Wednesday, January 15, 2014

The Growing Appeal of Who Uses Bitcoin

By David Zeiler, Associate Editor, Money Morning · January 13, 2014

Friday another Bitcoin milestone was reached, as it is the first day that Internet retailer (Nasdaq: OSTK) started accepting the digital currency as payment.

If it seems puzzling that more and more merchants are taking Bitcoin seriously, you need only consider who uses Bitcoin.

Two studies of who uses Bitcoin done earlier this year indicate that the typical user of the currency is male, relatively young and – most importantly – fairly affluent.

“One thing that people haven’t focused on with Bitcoin is that its users are a very attractive advertising demographic,” Nicholas Colas, chief market strategist at ConvergEx Group, told CNBC.

The mysterious nature of Bitcoin (they don’t exist in the physical world, despite all the photos you see of them), the extreme volatility of Bitcoin prices, and the unsettled regulatory situation with many world governments have restrained widespread adoption by merchants.

But as these concerns fade, the lure of attracting well-off Bitcoin users will tempt more vendors to take Bitcoin as a form of payment, which will in turn solidify its position as an alternative currency.

The surveys of who uses Bitcoin did not hold a lot of surprises. Bitcoin users are overwhelmingly male (88%), with an average age of about 32.

What few may have expected – and the one data point sure to draw the attention of more businesses – is that a person who uses Bitcoin frequently has a higher-than average income. - READ MORE

Bitcoin Fragmentation Is Getting Out of Hand / By Adam Clark Estes / 1-13-14 3:40pm

You probably won’t be surprised one bit to learn there’s a new Bitcoin competitor out there. A group of cryptographers just announced the creation of Zerocoin, an ultra-anonymous cryptocurrency that’s otherwise a lot like the dozens of other newly launched cryptocurrencies.

In a way, Zerocoin is a useful thing, especially for drug dealers and money launderers. While many people believe that Bitcoin is an anonymous currency, it’s actually not: every single transaction is recorded and linked to an account, the details and history of which are all public. Even Bitcoin’s keepers admit this in an FAQ: “Bitcoin is not anonymous.”

Originally conceived of last year as an upgrade to make Bitcoin more anonymous, Zerocoin added an extra layer of privacy to Bitcoin transactions. Now, as its own currency, Zerocoin will take advantage of a mathematical principle known as “zero-knowledge proof” that shows the end-result of transactions without revealing the computation process it took to get there. - READ MORE

GoldMoney enters Bitcoin business / Ana Komnenic / January 14, 2014

In a surprising turn of events, Bitcoin is getting support from an important member of the gold crowd.

GoldMoney, one of the UK’s biggest precious metals storage firms, has announced that it will introduce Bitcoin storage as part of its services.

According to CoinDesk, GoldMoney has entered the Bitcoin business through its subsidiary Netagio – “a spin-off business that offers a cold storage solution for bitcions.”

‘Cold storage’ might sound cool and confusing but it basically means the offline storage of coins, which is considered to be safer than keeping them online. The service is free.

“For the safety of your Bitcoins, we can’t tell you exactly where your Bitcoins are stored,” Netagio explains on its website. “But what we can tell you is that all of your Bitcoins are stored in secure locations around the EU and Switzerland (together with all of our encrypted backups).”

Netagio keeps a small portion of each account’s coins online so that clients can trade.

The company will also allow customers to buy and sell Bitcoin, along with other online currencies. - READ MORE