Saturday, January 25, 2014

Bitcoin news and views - January 25 , 2014 -- Nick Colas of ConvergEx offers his perspective on what challenges lie ahead for Bitcoin in 2014 ( The Three Critical Factors ) ..... And a look at Nick's critical three factors , with a focus on adoption of Bitcoin , implications and regulation .....


1/27/14...

http://www.zerohedge.com/news/2014-01-27/doj-finally-going-after-criminal-materminds-arrest-24-year-old-bitcoin-exchange-foun

( Interesting timing this criminal action brought forward the day before the big Hearing on virtual currencies such as Bitcoin with the  New York State Department of Financial Services (NYDFS) ! )



DOJ Finally Going After The Criminal Masterminds With Arrest Of 24 Year-Old Bitcoin Exchange Founder

Tyler Durden's picture





 
The US crackdown on Bitcoin has been long in coming, with ebbs and flows of enforcement as regulators have been unsure exactly how to proceed with dismantling the digital fiat alternative. This morning the ebb became a rising tide, after U.S. prosecutors announced charges against two men operating Bitcoin exchange businesses for attempting to sell $1 million worth of Bitcoin to users of the underground black market website Silk Road, which was shut down by authorities in September.
Reuters reports that the U.S. Attorney's office in Manhattan said in a statement that authorities arrested Charlie Schrem, chief executive officer of the exchange BitInstant.com, on Sunday and Robert Faiella, who ran an underground Bitcoin exchange called BTCKing, on Monday. The two were charged with conspiring to commit money laundering and operating an unlicensed money transmitting business. Schrem is also vice president of the main Bitcoin-focused trade group, the Bitcoin Foundation, according to the foundation's website and Schrem's LinkedIn profile.
Some details from the charge against the defendants:
Federal prosecutors charged Faiella, 52, and Shrem, 24, with engaging in a scheme to sell more than $1 million of Bitcoins to users of Silk Road. Each defendant was charged with conspiring to commit money laundering, which carries a maximum prison sentence of 20 years. They are additionally charged with operating an unlicensed money transmitting business, which has a max sentence of five years in prison.

The U.S. also charged Shrem with violating the Bank Secrecy Act by “willfully failing” to file suspicious activity reports on Faiella’s questionable transactions. This charge carries a maximum sentence of five years in prison.

In addition to the Manhattan U.S. Attorney, the charges were announced by the Drug Enforcement Agency and the criminal investigation division of the Internal Revenue Service.

“Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way,” said DEA acting special-agent-in-charge James Hunt.

Schrem was apprehended by authorities at JFK International Airport in New York on Sunday and is set to appear in federal court in Manhattan later on Monday. Faiella was arrested at his Cape Coral, Fla., home on Monday and is expected to appear in federal court in the Middle District of Florida.

The court documents allege Faiella operated an underground Bitcoin exchange on the Silk Road website between December 2011 and October 2013 that sold the crypto currency to users who wanted to buy illegal drugs on the site. After receiving orders, he filled them through a New York company designed to enable customers to exchange cash for Bitcoins anonymously, the U.S. alleges.

Shrem served as the New York Bitcoin company’s CEO during much of that timeframe and was “fully aware that Silk Road was a drug-trafficking website” and that Faiella was operating an exchange service for Silk Road users, the documents say.

Prosecutors say Shrem still did business with Faiella to maintain a “lucrative source” of revenue. He personally processed Faiella’s orders, gave him discounts on high-volume transactions, failed to file a single suspicious activity report and even helped Faiella “circumvent” the company’s anti-money laundering policies, the documents allege.

Bharara said the investigation remains ongoing.
As a reminder, BitInstant, which at the time "aimed to be the go-to site" to buy and sell bitcoins, received a $1.5 million investment by Winklevoss Capital in May 2013. From theTechCrunch profile of the startup:
BitInstant, which has a full-time staff of 16 led by CEO Charlie Shrem, has emerged as a key player in the nascent Bitcoin market: The company already processes approximately 30 percent of the money going into and out of Bitcoin, and last month alone facilitated 30,000 transactions, the Winklevosses said in a phone call this week. The funding is meant to allow the company to further scale up its staff and product as it angles to become the go-to site for Bitcoin transfers.
The US charge is not a ringing endorsement for the premise behind the Winklevi investment:
The Winklevosses say they were attracted to invest in BitInstant in large part because of its leadership. CEO Shrem is the vice chairman of the Bitcoin Foundation, and CIO Alex Waters previously worked with the core developers on the original Satoshi Bitcoin client. “Charlie has been in the space for a very long time, and he has an impeccable reputation among Bitcoiners. He knows everyone in the space and everyone in the space knows him,” Cameron Winklevoss said. “One of the most exciting things about people who are into Bitcoin is that they’re a really passionate community, and Charlie is a passionate entrepreneur. He would be in that category of someone who lives, breathes, and sleeps Bitcoin.”
Perhaps. However, in retrospect Charlie's biggest crime was not being CEO of JPM or, at worst, HSBC, where money laundering and other criminal activity is not only encouraged but rewarded with soaring bonuses. The good news is that one can once and for all confirm that when it comes to "Justice" in the US, some - those who deal with legacy status quo mandated and enforced ponzi scheme fiat - are far more equal than anyone who dares to think outside the Fed's printer.
Finally, here is a recent profile of 24 year old "criminal mastermind" Schrem via Bitcoin Examiner.
Meet Charlie Shrem. He’s 23 years old and theco-owner of Evr, one of the most famous gastro pubs in Manhatan. The name might sound familiar, since we talked about this pub before, when it became one of the first establishments to receive Bitcoin as a payment for drinks and food in New York City.
But why is Charlie Shrem different from other crypto-millionaires? Because he is now a BitAngel, member of an investment group created to invest in Bitcoin startups. We’ve also talked about this group before here.
Today, whenever someone pays at Evr with digital coin, Shrem gets a little bit richer, but he’s using his money to help others. Everything started in 2011, when Bitcoin became more famous, he bought thousands of Bitcoins for about $20 each. He invested almost everything he had in what could have been a dangerous game. However, since then, the digital coin value has skyrocketed.
130408074003-evr-bitcoin-bar-620xa
At Evr, with his business partner.
After his investment in the bar, he founded the exchange platform Bitinstant. “Infrastructure is what we need. We’ve got to build, build, build–financial software, exchanges, and different payment products”, says Charlie Shrem, who clearly followed his own advice and profited with it.
He might not have the same funds as big Silicon Valley investors, but he has turned into a Bitcoin angel anyway. “The early guys are the ones that run everything. In this space, how long you’ve been around matters”, explains the entrepreneur.
However, we would like to look at him and others and see some kind of Bitcoin ambassadors, the ones that are setting the example and showing how it’s possible to grow once you leave your fear behind and go deep into a new world like cryptocurrency. Because they show what Bitcoin is for real: an opportunity.

* * *
And now, please join us in a moment of solemn silence as we fondly recall the memory of all the HSBC bankers who were thrown in prison for aiding, abetting and profiting from laundering money with known global terrorists...



And......



BitInstant CEO Charlie Shrem Arrested in Silk Road Bitcoin Bust

 (@pete_rizzo_) | Published on January 27, 2014 at 17:27 GMT | CrimeNewsSilk Road News
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Charlie Shrem, CEO of bitcoin exchange service BitInstant, has been arrested for his alleged involvement in a scheme to “sell and launder over $1m in bitcoins” through the now defunct online black market Silk Road.
According to a document published by the Manhattan US Attorney, charges have also been filed against Robert M. Faiella, a 52-year-old Florida native better known as “BTCKing”. Both Shrem and Faiella have been charged with conspiring to commit money laundering and operating an unlicensed money transmitting business, among other individual charges.
If convicted, Faiella and Shrem face maximum prison sentences of 25 years and 30 years, respectively. The case is being handled by the Office’s Complex Frauds Unit, and Assistant US Attorney Serrin Turner is in charge of the prosecution.
Manhattan US Attorney Preet Bharara issued a statement, reinforcing his office’s hardline stance toward the use of virtual currencies to commit crimes, not simply the currency itself:
“Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes.”

An overview of the charges

Law enforcement officials allege that from December 2011 to October 2013, Faiella ran an underground bitcoin exchange through the Silk Road website, described as a “sprawling and anonymous black market bazaar” where “every variety” of illegal drugs was sold.
The release went on to detail why it believes Faiella failed to properly register his exchange as a money transmitting business:
“The company was designed to enable customers to exchange cash for bitcoins anonymously, that is, without providing any personal identifying information, and it charged a fee for its service. Faiella obtained bitcoins with the company’s assistance, and then sold the bitcoins to Silk Road users at a markup.”
Further, the statements allege that Shrem was complicit for failing to report Faiella’s crimes, as he was legally obligated to do in his position.
The charges state that Shrem “was fully aware that Silk Road was a drug-trafficking website”, and that he knew Faiella was “operating a bitcoin exchange service for Silk Road users”. It went on to allege that Shrem had also used the site to purchase drugs, and that correspondences between Shrem and Faiella provide evidence as to this preexisting knowledge.
“Shrem knowingly allowed Faiella to use the company’s services to buy bitcoins for his Silk Road customers; personally processed Faiella’s orders; gave FAIELLA discounts on his high-volume transactions; failed to file a single suspicious activity report with the United States Treasury Department about Faiella’s illicit activity, as he was otherwise required to do in his role as the company’s Compliance Officer.”

Charlie Shrem, a rising star

The announcement follows the news that Shrem was pulled last minute at this weekend’s North American Bitcoin Conference in Miami, Florida. His talk was replaced by an economics panel, but no official explanation for the change was given at the time.
Shrem is a high-profile member of the bitcoin community, serving not only as CEO of BitInstant, the New York-based bitcoin exchange that garnered a $1.5m investment from Wiklevoss Capital, but as vice chairman of the Bitcoin Foundation.
Cameron and Tyler Winklevoss issued a statement following Shrem’s arrest, indicating that when they extended capital to the firm, it was with the understanding that its management would abide by anti-money laundering laws.
“Although BitInstant is not named in today’s indictment of Charlie Shrem, we are obviously deeply concerned about his arrest. We were passive investors in BitInstant and will do everything we can to help law enforcement officials.”
The 24-year-old graduate of City University of New York-Brooklyn College received a rush of media attention and public interest for his status as a “bitcoin millionaire“, and has been an outspoken evangelist for bitcoin.
“Bitcoin is not simply a currency, or a payment system. Bitcoin is a technology that enables you and I to work together to make the world a better place,” Shrem wrote on December 25.
Despite Shrem’s success, however, BitInstant has been plagued by outrage from frustrated users and was even hit with a class-action lawsuit. Shrem has not commented on the allegations publicly or via his official Twitter account.

Silk Road prosecutions continue

Though the arrests may come as a surprise to those who have used the anonymous networks, researchers have indicated that tracing individual bitcoins to specific exchanges is possible, and as such, would lead to more arrests in cases like Silk Road.
Sarah Meiklejohn, author of the paper, “A Fistful of Bitcoins: Characterizing Payments Among Men With No Names,” noted in December that such actions would even be “easy” for law enforcement officials.
“The FBI now has all the data for Silk Road, they can see how much these guys earned, and they can see the addresses they used. So, it really seems like they have a lot of what they need to be able to prosecute them,” Meiklejohn told CoinDesk.
The Silk Road website has since been forfeited, and authorities have announced they will look to sell $25m in bitcoin holdings confiscated from the site.

Illegal sales crackdown

The announcement follows the increased scrutiny of US citizens who are using bitcoin black markets for illicit and illegal transactions.
On 18th January, a Florida man was arrested for selling a deadly toxin to police officers through the bitcoin black market Black Market Reloaded. Similarly, earlier this month, another black market use was arrested for shipping a legal firearm to international authorities.



Also interesting timing - Russia warns on Bitcoin today......


Bank of Russia Issues Warning on Digital Currencies

 | Published on January 27, 2014 at 18:04 GMT | EuropeNewsRegulation
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Recent sub-zero temperatures may have paralysed parts of Eastern Europe, but they haven’t done much to slow down the Bank of Russia, the country’s central bank.
On Monday, the bank issued a statement on the use of digital currencies. It resembled similar warnings issued by regulators in Asiaand Europe over the past few months, so the pattern is very familiar.
The bank points out that these currencies aren’t backed by a state entity, that they are speculative in nature and that trades are carried out on virtual exchanges are “high risk”. The statement goes on to warn citizens and businesses, especially financial institutions, about the risks associated with digital currencies like bitcoin.
In addition, the bank warns that issuing alternative currencies in the Russian Federation is prohibited:
“According to Article 27 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ issuing monetary surrogates is prohibited in the Russian Federation.”
The central bank also pointed out that the anonymous nature of digital currencies, and the unlimited range of actors who use them, could lead some people to break the law unintentionally, as they could unknowingly aid those who use such currencies for money laundering or even terrorism.
Involvement in such transactions and exchange services will be considered as “potential involvement in the implementation of suspicious transactions” in accordance with existing legislation on money laundering, as well as counter terrorism legislation.
The warning will no doubt leave many Russian bitcoin enthusiasts scratching their heads. It comes just days after Sberbank CEO German Gref publicly backed digital currencies in Davos, saying they are an interesting global experiment and that an outright ban would be a “colossal mistake”.
Sberbank is owned by the Bank of Russia, which makes the timing of the statement rather odd to say the least – it sounds rather like a case of damage control.
















1/26/14

Head of Russia’s Largest Bank Backs Bitcoin, Again

 | Published on January 26, 2014 at 15:33 GMT | EuropeNewsRegulation
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Sberbank may not be a household name in the west, but it just happens to be the third-largest bank in Europe.
It’s also the biggest bank in Russia and eastern Europe, with nearly half a trillion dollars in assets and a workforce of 300,000.
The bank is owned by the Central Bank of Russia and it is headed by German Gref, who served as the Russian Minister of Economic and Trade from 2000 to 2007. Gref’s tenure was marked by a period of economic reform and liberalization. Judging by his recent statements, he is still open minded when it comes to monetary issues.

Protecting bitcoin?

This news follows comments Gref made about the currency back in December. Speaking in an interview at the sidelines of the World Economic Forum in Davos, Gref voiced his support for digital currencies.
“It’s a very interesting global experiment that breaks the paradigm of currency issuance.”
He added that he had already made his opinion heard in government circles, by sending letters to the central bank, the finance ministry and to the very top, the Kremlin. In the letters, Gref asked officials to intervene with parliament in order to avert any bans against digital currencies, reports Bloomberg.
He said an outright ban would be a “colossal mistake”, adding: “It definitely shouldn’t be banned, it must be studied and maybe regulated properly”.

Colleagues aren’t convinced

Although Gref sees an opportunity in digital currencies, many fellow bankers would beg to differ. JPMorgan Chase CEO Jamie Dimon told reporters at Davos that the rise of bitcoin will prompt governments to clamp down and treat it like any other payment system.
VTB Group is Russia’s second-largest lender and its CEO Anrei Kostin doesn’t share Gref’s enthusiasm, either. He described digital currencies as “quite dangerous” for the money market and stated that VTB Group doesn’t plan on getting involved.
“Our monetary authorities are only now formulating their opinion about this,” he said.

Russia’s ultimate plan

Last week, a set of amendments introduced in the Russian parliament caused a fair amount of FUD (fear, uncertainty and doubt) in the bitcoin community, as it was misinterpreted as potential bitcoin ban. Russian regulators are of course keeping a close eye on digital currencies, as are their counterparts across the world. However, they have not taken any noteworthy action against the proliferation of digital currencies in Russia.
President of the Russian Electronic Money Association Viktor Dostov told Bloomberg that it is still unclear how Russia would regulate digital currencies. He stated that the only point of control would be an exchange centre where bitcoins would be traded for money. However, we are not sure whether Dostov is advocating the creation of a centralised exchange on a national level, or simply referring to independent bitcoin exchanges. It is a case of lost in translation.
In any case, Gref’s statements should go a long way toward reassuring bitcoin investors and enthusiasts in Russia and CIS member states for that matter.
It is also interesting to note that in a recent interview with CNN, Russian Prime Minister Dmitry Medvedev admitted the country’s economy is slowing down, but pointed out that his government is gradually transforming Russia into a knowledge-based economy and introducing 21st century technology into various industries.
Whether or not Russia is ready to embrace 21st century payment systems and alternative currencies remains to be seen.

















http://www.zerohedge.com/news/2014-01-24/bitcoin-2014-3-critical-factors


Bitcoin In 2014 - The 3 Critical Factors

Tyler Durden's picture





In the last year Bitcoin has gone 'viral'. As ConvergEx's Nick Colas notes, a lot has happened in 2013: Price appreciation, yes, from $20 to +$800 – the result of this online “Currency” going from science project to mainstream topic.  Volatility too – disruptive technologies seldom travel a level path. The story, Colas notes, is about to change, and there are three critical gates which bitcoin must navigate in the New Year.  First is regulation, and we will get a good dose of that next Tuesday and Wednesday when the New York State Department of Financial Services holds hearings on bitcoin and potentially issuing a ‘Bitlicense’ to help regulate business which transact in the currency.  Second isadoption – how will existing businesses incorporate bitcoin into their sales, marketing and payment channels.  Lastly will be volatility, which will have to come down in 2014 to encourage broader use. 
Via ConvergEx's Nick Colas,
If the ratio of dog-to-human years is something like 7:1, then a bitcoin year is something like 500 years to one regular 365 day turn of the modern currency calendar. Money as we know it today – a physical representation of stored economic value that supplants simple barter – goes back to about 600 B.C.. That’s when the Lydians – in modern day Turkey – started minting coins.  It’s a lot easier to buy a sheep or a goat with a coin than working out a barter with the seller, and every advanced civilization since then has used currency in some form to make economic transaction easier.  In 2008, an enigmatic programmer (or programmers) unknown released a paper describing an online payment system called bitcoin.  At first it was basically a puzzle contest for cryptographic hobbyists, with a prize for solving an endless battery of puzzles.  Bitcoins were code-breaking bragging rights that could be exchanged with others.
Then, in 2011, bitcoin began to find an actual following.  Its anonymous nature – the core of the system does not hold name, address and other information typical of a standard banking system – made it ideal for illicit transactions.  Individuals concerned over online privacy – ahead of their time, it now turns out – also appreciated the anonymity as well as the algorithmically controlled nature of the issuance of bitcoin.  No open-ended checkbook (as the Federal Reserve enjoys) in the bitcoin world – every 10 minutes another 25 bitcoin appear.  And that’s it.  For all this adoption, bitcoin remained largely under the radar.
Last year, bitcoin had its debutante coming out party, and its price went from $20 to $230 to $80 to $1000 and closed the year at $800. We started writing about it in February, mostly because we thought it was interesting that society – a portion of it, at least – had sufficient faith in technology to hand over their heard earned shekels to distributed network of computers running a program written by person or persons unknown.  Worshipping in front of a golden calf is one thing – making offerings to a virtual calf seemed to merit our attention.  Over the course of the year plenty of other market observers tossed their two cents in the hat, mostly in hater mode.
Well, its 2014 and the value of all bitcoin outstanding sits at roughly $10 billion.  Does that mean the future of the currency is assured? Of course not – there’s still plenty to go wrong.  But what that hefty amount does demand is a reasoned approach to the fundamentals driving bitcoin’s future.  There are headlines aplenty about bitcoin now – still, I think, with a distinctly skeptical eye.  Which is fine.  But to paraphrase a chant heard at many a street rally, ‘Bitcoin is here; get used to it.’
In thinking through a framework to interpret what will be an eventful 2014 for bitcoin, here are the three points – we’ll call them Bitcoin Buckets for a touch of alliterative flair – to guide the discussion.
Bitcoin Bucket #1 – Regulation. Since those little Lydian coins in 600 BC, issuing currency has largely been the domain of governments.  Granted, the U.S. itself only followed that guideline after the formation of the modern Federal Reserve 100 years ago.  But in general to issue currency you need some bureaucrats, a standing army, a bank, and some borders on a map.  Bitcoin has none of that, which makes it the currency equivalent of a “Stateless person” at the end of World War II or a White Russian after the 1917 revolution.

Initially, there was concern that governments – especially in America – would choose to squash bitcoin for fears over money laundering and illicit activity.  That was, after all, an early use case for the currency and one that continues to this day.  Then in the back half of 2013 two regional Federal Reserve banks published papers commending bitcoin for its low-cost facility of moving money, and it became clear that the U.S. central bank saw some value in the online currency.

We’ll have another data point on government’s take on bitcoin at a hearing next week in New York City, courtesy of the New York State Department of Financial Services.  The early buzz, from an interview on CNBC with Superintendent Benjamin Lawsky, looks promising.  He seems to see the potential for bitcoin and related services to provide much-needed competition to the U.S banking system.  Should merchants have to fork over 3-4% for credit card transactions?  Should credit card holders have to wait a day (or more, in the case of a weekend) for payments to post to their accounts?  Bitcoin-based competition – within the confines of modern anti-money laundering and “know-your-customer” laws – could help drive those charges lower.

In the end, bitcoin really isn’t competition for national currencies – at least not for quite a while.  It can be competition here-and-now for national banking systems.  It is a disruptive technology for transferring money cheaply, by virtue of the online system’s dual mandate of solving those puzzle and keeping track of all transactions as a requisite for a seat at that table.

Bitcoin Bucket #2 – Adoption.  One of the side benefits of getting on the bitcoin story early last year was that I had a lot of very entertaining conversations with computer nerds who had been early bitcoin adopters.  By virtue of their early “Mining” efforts – solving those puzzles in the core algorithm for bitcoins – many of them found themselves quite wealthy.  Not a few hundreds thousand dollars well off, mind you, but serious seven and eight figure wealthy.

At least on paper, that is…  But they were reluctant – and still are – to sell those bitcoins on a still illiquid open market.  And that’s where capitalism comes in.  Bitcoin millionaires are a ready-made customer base for a wide range of luxury and near-luxury goods and services.  If you want to peruse a list, look here:https://spendbitcoins.com/places/.

The bottom line is that bitcoin adoption by merchants is just going to accelerate.  There’s a reason why Rodeo Drive and Madison Avenue have all the chic shops; that’s where the money is.  And now the money is in bitcoin as well.

Bitcoin Bucket #3 – Volatility.  You can’t make an omelet without breaking some eggs, so it should be no surprise that bitcoin was both a big winner in 2013 and extremely volatile.  April saw the largest exchange melt down on huge volume.  Later in the year we had a similar selloff as the Chinese government sought to crack down on asset laundering.  None of this prevented bitcoin from ending the year near enough to $1000 to prove there is some level of organic global demand.

To succeed as a method of wealth transfer – which we believe to be the cornerstone of bitcoin’s long term success – price volatility will have to decline.  Yes, that is a tall order for asset with very little issuance and no convenient way to short it.  We have no doubt that merchants will adopt bitcoin simply to access newly minted high net worth individuals.  But to keep them in the fold and increase the usage of bitcoin in other parts of their business, they will need to see some greater stability in the price.

To end on a cautiously optimistic note, this appears to be happening already.  The decision by the Chinese government to curtail bitcoin exchange activity could have sent the currency into free fall – the growth in demand inside that country was a big part of the bullish case for bitcoin.  And drop it did – to $600.  But not $100.  Or $10.  Since then it has bounced back to $800-900.  Baby steps on the road to lower volatility.  But steps nonetheless.
It is tempting to conclude these notes with ‘Bitcoin is going to $5,000!’, but I don’t think anyone can reliably predict where it will trade over the next year.  What does seem more certain is that bitcoin is a very important disruptive technology in financial circles.  If it were a private, venture backed enterprise, it would certainly be worth more than the latest mobile picture app or video game platform.  Which puts that $10 billion total valuation in some context.  But our three buckets put some context around the challenges ahead – regulation, adoption, and volatility.  We think that bitcoin will grow in relevance over 2014; we know it will be fascinating to watch.



Different points of view are good and actually healthy  , which includes naysayers ! 



Nobel Laureate Thinks Bitcoin is an “Amazing” Bubble

 | Published on January 24, 2014 at 21:52 GMT | News
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American economist and Nobel Laureate Robert Shiller took part in an interesting panel discussion this week about digital trends at the World Economic Forum in Davos, and naturally he mentioned bitcoin.
Shiller said bitcoin is an inspiration thanks to its geeky roots, but he warned that it is not the way forward.
In fact, despite bitcoin’s digital heritage, Shiller argued that it is a throwback to the dark ages, reports Business Insider.
Shiller’s position is understandable, since he was awarded the 2013 Nobel Prize in Economics for his work on trend-spotting in asset markets. Shiller also examined the volatility of stock prices and their correlation with dividends.
The economists and his fellow laureates Eugene F. Fama and Lars Peter Hansenfound that high future returns are usually viewed as compensation for holding risky assets during risky times. The researchers also focused on departures from rational investor behaviour and its impact on asset prices. Many a bitcoin speculator would undoubtedly find Shiller’s work interesting.
Shiller is convinced bitcoin is a bubble and he is bemused by the fascination surrounding digital currencies. He said he is amazed by how people are excited by bitcoin – and bear in mind that a man who won the Nobel Prize for his work in the field of behavioural probably isn’t easy to surprise, let alone amaze. Shiller said:
“It is a bubble, there is no question about it. … It’s just an amazing example of a bubble.”
It would be rather presumptuous to argue with a Nobel laureate, but luckily someone already did that. Back in December Forbes put Shiller’s work to the test, comparing his findings with the bitcoin bubble.
Forbes contributor Tim Worstall argued that preventing a bubble from forming in the bitcoin market is not easy, since the market is not developed and lacks many tools needed to detect a bubble.
However, Worstall said it is “more than likely” that we are in a bitcoin bubble.


ATM developments......

Bitcoin ATM Appearance Draws Crowds in Zurich

 (@Jonakallgren) | Published on January 24, 2014 at 10:00 GMT | EventsNewsTechnology
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It’s the financial capital of Switzerland, filled with huge banks and powerful companies. It is also considered the world’s largest gold trading centre, and is home to over 1,300 multi-millionaires. And now, after a guest appearance by a bicoin ATM, Zurich has been introduced to cryptocurrencies.
The ATM in question is a Lamassu unit that was widely considered to be Europe’s first bitcoin ATM when it was installed at a market hall in the Slovakian Capital, Bratislava. After reading about the unit, two Zurich-based bitcoin enthusiasts, Dorian Credé and Christian Mäder, took the 10-hour trip to see the machine in action.
They were both impressed. So much so, that Credé called Lamassu that very evening to place an order for his own unit.
But unwilling to wait for the ATM to be delivered in mid-march, Credé set out to convince Marian Jančuška, who owns the Bratislava unit, to let them take it to Zurich for a guest appearance. To his surprise Jančuška immediately agreed, and one week later Credé and Mäder went back to pick up the unit and install it in a busy market hall in the centre of the city.

Beyond expectation



Dorian Credé and Christian Mäder with bitcoin ATM in Zurich
Dorian Credé and Christian Mäder with the ATM in Zurich

The trial ended on Wednesday, and Credé said it was a “huge success, beyond [...] expectations”. Over the four days that the machine was operational, 90 transactions were made and a total of 14.8 bitcoins were purchased.
This is despite the machine only being able to handle euros, not Swiss Francs – and only being able to display Slovakian as a language. Also, being a Lamassu unit, it only converts fiat currency to bitcoin, not the other way around.
Credé and Mäder were on hand with the ATM at all times to help people buy bitcoin, and answer any questions about the cryptocurrency. It was hard work, but worth it, said Credé:
“People came from all parts of Switzerland just to see the ATM. It was pretty cool. We had one person from MasterCard and one from a private bank who came all the way from Geneva just to buy some bitcoin, Then they asked a few questions before they drove all the way back.”
Credé said that he invested about 2,000 CHF (approximately $2,219) of his own money to bring the machine over. The 3% service charge went to the ATM’s owner Jančuška, so in the end he has no financial gain to show for it. But this was never the plan.
“It was more a spontaneous reaction. I love the idea of being the first to show it in Switzerland. I can say mission accomplished,” he said.

Bitcoin fascination



Dorian Credé with the Lamassu ATM
Dorian Credé with the Lamassu ATM

Credé’s fascination with bitcoin goes back several years, stemming from his other project: Wikirating which provides free and collaborative credit ratings of companies and countries.
After having the idea to pay contributors in bitcoin, he became more and more interested in the cryptocurrency. Credé eventually started the World Bitcoin Association with Mäder – who is one of Switzerland’s most prominent bitcoin bloggers. The aim of the Association is to unite non-profit bitcoin organisations around the world.
One person involved the project to bring the ATM to Switzerland had a step learning curve. Daniel Bollhalder, who manages the market hall where the ATM was housed, admits he did not know much about bitcoin and that he is quite “old-school” when it comes to these things.
However, after seeing the machine in action he was more than happy to offer a permanent space for Credé’s own ATM when it is delivered.
“We are crazy people, so we say yes to crazy projects. It is that simple,” he said.


AND.....




Investment Firm to Launch Czech Republic’s First Bitcoin ATM

 | Published on January 24, 2014 at 16:30 GMT | CompaniesNews
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Czech investment firm Marlyle has announced plans to set up the first bitcoin ATM in Prague, the Czech Republic’s capital.
The company’s website indicates it will launch a Robocoin machine – possibly the first one to be operated in Europe – which will allow users to purchase and sell bitcoins.
Marlyle has ordered three bitcoin ATMs from US manufacturer Robocoin Technologies, with the first one set to be located in the Smichov district of the Czech capital. The contract, signed in December last year, is worth about 1,500,000 CZK ($74,500) according to the operator.
Under the plan, Marlyle’s first bitcoin ATM is to become operational in April 2014. The locations of the remaining two machines have not been disclosed by the Czech company, but Marlyle says it will unveil further information on the project in February.
Last year, a bitcoin ATM was set up in Bratislava, in neighbouring Slovakia. However, the machine allowed its users to solely convert flat currency into bitcoins. Operated by local company 0011, and owned by IT entrepreneur Marian Jančuška, the bitcoin ATM is located in the centre of the Slovak capital.
The Lamassu machine has a “direct connection with major stock exchanges Mt. Gox and Bitstamp” and is fitted with an “intuitive and simple user interface” according to a translation from the Slovak company’s website.

Demand and supply

In late December 2013, Lamassu announced it had received over 120 orders from 25 countries “ranging from Canada to Kyrgyzstan” for their bitcoin ATMs. The manufacturer also set up an online map which shows the locations of the 100 machines the company sold in 2013.
Lamassu says on its website that a purchase of between one and four units of its bitcoin ATM generates a cost of $5,000 per piece, while buying 10 or more units diminishes the price tag to $4,000 per piece.
This means that, compared with the three machines acquired by Marlyle under the $74,500 contract, Lamassu’s small footprint machines have a lower price tag. However, the Czech company says the functionality of its Robocoin machine exceeds that of the Bratislava-based machine. Marlyle stated:
“Unlike the machine which was recently launched in Bratislava, [the machine in Prague] will allow you not only to buy bitcoins, but also to sell them.”
Martin Stránský, chief executive of Marlyle, said the country’s first Robocoin machine was part of a larger project aiming to provide a wide range of bitcoin-related services to the platform’s clients. To lure customers, the company says that qualified staff will help its clients make their first steps in the digital currency market.
“We believe that this versatile and customer-friendly service will enable digital currency trading to those people who are thinking about it today, but have been discouraged by concerns related to the safety of their investments,” he said.

Market confidence

Trust-building measures could be key to the company’s potential success in the Czech Republic.
Last year, the country’s bitcoin market was shaken by an attack which targeted Czech bitcoin exchange Bitcash.cz. In November 2013, the platform was hacked and up to 4,000 wallets of its customers were emptied, resulting in the closure of the site.
The same month, a similar incident took place in neighboring Poland, with bitcoin exchange Bidextreme.pl hacked and customers’ wallets containing bitcoins and litecoins emptied. Local company Magnus, which owns Bidextreme.pl, said the site was put up for sale to cover its users’ losses, with the starting price set at 170 BTC.
Robocoin claims that the machine’s three-step verification process allows users to buy bitcoin “in under 15 seconds”. Robocoin also says its ATMs “come fully equipped with bank-grade security and biometric hardware” and are fitted with a palm vein scanner which “can limit a user’s daily transaction amount by taking a unique, anonymous (no fingerprints) infrared picture of a customer’s blood vessels,” according to its website.


Bitcoin adoption......




Video Cards Drive First-Day Sales Surge For TigerDirect

 (@pete_rizzo_) | Published on January 24, 2014 at 20:09 GMT | CompaniesLitecoin,MerchantsNews
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TigerDirect’s decision to begin accepting bitcoin payments has sparked “video card madness” at the online electronics dealer, brand manager Steven Leeds told CoinDesk.
“Every single video card has seen a more than 50 percent spike [in sales],” Leeds said.
Rounding out the top four items in terms of sales increases since the company’s 23rd January announcement were power units, tablets and Xbox units. Further, Leeds revealed that TigerDirect’s website has seen a 30% bump in traffic on the news.
The top selling item in the first day was the Sapphire Radeon R9 280X VAPOR-X, of which 30 units were sold. Leeds reported that one buyer bought nearly half – 14 – of these components.
As of press time, the item was out of stock on TigerDirect’s website.
The news that TigerDirect would accept bitcoin was perhaps the biggest announcement on a day that included reveals that Fancy and Naughty Americawould also add bitcoin to their lists of accepted payment methods.
Leeds attributed the success to the fact that it offers products that more directly appeal to the community, as well as its more measured approach in its launch.

Timing the announcement

The latest in a string of major companies to accept bitcoin via BitPay, Leeds indicated that the decision marked an end to his company’s 10-month search for a partner. Leeds said TigerDirect had initial conversations “with several processing companies”, before selecting the Georgia-based processor.
As for the catalyst for the decision-making, Leeds noted that this is just another example of how TigerDirect not only listens to its community, but acts on its direction.
“The community itself and our customers started asking us to look into it, and we had seen a rise in all the equipment that’s used for mining. So, it was a very logical step for us to start accepting it,” Leeds said.
The brand manager continued, comparing his company’s approach to that of one of its more notable competitors in the space, Overstock.
“As opposed to Overstock, we didn’t just lock 40 engineers in a room for 10 days to be the first ones to come out with it. We really spent our time vetting companies.”

Ensuring long-term success

While TigerDirect’s first-day numbers saw a big boost, Leeds said his team is already looking ahead at how it can continue to engage this customer base.
“We understand the needs of bitcoin miners, and we plan on expanding even further our selection of mining products,” Leeds said.
Leeds went on to tease big upcoming deals for this demographic, suggesting TigerDirect will soon be the first retailer to carry products from certain notable mining companies.
In addition, Leeds said he would look to continue to incentivize bitcoin buyers, saying that TigerDirect has already begun getting involved in the discussion on reddit, Facebook and Twitter, while hinting at big discounts to come.
“With accepting bitcoin, there’s a lot of leeway in terms of what we can offer, it happens to be the more affordable way for us to accept currency.”

Could litecoin follow?

When asked whether TigerDirect would seek out more alternative currencies, Leeds didn’t shy away from his answer stating that the company “wants to make it as easy as possible to shop” at its store, and that bitcoin and litecoin fans are the kind of passionate customers it goes after.
“We are a tech company and everybody in this office is a gamer, a DIYer, a tech nerd. We look to our employees on guidance on what we like to use and what we like to buy.”
Leeds noted specific action would be taken to test the waters with the litecoin community. This community, he said, should look for exclusive units in the coming weeks. Based on reaction, Leeds said TigerDirect would make the best determination for its business when deciding whether to begin accepting litecoin for payments.



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Pinterest Competitor Fancy Adds Bitcoin Payments

 (@pete_rizzo_) | Published on January 23, 2014 at 23:28 GMT | CompaniesMerchantsNews
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New York-based social e-commerce platform Fancy, a website known as the “Pinterest for shopping,” is now accepting bitcoin.
The news was revealed in a 23rd January email from Fancy to its customers, which provided a basic introduction to bitcoin as well as simple directions on how bitcoin users can make bitcoin purchases
bitcoin, fancy
“Bitcoin is a cutting-edge digital currency that can be converted into cash,” the email explained. “The checkout process works the same as you’re used to. Simply select ‘Pay with Bitcoin’ as your payment method.”
Fancy also revealed that the option to pay with bitcoin is not yet available on its mobile app, but that such functionality would “soon be available”.

Another online retailer adds bitcoin

fancy, bitcoin
The news comes on the heels of decisions by online computer supply giant Tiger Direct and adult entertainment provider Naughty America to integrate bitcoin payments on 23rd January.
This influx of new companies into the bitcoin ecosystem further provides support for comments made by Overstock CEO Patrick Byrne who suggested other large companies would seek to follow his lead on bitcoin or risk losing market share.
“You’ll see Amazon jump on board. You’ll see other large companies – they have to because they cannot concede this whole section of the market to us,” Byrne told The Associated Press earlier this week.

Impact

Founded in 2009, Fancy has received nearly $80m in venture capital to date, with its most recent Series C round adding $60m to that total. The company was even rumored to be sought after by Apple as a possible acquisition in 2012.
Fancy earns $3m each month and was valued at $600m as recently as July 2013, meaning it would be one of the larger businesses to begin accepting bitcoin to date.
Further, Fancy has a reputation for innovation in e-commerce. Founder Joseph Einhorn has been heralded for adding more user-friendly functionalities, such as image recognition in product comparisons and user-submitted inventory, to Fancy’s website. However, while notable, such additions have yet to become widespread in e-commerce, a development that may suggest a lack of consumer interest in such shopping models.
Past investors in Fancy include American Express, Facebook co-founder Chris Hughes, General Catalyst Partners, Square founder Jack Dorsey and actor Will Smith.


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Naughty America Joins Porn.com in Bitcoin Acceptance

 (@pete_rizzo_) | Published on January 23, 2014 at 22:01 GMT | CompaniesLifestyle,MerchantsNews
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San Diego-based adult entertainment provider Naughty America, which operates a network of 30+ porn websites, is now accepting bitcoin payments.
With the decision, Naughty Americajoins Porn.com to become the latest major online adult entertainment brand to court the spending power and influence of the bitcoin community.
CEO and co-founder Andreas Hronopoulos spoke to CoinDesk about the announcement in an exclusive interview:
“We’re in the business of helping people find their fantasies, and our goal is to turn that fantasy into reality without reality getting in the way. For us, that applies to how you’re going to process the transactions as well as the type of content that is available.”
Hronopoulos indicated that Naughty America first considered accepting bitcoin after discovering the virtual currency through mainstream news coverage of Silk Road. Six months later, Naughty America will follow the Sacramento Kings and The D and Golden Gate hotel-casinos in Las Vegas to leverage the services of Georgia-based payment processor BitPay.
Websites available on Naughty America’s network include: My Friend’s Hot Mom,Naughty Office, and My First Sex Teacher – among others.

Bitcoin will go ‘industry-wide’

The announcement provides further evidence that Porn.com’s decision to embrace alternative currency has marked a turning point in the adult entertainment industry. Hronopoulos is particularly bullish about bitcoin’s potential to impact the adult entertainment market, as well as how quickly the industry will adopt bitcoin payments en masse.
“I think it will become an industry-wide thing within 45 to 60 days … Naughty America really sets the bar for where the industry heads.”
Of course, this migration could depend on whether Naughty America is able to replicate Porn.com’s initial earnings. Porn.com’s sales increased by 50% in the immediate aftermath of its bitcoin payment services going live, before settling to a 25% uptick over previous levels.
naughty america, bitcoinThese strong numbers have resonated in an industry that is increasingly fighting against low- or no-cost competitors empowered by innovations that have allowed amateurs to more easily produce professional-grade pictures and videos.
The bitcoin community may very well have more income to offer the adult industry. Past research suggests that 96% of bitcoin users are male, and that nearly half (46%) are not in a committed relationship.

Opening up the International Market

Hronopoulos indicates that the chief benefit of bitcoin – in addition to fighting piracy – is its promise as an international draw, one that can allow the privacy and anonymity for global purchasers to become more comfortable buying adult entertainment.
“In the United States, we can use our credit card to go out and buy things. We can go use our credit card to buy adult entertainment, we can use our checking account, all these different things. But, when it comes to these other countries … look at India, they don’t even have kissing in the movies. So, think about those countries and what could happen with something like bitcoin.”
Naughty America offers three-day and seven-day trial subscriptions, as well as monthly and yearly memberships. Alternatively, users can pay for content by credit or debit card, check or phone.

On the cutting edge

This isn’t the first time that Naughty America has ventured into uncharted tech territory before its peers.
On 14th January, Naughty America revealed plans to invest in Ultra HD (UHD) content, the proposed successor to the current HD format that offers four times the pixel resolution. The company indicated it would charge UHD users $35 a month for 24 days of premium content, compared to the $25 fee for regular content.
Similarly, another recent Naughty America incentive saw the company beginaccepting unwanted Best Buy, Macy’s, Target and Walmart gift cards for subscription purchases. The incentive aimed to help Naughty America cash in on the estimated $2 billion in gift cards that go unused each year.
When asked about the potential concerns about accepting the sometimes volatile currency, Hronopoulos remained confident: ”If there are any problems in the beginning, we expect that they’ll work out: the ball is rolling.”


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Australian Bus Commuters Can Soon Pay Fares With Bitcoin

 (@southtopia) | Published on January 23, 2014 at 19:42 GMT | CompaniesNews,Technology
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A team of mobile developers in Canberra, Australia, is aiming to be the first in the world to allow public transit users to pay for rides in bitcoin via its MyBus 2.0 app.
MyBus 2.0 is a timetable and route-planner app on Canberra’s extensive bus network ACTION, which is also the city’s primary public transit system. Developers Imagine Team Solutions announced the app now has more than 50,000 active users.
To celebrate that milestone, it turned its attention to ACTION’s prepaid fare smartcard system, MyWay. MyWay automatically deducts the correct fare when a passenger touches the card against a reader upon entering and exiting the bus.

Bitcoin fans

Imagine Team’s Zakaria Bouguettaya said the developers are “strong supporters” of bitcoin and would love to be the first in the world to offer it as a public transit payment solution. They have already developed a similar payment app for person-to-person transactions on iOS, and are putting the finishing touches to an Android version.
“I personally love what bitcoin is all about, and so we tried to work backwards from use-cases that weren’t about hedging and speculation,” he said.
“I catch buses as a primary method of travel, so we naturally went in that direction. We also saw a good fit into another app (QuicklyPay.it) we recently launched, where you can pay people in social situations (lunch, movie tickets, concerts, etc). Currently we use credit cards, but we’ve pushed out an update where you can pay someone using your bitcoins, and the recipients get cash.”
Currently, customers can add value to ACTION’s MyWay cards online with a credit card, via bank direct debit, over the telephone or in person at selected shopfronts.
Bouguettaya described the bitcoin integration in MyBus app and QuicklyPay.it as using a private wallet to accept incoming bitcoins, and then processing transactions almost immediately (or within 10 minutes) on the other end using a proprietary system Imagine Team built.
Should the bitcoin option become popular, it will probably turn to a more established payment processor like Australia’s CoinJar.

Government town

Similar in many ways to Washington, DC (on which it was partly modeled),Canberra is a purpose-built national capital in its own non-state territory (theACT) with a disproportionately large number of federal government employees compared to other cities in the country.
When Imagine Team posted its bitcoin intentions yesterday on a local internet forum, RiotACT, the response from other residents was generally cynical and negative.
The developers responded by citing high credit card fees paid by government-owned ACTION as the best reason to use bitcoin, and described price volatility problems as “overhyped”.
“Perhaps most obviously, there is no risk, only benefit,” they wrote.
“If you use bitcoin to recharge your MyWay card, who loses? It may not be an ideal currency, but we’re talking about recharging a MyWay card, not using it ubiquitously for everything ever. At the very least, it’s another way to recharge your MyWay card.”



Meaning / Implications of cyber currencies, Government action , Regulation and Security items...




The Implications of Bitcoin: Money Without Government

 (@jonmatonis) | Published on January 23, 2014 at 18:30 GMT | AnalysisCoinbase,CompaniesInvestorsNews
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One of my favorite things about bitcoin is how it’s such an all-inclusive tent.
Bitcoin attracts political idealists from the right, political idealists from the left, Silicon Valley technologists, social science academics, philosophers, capitalists, socialists, and even apolitical speculators.
Alex Payne kicked off this latest round of analysis with his blog piece“Bitcoin, Magical Thinking, and Political Ideology”. A self-described programmer and secular humanist, Payne worked as an early engineer at Twitter building the service’s developer platform and backend infrastructure.
Mostly, he criticizes Silicon Valley for its self-indulgent hyper-capitalism that lacks meaningful solutions to real-world problems. Oh yeah, and he specifically targets Chris DixonAndreeseen Horowitz, and their Coinbase investment.
Chris Dixon, Andreessen Horowitz’s partner on the Coinbase board, promptly shot back in defense with Why I’m Interested in Bitcoin where he disavowed himself of any libertarian ideology or “fantasies of a crypto-powered stateless future” and instead highlighted bitcoin’s technological promise in reforming the mismanaged financial system.
Personally, I prefer Marc Andreessen’s recent tribute in The New York Times,Why Bitcoin Matters.”
The divide between ideology and technology as the driving purpose behind bitcoin permeates the bitcoin investment community and the Bitcoin Foundation’s approach to public policy. Advocating and using a non-political monetary unit is a forceful political statement. Investing in a non-political monetary unit or its infrastructure companies is an equally powerful statement.
The bitcoin network cannot be separated from the bitcoin monetary unit and if the central bank, or the Federal Reserve in the United States, provided an important function, bitcoin would be unnecessary.
Carried through to its ultimate conclusion, the bitcoin unit competes with the government’s unit in a modern version of Hayekian currency competition.
More importantly, bitcoin is money without government: just as one cannot separate the bitcoin network from the bitcoin monetary unit, one cannot separate the bitcoin network effect from its central banking implications.

Personal Journey



digicash
Digital cash via Shutterstock

My personal journey towards bitcoin began in the mid-1990s when David Chaum’s DigiCash company and technology debuted in America.
At that time, I was working in Silicon Valley at RSA Data Security’s new spin-out company, Digital Certificates International, that later became VeriSign. The new SSL encryption in Netscape browsers relied on these digital certificates for authenticating and securing web servers.
With Chaum’s DigiCash technology, for the first time ever, digital bearer features of physical cash could be emulated in software using cryptographic protocols.
This was pure genius and it hit me like a ton of bricks.
During the next two years, I started thinking through scenarios of monetizing equity mutual funds and real estate and how ideas like e-gold could be transformed into digital bearer instruments backed by gold, not just a ledger-based transfer system. I even published a research paper at the London School of Economics.
However, I quickly realized that the centralized nature of these two systems inherently gave them a limited life span due to a single point of ‘failure’ that could be used for suppression.
Predictably, the political pressures increased with DigiCash needing regulatory approval to operate as an issuing mint within a bank and then e-gold suffering a Department of Justice shutdown and asset seizure at the peak of its epic success.
My thoughts shifted to how precious metals and other commodities could be stored, assayed, and audited without revealing knowledge of their location. This proved to be a very difficult feat.

The Bitcoin Protocol Network Effect

In late 2008, five years ago, a developer named Satoshi Nakamoto devised a protocol which distributed trust across a decentralized peer-to-peer ledger and eliminated confiscation risk by replacing physical assets with a mathematical proof of work.
More than anything, it is these two features that would lead to bitcoin’s real world success because the system now had the attribute of survivability. When angels and venture capitalists invest in bitcoin-related business models, they are investing in a survivable protocol – a protocol that will survive political institutions.
Money naturally operates like a virus and that makes digital bitcoin potently viral: it is viral cubed.
Herein lies the dichotomy: how can VCs knowingly invest in a protocol that survives political institutions when it is those same political institutions that allow them to capitalise on their investments?
Money naturally operates like a virus and that makes digital bitcoin potently viral. It is viral cubed – money on the Internet with a network effect. A monetary unit does not stop expanding until it runs into artificially delineated boundaries or achieves widespread dominance.
It is naive to think that governments believe so much in competitive currencies that they would encourage and accept a digital monetary unit without a central issuer. Some smaller governments may believe in that, but only as a way to use it against certain other governments that currently have dominant monetary units.
What’s more likely is bitcoin growth in the developed world constrained by regulatory endpoints, legislative taxing powers, and bans on merchants, but only up to a certain maximum market cap for bitcoin. Sure, we’ll let it grow but not too much.
So what is that magical permissible level of adoption where going beyond that point jeopardizes central banking and monetary policy? Is it a $100 billion, $500 billion, $1 trillion market capitalization for bitcoin?
No one really knows, least of all the governments. A $1 trillion bitcoin economy may not be suppressible, but it definitely becomes a less friendly environment with respect to established political institutions.


bitcoin mtrix
Bitcoin Protocol via Shutterstock

I guess your viewpoint depends on what problem bitcoin is solving – high transaction fees and complex international remittances or the problem of central banking and the intertwining of money and state.
Fortunately, bitcoin solves for both. But, you can’t have one without the other. You can’t believe that central banks play an important and necessary role in society and also believe that bitcoin serves as a monetary solution.
I am pro venture capital. Building the bitcoin infrastructure around the world is important, but within certain jurisdictions it can also be a frustrating contradiction. The success of an investment depends less on the execution of a stellar management team and more on the degree of regulatory latitude. For venture capitalists, bitcoin is not like Facebook and Twitter where worldwide market saturation and dominance is the end game for the IPO home run.
Market saturation with bitcoin means that something else lost and it’s not a competing cryptocurrency. Therefore, it will be imperative for venture capitalists to remain astute about the evolving political landscape and agile enough in timing their exits.
Andreessen stated in The New York Times article that he’s with Ben and Milton when it comes to the promise of reliable digital currencies. However, Bernanke and Friedman were referring to digitized national units, not an alternative and independent numéraire.
The only plausible outcome may be jurisdictional competition. After World War II, wealth flowed to the US dollar as the world’s reserve currency.
Now, real wealth flows from the West to the East in the form of gold bullion and claims to natural resources. In the cryptocurrency future, wealth will flow to the regions that facilitate and exploit bitcoin’s massive potential for unleashing true economic growth.


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Witness List Revealed for New York Virtual Currency Hearings

 (@pete_rizzo_) | Published on January 23, 2014 at 21:27 GMT | NewsRegulationUS & Canada
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The New York State Department of Financial Services (NYDFS) has announced the witness list for its upcoming hearings on virtual currencies to be held on 28th and 29th January in New York City.
Notable names from the virtual currency community that will be participating include principals ofWinklevoss Capital Management, Cameron and Tyler Winklevoss; Jeremy Allaire, the CEO and founder of Circle; Charles Lee, the founder of Litecoin; and Fred Ehrsam, co-founder of Coinbase.
Speaking to law enforcement concerns regarding bitcoin will be District Attorney of New York County Cyrus R. Vance Jr. and Deputy US Attorney for the Southern District of New York Richard B. Zabel, according to a release from Benjamin M. Lawsky, New York’s Superintendent of Financial Services.
The news follows the NYDFS’ launch of an “ongoing fact-finding effort” into virtual currencies in August. The NYDFS formally announced the hearings on 11 January, stating that the intent of the meeting was to “review the interconnection between money transmission regulations and virtual currencies” as well as discuss proposed BitLicenses for bitcoin businesses.
The event will be spread across two days and include five panels on topics related to everything from bitcoin investing to academic perspectives on virtual currency. The NYDFS indicated that further updates on witnesses as well as the timing of the speakers may be announced in the coming days.

28th January

Leading off the event on 28th January will be a panel addressing the investment opportunities posed by virtual currencies. Included in this speaker group will beBarry Silbert, founder and CEO of SecondMarket; Jeremy Liew, partner at Lightspeed Venture Capital; Fred Wilson, partner at Union Square Ventures; and Cameron and Tyler Winklevoss.
In an interview with CoinDesk, Liew spoke about his addition to the panel and his hopes for meetings.
“As an investor, one of the things we need quickly is regulatory clarity to ensure small companies don’t fail,” Liew told CoinDesk. “NYDFS has been proactive about educating themselves and informing themselves and this is part of that process, and I’m happy to be involved.”
The afternoon portion of the event will focus on regulating the still rapidly evolving industry. In addition to Charles Lee, the panel will include Judie Rinearson, partner at Bryan Cave, and Carol Van Cleef partner at Patton Boggs, as well as another as-yet unannounced speaker.

29th January

This day’s events will lead off with a panel on regulation given by New York’s law enforcement representatives, Vance Jr. and Zabel. Panel 2 will feature Ehrsam and Allaire, as well as an unannounced representative from major online retailer Overstock, which announced its plans to accept bitcoin earlier this year.
Panel 3 will conclude the two-day event with an academic overview of virtual currencies. The panel will include Ed Felten of Princeton University and Susan Athey of Stanford University.

Impact

New York has been active not just on matters related virtual currency, but also in regulating both the tech and financial sectors. For example, in December, regulators moved to crack down on payday lenders and enact policies for mobile phone campaign donations.
As the first state to formally call hearings on virtual currency, New York will likely set the tone for other states with its decision-making, meaning any decisions stemming from the hearings could have widespread implications in lieu of formal federal directions.



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Sweden Likely to Regulate Bitcoin as an Asset

 (@pete_rizzo_) | Published on January 22, 2014 at 20:51 GMT | EuropeRegulation
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An official from the Swedish Tax Agency has revealed it is drafting rules for bitcoin users and programmers that would treat bitcoins as assets.
In an interview with Bloombergreleased 22nd January, Swedish tax official Olof Wallin spoke about the proposal, stating why he believes bitcoin fails to meet Sweden’s definition of a currency:
“Currencies are traditionally tied to a central bank or geographic area,” Wallin stated.
Because of this distinction, Wallin said Sweden is likely to regulate bitcoin “like art or antiques”. Under the proposal, bitcoin would fall under the same asset class as antiques, copyrights, jewelry and stamps, and be subject to capital gains taxes.
Wallin stated that Sweden is also considering whether to tax bitcoin miners as businesses, stating only that his agency is considering its position on the matter.
The unconventional classification divided Bitcoin Talk forum commentators, with some finding it to be a level-headed approach, while others struggled to digest the comparison between bitcoin and creative works of value.
Regardless, with the announcement, Sweden becomes the latest Nordic country to update the world on how it is seeking to oversee virtual currencies.
On 20th January, the Bank of Finland took similar action, moving to classify bitcoin as a “commodity”, indicating that lawmakers across the Nordic region are working fast to set domestic precedents for virtual currencies.

Implications

Sweden’s interpretation of bitcoin would allow its government to charge Swedish users capital gains, breaking from Germany’s decision last year to exempt alternative currency actions from such taxation.
Seen in concert with past announcement, though, the proposal can be viewed as a positive for bitcoin. Just last April, Sweden warned its citizens against using bitcoin, choosing to focus its statements on bitcoin’s uses in money laundering.
However, comments from Sweden’s Financial Markets Minister Peter Norman suggest this viewpoint is still common among the country’s regulators:
“If we end up with artificial or virtual currencies, there is a risk that they could slip through the cracks and that would be serious. I don’t think Bitcoins are at that stage today, but if they were to grow into a big virtual currency that’s being used a lot, that would result in risks that we don’t want,” Norman told Bloomberg.
Jonathan Fors, a bitcoin researcher and Ph. D. student at Linköping University sees the announcement differently, arguing that Sweden should classify bitcoin as a “foreign currency”.
“In my opinion, classifying digital currencies as assets could hinder adoption here in Sweden. Digital currencies have many promises in store for the future, and I think the Swedish government should think carefully before placing such restrictions on this technology,” Fors said.

Regional consensus

Despite differences in how regulation could take shape in Finland and Sweden, the Nordic nations do have a commonality: They agree that bitcoin should not be treated as a currency.
In December, Norway’s director general of taxation stated that bitcoin does not “fall under the usual definition of money or currency“. Finland went one step further, suggesting that in addition to failing the definition of a currency, bitcoin does not qualify as a payment instrument under Finnish law.
The decision could also impact ongoing discussions in major markets like the United States and United Kingdom, which have still yet to declare how bitcoin will be taxed.
Since 2006, Sweden has seen steady economic growth after decades of economic struggles. As such, it has emerged as a country with what some consider is a proven model for steady economic growth at a time when other nations are struggling with debt and unemployment.


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Coinpunk Crowdfunding Bitcoin Wallet That Apple Can’t Ban

 | Published on January 24, 2014 at 13:30 GMT | CompaniesNewsWallets
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Open-source bitcoin project Coinpunk has launched an Indiegogo campaign in an effort to raise funding for a new wallet solution that could be used on iOS devices without a jailbreak.
Apple has a history of restricting bitcoin-related apps in the app store (which contains over 1 million apps). Thus, Coinpunk is not designing an app, but a web application.
The web application allows users to create self-hosted bitcoin wallets and access them through the browser, rendering Apple’s walled garden approach pointless. The idea of self-hosted wallets is interesting, as many users are still suspicious of online wallets, so they tend to believe their bitcoins are safer in their own hands.
Coinpunk is based on HTML5, and it is accessible from Safari, Apple’s stock iOS browser. Better yet, since it is a web-based HTML5 application, it can be used on almost any platform out there – Windows, Android, Mac OS X, etc.

100% open source

The developers say they are planning to make standalone/browser store versions, integrate support for cold wallets, introduce more merchant tools and add more options for buying bitcoin. Support for altcoins is coming too, but the team admits their primary focus is on bitcoin. Their goal is outlined on Indiegogo:
“We want to prove that you can make 100% open source HTML5/JS Bitcoin wallets that work just as well as proprietary native ones, if not better.”
However, to make it all happen the Coinpunk team needs a fair bit of cash. The funding goal is $55,000, which sounds rather ambitious. The money will be used to pay server and development bills, improve the website, conduct security audits and – of course – pay for living expenses. Even developers have to eat and sleep every once in a while.
There are still 60 days to go, and the team is accepting contributions in bitcoin, litecoin and dogecoin. At the time of writing, Coinpunk’s campaign had already raised $741.00.
Although many crypto fans are still expecting Apple to ease its restrictions, this does not seem very likely at this point. Apple has very strict policies, and unlikeGoogle it vets every app its offers through its app store.
Last year, the Coinbase iOS app, which enabled users to buy, sell and send bitcoin, was removed from the App Store less than a month after its launch. However, other bitcoin apps, including ZeroBlock and Blockchain.info, are still available on iOS.