Thursday, January 2, 2014

What Does Bitcoin’s Memorable Year Mean for the Future? / By Fani Kelesidou / December 30, 2013

From the U.S. government’s shutdown to the snowstorm that hit Cairo for the first time in over a century, 2013 was definitely an interesting year. For Bitcoin, the “underground” digital money system, it was a landmark year.

In 2013, Bitcoin was crowned “word of the year” by the Australian National Dictionary Centre, it crossed the $1,200 threshold but halved in value in just a split second, it raised eyebrows among regulators and world-class economists, while its “rebellious nature” allured Wall Street and Silicon Valley.

Here are a few of the most memorable Bitcoin moments of 2013:

The open source peer-to-peer currency kicked off a roller-coaster year with wallet – the “go-to” Bitcoin wallet service – surpassing 100,000 users. Throughout 2013 and as the Bitcoin craze begun to gather pace, the number of new users skyrocketed to nearly one million.

On Valentine’s Day, social discovery and discussion site Reddit started accepting Bitcoins for its premium Reddit Gold service. At the time, it was the second most popular website after WordPress to accept Bitcoin as a payment option. Slowly but surely, others like L.A.-basedtravel agency and the University of Nicosia in Cyprus followed suit, paving the way for the virtual currency’s push into the mainstream. - READ MORE

The Year of Bitcoin / By Patrick L Young / December 31, 2013 05:35

Like it or love it, bitcoin has been a constant theme of headlines for the past year, as 2013 marked its coming of age.

Last year’s nerd money fad has become this year’s most talked about product.

Ultimately, nature abhors a vacuum and with western political leadership an increasingly distant memory, citizens are becoming increasingly restive about the parlous state of financial governance. Throughout the West, the ravages of quantitative easing [QE] have helped the wealthiest prosper, while ordinary citizens have struggled through a grinding economic plight, which has left voters feeling increasingly abandoned by government.

Into this void has stepped something which had been mooted for many years: a popular electronic currency. Bitcoin is filling a gap self-interested central bankers are keen to suggest doesn’t need filling. Establishment media has been wrong-footed as the Copernican Revolution in finance creates not just bitcoin but a series of parallel financial universes where independent money is at the center of commerce, as opposed to government manipulated fiat currency. - READ MORE

Bubbles, Banks And Bitcoin / By Frances Coppola / December 30, 2013 12:29PM

We are used to money being created by the state. Or rather, we are used to money being created by banks on behalf of the state. The state has no direct control over the quantity of money created by the private sector on its behalf, though it does influence that quantity through monetary policy and, in these days of near-zero interest rates, fiscal policy. But it does guarantee it. Or rather, it used to.

Money created by the private sector on behalf of the state always ends up in a bank, and once it is there it is indistinguishable from money actually created by the state (bank reserves and physical currency). Private sector money and state money are “fungible”, or as Izabella Kaminska puts it, “entangled“. Trying to disentangle them is like unscrambling an omelet. So we don’t try to. We simply accept that all of it is equally valuable. Anything called a “dollar” and sporting the symbol $ is fully backed by the US government, however it was created – even actual counterfeits if they escape detection.

But the implied cost to the state of guaranteeing the value of all the money created by private sector lending activity is enormous,as we discovered when Lehman fell. So governments have been attempting to limit that guarantee – for example by capping the amount of private sector money that can be converted to safe government money (that’s what the depositor haircuts in Cyprus did), or limiting the types of institution whose money-creating they will guarantee. The trouble is that far from making the system stronger and safer, it’s actually making it riskier. Since private-sector-created money is indistinguishable from state-created money once it gets into a bank, limiting the state guarantee makes state-created money less safe. - READ MORE

61% of Canadians expect to Convert from Physical to Virtual Wallets by 2019 / By Chiraag Patel / December 31, 2013

Do you believe that virtual communication will replace face-to-face interactions in the next five years? How about branchless banking or Amazon Drone delivery? Well, what looked like sci-fi a few years ago is looking very real today. “Rogers report says that it has discovered a new demographic, Generation ‘D’. This group lives and breathes life through mobile devices and shares an optimistic view of what’s next,” stated the report.

Over 1000 people were surveyed by Harris-Decima between November 21st and December 2nd, 2013. To be very specific, the survey was conducted among a national sample of n=1,009 Canadian panelists, aged 16+ who owned either a tablet device or smartphone for personal use.

Some Highlights from the Survey:

61% of Canadians expect to change from physical to virtual wallets by 2019. This mobile wallet would include debit cards, credit cards and personal ID.

52% of the smartphone owners spend an average of 70% of the day with their phone within reaching distance.

28% of the respondents are willing to skip morning coffee in exchange for anytime, anywhere internet. 8% are willing to give up their cars for the same. - READ MORE

56% of Bitcoiners Believe the Bitcoin Price Will Reach $10,000 in 2014 / By Emily Spaven / January 2, 2014 at 16:00 GMT

More than half of bitcoiners believe the price of their favourite digital currency will reach $10,000 this year, a CoinDesk poll has revealed.

2013 was a turbulent year for bitcoin, with the price of the digital currency fluctuating between $13 and $1,147, but the bitcoin community largely thinks it will soar way higher than this over the next 12 months.

A whopping 56% of the 5,500 people polled so far said they believe the price will reach $10,000 this year.

Some 31% said they didn’t think the price would rise to this level and 13% thought the notion of it reaching $10,000 was ridiculous, replying “WTF are you smokin ???”. - READ MORE

eBay looks to join bitcoin in solving the programmable money problem / BY MICHAEL CARNEY / JANUARY 1, 2014

Bitcoin has been described as many things. It’s been compared to tulip bulbs, called internet gold and e-money, and labeled libertarian, as if a technology protocol can have a political ideology. At its core, though, bitcoin is a protocol for transferring value across the internet: in other words, programmable money. It may not be the optimal protocol, but it offers advantages over the incumbent financial services infrastructure, such as eliminating or drastically reducing the 2.5 percent “tax” levied on every payment transaction today.

Given the magnitude of this problem, it’s no surprise there have been multiple attempts at solving it. One of the most interesting came to light shortly before the Christmas holiday when the United States Patent and Trademark Office (USPTO) published a patent application for “Gift Tokens” submitted by eBay on June 18, 2012. For reference, a similar virtual money patent application submitted by JP Morgan was rejected earlier this year. - READ MORE

Timeline: a history of Bitcoin in China in 2013 / by Paul Bischoff / January 1, 2014 at 3:30 pm

Bitcoin enthusiasts, especially those in China, have been riding a financial roller coaster as of late. As 2013 comes to an end, we thought it would be helpful to recap just how we arrived where we are today: with heavy government restrictions on the world’s most robust Bitcoin market.

In the first three months of this year, China’s relationship with bitcoin was virtually nonexistent. A handful of scattered miners and exchanges like BTC China, which launched in 2011, had never really entered the public eye. As far back as we can tell, Bitcoin’s recorded history in China dates back to April, when a Chinese charity started accepting bitcoins to help earthquake victims in Lushan, Sichuan province. That probably sparked the curiosity of a few speculative investors. The miners sooned caught the favorable eye of state media, which led to China’s explosion of interest. - READ MORE

Money has corrupted us. We no longer understand what it’s worth / January 1, 2014

The house across the street has just gone on sale for £850,000. A bog-standard, late-Victorian, ex-council terrace house in the rough part of Islington, with a yard billed as a garden, costs as much as a street in Middlesbrough or Stoke.

When Marx wrote, in his Economic and Philosophic Manuscripts of 1844, that money “is the visible divinity” involving “the transformation of all human and natural properties into their contraries, the universal overturning and confounding of things: it makes brothers of impossibilities”, he wasn’t predicting how the north London propertymarket would heat up in 2013, but he was unwittingly prescient. What has happened to our moral and social values? Could they be more detached from monetary values? Or, hideously, are they accurately expressed by what money can buy?

Our task in 2014 is to stop this madness, get a grip on money, put a chokehold on Marx’s visible divinity and make it do our bidding rather than what it’s been doing for the past year: confounding, diminishing and degrading us. It’ll be an unequal struggle: in this contest with the divine, we’ll be like Jacob wrestling the angel. - READ MORE