Sunday, January 19, 2014

Bitcoin news January 19 , 2014 - Bitcoin ATM installations surge in Canada.... Is the UK going to take the German and Singapore approach to Bitcoin ? SEC receptive to Winklevoss Bitcoin trust ? How Bitcoin lowers the cost of transactions....Israel takes wait and see approach on Bitcoin.... Bitcoin operators in india cautiously resume operations ..... Bitcoin fragmentation becoming an issue ....... new crypto-currency backed by gold and silver launched ...... Will Overstock force the IRS to make up its mind about Bitcoin ?


Bitcoin ATM Installations Surge in Canada

 (@joonian) | Published on January 19, 2014 at 15:06 GMT | CompaniesNews
Share51
Three cities in Canada are set to have bitcoin ATMs installed in the coming weeks, making the country the top ATM location in the world. New ATMs will be installed in the Canadian capital city Ottawa as well as Montreal and financial hub Toronto.
The ATM operators are announcing their plans to install machines across the country even as Canada’s central bank issued a statement yesterday declaring bitcoin is not recognised as legal tenderthere.
Fadi Azouz, who operates the Montreal machine, said his ATM would be installed by 24th January at the Bitcoin Embassy in Montreal. It will take live rates from either BitStamp or the Canadian exchange Virtex and will charge a 5% for transactions. The ‘embassy’ is a non-profit organisation dedicated to promoting bitcoin. Azouz said the central bank’s announcement would have no impact on his plans:
“The [statement] does not affect us at all. As long as the millions of people using bitcoin around the world continue to believe in it and trust it to be an honest method of payment, it shall continue to [be] just that.”
Azouz added that his company, Vx5 Technologies, will be installing and operating bitcoin ATMs in eight countries this year. They include Lebanon, the Philippines, Hungary and Venezuela, among others.
Azouz will not be operating a Lamassu or Robocoin machine, which are the two most well known manufacturers of bitcoin ATMs at present. Instead, he has opted for a machine built by an Ottawa company called Bitaccess. The firm calls its machines ‘BTMs‘.
Bitaccess makes a machine that converts fiat currency to bitcoin and another model that does two-way conversions. Current players Lamassu and Robocoin offer machines that convert fiat to bitcoin or two-conversions respectively.
A Lamassu bitcoin ATM
A Lamassu bitcoin ATM
The Ottawa ATM maker has also included a wallet-generation feature on its machines. This means the ATM can create a wallet for a user who does not have an existing way of storing bitcoins. According to Bitaccess, a high-entropy, one-time, paper wallet is generated, which is then scanned manually by the user. The company says it doesn’t store any information about the printed wallets.
Ottawa will also get a Bitaccess machine, according to a report from the Ottawa Citizen. The machine will be operated by a company called BIT-Capital, which also claims to run several cryptocurrency investment funds. The Ottawa ATM was installed in the Clocktower Brew Pub yesterday, according to the Citizen‘s report. The micro-brewery boasts four home-brewed beers and an “upscale pub menu”.

View image on Twitter
We are proud to host Canada's 1st @Bitcoin ATM installed in our spot by @BiTCapital



Tom Drummond, a bitcoin user in Ottawa, said he welcomed the arrival of an ATM in the city. He said his current method of buying bitcoin on Canadian exchange Virtex takes between two hours and three days, depending on how he transfers his money to the exchange.
Virtex charges a 1.5% fee for a 120-day trading volume of less than 400 BTC and 0.5% for a trading volume greater than 2,000 BTC. It also allows customers to deposit or withdraw cash using a prepaid debit card that costs CA$10 for the card and CA$2 for each cash withdrawal from an ATM. The process can be complicated and daunting for a new user, which is one reason Drummond welcomes bitcoin ATMs in Canada.
“I feel ATMs will be good exposure to the public for BTC,” Drummond said.
In Toronto, Canada’s commercial capital, an ATM has been installed at Bitcoin Decentral, a co-working space dedicated to bitcoin businesses in the city’s downtown. The space is 5,500 sq ft spread over four floors. The ATM is run by the Bitcoin Alliance of Canada, according to a report from the Toronto Star. It’s unclear what type of machine has been installed, but it appears that it is not a Lamassu, as the Star reports that it can perform two-way conversions between bitcoin and fiat currency.
Robocoin-ATMs
Robocoin bitcoin ATMs
Vancouver was the world’s first city to have a bitcoin ATM permanently installed last October. That Robocoin unit made waves after it reportedly accepted more than CA$1m in deposits in its first 29 days of operation. Its operator, Bitcoiniacs,said in December that it would install Robocoin machines in Montreal, Ottawa, Toronto and Calgary in December, but the Bitcoiniacs website only lists the Vancouver machine.
Manufacturers of bitcoin ATMs, Lamassu and Robocoin, have been engaged in a race to sell their machines around the world. Lamassu announced it had sold its100th unit. New players have been entering the scene, ranging from the open-source Skyhook ATM to Canada’s homegrown Bitaccess BTM.



How bitcoin makes transactions cheaper

 (@johnehenderson) | Published on January 18, 2014 at 14:30 GMT | AnalysisBitcoin protocolFAQsTechnology
Share12
There are many reasons to be excited about bitcoin: it could enable totally new business and technology models; it resembles the internet in the early ‘90s in the sense that it is a network that no-one owns and everyone can contribute to; it could revolutionise legal concepts of ownership; it could disrupt the payments industry; it could even become a tax haven. It could also flop.
In an earlier post, I described the thinking behind my first angel investment in the digital currency space: CoinDesk. In this post, I discuss what first got me excited about bitcoin — the solution to the so-called “double spending problem” — and why this could drastically reduce the cost of non-cash transactions.

The double spending problem: why it costs so much to transact electronically

The double spending problem is the risk that a person could pay for two different things with the same unit of currency. This problem really only arises if you want to make a purchase electronically (i.e. with something other than cash).
Say I make t-shirts and you want to buy one. In the offline world, we could transact with cash. You give me a $20 bill, and I give you a t-shirt. As I’m now in physical possession of the $20 bill, I can be certain that you won’t spend it on something else. My only risk is that you’re a professional counterfeiter, but that’s pretty unlikely…
Now, say you want to buy one of the t-shirts from my online e-store. As it happens, my shop is overseas. Wouldn’t it be cool if we could replicate the offline experience by you simply sending me a digital version of a $20 bill? Until recently you couldn’t: you needed at least one financial institution involved and either you or I (or both of us) had to pay them a fee to facilitate things. A credit card payment is a good example. You would send me your card details and, in order to process it, I would involve the credit card provider, a merchant services company and my bank.
credit card transaction
We needed the financial institutions because, unlike physical bills, digital information is super easy to copy. If you try to send me a unit of digital money directly, how can I know that it is real — or that you haven’t sent the same thing to someone else? To be certain, I’d need to access your bank account to check that your balance actually decreased. And there’s no way you’d give access to your bank account to someone selling you a t-shirt!
The role financial institutions play here is to serve as a trusted third party to identify you and me, to ensure that the money is spent only once, and to process the payment. In order to retain their trusted status, financial institutions also become involved if there is a dispute between us.
This takes time and resources, for which financial institutions charge fees. In the example of the t-shirt sale, I (the merchant) would incur a cost of 0.5-2.5% to process the credit card. You (the purchaser) would probably be charged a currency conversion fee by your credit card provider (who would no doubt make additional money by giving you a crappy exchange rate).
These fees and charges add up. Some smart management consultants I used to work with estimated that transaction-specific fees amounted to nearly $140bn in 2012.
Bitcoin’s fundamental innovation is to obviate the need for a 3rd party to be involved in the transaction. It allows you to securely and anonymously transfer money to anyone, anywhere in the world. Going back to the t-shirt example: if you had paid me in bitcoin, I would have paid much much less than the c. 2.5% it cost me to process your credit card. And you would have paid no currency conversion fee whatsoever.

How does bitcoin deal with the double spending problem?

I can sense your skepticism. How does bitcoin cut out the financial middlemen?
Bitcoin is a “purely peer-to-peer version of electronic cash”. It allows you to securely send money directly to me. The bitcoin network is decentralised, which means there is no central financial body overseeing things. That sounds bad, right? Well, actually no — bitcoin’s inventor developed a clever mechanism to ensure that bitcoins couldn’t be copied and spent more than once.
Each bitcoin has a history attached to it — essentially a log of digital signatures showing the transactions it has been involved in. In bitcoin-speak, these logs are called ‘blocks’ and, when you put them all together, they form the ‘blockchain’. The blockchain contains a record of all the transactions ever made using bitcoin.
$140bn in transaction fees is a big pie, and bitcoin has the potential to take a large slice.
But what if someone alters a block? Couldn’t they ‘erase’ a transaction and spend a coin twice?
The nifty thing about bitcoin is that the blockchain is publicly available. Anyone on the internet can see it (don’t worry — the names of the parties to specific transactions remain hidden). There is a huge amount of computer power that goes into recording transactions and verifying the blockchain. This is what all the computers mining bitcoins around the world are doing and its why bitcoin transactions take an average of 10 minutes to complete. (To incentivise miners to undertake this work, they can ‘earn’ bitcoins along the way — but mining is a story for another post…) If someone were to alter a block, all the other computers on the bitcoin network would notice it and ‘vote’ to reject that alteration.
In short, in order to hack the system and spend a coin twice, you’d need more computer power than everyone else on the whole bitcoin network combined. And that’s virtually impossible nowadays.

So should I start buying things online with bitcoin?

You might not want to just yet. At the moment, not many merchants accept bitcoin and the huge price volatility outweighs the benefits of lower transaction costs. However, this is likely to change as the bitcoin ecosystem matures.
In the long term, the ability to securely transfer money on a peer-to-peer basis could be hugely disruptive. I’m not saying bitcoin will completely replace other methods of transacting money. It won’t. But $140 billion in transaction fees is a big pie, and bitcoin has the potential to take a large slice of it. What’s more, there are many other pies out there. I’ll discuss some of them another time, but as an example just consider the potential impact on the $550bn remittance market



Israeli Regulators Take “Wait and See” Approach on Digital Currencies

 | Published on January 18, 2014 at 16:28 GMT | NewsRegulation
Share
Over the past two months numerous regulators have issued warnings against the use of digital currencies, and some have even taken concrete steps to halt trading, most notablyChina and India.
Israel, however, appears to be taking a different approach.
Israeli regulators are not ignoring digital currencies, they are simply waiting to see what the rest of the world does about them.
Certain Israeli financial institutions are engaged in bitcoin transactions, and they would like to see clear guidance from regulators. However, the Bank of Israel, theIsrael Securities Authority and government ministries have not said a word on the matter. Yet, this may be about to change.

Lack of applicable legislation

According to Haaretz, regulators do not feel the need to prohibit transactions related to digital currencies at this time. Attorney Shiri Shaham, who specializes in banking law, told reporters that there is no legislation in Israel today that could address bitcoin and similar digital currencies.
Therefore, the use of digital currencies remains legal, or ‘unregulated’ to be more precise. Shaham said:
“Bitcoin brings with it a lot of innovation that has not existed until now. Consequently, it’s no wonder that it was not in the wherewithal of lawmakers in Israel and around the world to foresee this development and address it.”
Lawyer Guy Lachmann points out that currency is defined as the country’s legal tender and since bitcoin is not recognized as legal tender anywhere in the world, it should not be seen as a currency.

Taxation concern

Although Israel can apply existing money laundering legislation to questionable bitcoin transactions, there are still a number of issues that need to be addressed.
Taxation is perhaps the biggest problem. Traders must report their trading income to tax authorities, but there are some exceptions that might attract tax dodgers. In addition, value-added tax does not apply to the purchase of bitcoin.
Shaham believes the Bank of Israel should not ignore digital currencies, but she cautions that it should not adopt a conservative position either. She argues that there is nothing lawmakers can do to prevent trading in bitcoins, even if such trades are outlawed. She said:
“People who want to get their hands on bitcoin will always succeed, and it would be a pity if it were to occur in the shadows and not under the supervision of the banking system.”



Posted 1 day ago 

Yesterday we published the news Will The UK Exclude Bitcoins From Taxation? and it is now clear that United Kingdom is going to completely change their rules on Bitcoin taxation. Richard Asquite from the TMF Group breaks the news and says that the new clarification will give people and businesses using Bitcoins a far more stable future. The action taken by Her Majesty’s Revenue an Customs (HMRC) can push other countries, like USA, to create their own clear laws on how to regulate Bitcoin.
UK’s new classification of Bitcoin including other cryptocurrencies is set to be “private currency”. This is similar as what the Germans did in 2013 and Singapore just a few weeks ago.
It is said that the United Kindom changed their classification to private money from tradable vouchers due to pure public pressure because of the high interest and demand for Bitcoin and Bitcoin related services.
I believe that the coming clarification of how to regulate and use Bitcoin will boost both private and corporate use of Bitcoin and other digital currencies.




SEC Receptive to Winklevoss Bitcoin Trust

Posted 2 days ago 

Winklevoss Bitcoin
According to Michael J. Casey, an editor and senior columnist at The Wall Street Journal, the Winklevoss twins are receiving positive feedback from the SEC regarding their new bitcoin business venture, Winklevoss Bitcoin Trust. The following quote is from Mr. Evan Greebel, whom is the lawyer for the Winklevoss Bitcoin Trust.
“The SEC has generally been receptive,”  said Mr. Greebel, a partner at Katten Muchin Rosenman’s New York office. “We are working through common procedures and working through the registration process and we have not gotten any show stoppers. We think the SEC understands the nature of the project and understands that it does bring stability to bitcoin.”
Interestingly enough, the SEC declined to comment and Mr. Greebel does not want to speculate on when the approval or launch of the venture will take place. Many speculate that this venture, or a similar venture could bring great stability to the often volatile bitcoin price. CCN has reported on the Winklevoss ETF in the past and will keep you up to date regarding any further developments.


U.S. government’s bitcoin bonanza: How, where and when to sell?

  | 1 Comment
This isn’t new news, its been doing the rounds all week (and more), just a catch up.
US Federal authorities confiscated 29,655 units of the digital currency Bitcoin, worth around $US27 million at current rates, after the FBI raided  Silk Road, an anonymous online black market, saying it was a conduit for purchases of drugs and computer hacking services.
And there’s more than $27 million:
An additional 144,336 bitcoins, worth more than $128 million today, were also discovered, but the government’s claim on them is being disputed by Ross William Ulbricht, 29, who U.S. authorities say was the founder and main operator of Silk Road. They had been stashed on his laptop.
According to the report, “A spokeswoman for Preet Bharara, the U.S. Attorney for New York’s Southern District, said Friday that the government is still trying to decide what to do with the forfeited bitcoins.” Those suffering holding AUD longs are trying to convince them to buy aussie (OK, I made that bit up).


Bitcoin operators resume Indian exchange operations cautiously

After suspending their operations for a few weeks amid growing regulatory glare, many bitcoin operators have cautiously resumed courting business from their clients and some new players have also come to fore in India.
The Reserve Bank last month had issued a warning against dealing in bitcoin and other virtual currencies due to various risks, including those related to money-laundering and cyber security, as such digital currencies are not backed by any assets or monetary authorities.
Besides, tax authorities and the Enforcement Directorate have also initiated action against some bitcoin operators in recent weeks, which resulted in many entities suspending their operations.
However, many bitcoin operators and even some corporate houses have recently stepped up their lobbying for a clear regulatory framework on digital currencies in India.