http://www.businessinsider.com/jp-morgans-jamie-dimon-on-bitcoin-2014-1
The fact that we're still talking about Bitcoin seems to suggest that it has some staying power.
http://www.nakedcapitalism.com/2014/01/bitcoin-plays-hands-central-bankers-will-facilitate-use-negative-interest-rates.html
Jamie Dimon Goes On The Attack On Bitcoin
However, Jamie Dimon believes its standing as a currency will eventually end.
Dimon, who is the CEO of JP Morgan, spoke with CNBC's Andrew Ross Sorkin about the so-called digital cryptocurrency. And he went on the attack.
"It's a terrible store of value," said Dimon. "It could be replicated over and over."
That speaks to the logistical issues.
But what's worse is arguably the regulatory hurdles.
"It doesn't have the standing of a government," added Dimon. "And honestly, a lot of it — what I've read from you guys — a lot of it is being used for elicit purposes. And people who will get upset with it is governments. Governments put a huge amount of pressure on banks: know who your client is, did you do real reviews of that. Obviously it's almost impossible to do with something like that."
However, Dimon doesn't think Bitcoin will go away altogether.
"They will eventually be made as a payment system to follow the same standards as the other payment systems and that will be probably be the end of them," he said.
This is coming from someone who is arguably one of the most powerful bankers in the world.
http://www.nakedcapitalism.com/2014/01/bitcoin-plays-hands-central-bankers-will-facilitate-use-negative-interest-rates.html
How Bitcoin Plays Into the Hands of Central Bankers and Will Facilitate the Use of Negative Interest Rates
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Bitcoin enthusiasts like to present it as a “power to the people” form of money, stressing its apparent lack of ownership (the “Napster for finance“). They stress the lack of need for a “trusted party” like a bank or broker to verify that a payment has been made. And many clearly relish the idea of launching a currency outside the control of central banks (plus this beats Cryptonomicon in geekery).
If you believe the hype, you’ve been had. As Izabella Kaminska of the Financial Times tells us, you all are really just doing free/underpaid R&D for central banks, since you are debugging and building legitimacy for one of their fond projects, making currencies digital and getting rid of cash altogether.
I had wondered about the complacency of Fed and SEC officials in Senate Banking Committee hearings on Bitcoin last year. Press reports at the time attributed it to successful lobbying. But there’s no need to fight when you understand how to become the alpha quant per Tom Lehrer:
Plagiarize,
Let no one else’s work evade your eyes,
Remember why the good lord made your eyes,
So don’t shade your eyes,
But plagiarize, plagiarize, plagiarize -
Only be sure always to call it please ‘research’.
As Kaminska explains (boldface mine):
Central bankers, after all, have had an explicit interest in introducing e-money from the moment the global financial crisis began…Bitcoin has helped to de-stigmatise the concept of a cashless society by generating the perception that digital cash can be as private and anonymous as good old fashioned banknotes. It’s also provided a useful test-run of a digital system that can now be adopted universally by almost any pre-existing value system.This is important because, in the current economic climate, the introduction of a cashless society empowers central banks greatly. A cashless society, after all, not only makes things like negative interest rates possible, it transfers absolute control of the money supply to the central bank, mostly by turning it into a universal banker that competes directly with private banks for public deposits. All digital deposits become base money.Consequently, anyone who believes Bitcoin is a threat to fiat currency misunderstands the economic context. Above all, they fail to understand that had central banks had the means to deploy e-money earlier on, the crisis could have been much more successfully dealt with.Among the key factors that prevented them from doing so were very probable public hostility to any attempt to ban outright cash, the difficulty of implementing and explaining such a transition to the public, the inability to test-run the system before it was deployed.Last and not least, they would have been concerned about displacing conventional banks from their traditional deposit-taking role, and in so doing inadvertently worsening the liquidity crisis and financial panic before improving it…Almost of all of these prohibitive factors have, however, by now been overcome:1) Digital currency now follows in the footsteps of a “disruptive” anti-establishment digital movement perceived to be highly accommodating to the black market and all those who would ordinarily have feared an outright cash ban. This makes it exponentially easier to roll out. Bitcoin has done the bulk of the educating.2) What was once viewed as a potentially oppressive government conspiracy to rid the public of its privacy can be communicated as being progressive and innovative as a result.3) Banks have been given more than five years to prove their economic worth and have failed to do so. If they haven’t done so by now, they probably never will, meaning there’s unlikely to be a huge economic penalty associated with undermining them on the deposit front or in transforming them slowly into fully-funded fund managers.4) The open-ledger system which solves the digital double-spending problem has been robustly tested. Flaws, weaknesses and bugs have been understood, accounted for, and resolved.
The balance of the article describes how the central bank digital currency would be launched, and Kazmina finds a plan developed by Miles Kimball of the University of Michigan to be thorough and viable.
Oh, and why would Bitcoin, um, central bank digital currency make it viable to implement negative interest rates? Kaminska tells us:
…the greater the negative interest rate, the greater the incentive to hold alternative coins. The greater the incentive to hold alternative coins ,the greater the incentive to produce them. The greater the incentive to produce them, the greater the chances of oversupply and collapse. The more sizeable the collapse, the more desirable the managed official e-money system ultimately becomes in comparison.Either way, the key point with official e-money is that the hoarding incentives which would be generated by a negative interest rate policy can in this way be directed to private asset markets (which are not state guaranteed, and thus not safe for investors) rather than to state-guaranteed banknotes, which are guaranteed and preferable to anything negative yielding or risky (in a way that undermines the stimulative effects of negative interest rate policy).
So all these tales by Silicon Valley promoters (and remember, Marc Andressen mentioned all the money chasing Bitcoin-related ventures) of how liberating and democratic Bitcoin will be are almost certain to prove to be precisely the reverse. Hang onto your real world wallet.
Leaked Emails From Google Suggest it is Considering Bitcoin Integration
It never hurts to ask: That was the philosophy behind bitcoin advocate and bitcoin classifieds siteCoinList.me developer Jarar Malik’s decision to email the heads of the biggest tech powerhouses in the world – Apple, Amazon and Google – and inquire as to their stance on bitcoin this week.
This much can be seen in Malik’s earnest emails to top tech leaders in which he says “there’s nothing extraordinary” about himself, other than his willingness to go the extra mile to find out how these industry leaders view the emerging currency.
When none of the top brass answered, Malik says he remained undeterred, choosing to go “down the ladder” from Google CEO Larry Page to query Google vice president Vic Gundotra.
This time, Malik, to his own surprise, received a response: Gundotra referred him to Sridhar Ramaswamy, senior vice president of ads and commerce at Google, emails obtained by CoinDesk show.
Even more shocking to Malik was that Ramaswamy answered his inquiry promptly with what he considered game-changing news, that Google was exploring ways to incorporate bitcoin into its payments plans:
Elated about his findings, Malik took to Reddit to announce the emails in a post that quickly became a must-read for virtual currency buffs.
Just as quickly as news sources began to pick up on the story, however, Google moved to deny the reports:
The result is the bitcoin community is left with two possibilities: 1. Google is at least open to considering using bitcoin or 2. Google executives misstated their positions on bitcoin.
Malik reacts to the news
Google’s public statements stunned Malik, who insists he did not doctor the emails and had no incentive to do so.
Malik noted that he spoke to Google representatives after they were made aware of his Reddit posts, and that they subsequently asked him to moderate a Google survey that would ask “What would I want Google to do with bitcoin?“
In emails to Malik obtained by CoinDesk, Bardin indicated that he was not able to comment on the company’s plans for bitcoin.
At press time, more than 1,600 people had given Google over 500 suggestions with 20,000 votes, including novel ideas like adding a bitcoin tip jar to YouTube, an addition that would incorporate aspects of YouTube’s competitors like Patreon.
Google’s response
Malik contends that the emails he received are real, and that Google is taking the possibility of working with bitcoin seriously. But, he believes the attention his posts received likely caused the company to revert back to its previously stated policies.
Malik was further frustrated by Reddit users who allege that his intentions were to manipulate the price of bitcoin.
Google refused to comment on whether the emails were legitimate, however, the company did not denounce them either. Company representatives rather directed us to a CNBC story on bitcoin from last October, suggesting its stance on the virtual currency remains, publicly at least, unchanged.
Sweden Likely to Regulate Bitcoin as an Asset
Published on January 22, 2014 at 20:51 GMT | Europe, Regulation
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:
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:
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”.
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.
Microsoft Destroys Bitcoin Mining Botnet Sefnit
Published on January 22, 2014 at 16:31 GMT | Crime, News, Technology
Microsoft has gone on the offensive against the ‘Sefnit’ botnet and it has remotely removed an older version of the Tor Browser from an estimated two million computers.
Sefnit is a curious form of Tor-based malware that managed to infect millions of computers and turn them into zombies for click fraud andbitcoin mining.
It was first detected last summer, after the Tor Project noticed a 600% increase in Tor use. The spike coincided with the highly publicised revelations about NSA’s snooping programmes, namely Prism.
However, privacy concerns and paranoia had nothing to do with the surge. In September it became evident that the cause of the massive increase in Tor users had nothing to do with the NSA and whistleblower Edward Snowden: the culprit was Sefnit.
Remote solution
Sefnit was propagated in several ways, and it quickly found its way to several software bundles – complete with a vulnerable version of the Tor Browser. Themalware installed the Tor client in the background, and even when Sefnit was removed the infected computer would still connect to the Tor network.
Since Microsoft had no way of reaching the affected users, it decided to wipe the infections remotely, reports Hacker News. Microsoft updated definitions for its anti-malware suites and the new signatures allowed Microsoft Security Essentials, Windows Defender, Microsoft Safety Scanner and other tools to detect and remove Sefnit malware.
Bitcoin mining botnets have been around for a while. The most recent case of mining malware propagation involved Yahoo’s European servers, which served infected ads for a few days before the company identified the breach. Several mining botnets were identified and put out of action in late 2013.
Rising hash difficulty
However, bitcoin mining botnets are starting to look like dinosaurs. PCs have not been used for bitcoin mining for months and even a huge botnet is an extremely inefficient way of mining. As the hash difficulty goes up, returns go down. In other words, malware designers will simply stop bothering with bitcoin mining malware altogether.
There is a problem though. Some PCs can still mine Scypt-based currenciesquite efficiently. If litecoins or other altcoins based on ASIC-proof algorithms ever become popular, they could present a tempting target for cyber criminals.
Cryptocurrency Exchange CoinMKT Announces US Banking Partner
Los Angeles bitcoin exchange CoinMKT has announced a US-based banking partner. As a result, the company is now able to accept bank wires from US bank accounts.
Travis Skweres, CEO of CoinMKT, says he expects the company to grow as a result.
“We’re confident our growth will explode being able to accept wires deposits that can be credited same day or next day,” he said.
Not many exchanges currently have the ability to accept banking wires, and the ones that do have experienced massive user expansion. Exchanges that have the ability to link directly to the US dollar via a banking institution are more attractive to investors. Skweres told CoinDesk that his company has added staff in order to meet the expected demand.
The company is also announcing the addition of three more altcoins to its exchange: Megacoin (MEC), Worldcoin (WDC) and Quark Coin (QRK). Terracoin (TRC), which CoinMKT is now referring to as “problem plagued”, is being removed.
As a result, CoinMKT users can now trade between USD and nine cryptocurrencies in total. All of them are listed here, with informational resources for each. Additionally, users now have the ability to trade bitcoin for each of the eight altcoins. For example, there is a BTC/LTC pair for bitcoin/litecoin and a BTC/FTC pair for bitcoin/feathercoin trading.
Maker-taker structure
The company is also switching its commission structure to a ‘maker-taker’ setup. This adds an incentive for market makers, those who are selling a cryptocurrency on a particular market.
Essentially, it helps to better fill an order book, something that BTC China has already implemented. That exchange has seen impressive volume gains, which may partially be attributed to its maker-taker structure. Skweres observed:
Larry Harris, a professor at the USC Marshall School of Business, recently wrote a paper entitled ‘Maker-Taker Pricing Effects on Market Quotations’. In his abstract, he writes that his research found ”the exchange maker-taker pricing scheme affects incentives to take or make markets resulting in narrower bid-ask spreads”.
The more narrow the spread is, the more liquidity that exists in an exchange as buyers and sellers are closer to bid and ask amounts.
That’s good for cryptocurrency trading, since there’s a general lack of that attribute in many exchanges. CoinMKT’s new maker-taker commission structure means that the maker is rewarded 0.25%; the taker is charged 0.75%. CoinMKT also takes 0.5% as part of its fee.
Maker-taker aside, the US banking partnership is clearly the most significant of the company’s announcements. Yet there are also many other options available for CoinMKT deposit and withdrawals, according to Skweres.
“US customers now have the option of wire or money order. Foreign customers have wire, money order, OKPay or Egopay as choices,” he said.
Las Vegas Casinos Accept Bitcoin, But Not for Gambling
Published on January 21, 2014 at 18:50 GMT | Merchants, News, US & Canada
The D Las Vegas Casino Hotel and Golden Gate Hotel & Casino have announced they will become the first hotels in Las Vegas to directly accept bitcoin for purchases.
Notably, acceptance will be limited to certain sections of the hotels, including the Golden Gate’sfront desk and the D’s front desk, gift shop and on-site restaurants American Coney Island and Andiamo Steakhouse. However, bitcoin will not be an accepted payment method on the casino floor, Derek Stevens, co-owner and CEO of the D and Golden Gate, told CoinDesk, due to ongoing concerns from state regulators.
Golden Gate is primarily owned by Desert Rock Enterprises, an investment company led by Derek and Greg Stevens. The brothers are also co-owners of the D. From 22nd January, both properties will use the services of Georgia-based payment processor BitPay to handle transactions via tablet and mobile devices. Stevens said his company elected to use BitPay due to its ease-of-use.
BitPay @bitpay
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The oldest hotel casino in Las Vegas (Golden Gate, built 1906) now accepts #bitcoin http://www.sacbee.com/2014/01/21/6088159/las-vegas-hotels-become-first.html …
8:14 AM - 21 Jan 2014
Though patrons will be barred from bitcoin gambling, Stevens indicated that he believes his hotels have much to offer the currency’s dedicated user base.
Davis went on to suggest the decision to accept bitcoin would also appeal to Vegas residents who have relocated to the city due to its growing status as a technology hub.
A big step for bitcoin
While bitcoin gambling services have long been a staple on the Internet, the decision by Golden Gate and the D puts real-life bitcoin gambling one step closer to reality, even if this milestone is still far off. Stevens indicated that Nevada’s gaming regulation bodies remain wary of bitcoin and what it could mean for the city’s businesses.
“I do think that from the Gaming Commission’s perspective that there’s some greater interest in understanding with some better clarity where the US Treasury and the IRS falls on this before it makes a determination on whether bitcoin can be used in casino cages to purchase casino chips or to purchase slot play,” he added.
Still, bitcoin could mean big a new market for the hotels and Vegas at large, as it seeks to improve on recent record visitation figures. As of June 2013, one website in particular, SatoshiDice, was estimated to account for between 25% and 50% of all bitcoin transactions.
However, while notable, the D and Golden Gate are not located on the infamous Las Vegas strip, signaling that despite an increased interest from the area’s hotels, bitcoin has not yet cracked mainstream acceptance in Vegas.
Built in 1906, Golden Gate was one of the first hotels erected on Las Vegas’ famous Freemont Street. Today, the area is known affectionately as “Old Vegas,” and it draws more interest for its historic ambience than its nightlife.
This appeal is evidenced by advertising for properties such as the D, which is marketed to customers in the Great Lakes region of Ohio, Illinois, Indiana, Michigan and Wisconsin, whereas major nightlife destinations such as The Cosmopolitan frequently advertise nationally in major metropolitan areas.
Top bitcoin attraction
In addition to hosting the annual Inside Bitcoins conference, Las Vegas has nurtured a thriving bitcoin community, complete with a number of local merchants and retail outlets accepting the currency.
Rumours that major hotels were considering accepting bitcoin began surfacing last year, however, sources told CoinDesk that issues with the local gaming commission may have hampered these early initiatives.
Stevens reported that the pressure may be on at many hotels, however, as he stated that the number of customers inquiring about bitcoin acceptance at his properties helped sway his decision to become involved in the movement:
If you’re planning to spend your bitcoins in Vegas following the news, click herefor our complete guide to everything bitcoin in Las Vegas.
OKPAY Makes U-Turn on GBP to Bitcoin Transfers
Web payments service OKPAY has announced that it will allow users to move pound sterling (GBP) into OKPAY web-based wallet accounts and then transfer these funds to cryptocurrency exchanges.
Rumours of the policy change by the merchant and consumer payment provider first surfaced onreddit and Bitcoin Talk after customers received emails. The announcement was later confirmed on 21st January via OKPAY’s official Twitter account:
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