Saturday, June 29, 2013

Bitcoin Businesses Are Showing Up Everywhere

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June 27, 2013 by Liberty. I’ve discussed Bitcoins with significant hesitation in the past. As a rather new technology, there can be alot of hesitation in trusting them with a significant amount of money but I’m liking the signs Bitcoin is giving off more good signs everyday. My confidence is slowly growing and I’m excited to see what this new cryptocurrency can do for the free markets around the world.

Bitcoins are a virtual currency that develops it’s scarcity from algorithms and limitations in technology. While the dollar can be printed by the US government on demand, no centralized agency can create more Bitcoin without actually working to develop it.

One of the things that makes Bitcoin so amazing is the confidence that people are showing in it. There was a time when currency could only be made with real valuable commodities. Even the American government dollars used to be backed by the gold standard. Today, just about every currency is a confidence based currency. By that I mean, dollar bills have no inherit value. There is no scarcity for paper with ink on it. You can’t eat it and anyone can print it (theoretically). At least with the gold standard you could exchange the money for a certain amount of gold. Today there is nothing backing the dollar up except the confidence people have in the dollar.

The only thing that might be backing the US dollar is nuclear weapons and other advanced military technology. At any point, the rest of the world can lose faith in the dollar and almost everyone in America would become broke.

Bitcoins don’t have a military backing them up. Bitcoins only have technology protecting them. They have no inherent value. At any point the Bitcoin market could lose the confidence of it’s investors and collapse but… it doesn’t look like it will. - Read more here:

Some basic rules for using ‘bitcoin’ as virtual money

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Posted Jul 1, 2013 1:50 AM CDT. By Susan A. Berson. Techies know that “bitcoin” is a virtual currency generated by predetermined computers and recognized on traditional currency exchanges as BTCs. Of interest to investors and business owners, bitcoins have skyrocketed into mainstream popularity, as has their price.

No government is involved in creating bitcoins, and they are insulated from Cyprus-style bank lockouts. But before joining the BTC revolution, here are seven fundamentals to consider.

1.) Rules apply. Recent virtual currencies guidelines from the Financial Crimes Enforcement Network acknowledge the uses, while detailing the watchdog’s expectations.

“No new rules, no new regulations. We issued the guidelines to say how we see virtual currencies within the Bank Secrecy Act and record-keeping [and] reporting responsibilities,” says the director of FinCEN, Jennifer Shasky Calvery. “Virtual currencies are subject to the same rules as other currencies. … Basic money-services business rules apply here.”

FinCEN’s guidelines safeguard bitcoins from being used by money launderers. For example, an Austin, Texas, man selling a Porsche for bitcoins on Craigslist or a Houston lawyer announcing he’d accept bitcoin payments would not be “money transmitters” for the money-services business rules. Conversely, a trading exchange website could be subject to registering as a “money transmitter,” and to filing FinCEN anti-money-laundering reports and following its record-keeping requirements.

In contrast, Japanese-based bitcoin exchange Mt. Gox set up a U.S.-based bank account registered under the name of Mutum Sigillum in 2011. Last May, the Department of Homeland Security effectively shut down Mt. Gox’s operations for not registering itself as a money services business in accordance with FinCEN guidelines. Specifically, DHS got a court order restricting payments to the Mutum Sigillum/Mt. Gox account because it was involved with currency exchanges but failed to register as a money services business. - Read more here:

Snowden, narcs and Swedish chips: Bitcoin loves them all

Published On June 28, 2013 at 16:16 BST | By John Law. Welcome to the CoinDesk Weekly Review 28th June 2013 — a regular look at the hottest, most controversial and thought-provoking events in the world of digital currency through the eyes of skepticism and wonder. Your host … John Law.
The name’s Hill. Benny Hill.

Secrets ain’t what they used to be. A spook of John Law’s acquaintance used to have the James Bond theme as their ringtone; after Edward Snowden’s traipse around the world, skipping merrily out of reach of the CIA, NSA and GCHQ, it’s probably been replaced by Benny Hill.

For those who like to peer into the future of bitcoin, though, the whole episode has been a lesson in quite why cryptocurrency solves a real need – the best, although not the only, way to tell whether an invention will succeed. In this case, the problem is simple logic. Snowden’s revelations show that the security services are very capable and happy to snoop on millions of people and especially those they categorise as aiding terrorism. In return, the authorities have branded Snowden an ally of terrorism. So, if you want to give Snowden practical support and the spooks find out, what does that do to the chances of ending up in the wrong sort of database? - Read more here:

Regulatory Responses to Bitcoin: 2013 Edition

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Vitalik Buterin | On 27, Jun 2013. In the past three months, regulatory attention to Bitcoin has increased massively. Before March 2013, the Bitcoin community had had little more to go on than some various government reports, permission to use Bitcoin for political purposes from the New Hampshire Deputy Secretary of State, and a casual remark of approval from the Finnish Central Bank. Now that Bitcoin has become so (relatively) successful, however, governments from all over the world are watching, eager to figure out what they think is the best way to integrate cryptocurrencies into the established legal frameworks. The responses from around the world have been sometimes consistent, and sometimes wildly inconsistent even within the same country.

This shows clearly an important lesson with regard to the nature of governments: although pro-government and anti-government advocates alike often tend to think of governments as monolithic entities which undertake certain strategies and enact policies in order to achieve speficied, whether benevolent or malevolent, goals, in reality government decision making can often be as disparate and chaotic a process as the private market, with hundreds of entities pulling in hundreds of directions tailored to their own specific interests and perspectives. Once one goes beyond a single country to the entire geopolitical scene, the divide becomes even stronger, albeit with certain general patterns. The purpose of this article will be to look at the government response to Bitcoin from all across the world over the past three months and determine the general trends. - Read more here:

Wednesday, June 26, 2013

States Sound Warnings on Bitcoin

State regulators have issued warnings to a handful of bitcoin-related companies, alerting them that they may be running afoul of money-transmission laws. Andrew R. Johnson joins the News Hub.

States Sound Warnings on Bitcoin

Bitcoin vs The Banks | Plan B ep. 12

Getting money into Bitcoin has come under attack this week, we'll run down the stories that paint a troubling picture for Bitcoin, but as of yet seem to have left the decentralized currency unscathed.

Plus we'll chat with Donncha O'Cearbhaill, who worked with Coinbase on disclosing multiple vulnerabilities, and ask what his experience was working with their bug bounty program.

Bitcoin vs The Banks | Plan B 12

Monday, June 24, 2013

Bitcoin Foundation Receives Cease And Desist Order From California

6/23/2013 @ 11:11AM. Directly following last month’s Bitcoin 2013 conference event in San Jose, CA that brought decent revenue into the state, California’s Department of Financial Institutions decided to issue a cease and desist warning to conference organizer Bitcoin Foundation for allegedly engaging in the business of money transmission without a license or proper authorization.

If found to be in violation of California Financial Code, penalties can be severe ranging from $1,000 to $2,500 per violation per day plus criminal prosecution which could result in fines and/or imprisonment. Additionally, it is a felony violation of federal law to engage in the business of money transmission without the appropriate state license or failure to register with the U.S. Treasury Department. Convictions under the federal statute are punishable by up to 5 years in prison and a $250,000 fine.

The Bitcoin Foundation is a nonprofit corporation registered in Washington, D.C. with mailing address in Seattle, WA. As a nonprofit, its mission is to standardize and promote the open source Bitcoin protocol and they receive generous support from individuals and corporations to advance those objectives. The foundation also boasts significant international membership. - Read more here:

Sunday, June 23, 2013

Bitcoin and the IRS

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Posted on June 20, 2013 by Julia Dixon. Last month the GAO, Government Accountability Office, produced a report on ‘Virtual Currencies’ and tax compliance. The report urges the IRS to look into the use of virtual currencies and release guidelines on taxation of income earned via these currencies.

The report correctly notes that virtual currency transactions are similar to cash or barter transactions. There are no third parties involved whose responsibility it is to report the transaction and transactions of this sort making “underreporting, mischaracterization, and evasion” much easier.

This does signal that the IRS will be keeping a closer eye on the Bitcoin economy, but there is nothing terribly surprising here; the IRS wants a share of your income…however you earn it. - Read more here:

Inside the mind of an avid bitcoin investor

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BY MICHAEL CARNEY ON JUNE 21, 2013. Though not widely well known across the venture capital world, Ribbit Capital founder Meyer “Micky” Malka is making a name for himself within a particular subset: the bitcoin ecosystem. Malka has made several bets on the cryptocurrency since first encountering it in fall 2011 and says that Ribbit might be the largest venture investor in the category as measured by total dollars deployed.

Malka comes to bitcoin with a lengthy background with disruptive financial services, having founded five companies in the sector in the US, Europe, and Latin America. Asked why he views bitcoin is so attractive he said money is ripe for disruption and bitcoin has all the essential attributes of either cash or gold, with a number of inherent advantages. Specifically, the virtual currency can at times be a method of payment, a store of value, and a unit of account depending on the needs of the holder. Bitcoin also offers security and ease of transfer that makes it more attractive than fiat currencies or gold. - Read more here: