superstar Blythe Masters, and Symbiont, a new digital fintech company focused on fostering the symbiotic relationship between traditional financial markets and cryptographic blockchain technology.

Symbiont was co-founded by the founders of Counterparty, whose technology was initially selected by Overstock as the main software backbone of Medici.

 

Bitnation, the blockchain-based Governance 2.0 initiative led by charismatic founder Susanne Tarkowski Tempelhof, released a first alpha of its Bitnation Pangea collaborative platform for DIY Governance. The release is tagged alpha 0.1.0, which makes it clear that it isn’t yet stable or full-featured. However, the roadmap is nothing short of revolutionary and could have a significant impact.

“Bitnation is a Governance 2.0 Operating System, designed to disrupt the nation-state oligopoly through offering more convenient, secure and cost-efficient governance services,” Tarkowski Tempelhof, a Swedish thinker and activist who spent years working as a contractor in various conflict zones , told Bitcoin Magazine. “As the world progressively moves away from the current geographical nation state paradigm due to globalization, it leaves room for a brand new solution to rise from its ashes, one where governance service providers compete through offering better services, rather than through maintaining a geographical monopoly using violence.”

Bitnation Pangea wants to be the world’s first blockchain powered Virtual Nation, able to provide all services that traditional governments provide and replace the nation state system with a voluntary form of governance. Bitnation’s ultimate aim is to create a new world where everyone can choose the nation they prefer, several nations, or none at all, and even create their own nation on the Bitnation platform.

“The alternative the world is currently pivoting towards is U.N.-style global organizations, which would be an even worse ‘one-fit-all’ type governance model than what we currently have,” says Tarkowski Tempelhof. “Bitnation aims to prevent that, through setting a precedent for voluntary competing service providers, powered by the Bitcoin blockchain technology, effectively creating an open source cryptonation protocol.”

The backbone of the platform consists of the ID and Reputation System (The Bitnation Passport), the Dispute Resolution System, the Public Notary and a DIY Governance (D)App Library where others can create, upload, share or sell their own Governance (D)Apps. Planned services include marriage, wills, childcare contracts, birth certificates, land titles, corporate incorporation and equity trade, unemployment insurance, pensions, health care insurance, security and diplomacy.

The alpha release, which is updated in realtime in response to user feedback on the Bitnation discussion groups, already includes some interesting features, such as the possibility to register and timestamp a document on the blockchain.

Previous Bitnation pathfinders and proofs of concept include the first marriage registered on the blockchain and the first blockchain passport. Bitnation also developed and tested workable DIY land titles recorded on the blockchain in Ghana, where 70 percent of land lacks proper titles, preventing investing in and borrowing against land.

Bitnation, after surveying many blockchain-based protocols, has teamed up with Horizon and Blocknet to develop the first implementation of Pangea. While the Horizon blockchain is used in the alpha release, Blocknet technology will enable Pangea to support other blockchains. According to Tarkowski Tempelhof, future releases of Pangea will not be limited to altcoins but able to use the Bitcoin blockchain itself, which bids well for the future of the project.

“Bitnation is a groundbreaking concept, and we’re very excited to provide a platform for it to be developed upon,” said Blocknet core team member Arlyn Culwick. “We believe that the Blocknet, by enabling open ended inter-chain services, unlocks the full potential of blockchain-based technology.”

“Bitnation is a revolutionary idea, an idea which we believe will radically change the world for the better,” said Tarkowski Tempelhof in a previous press release. “However, being the first in the world to challenge the nation-state construct head-on through providing better services using blockchain technology, it is not always easy to implement.”

Of course, one of the main challenges is funding. Therefore the Bitnation team, which so far has mostly relied on volunteers, is looking for a moderate amount of angel funding to put its operations on more solid ground.

AlphaPoint has just announced that it is integrating two-factor authentication service Clef into its platform, making it convenient to login securely to more than 20 exchanges that depend on its digital currency exchange technology.

According to the company, AlphaPoint “offers a white label solution that allows clients to launch their own digital currency exchange in under 20 days.” AlphaPoint has also recently partnered with IdentityMind to solve know-your-customer and anti-money laundering compliance issues.

No more passwords, no more tokens

Security has always been an important focus in the digital currency world, but high-profile hacks of several exchanges have only heightened these concerns. Clef, which has already integrated its authentication service into more than 64,500 websites, also works with Apple’s Touch ID technology on iOS devices. This allows users to sign in using biometric authentication, increasing the difficulty to compromise an account secured this way.

Typically, two-factor authentication (2FA) requires users to remember a number shown to them through an app or device and enter it into a login page. Clef automates this process by using the phone’s camera and an animation called the Clef Wave; the phone seamlessly syncs with the computer and logs the user in. The service is readily available for iOS and Android, and can be downloaded for free on the App Store or Google Play.

“We take security extremely seriously and are always looking to leverage the latest solutions for our exchanges and their users,” said AlphaPoint CTO Joe Ventura. “We’re very excited to offer Clef’s robust, intuitive solution and believe it will help ensure more traders use 2FA to protect their accounts.”

2FA from the future

While relatively new in the digital currency ecosystem, Clef has already announced deals with major players such as Koinify,  a marketplace for decentralized applications, and Ziftr, a service that allows shoppers to use credit cards and bitcoin seamlessly. When asked about AlphaPoint, Clef CEO Brennen Byrne said, “They also have huge reach into bitcoin so it’s exciting to work with them and help make 2FA on their client exchanges more accessible and user-friendly.”

It is this ease of use that is Clef’s major advantage over other 2FA solutions such as receiving a second code via SMS. Traditional forms of 2FA see fewer than 1 percent of users opt in to protect their accounts, but Clef claims that sites using its service have seen more than 50 percent of their users opt in to safer login.

The company offers five packages for security, ranging from a free service without premium features for unlimited logins and users to an enterprise solution with fraud and usage metrics and dedicated support.

MeXBT, a Mexican-based exchange, will be the first AlphaPoint exchange to use the new integration, followed by Brazilian FlowBTC and Barbados-based Bitt.

The New York Stock Exchange today launched its NYSE Bitcoin Index (NYXBT) to track the price of bitcoin and give the digital currency’s value a definitive global benchmark.

This move by one of the largest and most influential stock exchanges in the world gives bitcoin new legitimacy and “gravitas” and may seal its spot in first place as the digital currency of choice.

New York Stock Exchange President Thomas Farley made the announcement today saying in a news release:

“Bitcoin values are quickly becoming a data point that our customers want to follow as they consider transacting, trading or investing with this emerging asset class. As a global index leader and administrator of ICE LIBOR, ICE Futures U.S. Dollar Index and many other notable benchmarks, we are pleased to bring transparency to this market.”

Tracking the Price of Bitcoin

The new NYXBT Index will indicate the U.S. dollar value of one bitcoin based on actual transactions occurring at 16:00 London time on selected bitcoin exchanges.

The NYSE Bitcoin Index will initially use data from transactions from Coinbase Exchange. Other bitcoin exchanges will be carefully evaluated by the NYSE and will have to meet the quality standards set by the stock exchange.

The NYSE’s Index Committee will oversee the rules and methodology behind the benchmark, making sure it reflects the current nature of the evolving bitcoin market. The committee will also identify and review the data sources for the index calculation process and identify other bitcoin exchanges that meet NYSE’s “rigorous standards for transparency, liquidity and governance.”

The NYXBT index will be published as a part of the NYSE Global Index Feed and will be publicly available on the New York Stock Exchange’s Index Page.

Currently, sites such as Google and Bloomberg track the price of bitcoin, but the New York Stock Exchange’s Bitcoin Index will likely replace these indices as a single global indicator.

As a result of a six-month joint investigation between the United States Department of Homeland Security (DHS), Australian Federal Police (AFP) and Australian Customs and Border Protection Service (ACBPS), law enforcement agencies charged four Australians with attempts to purchase illegal firearms and arrested 17 Dark Web buyers and merchants across Europe and North America.

Following the arrests from the undercover operation, all firearms, ballistic armor, and illicit drugs were seized and around $80,000 USD worth of bitcoin was confiscated.

In September of 2014, the joint investigation between the law enforcement agencies in the United States and Australia focused on the illicit trade of firearms via the Dark Web which led to the identification of an online alias account for a 33-year-old man in Montana.

The operation officially began as the U.S. Department of Homeland Security received relevant information from the ACBPS. In the same month as the investigation, HIS initiated a secret operation with an online alias account. HIS was able to identify Australian suspects attempting to engage in illicit trading of firearms.

Two months after, AFP partnered with HIS to instigate another secret operation targeting the Australian suspects.

As a part of the operation, HIS and AFP manipulated the secret account to complete six deals over Dark Web markets, which allowed them to identify the addresses of the buyers.

After identifying the addresses, HIS and AFP received 15 search warrants in February and March of 2015, and seized most of the items in the addresses including four illegal firearms, ammunition, steroids, computer equipment and mobile telephones. Supported by the Queensland Police Service and Australian State and Territory Law Enforcements, the operation filed 34 charges against the individuals involved.

“Disrupting the supply of illegal firearms remains a priority for the AFP, and the success of this operation is another example of the results that can be achieved through cross-agency collaboration,” said Steve Lancaster, ACBPS national director of investigations and assistant commissioner. This secret operation was the most successful Dark Web investigation in the history of Australia, he added.

“People using these sites should not be fooled by claims of online anonymity,” he said. “Each transaction builds up a global web of intelligence which international partners are using to target you.”

Due to the success in the recent secret operation, Australian law enforcement will continue to target illicit online trades, especially firearms, with a strong support from national and international law enforcement partners.

Danish cryptocurrency exchange CCEDK has announced a MasterCard Bitcoin debit card product, building a bridge between bitcoin users and MasterCard-enabled merchants all over the world, while adhering to strong compliance standards in accordance with E.U. financial regulators.

The Bitcoin Debit NanoCard MasterCard will enable withdrawals from their multi cryptocurrency exchange to ATMs and MasterCard-enabled merchants worldwide.

Unlike other Bitcoin debit cards including BitPlastic, CCEDK claims this card “is regulated by The European Union (EU) MasterCard rules” and as such it is covered under their fraud protection programs.

As such, CCEDK and any financial movements of its customers are strictly regulated under European anti-money laudering (AML), know-your-customer (KYC) and counter-terrorist financing (CTF) guidelines, as explained on their website.

While this will alarm privacy buffs and does not provide anonymity or privacy like that advertised by BitPlastic, it nevertheless should provide fraud protection under the MasterCard umbrella.

Verified users can expect service as if they were using a regular MasterCard, up to unlimited withdrawal limits, depending on your level of verification with CCEDK and their banking partners.

“At first, the Bitcoin Debit NanoCard MasterCard will only support bitcoin, but CCEDK plans to implement further cryptocurrencies as there is demand – including NuBits, BitUSD, NXT and LTC. In the meantime, other coins can of course be exchanged for bitcoin on the exchange, to be used to fund the NanoCard,” said a CCEDK spokesperson in a written statement.

The NanoCard will start shipping mid-June. Those who cannot wait that long can get it with CCEDK’s partner at Bit-X.

Is it really anonymous?

The card is also advertised as anonymous, but true anonymity is very difficult, particularly when interacting with the banking system. For example, while you may indeed be able to create an account with CCEDK using fake information and a VPN and order a NanoCard with no verified information, the withdraw limits are much lower than with a verified account.

For cash withdrawals from ATMs, nonverified or “Level 1” users can withdraw 100 euros a year. For point-of-sale purchases, Level 1 users can spend 250 euros per year. This is presumably per card. Here are the costs of getting a card and transaction fees.

• Embossed name on card – 0.10 BTC
• Card activation – 0.05 BTC
• Card delivery via airmail – 0.05 BTC
• Card delivery via DHL – 0.30 BTC
• Monthly fee – FREE for the first 10,000 users
• Monthly fee (no activity*) – 0.05 BTC
• Cash withdrawal at ATM – 0.02 BTC (plus 3 percent MasterCard commission)
• Payments (POS) – 0.005 BTC (plus 1 percent MasterCard commission)

Like any other MasterCard, all debit card and credit card transactions are recorded and transmitted as per standard operations. This means that the privacy concerns associated with using any credit card that can be tied to a series of transactions also apply to the NanoCard.

On May 9, an international group of hackers launched distributed denial of service (DDoS) attacks on two of the largest financial institutions in Hong Kong. Hong Kong police confirmed that they have received reports from the Bank of China and the Bank of East Asia claiming that the hackers demanded payments in bitcoin.

“The two institutions later received emails demanding payments in bitcoins, or there would be another round of attacks,” a spokesman said.

According to The Standard Hong Kong, the hackers overwhelmed the websites of the two banks with traffic from multiple sources, causing irregular spikes in Internet traffic and forcing some of the websites’ resources to be unavailable.

However, both banks stressed that none of its data and customer accounts were compromised.

Finance Magnets reported that the Cyber Security and Technology Crime Bureau has classified the case as “blackmail” and has begun an investigation.

The attack imposed on the two banks is similar to the DDoS attacks launched on the official corporate websites of banks in China and Hong Kong, most notably the People’s Bank of China in late 2013. The investigators at the time believed that the attacks were a result of the issuance of new rules which prohibited financial institutions from dealing with bitcoin.

The State media reported that they believed “bitcoin fans” have initiated the attack, as a response to prohibiting the use of digital currencies in China.

The local media began to speculate that the recent attack initiated on the Bank of China and the Bank of East Asia might have been launched by a group of hackers known as DD4BC. The group is currently listed on Bitcoin Bounty Hunter and has attacked several websites, including Finnish Bitcoin wallet and exchange Bitalo and Bitcoin sports betting platform Nitrogensports.

“DD4BC threatens the Bitcoin Community with DDoS extortion, blackmailing and slander,” Bitcoin Bountry Hunter explained. “Famous Bitcoin services like Bitalo.com and Nitrogensports.com were attacked and blackmailed.”

The banks declined to release information of the emails received by the hackers and the amount of BTC demanded.

If the DDoS attacks are continuing, the two banks may lose up to $100,000 an hour, American Banker reports. AMR (American Banker Reports) stated that “the average bandwidth consumed by a DDoS attack increased to 7.39 gigabits per second, according to Verisign’s analysis of DDoS attacks in the fourth quarter of 2014.”

A few days have passed since the Cyber Security and Technology Crime Bureau began investigating the case, but the case hasn’t showed any progress.

Two weeks ago XBT Provider AB announced the authorization of Bitcoin Tracker One, the first Bitcoin-based security available on a regulated exchange. Today, Bitcoin Tracker One started trading on Nasdaq Stockholm.

“NASDAQ OMX Stockholm decides to officially list 1 Exchange Traded Note issued by XBT Provider AB with effect from 2015-05-18,” announced XBT Provider AB on Friday. “We are proud to offer the world’s first “Bitcoin tracker” to be traded on a regulated exchange,” states the XBT Provider website. “By enabling this easy and secure way to invest in Bitcoin we hope to have eliminated the boundaries that earlier prevented individuals and companies from being able to actively invest in what we believe to be the future of money.”

“The world’s first Bitcoin-based security on a regulated exchange has been launched in Sweden,” notes the Swedish edition of the English language news site The Local. “The digital currency began trading on the Stockholm market on Monday.”

Bitcoin Tracker One is an “Exchange Traded Note” (ETN) designed to provide investors with convenient access to the returns of the underlying asset, U.S. dollar (USD) per bitcoin, less investor fees. The average dollar exchange rate of bitcoin from the exchanges Bitfinex, Bitstamp and OKCoin provides the underlying reference price. A detailed breakdown of the value of Bitcoin Tracker One is given here.

“Young guys will probably buy it. Bitcoin stands for a new digital world, free from the banking system. It’s almost somewhat political,” savings analyst Claes Hemberg of the Avanza bank told Swedish news wire TT.

The ETN could become an attractive investment option for those traditional investors who want to speculate on the dollar exchange rate of bitcoin with traditional investment vehicles, rather than going through the hassle of buying and holding bitcoin directly. In particular, traditional financial instruments such as Bitcoin Tracker One offer easy ways to short bitcoin and profit from price drops. However, all investments are risky, and this is no exception.

“You shouldn’t put more money towards bitcoin than you would bet on a horse race. You can win, but also lose everything,” Hemberg warned.

Other similar bitcoin investment vehicles are Barry Silbert’s Bitcoin Investment Trust (BIT), now trading on the OTC Markets Group’s OTCQX exchange with the symbol GBTC, and the upcoming Winklevoss Bitcoin Trust ETF (Exchange Traded Fund), which will be available to investors on NASDAQ with the ticker COIN.

XBT Provider AB (publ) is a public limited liability company formed in Sweden and incorporated under Swedish law, with statutory seat in Stockholm. The XBT Provider website states that the company is backed and guaranteed by bitcoin mining hardware manufacturer and service provider KnCGroup. The Local notes that KnCGroup, which had racked up $75 million in turnover in around eight months after its launch in June 2013, opened a new data hub in northern Sweden last year, just a stone’s throw from Facebook’s European data center.

Interest in bitcoin and blockchain technology by business and governments around the world increased in the past months. However, many governments have yet to take an official stance on digital currencies while some have placed restrictions or regulations on the use of Bitcoin. Russia was one of these countries, as it blocked access to websites with information about Bitcoin.

The ban was implemented by the City Court Nevyansk on the basis that these sites contained information which was prohibited in the Russian Federation. The ban began on January 13th 2015 and included access to the following sites:

• Bitcoin.org
• Indacoin.com
• Coinspot.ru
• Hasbitcoin.ru
• Bitcoinconf.ru
• Bitcoin.it
• BTCsec.com

However, on May 15^th, 2015, a Sverdlovsk Regional Court overturned a ruling from City Court Nevyansk about blocking sites with information about digital currencies.

Bitcoin Magazine spoke with Ivan Tikhonov, the owner of BTCsec.com to gather more information about this court decision. Ivan learned about Bitcoin in 2011, and at that time, there was virtually no information on Bitcoin sites in Russian. Seeing an opportunity, Ivan launched BTCsec.com.

“The decision of the court Nevyansk about the blocks was canceled because it clearly violates the laws of Russia,” said Tikhonov.

In August of 2014, the Russian Minister of Finance Alexei Moiseev announced proposals to ban the issuance of bitcoin and any operations related to cryptocurrency in the spring of 2015. The announcement prompted several bitcoin and digital currency companies operating in Russia to exclude the Russian market from their business operations. With the overturn of this ban, entrepreneurs are like Tikhonov are optimistic. “This is good. Now there is a chance that people will be able to obtain objective information. We will be able to legally work these technologies,” said Tikhonov.

Speaking about public perception of bitcoin in Russia, he added, “There are those who are well aware of what is Bitcoin and refer to it well. Those who do not know, consider it a pyramid or a Ponzi scheme.” The recent court decision will help inform people about the true value of digital currencies without fear of violating any laws. “I believe that Bitcoin and other decentralized modern technology can improve our lives. At least, cheaper remittances replace outdated accounting systems and provide new business opportunities,” he said.

As bitcoin gains international recognition, more governments will be forced to take an official stance on bitcoin. Will governments see digital currency as a threat or as an opportunity for their country to create value in a new, burgeoning industry? Only time will tell.

A few weeks ago, Bitcoin Magazine reported that the prestigious Massachusetts Institute of Technology (MIT) Media Lab announced the launch of a Digital Currency Initiative, to be directed by former White House senior adviser for mobile and data innovation Brian Forde.

Soon afterward, lead Bitcoin developer Gavin Andresen announced that he and other Bitcoin Core developers were joining the MIT Digital Currency Initiative, which gives MIT the roles of leadership, funding and co-ordination of Bitcoin technical development. In parallel, Bitcoin policy think tank Coin Center claimed the role of interface to policy makers and regulators, with the publication of a framework for state digital currency regulation.

Now, MIT and Coin Center are beginning to act jointly as Bitcoin representatives in policy and regulatory discussions, and expressing the concerns voiced by the Bitcoin community about the initiative of the superintendent of the New York Department of Financial Services (NYDFS) Benjamin Lawsky, who is expected to issue this month a new regulation called BitLicense, much stricter than the agile framework proposed by Coin Center.

On March 27, Coin Center issued a detailed commentary to the current BitLicense text, in the hopes that some further adjustments may ensure that New York State becomes a leader in the financial technology of the future.

In a recent Medium post titled “How to Prevent New York from Becoming the Bitcoin Backwater of the U.S.,” MIT Digital Currency Initiative lead Brian Forde praises the Coin Center commentary, and, in particular, the idea that regulations should strike a middle ground in such a way as to protect both consumers and digital innovators.

“If done right, along the lines of what has been proposed by Coin Center, [regulation] will increase investment in digital currency startups, create jobs and allow consumers to receive cutting-edge financial services of the future, faster and safer,” says Forde. “And it’s challenging to balance consumer protection, competition and prevent money laundering while also enabling innovative new industries to grow and prosper.”

Similar arguments have been used to justify agile and enlightened Bitcoin regulatory frameworks, for example by the Isle of Man government, which wants to offer “Freedom to Flourish” to digital innovators while protecting consumers and keeping crime out.

Forde welcomes the initiative of Lawsky and his team to provide regulatory clarity for the emerging technology of digital currencies, but issues a clear warning that the current BitLicense text has four fundamental flaws:

• The NYDFS would like to review and approve all software updates for Bitcoin apps;
• NYDFS approval would be required to raise a round of financing if any new investor provides an investment for more than 10 percent of a Bitcoin company;
• BitLicense proposal requires Bitcoin companies to get both a money transmitter license and a BitLicense  –  even though they have substantial overlapping requirements;
• The NYDFS would like to regulate Bitcoin wallet applications – even open source software that doesn’t control users’ funds – instead of specific illegal behaviors, which would be like trying to regulate Internet browsers instead of fighting online crime.

Regarding the last point, it’s worth noting that the framework proposed by Coin Center emphasizes that only operators with unilateral control of customer funds should be subject to a license requirement.

Forde is persuaded that, if the current BitLicense proposal is not significantly amended, New York would become a digital fintech backwater.

It’s easy to see what would happen in that case: Innovative companies would leave New York and move elsewhere, resulting in loss of jobs and technology leadership. If similar, unnecessarily restrictive regulations were to be adopted in the rest of the United States, innovative companies would just move abroad. The recent decision of Xapo to move its corporate headquarters to Zurich, Switzerland, should be a wake-up call for U.S. regulators.
Photo: no telling where the money went / CC BY 2.0

Xapo, a provider of secure bitcoin wallet and vault storage solutions deemed “the Fort Knox of bitcoin,” announced that it is relocating its corporate headquarters to Zurich, Switzerland. The company will retain a small presence in its previous home base in Palo Alto, California to serve U.S. customers, but its main operations will move to the new home base.

Xapo’s primary deep cold storage vault is already located in Switzerland (the precise location hasn’t been disclosed), with additional secure sites deployed around the globe.

“[A]t the request of our expanding global customer base, now is the time to bring our center of operations closer to the heart of our security infrastructure,” the announcement reads. “The country’s regulatory stability, international neutrality and its deep-seated tradition in global finance also factored into the decision.”

Xapo’s deep cold storage servers are housed in radio wave-blocking Faraday cages and secured behind military-grade security controls deep within reinforced underground bunkers. All vaults utilize multi-signature transaction authorization, and withdrawals must be signed by at least three of five deep cold storage sites around the world. For extra physical security, Xapo has partnered with satellite surveillance service provider Satellogic.

In August 2014, Xapo became the first Bitcoin services company to complete a Service Organization Control 2 (SOC2) Type I audit, a widely recognized auditing standard against which service providers are able to report and validate their internal security controls. Customers’ funds are covered by two separate insurance policies against cyber-theft, hacking attacks, physical break-ins and employee dishonesty.

That shows how Xapo wants to take all measures to protect its current and future customers’ funds from all risks and threats.

“[O]ur fiduciaries are protected by our vault, which uses private keys that never touch the client or the Internet and are buried deep within geographically dispersed, heavily guarded locations with multi-signature technology for transaction signing,” notes the announcement. “We have customized security protocols to reduce the likelihood of theft through social engineering, phishing or brute force hacks, and offer full insurance in the unlikely event that these systems are compromised.”

Though not explicitly stated in the announcement, it seems evident that Xapo needs to protect its key customers from the possibility that the political climate in the United States might become unfriendly to crypto-currencies, and therefore decided to move to a country with strong privacy and banking secrecy traditions. The linked page “Why Switzerland?” is more explicit:

“Switzerland has a long tradition of protecting both personal and financial privacy. The fundamental right to personal privacy is established as part of Article 13 of the Swiss Federal Constitution, and the protection of personal financial information is still maintained today by the provisions of the Swiss Banking Law of 1934.”

The page also notes that the Swiss spirit of independence endures, with Switzerland remaining apart from the European Union, and deciding participation in any non-governmental organization by popular referendum. The country protects its multiple borders, and national sovereignty, with an active military force of professional soldiers and civilian reservists.

“This is not to facilitate crime, this is to protect privacy,” Xapo CEO Wences Casares told CoinDesk. “There are some customers that will bring more balances if we do this and there are some customers who have said we will work with you if you do this.”

Social media has been around since the infancy of the internet, beginning with BBS and CompuServe in the ‘80s and ‘90s which allowed members to share files and access news and events.

Now, Facebook and Twitter are arguably the kings of social media, but ChangeTip wants to lead a new era of social media where you can share more than cat pictures.

ChangeTip aims to transform social networking forever by introducing “the money layer of social media.” Recent integration with the social sound platform, SoundCloud, is evidence of ChangeTip’s commitment to becoming the biggest platform dedicated to the exchange of money in the digital universe.

“It’s the transformative nature of where technology is taking us,” says ChangeTip’s Kyle Kemper.

The heavily requested integration is good news for users and producers of music. Now for the first time, supporters of indie artists can tip their favorite musicians and directly express appreciation for their content. But ChangeTip is not stopping there. Future plans include integration with other music platforms like Spotify, as well as Meetup.

“The demand can get pretty overwhelming,” Kemper states. “The most effective way to handle [the demand] is through a robust API. That way other platforms like Meetup and Spotify can just do their own native integration using our API.”

ChangeTip’s technology can be used for more than supporting indie artists and sending your friend’s payment for beer. Recent integration with the Red Cross has allowed people from all over the world to donate over 28 bitcoins to Nepalese victims struggling after the earthquakes.

Value Transfer Competition

Sending money over the internet is not new. Online payment platforms like Paypal and Venmo have existed for years. Kemper explains what separates ChangeTip from the rest of the pack, saying, “ChangeTip is international, bitcoin is international and with ChangeTip sending money can all done with no fees – instantly.” ChangeTip is also able to process microtransactions, transactions with a value of less than a dollar, which are typically cost prohibitive for traditional payment methods.

Coinbase had also developed a tipping service similar to ChangeTip but deferred to ChangeTip’s platform, stating, “ChangeTip is an excellent example of a company which uses our APIs, and we’d like to support them instead of competing with them.”

With seemingly no competition in the “money layer of social media,” the ultimate goal for ChangeTip, according to Kemper, is for people to, “understand they can become their own bank with bitcoin. What makes it feel like real money is that they offer to buy $20 USD worth of bitcoin, and you send them $20 USD worth of bitcoin on ChangeTip.”

Critics Speak Out

But not everybody is happy with ChangeTip. Some criticize the company for its centralized practices and off-chain transactions. In off-chain transactions a claim is made on an amount of bitcoin and sent from one person to another – no actual bitcoins get exchanged, and the transactions are not recorded on the blockchain. In this case, ChangeTip also controls the private keys for all bitcoin addresses associated with the service.

While no transactions are recorded on the blockchain, off-chain transactions are beneficial because transactions can be made instantly without waiting for confirmations. Kemper comments,“ChangeTip is a transitional wallet for fast spending. We don’t encourage people to keep a lot of money on their account.”

Some users have raised concerns about the amount of personal and social data that ChangeTip is collecting. For example, ChangeTip collects information about every social network where its users send tips. This means that ChangeTip could potentially be able to link a private Facebook profile to a Reddit account or a withdrawal bitcoin address for a user.

Despite these concerns, ChangeTip continues to grow its presence across the popular social platforms and spread awareness about bitcoin.

Trading roughly $450,000 every 30 days as of last month, Ohio-based BitQuick is a new peer-to-peer platform that intends on swiftly connecting digital currency buyers with sellers through over-the-counter (OTC) trades. The majority of the company’s user-base is from the United States, but there are also Taiwan and India branches.

It’s been a busy few months for BitQuick. The volume of trades on their website has increased by nearly five times since January 2015, and it was just chosen as a top-five startup on Boost.VC’s demo day, last week.

In comparison to conventional bitcoin exchanges, Jad Mubasalat, CEO of BitQuick tells Bitcoin Magazine, “When you look at the typical incumbents, like Coinbase and BitFinex, they require multiple business day delays and a bank transfer to be able to buy your first bitcoins”, which, admittedly, can be frustrating for those buying bitcoin to speculate, spend online, or perform cross border payments.

The delay factor of most big exchanges robs bitcoin of its novelty in instantaneous transfers without questions. “BitQuick, however, allows anyone to trade bitcoin instantly with cash, without any risk of fraud,” added Mubasalat. Unlike other OTC trading platforms such as Localbitcoins, Bitquick relies on BitGo’s P2SH multi-sig protection technology with a hefty insurance level of $250,000.

Troubled Beginnings

Like many other Bitcoin early adopters, Mubasalat’s experience dates back to managing an escrow service on Bitcointalk.org, where he had to learn about digital currency the hard way.

“I had the misfortune of being scammed for over 10 BTC and having my Mt. Gox account hacked and losing 20 BTC,” he said.

At the time, the Bitcoin community lacked an international mainstream, user-friendly escrow interface for digital currency trading. Only a few days after he got robbed, someone was offering to sell a prototype for a Bitcoin middle-man service on Bitcointalk, and Mubasalat swooped in.

“I checked it out and loved it so much that I offered to buy the platform before he launched it for $300.” After some tweaking here and there, BitQuick.co was officially launched in August 2013.

Traction came along naturally to BitQuick through word-of-mouth, but Mubasalat needed help managing the increased trade volume because he was still studying Biomedical Engineering at Ohio State University at the time.

“So I brought on Chad Davis in October, 2013,” Mubasalat said. “He was already my roommate then, and we had known each other since the sixth grade, so it made perfect sense!”

Three Simple Steps

• The user selects an order from the current order book, entering his or her email address and desired BTC to trade as well as his or her wallet info.
• The desired sum is paid in cash (physical bills) to the account shown on the confirmation page by going to any local branch of the seller’s bank and filling out a deposit slip, or sending a SEPA transfer (EU customers).
• Finally, a link is sent to the user’s email, where a proof-of-purchase receipt is uploaded.

Transfer times in the United States have a three-hour guarantee, with no registration required. At only 1 percent to 2 percent in fees, the two-man team is “working towards integrating new payment methods in addition to cash deposit in the United States.”

It’s not far-fetched to see them dominating the OTC market soon, at least in the western world.

A future for the Middle East

Although Bitquick.me was launched for a short while to cultivate a market in the Middle East, it was soon pulled due to a lack of demand. Mubasalat said that they “shut it down temporarily to focus on the United States platform.”

For the foreseeable future, bitcoin might not gain a large everyday usage in the Middle East until there is an emergence of basic Bitcoin infrastructure such as wallets and exchanges, he said, given that the Middle East is largely underbanked and has plenty of access to mobile technology.

In the meantime, Bitquick.co users can look forward to a Clef integration, which should be completed in the next few months to give users an alternate mode of authentication.

Renowned futurist Peter Diamandis, the author of “Abundance – the Future is Better Than You Think” and “Bold – How to Go Big, Create Wealth and Impact the World,” has written a thoughtful post on Singularity HUB with 8 predictions for the next ten years. He is persuaded that we’ll see extraordinary transformation in the next decade and that blockchain technology will be one of the enablers.

“If you haven’t heard of the blockchain, I highly recommend you read up on it,” says Diamandis. “You might have heard of bitcoin, which is the decentralized (global), democratized, highly secure cryptocurrency based on the blockchain. But the real innovation is the blockchain itself, a protocol that allows for secure, direct (without a middleman), digital transfers of value and assets (think money, contracts, stocks, IP). Investors like Marc Andreesen have poured tens of millions into the development and believe this is as important of an opportunity as the creation of the Internet itself.”

Diamandis, who co-founded the XPrize and the Singularity University, believes that Bitcoin is a disruptive technology poised to have a big impact.

“At its core, bitcoin is a smart currency, designed by very forward-thinking engineers,” he wrote in Forbes in June 2014. “It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transitions… all good things. Most importantly, it is an ‘exponential currency’ that will change the way we think about money. Much the same way email changed the way we thought of mail. (Can you remember life before email?)”

In the same article, Diamandis predicted that “Fall 2014 thru 2015 will like see the start of the Wall Street Phase [of Bitcoin]” – a prediction fully validated by current events – and then, “Finally will come the ‘Mass Global Consumer Adoption’ phase – this is where bitcoin becomes a major player in the global economy.” According to Diamandis, this phase is only a couple of years out.

Diamandis’ Singularity University, an educational center dedicated to world-changing applications of disruptive, exponentially accelerating technologies, is based at Moffett Federal Airfield, formerly operated by NASA. In November 2014, NASA announced that it would be leasing the airfield to Google for 60 years. Google is one of the corporate founders of Singularity University.

On June 2-3 in New York, Singularity University and CNBC will host the Exponential Finance 2015 conference, which will examine how rapidly accelerating technologies such as artificial intelligence, quantum computing, crowdfunding, digital currencies and robotics are rapidly disrupting businesses throughout the financial industry.

The conference program features an impressive set of high-profile speakers, including Blythe Masters, the former J.P. Morgan star who now leads digital currency startup Digital Asset Holdings. Masters’ presentation will be titled “Blockchain: the Financial Challenge of our time.” Brock Pierce, founder and Managing Partner of Crypto Currency Partners (CCP), and Abra CEO Bill Barhydt will also give talks related to digital currencies.

Another high profile speaker, Singularity University Networks & Computing Chair and former Chairman of the Board of the Electronic Frontier Foundation Brad Templeton, is persuaded that bitcoin and other virtual currencies are significant in that they take some aspects of finance that were formerly in the hands of professionals and unlock them for the public at large. In a Big Think video interview, he explains why Bitcoin matters.

 

Photo via the XPRIZE Foundation / CC BY 2.0

CNBC contributor Brian Kelly, the author of “The Bitcoin Big Bang: How Alternative Currencies Are About to Change the World,” proposes a quick and simple bitcoin-like solution for Greece’s troubled economy.

Since the January elections that brought the “anti-establishment” Syriza party to power, Prime Minister Alexis Tsipras has been trying to renegotiate the Greek debt with the European Union (EU), but the country remains strangled by foreign debt. Rumors of a possible “Grexit,” the exit of Greece from the EU, keep surfacing.

Writing on CNBC, Kelly notes that Greece could stay in the Eurozone and begin repaying its debt, but it needs a method to monetize state-owned assets while still maintaining ownership. Kelly is persuaded that a digital currency based on blockchain technology could provide the solution.

While Greece may not have the liquidity to satisfy its current obligations it does have enough illiquid assets to solve much of its financial problems. The Greek government could use blockchain technology to create a digital currency backed by Greece’s 86 billion euros in illiquid assets.

The government of Greece would place a portion of its assets into a trust, and create a digital currency backed by this basket of assets. The digital currency could then be used to repay creditors and pay government employees. Initial proceeds from the sale of the currency could be used to meet obligations to the European Union, while government employees could be paid in this parallel currency.

According to a Reuters report, the European Central Bank is working on an IOU-based secondary currency similar to the IOU’s used by California in 2009. Kelly notes that Greece’s Finance Minister Yanis Varoufakis wrote a blog post in February proposing a similar IOU-based currency, which he dubbed Future Tax Coin (FT-Coin). Varoufakis is not impressed by bitcoin as a currency, but he is persuaded that its underlying technology could be put to effective use in troubled economies.

“[T]he technology of Bitcoin, if suitably adapted, can be employed profitably in the Eurozone as a weapon against deflation and a means of providing much needed leeway to fiscally stressed Eurozone member-states,” said Varoufakis. His post explained in detail how Greece could create an FT-Coin payment system with a Bitcoin-like algorithm to make it transparent, efficient and transactions-cost-free.

According to Kelly, an IOU currency issued by a government under financial stress is not a workable solution. Its acceptance would depend on the public confidence in the Greek government and its ability to collect future taxes, which can’t be taken for granted, and on the availability of easy ways for consumers to spend the new currency.

Kelly is persuaded that his alternative proposal – an opportunity for real-world implementation of block-chain technology – would work, and invites everyone to be a part of the solution by submitting proposals and commenting at drachmae.org. A wiki has been created where block-chain technology firms can submit and discuss all the technology that will be needed.

“The aim of this WIKI is to support a white paper and project think tank looking to see if a viable working real-life solution can be delivered to help Greece with their real-world problems,” says the drachmae wiki. “An open invite has been put out to the Crypto and wider technical community to understand how blockchain technology can be used to provide a working solution.”

On May 20, Kelly will host an online symposium where companies will have the opportunity to present their piece of the workable solution.

Coinify, a Danish bitcoin exchange and bitcoin payment processing platform is expanding its platform to all 36 EU member states under the Single Euro Payments Area (SEPA) including Monaco, Malta, Iceland and Croatia.

The SEPA project was initiated in February of 2014, with an aim to make cross-border Euro transfers equivalent to a domestic transfer in a country. Exact description of the project is “To improve the efficiency of cross-border payments and turn the fragmented national markets for euro payments into a single domestic one.”

Coinify plans to expand its services to the countries under the SEPA project to make it even cheaper for those needing to make cross-border remittances/transfers, with 0% transaction fees.

The Danish bitcoin startup completed an early multi-million seed funding led by SEED Capital, the largest tech-focused VC firm in the nation, hoping to be the leading bitcoin startup in Denmark’s cryptocurrency industry.

The investment from SEED Capital and Accelerance allowed Coinify to acquire one of the earliest European bitcoin exchange, Bitcoin Broker Bitcoin Nordic. Due to the acquisition, the bitcoin exchange of Bitcoin Nordic began to operate as a core service of Coinify, with the founder Lasse Birk Olesen appointed as the Chief Product Officer.

Coinify later acquired the intellectual properties and all merchant relationships of one of the largest payment solution providers and payment gateway developer within Europe, Bitcoin Internet Payment System. Kris Henriksen, founder of Bitcoin Internet Payment System, said the company will now focus on technological innovations.

Prior to the funding led by SEED Capital, Coinify was supporting more than 6,000 merchants and 7,000 just from Europe. Moreover, Coinify’s exchange satisfied over 7,000 European users.

With their bitcoin exchange and merchant services solidified, Coinify began to grow its platform and targeted markets including Sweden, the UK, Norway and Denmark and to establish their presence throughout the European region. Coinify specifically targeted Germany and the UK, due to the countries’ large e-commerce markets.

As of now, Coinify plans to seek for investments in the second half of 2015, as Chief Financial Officer Christian Larson stated “We expect to raise a significant amount to make sure that Europe will be playing a leading role in this new payment space. We believe that our strategy on providing the traditional payment service providers with dedicated service is our way in to the market.”

As Coinify expands its service to 36 European countries listed under SEPA, the bitcoin startup hopes to see an increase of trading volume in their exchange and to facilitate more individuals to send cross-border payments throughout Europe.

The World Table, a startup company in Orem, Utah, is building a quantified reputation system to aggregate reputation data and report trust scores for individuals and organizations. The system is built upon Open Reputation, an open source decentralized reputation platform under development, sponsored by The World Table, which maps identity and reputation onto the Internet-of-things (IoT).

The Open Reputation concept is open and flexible, able to accommodate diverse applications and usage patterns, from user reputation and “karma” in online discussion spaces to automatic reputation-based agreements between agents in IoT networks of independent connected devices. Open Reputation models a universe of relations between entities and agents, anything in the IoT, each of which has an identity and may have a reputation. The initial Open Reputation source code is expected to be available before the end of 2015.

“Everyone and everything [in the reputation web] will have at least a public pseudonymous identity, created at the moment of interaction with any other part of the web,” states the Open Reputation High Level Whitepaper. “Everyone and everything may also have an encrypted shareable reputation, reflecting each of its transactions with any other part of the web. Some will choose to aggregate and share more reputation. Others will choose less. And our trust will flow accordingly.”

The High Level Whitepaper mentions a wide range of use cases. Software companies could improve virus and spam detection, web content filtering and software updates, as well as Internet commenting, reviewing, sharing and advertising. Electronics companies could make fully autonomous systems that contract for their own maintenance and supplies. Social and financial qualifications could merge into a reputation economy that improves renting, sharing, purchasing, lending, insuring, interviewing and dating. Biotech firms could enhance big data projects with behavioral correlations. Governments could facilitate administration of voting and social services.

Identities, reputations, and relations persist in a decentralized public database anchored to a decentralized public ledger – the Open Reputation blockchain – both of which compensate participants via a cryptocurrency dubbed Cred. The Open Reputation platform uses a Byzantine agreement algorithm, detailed in the Open Reputation Low Level Whitepaper, to maintain consensus across hosts while supporting higher transaction rates than legacy blockchains. Cred tokens, which, according to the World Table team, will be exchangeable like other cryptocurrencies, will be paid by agents who perform transactions and earned by operators of computers that process the transactions and store related data.

The first product built on the Open Reputation platform will be a comment system for major media sites that will increase the quality of online engagement, boost ad revenues, and create brand lift.

“When our reputations are on the line, most of us choose to behave better – and that also happens to translate into more valuable web properties,” said World Table CTO and EVP of products Lincoln Cannon. The company’s pilot programs showed dramatic increases in “good” behavior when people understood that they were being assessed by their peers. The company describes this feedback model as “adding trust to the Internet.”

“With this announcement, we’re making it clear that a whole class of online interactions are due for a major upgrade,” said World Table CEO Bryan Hall. Patheos, one of the 200 largest content sites in the United States, is expected to begin testing the product in July. When fully deployed, The World Table comment system will be embedded in 20 million page views per month at Patheos alone.

“We’re creating an open-source platform so we can all see and understand how reputations are being formed from the data stream, and we’re using a blockchain architecture to ensure that trust is distributed,” added Cannon. “No central authority will have control over the information used to create your reputation.”

The World Table, which has raised approximately $700,000 to date, is about to launch a seed financing offering for an additional $1.3 million on Angel List.

That’s Janah Riddle of Coinbase living the dream after a hike through Colombian rainforest to drink some cold coffee and dip into a few waterfalls. She and her husband, Luke, are taking on the #ProofOfWorkout challenge to stay active while they travel and work remotely. Follow their journey on the Roaming Riddles blog.

You can imagine a blockchain saying to a miner, “Do you even lift, brah?” and the answer being, “Yah, dude, here’s the bitcoin to prove it.” This simple joke explains, in essence, the concept of proof of work.

Proof of work is simply the ability to show through a piece of data that your machine has used some of its precious computing power crunching cryptographic functions. The reward for all that computing power at a certain threshold and moment is bitcoin. The metaphor is apt when compared to accomplishing health and fitness goals. The work put in to maintaining a healthy and fit body is proved by muscle tone and improved health.

Last week #ProofOfWorkout announced a 30-day fitness challenge, in which participants share their fitness progress on social media and compete to win bitcoin or Gyft cards to Nike, Sports Authority, etc. Here are some numbers from the first 55 registrants.

Overwhelmingly, people are focusing on strength training, with cardio enthusiasts coming up closely behind. Body weight exercises such as yoga come up third while hiking and walking follows. Training for races, diet and specific training courses such as Cross Fit make up the last handful of goals.

The reasons people gave for honing in on these goals included: wishing to reduce body fat, build strength, train, lose weight, improve fitness and well-being, and start a routine. The number strength-training participants who used the phrases “swole” or “ripped” to describe their challenge was 44 percent.

Some of the goals listed included:

“To beat my father in an arm wrestle.” “Shrink.” “Follow the Nike training club for 4 weeks.” “Lose weight, walk daily AND spend less time in my office chair by standing while working.” “Get swole.”

Co-founder of Blockchain, Nicolas Cary’s goal: “I’d like to run more than anyone else in this contest.”

With Bitcoin rock-stars such as Elizabeth Ploshay starting the challenge with a 13-mile run, it looks like the competition is heating up.

@proofofworkout goal completed on Day 1: 13 miles of running down!

— Elizabeth Ploshay (@etploshay) May 11, 2015

#ProofOfWorkout started this week with more than 65 participants across four continents in nine countries. Participants have already begun tweeting and sharing their workout progress and goals through screenshots of fitness apps to gym selfies. According to the organizers, #ProofOfWorkout has raised in excess of their fundraising goal from corporate sponsors and individual donors, allowing participants to compete for weekly giveaways in addition to the five $100 Nike Gyft cards reserved for the final prize.

There’s still time to sign-up online.

 

Photo courtesy of Luke and Janah Riddle.

The Euro Banking Association (EBA) has published two reports on Digital Customer Service Interfaces (DCSI) and crypto-technologies, with the intention of detailing the electronic payments landscape of the future. The reports have been announced at the EBAday payments conference in Amsterdam, Finextra reports.

The Euro Banking Association is a practitioners’ body for banks and other service providers supporting a pan-European vision for payments, with membership including more than 180 institutions from across Europe and beyond. Its mission is to provide payment professionals with a country-neutral forum for driving and contributing to the delivery of pan-European co-operative payment initiatives and business practices.

The reports, produced by the EBA’s Working Group on Electronic Alternative Payments (e-AP WG), are intended to help financial institutions (FIs) navigate the changing payments landscape. The publication of the EBA reports follows closely the EU Commission’s “Blockchain and Digital Currencies Workshop” on April 27.

According to the EBA, digital currencies such as bitcoin or ripple have the ability to disrupt the payment and banking landscape and assist in the fight against cyber-criminals.

The opinion paper on Digital Customer Service Interfaces focuses in particular on a ‘virtual layer’ on top of the existing single euro payments area (SEPA) transfer and card payment infrastructure, referencing the EBA’s MyBank offering that is seeking to become a ‘one stop shop’ e-commerce transaction platform.

The crypto-technologies paper, titled “Cryptotechnologies, a major IT innovation and catalyst for change,” is an information paper for transaction banking and payments professionals. It details four categories (currencies, asset registry, application stack, asset centric), applications such as remittances and real-time payments and scenarios, and describes the respective potential for these different categories of applications to have a major short-term impact on the architecture of systems and processes in a number of digital transaction-based industries. It also details four use cases for the most promising category. It concludes by setting forth four different scenarios of how organizations in transaction banking and payments could position themselves with regard to these new technologies.

“Cryptotechnologies are a key subject for further study for transaction banking and payment professionals, especially against the background of evolving financial infrastructures,” said Vincent Brennan, deputy chairman of the Euro Banking Association and chair of the EBA e-AP WG. “The information paper put together by the e-AP Working Group provides a hands-on introduction to this topic, which specifically focuses on the practical potential and related implications of cryptotechnologies for the transaction banking and payments area in the short to medium term.”

The four scenarios analyzed by the paper reflect different degrees (high and low) of cooperation between banks and the crypto-community, and crypto-adoption by banks. The four scenarios are dubbed:

• “Out in the cold” – the creation of a separate cryptoconomy.
• “First amongst equals” – an approach where individual payment service providers (PSPs) strive to position themselves as developers of cryptotechnology applications.
• “Awake and aware” – a collaborative approach based on constant dialogue and possible partnerships in selective areas.
• “United we stand” – a collaborative approach based on partnerships between PSPs and the cryptotechnology community embracing a successful integration of processes.

Fidor Bank, a bitcoin-friendly German bank that makes extensive use of social media, is presented as a technology innovator and an example of a bank that leverages the latest regulation to provide cryptotechnology-powered services to its customers.

On May 14 the Social Media Leadership Forum will host the inaugural meeting of the Bitcoin and Blockchain Leadership Forum, a new initiative to explore the future of bitcoin and other digital currencies as well as the disruptive impact of the blockchain.

The event will take place in London at Allen & Overy, a legal consulting firm.

Currently, the Bitcoin and Blockchain Leadership Forum website is scant on details and invites interested readers to subscribe to their mailing list. On Twitter, the Forum invites people to come and explore the next generation Internet and hints at regular sessions after the inaugural event.

The Social Media Leadership Forum is a membership organization that organizes periodic events focused on business-related aspects of emerging digital technologies, hosted in the offices of a variety of world-leading member organizations based in London.

According to an invitation email shared on Reddit, representatives of the London School of Economics and the Bank of England will participate in the Bitcoin and Blockchain Leadership Forum and give talks.

The participation of representatives of the Bank of England is especially interesting. As recently noted by The Financial Times, Great Britain is on its way to becoming a global hub for bitcoin and other digital currencies, with both the government and Bank of England having made recent moves designed to stimulate the development of digital fintech.

A few months ago the Bank of England published a research paper titled “Innovations in payment technologies and the emergence of digital currencies.” The initial three bullet points provide a concise summary of the Bank of England’s thinking:

• Modern electronic payment systems rely on trusted, central third parties to process payments securely. Recent developments have seen the creation of digital currencies such as bitcoin, which combine new currencies with decentralized payment systems.
• Although the monetary aspects of digital currencies have attracted considerable attention, the distributed ledger underlying their payment systems is a significant innovation.
• As with money held as bank deposits, most financial assets today exist as purely digital records. This opens up the possibility for distributed ledgers to transform the financial system more generally.

“Digital currencies do not currently pose a material risk to monetary or financial stability in the United Kingdom, but it is conceivable that potential risks could develop over time,” reads the conclusion of the Bank of England’s report. “The distributed ledger is a genuine technological innovation that demonstrates that digital records can be held securely without any central authority.”

A recent U.K. Treasury document titled “Digital Currencies: Response to the Call for Information” shows that the U.K. government is interested in supporting and understanding blockchain-based digital fintech, and understands the potential benefits it could bring to society. In particular, 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.

After its recent purchase of the bitcoin exchange Cointrader.net, Canadian company Newnote Financial has now moved into the multi-vendor website market. On May 12, 2015, the Vancouver-based corporation announced its acquisition of PayIvy.com, an online site that allows vendors to register and sell digital products and services, including ebooks, software, graphic designs, web designs and intellectual property.

PayIvy co-founder Lode Kennes says in a press release that the company hopes to better reach its potential following the acquisition.

“With the investment from Newnote, PayIvy will be able to serve more sellers with features that no other site can offer,” he said.

Kennes, along with co-founders Ton Manh Nguyen and David Snyder, will stay on at PayIvy to assist with daily operations and development.

“This is a very strategic acquisition for Newnote,” said Newnote CEO and President Paul Dickson. “Each of our services will be integrated into one another utilizing our APIs.”

Besides Cointrader.net, Newnote also owns and operates the CoinExchange Android app, Coinpayments.net, and the BitVisits.com paid-to-surf advertising platform, in addition to several other cryptocurrency-related assets.

“Merchants can now set up shop with PayIvy.com, accept payments through Coinpayments.net, convert bitcoin to cash on Cointrader.net, and transfer the funds into their bank account or remit overseas instantly,” says Dickson. On April 24, 2015, Newnote announced that it had signed a strategic partnership with Rebit.ph of the Philippines to enable remittances.

PayIvy merchants are also able to protect their digital wares from online piracy and other unauthorized software distribution and sharing. Custom fields enable customer data collection and an advanced affiliate program is available for sellers looking to promote their products. The site accepts various crypto-currencies, including bitcoin, litecoin and omnicoin via Coinpayments.net.

Dickson stressed Newnote’s commitment to cracking down on recent illicit sales of Netflix and other accounts through the PayIvy site.

“Our priority is to protect intellectual property,” Dickson said in a telephone conversation with Bitcoin Magazine.

In its first six months of operation, PayIvy has registered over 10,000 merchants, processing over $200,000 per month in sales. Newnote reports paying a purchase price of CDN $260,000 in cash and stock.

Nasdaq has become one of the first multinational financial services companies to delve into non-currency usage of blockchain technology. On Monday, May 11, the company announced that it would begin to leverage the colored coin protocol Open Assets to “expand and enhance the equity management capabilities offered by its Nasdaq Private Market platform.”

According to Nasdaq CEO Bob Greifeld, the distributed ledger function of the blockchain will “modernize, streamline and secure typically cumbersome administrative functions, and will simplify the overwhelming challenges private companies face with manual ledger record-keeping.”

Nasdaq joins the blockchain-integrated securities exchange market field just a few weeks after Overstock’s Medici Project filed S-3 forms with the Securities and Exchange Commission, outlining its intention to issue new stocks or securities, including the potential to issue digital securities.

In an interview with Bitcoin Magazine, Overstock.com’s director of communications, Judd Bagley, welcomed Nasdaq’s announcement, noting several ways in which it could have a positive impact on the financial sector.

The first is in overcoming the hurdle of market acceptance. “The actual people who will be clicking the mouse authorizing real trades need to feel comfortable with this new paradigm, which upends a 75-year-old system some don’t currently see as broken,” said Bagley. Having Nasdaq on board could help to push blockchain technology into the financial sector mainstream.

Regulatory acceptance is another matter. According to Bagley, it’s up to companies like Overstock and Nasdaq “to impress upon regulators that a stock exchange based on decentralized ledgers is not only as good as what’s currently in place, but better.”

Bagley said that with Overstock in the process of getting SEC approval to issue digital shares, it has developed some “very interesting financial innovations” that will be rolled out on the Medici platform in the near future.

“Understandably, we’re expecting some probing questions. After all, regulators are, by nature, conservative. But this is one of the reasons we are so pleased to see NASDAQ getting in on blockchain trading. We can use all the support we can find when it comes to getting this new approach approved. Having NASDAQ working to meet the same regulatory goals as we are can only help us.”

Overstock CEO Patrick Byrne has been outspoken in the past about Wall Street’s culpability when it comes to shielding bad actors in the financial sector. Bagley does not expect that Nasdaq’s latest move will do much to affect this larger problem.

“One of the reasons young companies avoid the public equity markets is concern over the predations of illegal short sellers,” he explained. “Blockchain trading of pre-IPO shares will go far to keep bad actors from preying on these companies. So on that level, Nasdaq is joining us in doing a good thing.”

Trading of pre-IPO shares, however, represents only a small fraction of the overall financial trading picture, Bagley added. “Decentralized ledgers like the blockchain are also extremely well-suited for the trading of shares of public companies, and so we’re incorporating that functionality into Medici as well.”

 

 

 

Photo: Time Square/New York / CC BY 2.0

Corona is a new collaborative-oriented network and community for decentralized application (DApp) developers in search of resources and financial support.

Corona is a technology agnostic site that supports a diversity of decentralized platforms, technologies and digital currencies, such as Bitcoin, Ethereum, MaidSafe, Codius, Sidechains, Eris Industries, NXT, Factom, Counterparty and Omni, among others.

Although there are several initiatives to fund development on various platforms, founder Daniel Greene says there are no programs currently doing anything similar to Corona.

“The closest projects to ours which operate similarly, such as DEVgrants and College Cryptocurrency Network (CCN), are actually complementary to our goals and share a strong potential for symbiotic and mutually beneficial relationships,” he said.

DEVgrants is a project built by the Ethereum team that offers funding for contributions to both the Ethereum platform and projects based on Ethereum. While, DEVgrants is not a funding platform, it does provide resources to continue building a Dapp.

CCN, founded in 2014, is a nonprofit dedicated to blockchain education, innovation and development. CCN focuses on connecting the novice with the experts and has reached a network spanning the globe in more than 150 locations.

Proponents of DApps claim that the decentralization of software services people use on a daily basis, such as Dropbox, WhatsApp and eBay, could greatly benefit the users of those services. For example, a decentralized marketplace would mean that buying and selling goods and services would be conducted directly between buyer and seller without unwanted third-party involvement, and would be regulated by cryptocurrency smart contracts and arbitration.

“Over the next decade businesses will start assessing their decentralization strategies. Decentralization technology undermines the core control mechanism businesses use today to monopolize their customer base thanks to its abstraction effect,” states the Corona whitepaper.

Corona also outlines the possibility that decentralized identity, reputation and credit rating applications could possibly be the backbone in the creation of more competitive peer-to-peer insurance and loan markets which have the potential to disrupt these industries, as well as serving the unbanked worldwide who cannot currently benefit from such protection. Decentralized messenger and network applications free from government interference could also have positive impacts on democracy and freedom of speech.

About Corona

Founded by Greene and backed by an experienced team of developers and advisors, Corona strives to make DApps easier to develop while promoting their use cases.

According to Greene, DApps can be built “in a shorter time period compared to standard applications because of the turnkey infrastructure, lowered barrier to entry and simplified deployment. The increasing ease of creating such software will lead to the rapid expansion of decentralized services. These peer-to-peer services are revolutionizing the Internet economy, offering alternatives to centralized corporate monopolies.”

By building a networking hub for DApp developers in need of funding and resources, Corona is poised to advance new blockchain technologies, open-source software solutions and disruptive decentralized business models that may benefit billions worldwide.

The Philippines has the world’s third largest remittance market just behind India and China, with overseas remittances reaching more than $25.1 billion in 2013. But due to the country’s poor banking systems and expensive remittance services, overseas Filipino workers and the local workers working far from their provinces have always searched for alternative systems for transferring cash.

For generations, remittance services including Lhuiller and Palawan Pawnshop dominated the market in the Philippines, despite its high transaction fees. On average, the fees are close to 10 percent for small transactions ranging from $1 to $300. The majority of overseas workers have been using expensive remittance services due the bank’s inefficiency in sending payments and its substantially high minimum deposit rates.

Since late 2013, Bitcoin startups aiming to introduce bitcoin as a remittance solution began to emerge. One of the first Bitcoin startups to do so is Coins.ph, founded by Ron Hose.

Coins.ph

Coins.ph launched its platform in 2014, announcing a major partnership with Metrodeal, the largest e-commerce store in the Philippines. Started out as a bitcoin payment processor for merchants and a bitcoin exchange, Coins.ph evolved into a complete bitcoin service through partnerships with the country’s largest financial institutions and banks including the aforementioned remittance service Lhuiller, BDO (Banco de Oro), BPI, China Bank, HSBC, RCBC, MayBank and many others.

On December 17, 2014, Coins.ph partnered with Security Bank, which has allowed Coins.ph users to withdraw cash in 450 ATMs nationwide. The partnership also meant that Coins.ph users could purchase bitcoin by depositing cash to the ATMs.

Since December, Coins.ph continued to add features to help day-to-day purchases, currently allowing users to pay bills for utilities (electricity and water), credit card, cable providers, insurance and tuition.

BitSpark

Launched in late 2014, Bitspark is a bitcoin remittance startup which initially aimed to help overseas Filipino workers transfer cash to the Philippines using bitcoin.

The Hong Kong-based startup charges less than 1 percent in transaction fees, which Is substantially lower than Lhuiller, Palawan Pawnshop and the global remittance service Western Union.

To send payments, Hong Kong-based workers can simply visit the Bitspark booth in World-Wide House (a place where most migrant workers spend their time during weekends) and give them Hong Kong dollars and specify the preferred bank outlet.

Due to its success in Hong Kong, BitSpark expanded to Indonesia in January of 2015, targeting more than 165,000 Indonesians working or staying in Hong Kong. Bitspark partnered with Artabit, an Indonesian bitcoin payment solution to allow the recipients to collect Indonesian Rupiah from a bank or a post office.

During its expansion, Bitspark stopped charging its transactions fees in percentages. Instead, the startup began charging a flat fee of $25 HK (to Indonesia) and $14 HK (to the Philippines).

In April, Bitspark partnered with multi-sig institutional wallet security provider BitGo, following the startup’s first external funding round.

“There are a number of Bitcoin startups involved in the Philippines remit corridor but the volumes are still low compared to the established incumbents so there is still plenty of room for growth,” the CEO of Bitspark George Harrap told Bitcoin Magazine.

“I think you will continue to see this area grow over the coming years and Bitcoin remittances reaching more people forcing existing businesses to consider adopting Bitcoin as a means of transmission of money,” he added.

Harrap also told Bitcoin Magazine about the company’s vision for expansion, explaining, “Ultimately we want to continue to bring our services to more people in more places throughout the APAC region. We are seeing a rise in B2B interest, which is something we are pursuing at the moment and we’re focusing on the sell sell sell, getting the word out.”

Rebit.ph / Satoshi Citadel Industries

Launched by the co-founder of Satoshi Citadel Industries, Miguel Cuneta, Rebit.ph allows its users to receive cash in more than 20 different bank outlets. Rebit receives BTC from anywhere around the world and converts the BTCs to Filipino pesos with a zero percent conversion fee.

The parent company of Rebit.ph, Satoshi Citadel Industries, has acquired and launched many of the Philippines’ active Bitcoin startups including the nation’s first bitcoin exchange Buybitcoin.ph, Bills Ninja, prepaidbitcoin.ph and Bitmarket.ph.

Remittance is and has always been a serious problem for both overseas and local employees in the Philippines. Although trading volumes of bitcoin remittance startups are substantially lower than the existing remittance services, the number of employees sending remittances in bitcoin is rising so quickly that the bitcoin remittance startups may be able to compete with the existing remittance services such as Western Union or Lhuiller in the near future.

Mycelium has announced the launch of a new merchant processor, Mycelium Gear. Merchants can now receive payments directly into a Mycelium or Electrum wallet free of charge by installing a payment widget on their website or by integrating its open-source API into their backend.

In Friday’s announcement on r/Bitcoin, Mycelium Community Manager Dmitry Murashchik states, “Mycelium Gear is a merchant processor which demonstrates something that has never been possible before Bitcoin: the ability for merchants to use a full featured merchant processor to receive payments online, and have the money go straight into their own wallets, even if that wallet is running on their own phone in their pocket.”

According to Murashchik, Gear “generates invoices with unique addresses for every customer, automatically calculates the exchange rate, and sends a payment confirmation to the site’s shopping cart software. Basically, instead of coding a basic thing from scratch on your own, you can use advanced shopping cart software that tracks customers, invoices, addresses, revenues, etc., and add this little plugin to it to allow it to process bitcoin transactions too.”

Gear is built on top of the open-source Straight Server payment processor, originally developed by Roman Snitko in 2014. “It turned out [Mycelium] wanted to build the exact same thing and were looking for people capable of doing that,” said Snitko in an email to Bitcoin Magazine. “They liked that the project was open source and already the most important parts were functioning. So we decided to join our forces on this one.”

Straight Server uses the BIP32 protocol to generate a new bitcoin payment address for each customer order. As a result, merchants are able to receive payments directly from customers without Mycelium ever touching the funds. Once the payment is sent, Gear is able to track it through the Bitcoin blockchain. This capability is the pivotal feature of Gear: it is a tool that watches the blockchain and detects new transactions at the addresses associated with its clients.

From there, Gear offers the same features as most other payment processors: webhooks that notify your website of the transaction, automatic currency conversion, and notification of over- and underpayments. A notable exception to this common ground is that Gear bypasses traditional payout structures associated with other payment processors. Funds are transferred instantly and directly into merchant wallets.

In the comments following the original Reddit post, Murashchik points out that it is also possible to integrate Mycelium Gear with a Trezor hardware wallet, with Ledger support “coming soon.” It is also useful for sites that accept donations in bitcoin.

At the moment, prices can be set in USD and EUR. Bitcoin prices are automatically adjusted based on the price of bitcoin at the time of purchase. Gear has plans to introduce fast EUR withdrawals in the EU in the near future.

“What’s important to emphasize is that there are two things to supporting currencies: setting prices and conversion of received funds,” Snitko explains. “The first one is easier and we plan to introduce many different currencies in a relatively short period of time. The second one is more complicated due to all the regulatory problems and also the fact that by design Mycelium Gear doesn’t touch the merchants money and thus has no ability to convert them at this point.”

Mycelium Gear adds to its trustless, hands-off approach to payment processing by eliminating personal information gathering, approvals, and KYC/AML requirements. According to the company website, “Because Gear doesn’t hold or even touch the money, we don’t need to know any intrusive information about the merchants.”

“Mycelium’s hope is that Gear will encourage even more merchants to adopt bitcoin and completely change the way merchant transactions are done,” Murashchik adds, “thus continuing our goal of decentralizing everything, improving privacy, and eliminating unnecessary third parties in the Bitcoin economy.”

Mobile games are one of the many technologies that have begun to integrate cryptocurrencies. For example, Shaq Fu: The Legend Reborn has integrated Quarkcoin for in-game payments, and new games based on the blockchain, using Huntercoin and Motocoin, have emerged.

EverdreamSoft, a Swiss mobile gaming company, is a part of this movement, and has committed to using bitcoin with its star franchise. Using the Counterparty protocol, EverdreamSoft plans to place their online trading cards on the Bitcoin blockchain, along with a new cryptocurrency called BitCrystals.

EverdreamSoft rose to popularity in 2010 with the release of their app Moonga, one of the first free-to-play games for iOS or Android. The online trading game has been ranked the top role-playing game in the Japanese App Store, and has been downloaded more than 250,000 times.

In order to compete with larger and better-funded competitors such as Blizzard Entertainment, EverdreamSoft continues to innovate in hopes of regaining the spotlight. Based in Geneva, the city of private banking, Bitcoin has long been on the company’s radar.

“I believe that blockchain technology will create a profound change on our society,” said CEO Shaban Shaame via Skype chat . “We are at the dawn of complete change in how people exchange value over the Internet.”

EverdreamSoft plans to take advantage of smart properties on the blockchain through its integration with Counterparty. Rare digital game cards in Moonga will be placed on the Bitcoin blockchain so that they can be used in other Moonga games and easily transferred between players by sending a transaction .

The first new video game to take advantage of this ability will be Spells of Genesis. Moonga was a pure card game, requiring the player to build the perfect deck of Spells with which to battle. Spells of Genesis, however, adds an arcade twist, with additional elements of timing and strategy. The Spell cards are represented as orbs, which you must launch at enemies on the playing field to drain their life before they drain yours.

BitCrystals, the cryptocurrency native to Spells of Genesis, will be used to fund the development of these features. One hundred million BitCrystals will be created on the blockchain as Counterparty assets, and 70 million of those will be sold in a presale lasting 30 days.

BitCrystals derive their value from their utility and purchasing power in the Spells of Genesis game. Although you can effectively buy or sell cards in any currency, BitCrystals are necessary to purchase booster packs and bring new cards into the economy. The BitCrystals are then burned or recycled.

EverdreamSoft claims the crowdsale will begin as soon as they gain enough social media traction, and that development is under way. Currently, only testers have access to the alpha version, but a beta version is scheduled to be released next month.

Today, international bitcoin exchange itBit announced it had been granted a trust charter by the New York Department of Financial Services (NYFDS) under New York State banking law. This is the first such charter granted to a digital currency company by the NYDFS. ItBit also announced the successful completion of a $25 million Series A funding round and the expansion of their board of directors.

Under the charter granted to itBit by the NYFDS, itBit is now able to accept customers from all 50 U.S. states in full compliance with state and federal law.

“We have sought to move quickly but carefully to put in place rules of the road to protect consumers and provide greater regulatory certainty for virtual currency entrepreneurs,” said Benjamin Lawsky, superintendent of the NYDFS, in a statement.

ItBit applied to NYDFS for a charter beginning in February 2015. According to the NYDFS, it conducted a thorough review of itBit’s anti-money laundering, capitalization, consumer protection and cyber security standards.

“Our mission at itBit has always been to create a trusted, institutional-grade exchange, and regulatory compliance is an important pillar of that mission,” said itBit CEO and co-founder Charles Cascarilla in a statement. “Regulatory approval from the NYDFS allows us to serve as a custodian for our clients’ assets and expand our services to U.S. customers – the largest market of bitcoin traders in the world – and allows us to do so with the highest standard of care afforded by any Bitcoin company.”

In addition, itBit has partnered with a U.S. FDIC-insured banking institution to be able to offer FDIC insurance on all fiat balances held by U.S. clients. itBit has also confirmed the immediate availability of their exchange platform to all U.S. retail and institutional bitcoin traders.

The funds itBit has raised in its $25 million Series A round will be used to scale operations as it begins to onboard U.S. clients. Previous investors RRE Ventures, Liberty City Ventures and Jay W. Jordan II participated in the round, along with new participant Raptor Capital management chairman James Pallotta.

Coinciding with the raising of funds, itBit has added three new members to its board of directors: former Sen. Bill Bradley, former FDIC Chairman Sheila C. Bair and former FASB Chairman Robert H. Herz. Bradley served as a U.S. Senator representing New Jersey from 1979 to 1997 and was a member of the Senate Finance Committee. Bair served as Chairman of the FDIC from 2006 to 2011 and was named one of Time’s 100 Most Influential People. Herz was previously the Chairman of the Financial Accounting Standards Board (FASB) and is on the boards of Morgan Stanley and Fannie Mae.

This announcement from itBit sets a new standard for regulatory compliance for digital currency companies.

This is a developing story and Bitcoin Magazine will continue to update it.

This is a guest post by Pamela Morgan, Esq., CEO of Third Key Solutions LLC.

Security is tricky. Sometimes the most obvious security solution is ineffective and, worse, a distraction from the real risks and issues. In the security industry this is called “security theater.” It looks good and makes some people feel secure, but doesn’t actually reduce risks. Sometimes security theater even exposes people to even greater risk. Such is the case with third-party identity verification for the recovery of bitcoin accounts. It seems like the obvious solution and feels secure, but, in fact, it exposes users to far greater risks without actually doing much to increase security.

One of the most appealing parts of using Bitcoin multi-signature addresses is the potential for complete separation of control, combined with enhanced security. There are a number of ways to implement multi-sig. The most popular today involves 2-of-3 with the end-user holding two keys and a wallet company holding one. While this model secures against misconduct by the company, it doesn’t protect the customer from the very real risk of losing his or her online key or cold storage key or both. It concentrates risk and creates single point of failure with no redundancy.

This solution is flawed for a number of reasons. Doing cold storage right isn’t easy or convenient. Sure, printing a paper wallet isn’t that hard. But many people won’t even do that. Instead they screenshot their private key. They store it on their online laptop, in a cleverly named file such as “not my bitcoin,” or on their phone and forget all about it. Until they get hacked. Or lose their phone. Or their laptop dies. Unless you’re really into bitcoin or have large holdings, if you’re dealing with a broken, stolen or lost device, your bitcoin key backups might not be the first thing on your mind. You might even forget about them completely until it’s too late. For those who do print paper wallets, they must be stored in a secure, fireproof, waterproof environment, ideally off-site. This adds another layer of work that most people put off indefinitely.

Mainstream customers don’t expect to have to back up their own accounts. Password recovery is a standard part of interacting with websites and online services. Mainstream customers consider Bitcoin keys the same as passwords. I know some of you just cringed, but it’s the truth. And so is this: Most people are bad at security; they’re bad at choosing passwords and even worse at remembering them. Consumers expect their wallet company to have a “backup” or be able to restore their funds. But if the customer has lost both of his or her keys – aka passwords – the bitcoin will be lost, too.

As an industry, we’ve recognized this problem and tried to devise other solutions. The most common is to “outsource” the third key. Essentially, this configuration is also built on a 2-of-3, but instead of having the end-user deal with a backup key, a third party holds the third key instead of the customer. Issue solved! Article over … except it’s not. While outsourcing does protect the end-user from the company and provides an independent way to recover funds, consumer privacy and data protection issues arise. Let’s explore this in greater detail.

Today the en vogue idea is to have the third party verify the identity or authenticate the recovery request directly with the end user. This independent user authentication is touted as an important security feature – but is it really? What risk does it protect against? Bad actors within the company, surreptitiously stealing bitcoin from customers? New industry auditable standards (CryptoCurrency Security Standard – Level III) require all company authorized signers to have their identities verified and undergo background checks, significantly reducing the likelihood of this scenario. This idea is so pervasive, however, that it’s helpful to work through it.

The scam works like this: an employee creates fake recovery transactions and requests recovery from the third party. The third party contacts the end user who says “NO!” and the end user is protected. On its face, it seems to make sense. But when we look critically, the flaws become obvious. First, shouldn’t the company’s own internal governance processes be designed to prevent this? A few simple steps to separate duties within the company could prevent all but the most widespread collusion. Also, good governance processes should create a clear auditable and likely prosecutable trail should this level of malfeasance actually occur. Second, in order to be effective, the third party must have a pre-existing independent relationship with the end-user. This means the end-user must set up an account with the third party, separately, during the wallet setup process. Otherwise, the third party must rely on company data for verification, which leaves the bad-actor risk unmitigated. Requiring end-users to register with a third party and provide personally identifiable information is dangerous. It concentrates bitcoin user information into a small subset of the industry, recreating the client data honeypot problem and incentivizing law enforcement and criminals alike to target key storage services.

If the company is validating the recovery request, how can we be absolutely sure the customer actually requested it? We can’t – even if a third party verified the request. The issue is not who verifies the request, but what data is being verified. Verifying a phone number, sms, and/or email address could work, unless the customer’s smartphone has been stolen. Having a third party send an email or sms verification provides no more consumer protection than if the company itself sent the email or text to the user. If someone has access to the end user’s authentication device, the bitcoin can be compromised regardless of whether the verification is performed by a third party or by the company itself. It’s the illusion of protection without much substance.

Real security requires more than an email, more than an sms; it requires knowledge or biometrics. It requires the company to obtain additional personally identifying data from users during setup. Then the question becomes should all of that data be shared with a third party? Isn’t the company in a better position to secure and update that data, then validate against it when the time comes? Couldn’t the recovery request be sufficiently approved and validated within the company without sharing all kinds of private customer data with outsiders?

There is another way. If, instead of outsourcing identity verification, we outsourced governance and process validation, end users would be protected from both bad actors within a company and data compromise arising from third-party data sharing. Recovery processes move from an afterthought, only applicable in times of emergency, to an integral part of operations. This makes sense from a user-retention perspective as well. As processes are tested and refined, the user-experience improves. The company learns what data it needs, what data it doesn’t, and isn’t concerned about a third-party customer data breach that jeopardizes its entire client base. The end user still is involved in the process, confirming identity and recovery requests with the company selected to be the service provider. The company coordinates the recovery process, and is there to help the customer throughout, while the third party introduces checkpoints in the process to ensure that it is followed correctly. This way, all parties are protected from rogue employees, sloppy process, human error or malicious actors.

In the end, the best way to handle the recovery of user funds is for the company with the strongest relationship with the user to stay focused on delivering the best customer experience. Recovery is not the time to hand users over to a third party. It’s not more secure, it’s just security theater.

 

Background by Freepik

While the Internet has allowed people all around the world to find freelance work at the click of a button, it also has created a situation where these online workers are sometimes exploited or simply not paid for their work. Microwork.io is a startup that plans to put power back into the hands of the freelancer and allow the poor all over the world to earn a decent wage.

Microwork.io founder and CEO Andy Gough recently spoke to Bitcoin Magazine and answered a few questions about his new project. He described how blockchain technology can be used to “free workers all over the world from exploitation and abuse.”

Gough’s hopes for Microwork.io

Microwork.io is best described as a more open variation of Amazon Mechnical Turk. Although most freelancer websites seem to focus on the employer side of the equation, it’s clear that Microwork.io plans to help all of the freelancers in the world who have dealt with dishonest clients in the past.

“Workers will always have a voice with us,” Gough said. “We are building our site with input from the workers to determine best practices and processes, and we hope to blaze a trail that will light up millions – and later billions – of the world’s poor to a life without poverty.”

Gough also noted that the platform will enforce a minimum wage on all contracts. Many users also may not even realize that bitcoin is being used for payments under the hood.

“Our users will mainly have no familiarity with bitcoin and the blockchain, so we also allow users to have their tasks deposit money directly in their bank accounts or some other method,” Gough said. “For example, our users in the Philippines can select a smart task, do the work, and then the money will be deposited directly in their bank account as pesos. These users need not know that bitcoin is invoked, which we feel is crucial to onboard the 99 percent.”

Full verification of work via smart contracts

Perhaps the most innovative, and somewhat sci-fi, feature of Microwork.io is the ability to finalize contracts without the help of a third party. Although it obviously will not work for every type of job posted on the platform, there are certain tasks that can be confirmed via smart contracts checking the status of a certain data feed on the Internet. For example, a smart contract can check to see if a specific type of code has been added to a GitHub repository or a tweet has been sent out by a specific Twitter account.

With these sorts of “smart tasks,” the completion of certain projects can be verified via a smart contract oracle system rather than a subjective third party. This feature has the potential to help workers avoid online jobs where the employer decides to not pay an employee after the work has been completed.

Microwork.io also will have an arbitration section for jobs that are unable to be completely verified via a smart contract. Gough was able to explain what would happen in a situation where the two parties on a contract disagree on the outcome of the project:

“When this happens, the original smart task spawns a predefined number of other arbitration smart tasks, which can then be picked up by members of the community,” he said. “Arbitration smart tasks employ users to examine the original smart task requirements and vote to determine if the terms of the contract have been filled or not. These new contracts are funded by a percentage of the original smart task’s funds.”

Bitcoin for payments, Thelonious for reputation, and Codius for smart contracts

Microwork.io takes advantage of a variety of technologies in the blockchain ecosystem to create their market for smart tasks. Bitcoin is the only option for payments at this time, although (as mentioned above) many users will not even notice that bitcoin is being used behind the scenes.

A customized Thelonious blockchain is used for Microwork.io’s reputation system. Thelonious is a blockchain platform built by Eris Industries that was originally based on the Ethereum blockchain. The high level of customization offered by Thelonious made it the right choice for Microwork.io during the development process. As Gough noted, “Thelonious was used because at that time it was the only blockchain designer that could do what I wanted, but, as you know, bitcoin moves fast.”

Codius, which is developed by Ripple Labs, is the platform where the smart contracts are processed, but this could eventually change. Gough noted, “We hope to use Ethereum in the future.”

Microwork.io is currently seeking seed funding in order to bring their vision to as many people around the world as possible.

Startup Europe organized a “Blockchain and Digital Currencies Workshop” on April 27. Digital Currency Summit founder Alex Puig led the event, with the participation of Bitcoin companies and senior financial experts.

Each European Union (EU) country regards Bitcoin differently, and regulations are constantly evolving. The Startup Europe initiative seems a first step to establish EU-wide coordination of national initiatives for Bitcoin regulation and government-funded research.

Startup Europe aims to strengthen the business environment for web and ICT entrepreneurs so that their ideas and business can start and grow in the EU. Startup Europe is part of Digital Agenda for Europe (DAE), an initiative of the European Commission, and contributes to the Entrepreneurship 2020 Action Plan.

Puig opened the workshop and outlined the possibilities opened up by digital currencies based on blockchain technology, including micropayments, crowdfunding, distributed exchanges, smart property, property registry, ticketing, secure voting systems and more.

After the opening, Paolo Tasca, research economist at Deutsche Bundesbank and founder of digital finance startup ECUREX Research, presented statistics and analysis extracted from a forthcoming Digital Currencies Market Report from ECUREX. He covered Bitcoin arbitrage opportunities and wealth distribution in the emerging Bitcoin economy, and other socio-economic and monetary aspects of the cryptocurrency ecosystem.

The Workshop included talks by representatives of digital fintech firms Coinffeine, Bit2Me, Ethereum and Circle.

Tasca outlined for Bitcoin Magazine his impressions of the final roundtable led and moderated by the European Commission, with the participation of the speakers in the workshop and experts from the European Commission.

“The recurring question was not ‘whether’ but ‘how’ the blockchain technology will impact on our daily life activities,” he said. “Of course, the activities that will be firstly disrupted will be those related to the capital and banking sectors (we are already observing the first effects).”

He noted that this also will have impact on the role of financial market authorities and central banks. There are many regulatory authorities and supervisory agencies (almost 100) in Europe currently, and their positions on the matter are most of the time not well coordinated or harmonized even within the same country. Tasca emphasized that a similar mis-coordination is also happening in the United States.

He added, that Europe, however, is strategically in a better position than the United States “because we don’t have yet a capital market union, and the infrastructures (‘bridges and streets’) toward this goal need to be created from scratch: In EU we don’t have ‘legacies costs.’ This is not the case for the USA where the capital markets are more radically and deeply developed.”

Thus, the EU 2020 initiative Digital Agenda for Europe and the EU digital economy agenda, combined with the recent call for a capital market union with the aim and scope to unlock capitals around Europe, may open the doors to blockchain-based technology applications. The capital market union would give savers more investment choices and offer businesses a greater choice of funding at lower costs, among the other things.

“We expect that the EU Commission will start funding research projects specifically targeted to digital currencies and blockchain technologies as recently done by the U.K. government,” said Tasca, referring to the recent U.K. government decision to fund research in digital currencies.

Tasca’s statements reflect his personal views and do not necessarily coincide with the position of the Deutsche Bundesbank.
EPP Summit December 2010 / CC BY 2.0

European Bitcoin payment processor Coinzone officially announced in a recent blog post that the company will be launching a Bitcoin wallet for its European customers. The announcement follows the recent launch of the company’s Bitcoin processing platform in the Czech Republic.

Like many others, Coinzone’s Bitcoin wallet will allow users to send, receive, buy and sell bitcoin on both mobile platforms and web browsers. Currently, the company is focusing on building country-specific features to allow users to withdraw and deposit through local banks.

CEO Manuel Heilmann stated, “We’ve developed Coinzone Wallet in response to an overwhelming demand from users seeking a wallet that stores their sensitive information locally in Europe.”

Heilmann added that there is a growing European demand for bitcoin, which means more consumers want a simple and secure way to make transactions.

For the past year, Coinzone has focused on offering payment gateways fully localized for each country that the platform supports, “compliant with all regulatory and data privacy laws.” Although the payment gateway will remain as one of its core services, Coinzone has a global vision to transform into a full-stack Bitcoin solution for the European market.

Launch at the Czech Republic

On April 20, Coinzone launched its Bitcoin merchant services in the Czech Republic, fully localizing the entire platform to allow merchants to settle all transactions, with local banking partnerships, in Czech koruna.

“The Czech Republic was a natural extension for our payment gateway due to the strong infrastructure that already exists within the country,” Paul Sylling, chief marketing officer and vice president of user experience told Bitcoin Magazine.

“Merchant adoption is growing fast, especially in Prague, and with eight ATMs, consumers have easy access to bitcoin,” he said. “We also look at other factors. The Technical University has a long-standing reputation for producing highly talented individuals that will start businesses and contribute to the growing economy.”

He also added that Coinzone tracks wallet downloads, search volume, and its own internal analytics, for which the Czech Republic always ranks near the top.

“In terms of banking partners, we don’t disclose them publicly, although it is our policy to have two relationships in place before launching in a country,” he said.

The Spanish Bitcoin startup Coinffeine has launched a technical preview of its peer-to-peer (P2P) Bitcoin exchange. For the first time in a P2P exchange, users can experience an automatic and secure exchange similar to that offered by traditional exchanges, but with all the advantages of the P2P.

This version is intended to enable independent users and banks to try the application at an early stage, integrate it into their services and operate as Bitcoin exchanges. Anyone interested can download the application and, once it is installed, can begin to buy and sell bitcoin with other Coinffeine users.

Although the Coinffeine Technical Preview is fully functional, they decided to go step-by-step in this early stage and distribute a version that is configured to be used on a Testnet or test blockchain.This way, users can try it without spending actual bitcoin.

“From today, the Bitcoin community can try Coinffeine, the first P2P Bitcoin exchange without arbitrators,” said Alberto Gómez Toribio, CEO of Coinffeine. “This is the same version that we are offering to our bank partners and customers. Users will have to wait a little longer to use it with real bitcoins, but we are sure the wait will be worthwhile. We hope to transform Coinffeine’s relationships with banks and payment processors into services that give them added value.”

To test the platform, users can download it from the Coinffeine website. Just as users do not need to register to use BitTorrent, they do not need to register or provide any identification to use the application; they just install it and use it.

Coinffeine is available for Windows, Mac and Linux.

The new version also introduces a new user interface, which is very different from its previous public appearance.

“Few Bitcoin products invest sufficient resources in design and usability. Our team continues to grow, and we have recently added an expert in this field to our team. He has been in charge of the transformation of Coinffeine’s user experience, and the result is something completely new,” said Gómez. “Coinffeine’s intention is to combine the concept of a wallet and exchange in the same product. It is a concept we believe have a great potential, and therefore we leave the following steps to the imagination.

“Coinffeine is a desktop wallet like Armory or Electrum with which you control your money safely,” Gómez added. “This allows the company to avoid disclosing MSB, because we do not touch the money or the bitcoins from our users. We have learned much from the P2P industry and we want to apply many of these concepts to the FinTech ecosystem.”

The release concludes the period of private testing that started December 18th, where Coinffeine presented the first alpha version of the platform in a public event in Madrid and a limited number of users joined the private user experience program.

Prior to the release of the 1.0 version, they will evaluate the creation of a similar private testing program, but with real bitcoin and money.

Coinffeine, a desktop application

Coinffeine is a desktop application that has been defined by those who have tried it as the “BitTorrent for Bitcoin.”

The application works as a wallet, which allows users to store bitcoin safely and to connect an OKPay account – a payment processor similar to PayPal – to buy and sell bitcoin with other users.

The main difference with other P2P Bitcoin exchanges, such as LocalBitcoins or BitSquare, is that these exchanges function like eBay, i.e. with the need to establish contact with another person, agree on the price, and pay, trusting that the user will receive the bitcoin. In Coinffeine, the process is automatic, safe and without arbitrators; the experience is the same as using an exchange as Bitstamp or Coinbase.

“In LocalBitcoins or BitSquare you can’t do trading efficiently because you can’t keep orders in the market that run automatically. In these markets, when a user opens an order that corresponds to yours, you must intervene. Some platforms incorporate persons acting as an arbitrator in a dispute, which makes the process a little safer, but much slower and expensive,” said Gómez.

In addition, with Coinffeine you do not have send your bitcoins to a platform to operate, as in Bitstamp. Instead, they remain at all times in your wallet, and only you have control over them.
Coinffeine’s design is similar to BitTorrent: It works between users. This means that the user does not have to register or provide personal information to use the application – he or she can simply download it and use it.

Coinffeine also is open source and the entire source code is available to anyone who wants to review it on Github.

Brief history of Coinffeine

Coinffeine is a Bitcoin startup based in Madrid. It was founded in 2014 by four Spanish engineers with previous experience working together on projects related to distributed systems and big data.

It was the first company in the world that was founded using bitcoin as social capital. The potential of Coinffeine’s work has been recognized at conferences such as CoinSummit. The Spanish organisation ICEX recently selected the startup as one of the 12 Spanish companies with most international outlook to be presented in Silicon Valley.
Photo by Freepik

BitGold Inc. has announced the public launch of the BitGold platform, a software service that connects gold storage with payment networks, resulting in a banking-like platform for gold.

The announcement refers to the BitGold platform as a “new global operating system for gold.” In fact, BitGold is a digital payments platform that connects gold stored in real-world vaults with online payments.

Though the BitGold press release emphasizes that BitGold is not a cryptocurrency like bitcoin, there are similarities. In particular, the BitGold platform allows for the quick settlement of gold trades so that a users’ gold is easily acquired and accessible across various payment networks such as SWIFT, Visa, MasterCard, Interac, SEPA, UnionPay, Discover, American Express and others – including bitcoin.

BitGold payment fees are higher than those of bitcoin payment processors but lower than most alternatives.

Thus, BitGold provides some of the advantages of bitcoin payments – faster and cheaper digital cross-border transactions – combined with the advantages of gold as a store of value, and can be seen as a Bitcoin-like system for gold. BitGold seems likely to become an appealing option for those who trust gold more than bitcoin.

The BitGold website states that the company views gold as a security switch for a world that is increasingly digital, and implemented security features to protect users’ accounts and identities, such as secure vaults, full insurance with Lloyds of London against theft or loss, military-grade encryption (RSA 4096 and AES256) to secure users’ accounts and personal information, and multi-factor authentication measures.

BitGold claims that it offers the most competitive rates in the industry for buying and selling gold, and is the only platform that allows users to spend from their gold account.

“At BitGold we have a mission to democratize global access to gold for stable savings, and to make gold useful in micro-transactions using the Internet or mobile phones,” said co-founder and Chief Strategy Officer, Josh Crumb. “No matter where you live in the world, gold has held value over time relative to costs like food and energy that we require as humans, making it one the most important savings tools for most of the human population. We believe that by broadening access to a commodity-money that holds value we can help combat the rise in wealth inequality and the short-termism.”

BitGold is a Canadian corporation with offices in Toronto and Milan and a network of secure vaults for gold storage, operated in partnership with The Brink’s Company, a global leader in security-related services for banks, retailers and a variety of other commercial and governmental customers. Users can choose where in the world they want their gold physically stored. The company’s financial statements are audited by PriceWaterhouse Coopers.

BitGold accounts are free and can be opened in minutes. New users are provided with a secure vault account to purchase and hold gold, the ability to make and receive instant gold payments, and a debit card for spending gold at traditional points of sale. Customers can fund their accounts with local-currency by using a network of ATMs. BitGold will not initially be available to U.S. residents, and will be unavailable to residents of sanctioned countries.

“We are excited to unveil the BitGold platform, an architecture and technology that’s taken years of careful planning and execution, which now allows users to seamlessly use gold again as a store of value and medium for payments,” said co-founder and CEO Roy Sebag.

“As a global asset, gold is recognized in nearly every culture as a long-term protector of value, but has been a poor medium of exchange compared to the advances in money technology,” Sebag said. “We felt that gold needed the modernization and mobilization that’s now happening in the global payments revolution. We have built a financial services platform that is as close to being counterparty-free as possible, enabling economic transactions within the existing global financial system to be settled in full reserved gold bullion.”

The term “BitGold” may be confusing because it is also used by Bitreserve. Previously, it was used by cryptographer Nick Szabo for the cryptocurrency that he proposed before Bitcoin.

Old Vault Door / CC BY 2.0

Earlier today, Ripple Labs Inc. was fined $700,000 for “willfully violating several requirements of the Bank Secrecy Act (BSA).” The Financial Crimes Enforcement Network (FinCEN) stated that the company issued its own currency (XRP) and failed to implement adequate anti-money laundering measures, in addition to operating as a money services business without the proper authorization from the federal regulatory body. FinCEN worked with the US Attorney’s Office for the Northern District of California to coordinate the civil money penalty against Ripple Labs Inc and XRP II, LLC, which is owned by Ripple Labs.

Sale of XRP to Roger Ver

A statement of facts included in FinCEN’s assessment of the violations describes multiple situations where XPR II “failed to file, or untimely filed, suspicious activity reports.” One such scenario involved noted bitcoin entrepreneur and evangelist Roger Ver. The report alleges that Ver purchased $250,000 worth of XRP from XRP II without filling out a KYC (know your customer) form. The report notes:

“On September 30, 2013, XRP II negotiated an approximately $250,000.00 transaction by email for a sale of XRP virtual currency with [Roger Ver]. XRP II provided [Ver] with a ‘know your customer’ (‘KYC’) form and asked that it be returned along with appropriate identification in order to move forward with the transaction. [Ver] replied that another source would provide the XRP virtual currency and did not ‘require anywhere near as much paperwork’ and essentially threatened to go elsewhere. Within hours, XRP II agreed by email to dispense with its KYC requirement and move forward with the transaction.”

Implications for the Ripple protocol going forward

This course of action from FinCEN could have implications for the level of anonymity offered by Ripple in the future. In fact, “enhancements to [the] Ripple protocol” are outlined in a document explaining an agreement by Ripple Labs and XRP II to ensure compliance with AML/CFT obligations. The report states:

“Within 60 days, Ripple Labs, XRP II, and the Ripple Trade MSB will improve, and upon request provide any information requested by FinCEN or the U.S. Attorney’s Office as to the use and improvement of, existing analytical tools applicable to the Ripple protocol, including: (1) reporting regarding any counterparty using the Ripple protocol; (2) reporting as to the flow of funds within the Ripple protocol; and (3) reporting regarding the degree of separation.”

The document also explains how AML transaction monitoring will be implemented across the entire Ripple protocol:

“Ripple Labs will institute AML programmatic transaction monitoring across the entire Ripple protocol, and will report the results of such monitoring to the U.S. Attorney’s Office, FinCEN, and any other law enforcement or regulatory agency 4 upon request. The monitoring and reporting must include, at a minimum: (a) risk rating of accounts based on the particular gateway used; (b) dynamic risk tools to facilitate investigation of suspicious activity, including counterparty reporting, flow of funds reporting, account flagging of suspicious accounts, and degrees of separation reporting; and (c) other reports of protocol-wide activity regarding any unlawful activity.”

Decentralized software vs distributed transaction ledgers

This action against Ripple Labs from FinCEN will undoubtedly be used by bitcoin proponents as proof that proof-of-work-powered, decentralized solutions (such as bitcoin) are still necessary. The course of action taken by FinCEN may be used as proof that the regulatory body will go after any point of failure in a distributed ledger system when complete decentralization is not achieved. This is not to say that Ripple can no longer provide value to its users; however, the fact that bitcoin and Ripple are to be used for different use cases should now be as clear as ever.

On May 4, The Times of India reported that Halsey Minor, the multi-millionaire entrepreneur and founder/CEO of BitReserve, engaged a meeting with the local regulators for the company’s future plans to launch its services there.

“After the U.S., U.K. and China, we want to now set up operations in India, and we are talking to regulators and potential partners on a range of our Internet-based finance offerings,” Minor told Times of India.

The aim of the launch in India is to provide users with “direct control of their money,” as Minor plans to offer BitReserve as a “financial inclusion product which can be used for money transfers.”

Officially launched in May of 2014, BitReserve is a bitcoin and fiat currency platform founded by Minor, the technology entrepreneur who founded CNET in 1993. CNET is an American media website that publishes reviews, news, articles, blogs, podcasts and videos on technology which was acquired by CBS Corp. for $1.8 billion USD.

BitReserve is a Bitcoin service which was originally developed to protect merchants and users from bitcoin volatility.

“If you want to create something that is perceived as money, it’s going to have to represent the same value that people are using already,” Minor said at a news conference announcing BitReserve last May.

As a solution to the biggest problem for bitcoin merchants – price volatility – BitReserve allows users to hold bitcoin in stable currencies, such as the U.S. dollars, U.K. pounds, Chinese yuan, Japanese yen and Korean won.

Users can hold bitcoin in what BitReserve refers to as “currency cards,” and still send bitcoin around the network for free. Users can simply convert or transfer the BTCs to the preferred currency cards such as the dollar card, and avoid the price volatility of bitcoin. The fiat-to-fiat transfers are free of charge, and the users are charged only 0.45 percent for BTC to USD conversions.

Transactions on BitReserve are also processed faster, as the transactions are verified by the Bitcoin mining network after the primary verifications by BitReserve.

“Because we built a cloud-based service that’s debiting and crediting money, instead having a bunch of banks and processing companies in the middle, we can do this very quickly between accounts,” Minor explained.

Minor, the founder of CNET and technology entrepreneur, has invested in a variety of tech companies, including Salesforce, Open DNS, GrandCentral, Vignette and Rhapsody. Minor is currently the second-largest shareholder in salesforce.com, a company recognized as one of the most successful tech companies of the decade. Following the success of salesforce.com, Minor built Minor Ventures, and funded companies including Grand Central Communication and Open DNS.

Accenture’s recent report projects investment in the financial tech sector to more than double in five years, from $3 billion in 2013 to more than $8 billion in 2018.

With the rise of investments comes the rise of demands for employees. The first quarter of 2015 shows a 54 percent increase of venture capital funding for Bitcoin companies, with the total sum growing from $133 million to $229 million with notable investments in both Coinbase and 21inc.

At the Bitcoin Job Fair last week hosted by the Plug and Play Tech Center, the 30 companies represented were focused on attracting and keeping the best talent. The 350 attendees were passionate about Bitcoin, and many of the job seekers were interested in being at least partially compensated in the digital currency. Many of the startups present at the job fair, including BitPay, have international employees and are seeking both domestic and international talent.

Although choices abound for human resources and payroll solutions, the biggest payroll companies with automated services in Silicon Valley such as Zenpayroll and Zenefits have not integrated bitcoin for international payments. Instead, new entrants such as full-enterprise HR solution Zuman and simple payroll services such as Incoin are integrating bitcoin payments to solve central challenges for established and growing businesses.

They seek to offer flexible choices, automation and frictionless solutions for companies of all sizes. In addition to addressing common business pain points, they hope to give additional options to savvy tech employees across the world.

Zuman, unlike Zenefits or Zenpayroll, is a full-on enterprise HR solution solution providing services taking care of compliance, tax and legal issues but also combining them with payroll and employee record keeping in one easy to use interface with prices starting per employee. On the other end of the spectrum is Incoin, a lower-cost solution providing automated bitcoin and USD payouts to companies with a U.S. bank account with one low, flat fee. Bitcoin processing for both companies is accomplished through an API provided by BitPay, an international payment processor.

“If Bitcoin companies want to retain top talent, taking measures to ensure employee satisfaction is vital,” says BitPay Marketing Manager Emily Vaughn. “Receiving all or a portion of your paycheck in bitcoin is a major benefit for tech talent, and BitPay has partnered with payroll providers to make this easy and affordable for employers.”

“Through our partnership with BitPay, we are be able to better help companies that are moving beyond their startup phase attract and retain high-value employees,” says Doug Devlin, CEO of Zuman.

Companies such as Incoin and Zuman allow companies to pay domestic and international employees in USD and bitcoin, saving real time and money for startups. They are also helping lead bitcoin adoption by allowing employees to earn bitcoin rather than forcing locals to tap into exchanges.

“Offers like this are increasingly attractive to people in countries that have a volatile local currency where binding Forex market restrictions are in place and black markets charge unheard of prices, like Argentina” says Tony Holdstock-Brown of Incoin.

According to the New York Times, the official exchange rate for the Argentinian peso can be as much as 40 percent less than the effective, black market rate (the dolar blue). Increasingly, talented and educated Argentinians are trying to buy bitcoin and even trying to earn it.

Bitcoin companies BitPay, BitPagos and Bitex all have opened headquarters in Argentina to take advantage of this demand.

Being able to earn in bitcoin lowers the barrier to obtaining bitcoin and also provides opportunities for what 21 Inc.’s Balaji Srivinasan calls “closed-loop” companies and systems that accept bitcoin as payment for goods and services. Closed-loop systems are growing extremely important in the developing world as venture capital firms incubate companies that allow locals to spend bitcoin for goods and services, such as Purse.io, Zapgo.co, and Bankymoon.

Srivinasan highlighted a few potential issues in a presentation at the job fair. For example, closed-loop systems may push forward adoption, but adoption could also lead to a depression in the bitcoin price if individuals are forced to go to exchanges to convert bitcoin to spend fiat currency for goods and services.

The solution, according to Srivinasan, is to encourage a less volatile and valued bitcoin currency by giving individuals choice to purchase goods and services with digital currencies – especially in emerging markets such as the developing world.

 

Photo by Dave Dugdale / CC BY-SA 2.0

Bitcoin is mined based on the concept of proof of work. The difficulty of proof of work and the computing power required make bitcoin special and very rare and therefore very valuable.

This concept of proof of work is integral not only to bitcoin but also applies to many facets of life. Anything worth having or accomplishing takes work, as the old saying goes. Health and fitness is no exception to this rule. Consistent habits can create an amazing body and health.

The proof of your workout is clear when you have great biceps. The only way you get those biceps is through a dedication to your goal and by holding yourself accountable.

BitPay, Bitcoin Magazine, ChangeTip and the Chamber of Digital Commerce have teamed up to sponsor a 30-day challenge to encourage fitness and health. These organizations want to mobilize their decentralized community to take up a positive challenge, hold accountability and inspire via social media tools such as ChangeTip. Getting to your goals will be made even sweeter with prizes.

Psychologists say it takes 5 days to create a habit and 21 days to cement one. Emily Vaughn of BitPay has experience joining social fitness campaigns, which encourage members to share their progress and health and fitness tips daily. When discussing parody April Fools Day Bitcoin projects with the marketing team at BitPay, the moniker “proof of workout” was born, and thus the idea of a social fitness campaign that encourages participants to prove their work and get results.

After starting the paleo diet and joining a Facebook group for local paleo dieters, she realized that sharing the ups-and-downs of a health and fitness challenge created social accountability and resulted a true lifestyle change, a success that is difficult to achieve when you go it alone. So she dreamed up #ProofOfWorkout, a 30-day health and fitness challenge. The goals of the challenge are to use fitness to educate about the social and transformative properties of Bitcoin technology, and to mobilize the Bitcoin community towards a common goal – getting fit. She designed the challenge to make it accessible to anyone. She plans to use the proof-of-work concept herself, to hack her way to better habit and eventually great fitness and inspire others to do so as well.

Join the Challenge!

Simply sign up on the #ProofOfWorkout website with your email, tell us your goal, and then start posting to social media with #ProofOfWorkout so we can track your goals and connect you with like-minded people. Signups begin today and the challenge starts on Monday, May 11^th. After 30 days, the contest concludes on June 9^th. Winners will be announced on Friday, June 12^th. #ProofOfWorkout hopes to award five $100 Nike Gyft cards to the most engaged and enthusiastic participants.

Join the #ProofOfWorkout challenge and prove your work with a strong body and a healthy mind. And maybe score some Nike gear, too!

Tsinghua University PBC School of Finance and Bitcoin exchange Huobi have launched a joint Digital Assets Research Initiative. With this initiative, Tsinghua University joins MIT and technology giants IBM and Samsung as one of the world’s major institutions conducting research and development of blockchain technology, decentralized systems and digital assets.

Founded in 1911, Tsinghua University is one of the nine elite Chinese universities, and it is considered the top institution of higher learning in mainland China alongside Peking University. It describes itself as being dedicated to academic excellence, the wellbeing of Chinese society and global development. Often described as “the MIT of China,” Tsinghua was regarded as the top Chinese university by the 2015 Times Higher Education World Reputation Rankings, where it was ranked 26th globally.

The PBC School of Finance at Tsinghua University was founded in 2012, as a joint venture between the University and the People’s Bank of China (PBC), with the mission of promoting excellence in the finance industry and financial regulation through top-notch education and cutting-edge research. In partnership with the central bank and national financial regulators, the PBC School of Finance established the National Institute of Financial Research (NIFR), with the mission of doing top-class research on financial reform and development, and providing policy analysis and advice for financial policymakers and regulators.

Huobi is China’s leading Bitcoin company. With financial backing from Silicon Valley investment firm Sequoia Capital, Huobi operates a Bitcoin exchange and provides services to individual and institutional clients. With a 16.34 market share, the Huobi Bitcoin exchange is one of the most active in the world.

PBC School of Finance Dean Liao Li, PBC School of Finance Vice President and Deputy Party Secretary Zhao Cen, Huobi founder and CEO Li Lin, and other leaders attended the Digital Assets Research Initiative launch event. Li Lin and Liao Li each gave a speech, and Vice President Zhao Cen signed an agreement formalizing the university’s long-term cooperation with Huobi.

The work of the Digital Assets Research Initiative will be jointly conducted by finance and technology experts from Tsinghua University PBC School of Finance and Huobi. It will be hosted at the Tsinghua PBC School’s Internet Finance Research Lab and Huobi will be the official sponsor of the program.

There are evident parallels between Tsinghua University’s Digital Assets Research Initiative and the MIT Digital Currency Initiative, recently launched by the MIT Media Lab to address some of the most critical challenges to creating a safe, stable and secure digital currency and directed by former White House senior adviser for mobile and data innovation Brian Forde. In both cases, a prestigious university with strong ties with the nation’s technical, financial and political establishments takes the lead in the digital currency space, with funding coming partly from the private sector.

It’s important to note that, as revealed by Goldman Sachs’ recent report about the future of money, 80 percent of bitcoin volume is exchanged into and out of Chinese yuan. Therefore, the Digital Assets Research Initiative could influence the positions of the Chinese government on bitcoin and digital currencies.

“Contrary to commonly held belief, the regulatory environment for operating a Bitcoin business in China is actually more accommodating than the United States,” said Huobi product manager Robert Kuhne in a recent interview on CoinReport. “It can’t be said with absolute certainty what the Chinese government policy will be in the future. It is likely that the government will not do anything until Bitcoin grows significantly. Today, Bitcoin’s total global value is a $4 billion U.S. dollars. This does not appear on the radar of Beijing bureaucrats who are responsible for managing the world’s second-largest economy.”

The Boost VC Tribe 4 graduate Hedgy completed a $1.2 million funding round from investors including Tim Draper, Salesforce CEO Marc Benioff and Sand Hill Ventures.

Hedgy, founded in April 2014 is the first Bitcoin startup to create multisig powered smart contracts to protect merchants from the price volatility of bitcoin.

Initially, under the project name Coindash, Matt Slater (co-founder and head of trading) and Juan Pineda (co-founder and head of technology) worked together in Boost VC’s bitcoin hackathon to create prototypes of the world’s first programmable smart contracts for derivatives.

Using a derivative called “over the counter non-deliverable forward contract,” Hedgy allows two parties to agree on a price of bitcoin that will be traded at in the future.

“All it means is that instead of exchanging bitcoin at the end you just exchange the price difference,” Slater explained. Essentially, the agreement would lock the price of bitcoin, say $500 / BTC, for a certain amount of time. This way, merchants or miners will be free from the volatility of bitcoin.

In correlation to the recent funding round, Hedgy launched a product similar to the concept of the original merchant-targeted smart contracts, this time for miners.

Miners using the newly launched derivative can initiate smart contracts to agree upon a future price of bitcoin which they wish to sell after a certain amount of time that will be settled on the bitcoin blockchain.

The new product of Hedgy is mentored by the founder of MegaBigPower Dave Carlson, who has been working with Hedgy to develop the derivative. The U.S.-based bitcoin mining company MegaBigPower is also the first bitcoin mine to use the derivative. The bitcoin mined from MegaBigPower is purchased by London-based Bitcoin derivatives exchange Crypto Facilities.

How Hedgy Works

A bitcoin miner will first “hedge” bitcoins at a price of perhaps $250/BTC for 30 days. Then an indicator of Interest is sent to the Hedgy Chat. To initiate in a smart contract, a pre-contract negotiation is made directly with counterparties. Once the terms are agreed upon by the counterparties, the contract is submitted to the Hedge Oracle to create and settle the smart contract.

After the smart contract has been created, a multisig address is generated where the miner and counterparties each deposit at least 30 percent of the BTC to the designated multisig address. As soon as the deposits are confirmed, it goes live on the blockchain, completing the deal.

Hedgy explains that this could help miners deal with increasing electricity costs, hardware obsolescence and fluctuating prices, which are a major problem facing bitcoin mining profitability.

As a decentralized brokerage for miners and counterparties, Hedgy could provide miners an effective method of dealing with bitcoin volatility in the future.