Thursday, February 13, 2014

Bitcoin news round up February 13 , 2014 --Transaction malleability and attack on the Bitcoin network .....Silk Road 2.0 'Hacked' Using Bitcoin Bug, All Its Funds Stolen ......... The Guardian reports Bitcoin exchanges ( Mt Gox , BTC-e and Bitstamp ) suspend conversions as hacker attack intensifies ....... Mt. Gox Founder Mark Karpeles Responds to Critics ...... Bruce Fenton opines " Why Life Under Bitcoin Regulation Will Be Worse Than Investors Think " ...... Canada’s Finance Minister Prepares to Regulate Bitcoin ....... India’s Government Claims the RBI is Examining Virtual Currencies ......Bank of Greece Breaks Silence on Bitcoin ........ St Louis Fed curious as to why businesses would accept bitcoins in spite of fiat ? Roger Ver bets on Mt Gox solvency...... New Jersey slaps MIT Bitcoin hackers with subpoena — and they’re fighting back ....... Utopia Drug Marketplace Shutdown

Malleability problem addressed by Justcoin already  ? How long for Bitstamp and Mt Gox to fix their particular glitches ?

Transaction malleability and attack on the Bitcoin network

TL;DR Funds are safe and Bitcoin withdrawals are back to normal
The following post is quite technical, simply because Bitcoin is very technical.
There’s more work to do on DoS, but I’m doing a quick build of what I have so far in case it’s needed, before venturing into more complex ideas.
Like Satoshi Nakamoto, the creator of Bitcoin, wrote back in 2010, we've been learning the last few days that Bitcoin is an experiment still in its early stages. A quirk in the Bitcoin protocol, transaction malleability, causes transaction hashes to change from when the transaction is broadcast to when it is included in the block chain. Some exchanges, notably MtGox, had been using this transaction hash to track payments, possibly causing them to mistakenly refund payments that had actually gone through. One or more users of the Bitcoin network noticed this and set up a relay node that would purposefully change the transaction hash of every transaction they heard about and re-broadcast it.
Because Justcoin does not track withdrawals using transaction hashes, things were looking pretty good for us. But it didn't take long until also Bitstamp shut down their withdrawals. I started to get worried. Looking at the Bitcoin developer chat the problem seemed to be with spending unconfirmed change. At this time I stopped automatic withdrawals from Justcoin and announced it on our Twitter account,@jstcoin. Since then we've been running withdrawals manually every few hours, always checking on the health of our wallet before proceeding.
Already on Monday, a fix was proposed by Wladimir J. van der Laan and accepted by the Bitcoin core developers:
gavin acks
I spent most of yesterday testing and applying this fix to our servers. Today, I've been running a tool created by Gavin Andresen to fix a small number of transactions in our wallet that were not confirming for a long time. Things are looking good and we have resumed normal withdraw schedule.
Thanks to the Bitcoin core developers, pool operators and several other exchange operators who have been staying up late and working together to share both problems and solutions.
Andreas Brekken
Lead Developer/Co-founder

( Convenient - anyone buying this one ? )

Silk Road 2.0 'Hacked' Using Bitcoin Bug, All Its Funds Stolen

The same bug that has plagued several of the biggest players in the Bitcoin economy may have just bitten the Silk Road.
On Thursday, one of the recently-reincarnated drug-selling black market site’s administrators posted a long announcement to the Silk Road 2.0 forums admitting that the site had been hacked, and its reserve of Bitcoins belonging to both the users and the site itself stolen. The admin, who goes by the name “Defcon,” blamed the same “transaction malleability” bug in the Bitcoin protocol that led to several of the cryptocurrency’s exchanges halting withdrawals in the previous week.
“I am sweating as I write this… I must utter words all too familiar to this scarred community: We have been hacked,” Defcon wrote. “Our initial investigations indicate that a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as “transaction malleability” to repeatedly withdraw coins from our system until it was completely empty.”
Just how many bitcoins were stolen wasn’t included in the post, although it included a list of Bitcoin addresses that the Silk Road administrators believe to have been involved in the heist. Those transactions seem to point to a Bitcoin address that contains 58,800 coins, worth more than $36.1 million at current exchange rates. But tracing Bitcoin’s pseudonymous transactions is always tricky–other estimates range from 41,200 by a Silk Road user and 88,000 by the Bitcoin news site.
Based on the Silk Road’s data about the attack, the site’s staff point to three possible attackers, two in Australia and one in France. “Stop at nothing to bring this person to your own definition of justice,” Defcon writes.
Silk Road’s users, predictably, didn’t take the announcement at face value, and instead suspect that the site’s staff have used the “transaction malleability” bug as a scapegoat to cover their own incompetence–the site has been plagued with more pedestrian bugs since launching in November or even that they’ve run off with the users’ bitcoins themselves. “Transaction malleability,” after all, has been a known issue with Bitcoin for two years, and is described by most Bitcoin security experts as more of a major nuisance than a real threat allowing coins to be stolen.
“Something’s not correct: The bug…can’t be made responsable if bitcoins are missing now!” writes a user named pathfinder.
“Oh, this is rich. How many users called for the shutdown of SR2 to fix the problems? They were ignored,” writes a user named aqualung on the site’s forums. “Admins did this. Not some vendor.”
Defcon denied those accusations, but took full responsibility for allowing the theft. “I didn’t run with the gold,” he writes. “I have failed you as a leader, and am completely devastated by today’s discoveries…It is a crushing blow. I cannot find the words to express how deeply I want this movement to be safe from the very threats I just watched materialize during my watch.”
I’ll have further updates as this story develops.

( Using 600 per coin as a rough number , the alleged theft is about 52.8 million ! ) 

Bitcoin exchanges suspend conversions as hacker attack intensifies

Moves follow crackdowns by China and Russia on use of the cybercurrency amid fears over criminal use
Bitcoin's value has plunged as the attack has intensified. Photograph: Ted Soqui/ Ted Soqui/Corbis
Three online exchanges for the bitcoin virtual currency have suspended conversions into state-backed currencies, saying they are under attack from hackers suspected of trying to create fraudulent transactions.
The value of the currency has plunged as the attack has intensified, from $926 on 5 February to $530 on 12 February on MtGox, one of the affected exchanges. Bitstamp, based in Slovenia, and BTC-e, inBulgaria, also halted withdrawals indefinitely on Wednesday as they came under attack.
The moves follow crackdowns by China in December and Russia last week on use of the cybercurrency, which some authorities fear could be used for money laundering, funding terrorism or tax evasion.
"This is a denial-of-service [DoS] attack," said Jinyoung Lee Englund, a spokeswoman for the Bitcoin Foundation, a trade organisation for exchanges. "Whoever is doing this is not stealing coins, but is succeeding in preventing some transactions from confirming. It's important to note that DoS attacks do not affect people's bitcoin wallets or funds."
In a statement, MtGox said: "A bug in the bitcoin software makes it possible for someone to use the bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be re-sent." Such "double spending" could destroy trust in the system.

Coin Desk.....

( If malleability isn't fixed quickly , the bitcoin withdrawal lockdown will drag on and on .. ) 

Mt. Gox Founder Mark Karpeles Responds to Critics

 | Published on February 13, 2014 at 11:14 GMT | Bitcoin protocolExchangesMt. GoxNews

Mt. Gox chief executive and founder Mark Karpeles has fired back at critics in a recent interview withForbes.
Both Karpeles and Mt. Gox have been taking a lot of flak since the exchange suspended bitcoin withdrawals last week. The decision was brought about by transaction malleability issues, which indirectly led to a massive DDoS attack targeting bitcoin exchanges on Monday.
Since then Mt. Gox has tried – and largely failed – to reassure the bitcoin community, while the bitcoin price dropped to its lowest point this year.

Who is to blame?

When asked whether the problem was caused by the Bitcoin protocol itself or Mt. Gox’s implementation, Karpeles told Forbes that the Bitcoin client is simply not designed to handle the sort of load that Mt. Gox experiences.
He added that the exchange chose to develop its own implementation to overcome lagging and crashing. However, as the Bitcoin protocol was constantly updated, Mt. Gox simply could not keep up. Karpeles explained:
“With bitcoin 0.8.0 [...] a breaking change has been included that would prevent transactions to be accepted if their signature did not include the right number of zeroes in front of the signature values (in an effort to reduce risks of transaction malleability). We did not notice this change but a few of the transactions we were sending would become invalid because of this.”
Karpeles said Mt. Gox started looking into the problems and began being “more transparent” in an effort to provide the public with a full list of pending transactions.
“Nobody was however able to tell us what went wrong at that time. Since only a few transactions were affected anyway we didn’t give it much attention (recently we were able to look more into this and fix this issue),” said Karpeles.
He continued: “This meant however that some of our invalid transactions were listed publicly, making it rather easy for someone with bad intention to alter these, hence the reason why many people claim there was an issue in our code.”
He added that exchanges using the standard Bitcoin client were a lot less likely to be affected by the problem.

There is no quick fix

Karpeles said he is puzzled by the fact that the Bitcoin Foundation failed to address the transaction malleability problem after it was originally identified in 2011.
He said that Mt. Gox proposed a solution that would allow people who send coins to track them no matter what happens in terms of malleability. The solution would not be perfect, but it could be applied quickly and it wouldn’t “break” anything.
Bitcoin developers are currently working on another way to tackle the problem, but it will take more time to deploy and it may break some custom clients.
Karpeles was keen to point out that the Mt. Gox announcement allowed other exchanges to be more cautious when faced with failing transactions. Although it upset a lot of people, it also helped a lot of people understand and deal with the problem, he argues.
Mt. Gox and Karpeles have long been a source of controversy within the bitcoin community, even before the malleability issue forced the exchange to suspend bitcoin withdrawals.
For the time being, it is unclear how and when the malleability issue will be resolved once and for all. However, the longer the problem drags on, the more outspoken Mt. Gox’s critics will surely become.

Why Life Under Bitcoin Regulation Will Be Worse Than Investors Think

 (@pete_rizzo_) | Published on February 13, 2014 at 10:04 GMT | AnalysisRegulationUS & Canada

Fewer startups. A drain of top talent. Jobs and opportunities pushed overseas.
These are the nightmare outcomes that Atlantis Financial founder, 20-year Wall Street veteran and Bitcoin Financial Association member Bruce Fenton believes could befall the bitcoin industry, should US lawmakers heed calls for regulation from the bitcoin community.
Having worked under the conditions imposed by traditional financial regulation, Fenton offers an insider’s account of how detrimental these policies could be for bitcoin’s growth and ultimate longevity.
“[The traditional financial system has] seen firsthand the damages regulation can cause. Some of the people who spoke at the hearings in New York, they’re well-meaning people, they say things like ‘We need regulation’, but I don’t think they understand what they’re asking for,” Fenton said.
Fenton claimed that applying existing regulation to the bitcoin industry could adversely affect bitcoin startups – which already operate in an uncertain market – virtually overnight.
Speaking to CoinDesk, Fenton discussed what was at risk:
“What innovations have we seen in the banking or financial sector in the last 30 years? Almost nothing. Nobody ever decides to start a bank out of their garage, there is no Google, PayPal or Youtube-like innovation that’s come out of banking or finance, because it’s so scary to people they don’t even bother to try to begin with.”

A day under bitcoin regulation

Recently, Fenton has become more outspoken about his belief that regulation is not the solution the bitcoin industry needs.
Drawing on his experience working at major investment firms, Fenton painted a vivid picture of what bitcoin business owners could expect under regulation:
  • All correspondences, including email, would be monitored.
  • All emails would need to be saved and reviewed.
  • All public speaking events would need to be approved, and all content published ahead of time.
  • Certain written materials would need to be reviewed by compliance officers and regulators.
  • Company representatives would need to take continuing education and be regularly fingerprinted.
Further he named the following, seemingly innocent actions as examples of regulatory violations:
  • A client moves out of state, and the company reaches out to this client though they are not licensed in that state.
  • An assistant answers the phone for a client who wants sell a fund and executes the order though they are not registered to.

What New York got wrong

Fenton noted it was the New York hearings that partly influenced his decision to offer guidance to the reddit community.
Speaking to CoinDesk, he reiterated that though both sides likely had the best intentions, he was shocked by some of the suggestions, such as how New York officials suggested regulating miners, simply for running free programs on their computers.
However, Fenton isn’t against regulation altogether.
Rather, he believes that many existing consumer protection laws – those that prevent harm and violence – can easily be applied to bitcoin, but this definition of regulation is far from the result that the ecosystem would see enacted.
“I understand regulators want to regulate. If they must do something in this space, there’s a lot of productive things they could do,” he said.

Choosing smart regulation

Should these parties choose to enact new regulations, Fenton had several suggestions for how they could move forward and benefit the ecosystem.
He proposed that states like New York should work with their law enforcement officials to protect bitcoin consumers from fraud, theft and hacking. Furthermore, he added that there is work that could be done to help miners and overall block chain security.
Fenton also encouraged investors and those in the community to consider what illegal actions – like theft and fraud – aren’t already enforceable in the bitcoin space under current law.
To sum up this point, Fenton asked:
“Supposed we didn’t have a single new regulation covering bitcoin, what would be the situation where we would have a victim, where a real human being would be harmed because of that?”

Canada’s Finance Minister Prepares to Regulate Bitcoin

 (@dannybradbury) | Published on February 13, 2014 at 05:04 GMT | NewsRegulation,US & Canada

Signals are emerging that Canada is about to tighten its grip on bitcoin and other decentralized digital currencies. The country’s finance minister Jim Flaherty singled out bitcoin by name in his federal budget today, and announced forthcoming laws that would regulate it.
“It is important to continually improve Canada’s regime to address emerging risks, including virtual currencies, such as Bitcoin, that threaten Canada’s international leadership in the fight against money laundering and terrorist financing,” said Flaherty in the budget document.
The budget went on to promise “anti-money laundering and anti-terrorist financing regulations for virtual currencies, such as Bitcoin.”
When such laws emerge, they will most likely be developed by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), which is the country’s financial intelligence unit, responsible for preventing money laundering and other financial acts that could support terrorism.

Changing attitudes to bitcoin

FINTRAC has practically ignored bitcoin since its inception, but things may be changing. An internal report from the organization, obtained through an Access to Information request, has revealed that the agency is contemplating a range of regulatory measures.
Options that the agency may be considering include an potential plan to “choke bitcoins oxygen” [sic] by denying Canadians access to foreign exchange markets, said reports. It is also said to have considered forcing bitcoin exchanges underground, but acknowledges the potential downside for consumers.
FINTRAC’s hands-off approach has enabled numerous start-ups to flourish in Canada, said Michael Patryn, director of the Vancouver Bitcoin Co-Op, and of new Vancouver bitcoin exchange QuadrigaCX. “Entrepreneurs are comfortable with their country’s regulatory stance, and are therefore able to offer new services and create new jobs without the burden of excessive regulatory requirements stifling their innovation,” he said
Jesse Heaslip, who runs Vancouver-based white label exchange software company, also argued that FINTRAC’s hands-off approach has been a good thing for the industry.
“When I compare where Canadian entrepreneurs are focusing their attention in the bitcoin ecosystem compared to our American counterparts there is no question that we are spending more time, effort and energy on innovation,” he said, pointing to projects like EthereumCoinKite, and his own Bex as home-grown examples.
They need to make a decision and figure out what regulations need to be or not be in place, sooner rather than later.
FINTRAC has been so hands off in the past that Canadian exchanges have had a hard time getting it to take notice of them. Mike Curry, founder of Toronto-based Vault of Satoshi, tried to apply for an MSB license last year, but was refused, on the basis that as a bitcoin business he didn’t need one. It’s time for some clarity, he said.
“Thus far we’ve been treating digital currency with the same care as we do with fiat (in terms of AML/KYC),” Curry acknowledged. “I think they need to make a decision and figure out what regulations need to be or not be in place, sooner rather than later.”
Like many south of the border, Heaslip wants consistency. “The best possible outcome would be if there was one global license that was required rather than having an application for each individual country and or state,” he said. “That would limit the mental and financial burden on entrepreneurs around the regulatory issues and allow us to focus on innovation in the marketplace.”
Eric Spano, director of finance at the Montreal-based Bitcoin Embassy, which is an affiliate chapter of the Bitcoin Foundation, said that the Canadian government had let bitcoin breathe for a while without regulatory smothering, and welcomed the next step.
“Now that Canada is becoming a hub for Bitcoin enthusiasts and businesses, we’re very happy to see FINTRAC’s interest in the technology,” he said. “The establishment of a regulatory framework that mitigates money laundering and fraud risks, while continuing to enable Canadian businesses and startups to create innovative technologies and services, will continue to attract talent and venture capital from around the world.”
When FINTRAC turns its attention to a subject, it has a history of aggressive reporting. Two separate audits have found the agency to exceed its mandate when pursuing and storing personal information, for example. It was discovered to have been processing reports of financial activity without explaining why they should have been considered suspicious. The Canadian bitcoin community will be watching its next move with interest.

Bank of Greece Breaks Silence on Bitcoin

 (@pete_rizzo_) | Published on February 13, 2014 at 17:14 GMT | EuropeNewsRegulation

The Bank of Greece issued a brief statement on 11th February warning citizens of the potential risks associated with virtual currencies, such as bitcoin.

In particular, the bank cautioned that investors should be mindful that losses related to changes in the priceof virtual currencies are not protected.
A recently released report from the Law Library of Congress, the research arm of the US Congress, suggests that this is the first time the Bank of Greece has issued a statement on virtual currencies.
Citing past statements from the European Banking Authoritythe release included introductory information meant to guide consumer decision-making, as well as material that further informed readers of the potential tax implications and legal consequences associated with the use of virtual currency.
The announcement comes after a string of similar remarks from other European central banks, such as the Central Bank of Lithuania and the Central Bank of Cyprus, which both issued statements to raise awareness of the potential risks of virtual currencies in the last week.
The Bank of Greece did respond to requests for comment, but declined to elaborate on the timing of the release.

Initial reactions

Greek bitcoin users have suggested that bitcoin has yet to garner mainstream media attention in the country, and that awareness remains low as a result – although some businesses in major metropolitan areas are beginning to accept payments in BTC. Therefore, they say, the bank’s statement is unlikely to have much of an impact on the Mediterranean nation’s fledgling virtual currency ecosystem, but it could influence those who have yet to become involved.
Computer scientist and bitcoin enthusiast George Zervos described the current state of the ecosystem to CoinDesk:
“I can assure you that most people [have] heard about bitcoin, but [they] don’t exactly know what it is or how to explain it to someone if asked.”
Zervos went on to suggest that Greece’s ongoing problems with tax evasion have likely stoked fears in its banking community that more wealth could “flow out of the country into bitcoin exchanges [in order to] to avoid tax”.

Potential impact

Problems with the Greek banking system in 2013 were initially cited as one of the driving factors of bitcoin’s surge in value, along with similar issues in Cyprus, Italy and Spain.
At the time, Greece was in the midst of imposing severe austerity measures in an attempt to fight its escalating debt-to-GDP ratio, and members of the bitcoin community, such as Charlie Shrem publicly discussed how bitcoin’s advantages could prove attractive to the market.
When asked, members of Greece’s bitcoin community seemed convinced that the bank’s statement will not affect current bitcoin users.
Zervos concluded:
“We all know that banks are fighting bitcoin in one way or another. Personally I think not much has changed since this warning.”
Bitcoin developer and miner Yorgos Ntovas agreed Greek bitcoin users will be indifferent to the statement.
“I do not think that the Bank of Greece has any impact in Greece’s bitcoin ecosystem. The Bank of Greece has a bad reputation in Greece, and for that, users do not pay any attention at all,” he said.

India’s Government Claims the RBI is Examining Virtual Currencies

 (@roopgill) | Published on February 12, 2014 at 15:12 GMT | AsiaNewsRegulation

The Indian government has claimed that the Reserve Bank of India (RBI) is examining the legal and security ramifications of virtual currencies.
The Hindu reported that Indian Finance Minister P Chidambaram made the following statement to the Rajya Sabha, India’s Upper House of Parliament:
“The RBI is presently examining the issues associated with the usage, holding and trading of virtual currencies, including bitcoins, under the extant legal and regulatory framework of the country, including foreign exchange and payment systems laws and regulations.”
Last December, the RBI issued an advisory cautioning Indians against the volatility of all virtual currencies. A bitcoin fan filed a claim pressing the RBI for clarification on this advisory, which alluded to the legitimacy of bitcoin.
Mr Na “Naavi” Vijayashankar is the lawyer representing that case. He claimed the latest statement from Chidambaram is quite neutral:
 “I don’t see anything different except now we can say that the matter is under the attention of the biggest monetary authority in India, which is the Finance Minister.”
He added: “Even though the Reserve Bank of India is the regulatory authority, the political support has to come from the government. So at least now we can say all the persons who ought to be there in decision-making have been properly brought to the discussion table.”
The current term of the Indian Parliament is coming to an end with a general election this spring. Vijayashankar stressed that with this development, it is important to get the political support for the virtual currency agenda.
Meanwhile, Vijayshankar is planning on taking his case to the higher courts of judiciary by next week.

Yesterday, I was invited to The Saint Louis Federal Reserve to speak with a couple of people in the institution about why a business owner like me would be willing to accept Bitcoin.  We met informally over lunch, and I was actually quiet pleased with how much my lunch companions knew about the Bitcoin system. 
Adoption Curve.png
I am certainly not a leading expert on Bitcoin. Instead, I am perhaps best described as an “early adopter,” the person sitting at the left corner of the adoption curve.  The people that were into Bitcoin before me are probably more aptly described as Bitcoin Innovators as they are the ones actually building the infrastructure and culture.  Because Bitcoin is now attracting early adopters, it is now drawing the attention of people that regulate other areas of US monetary policy; they want to know why someone like me is willing to take risks.

Our conversation wasn’t about monetary policy or politics; I believe that they were genuinely curious about why I would see value in using Bitcoin when I have U.S. dollars available to me.  I felt free to talk about how I came to learning about and ultimately embracing Bitcoin.  Our conversation spanned many areas, like how consumers will protect themselves from fraud, and what sort of illegal activities could individuals carry out in the Bitcoin system.  I could go into detail about that part of the conversation, but for the most part I wanted to share what messages I hope I conveyed in the conversation.

I don’t have a magic 8-ball, but while I was talking I brought up the 4 predictions I was willing to make when they asked my to speculate on what will happen with Bitcoin.

1.     Bitcoin will likely be valuable first in places with wild currency fluctuations

There are a lot of places in the world where currencies have been horribly managed.  The citizens are held hostage as their government prints more money, or takes out bonds to finance bad decisions, because the price of food or rent will fluctuate from one day to the next.  This is going on right now in Argentina
Monetary Base.png
Even though Bitcoin is seeing big swings in its price, as the Bitcoin system grows it will likely become far more resistant to big peaks and troughs.  Because there is a finite number of Bitcoin (21 million), citizens won’t ever have to worry that an irresponsible government will print money or take on debt, thereby lowering the value of the current dollars/yen/pesos.
In an economy where you don’t know what your currency will be worth tomorrow there will be incentives to storing value in a currency that is safer.  I predict that Bitcoin will begin to be used by people and accepted by merchants when those citizens are looking for alternatives to using state currency particularly in countries where the future of their currency comes into question.

2.     Bitcoin is rough around the edges and innovators will be creating businesses that make using Bitcoin better, easier, more beautiful. 

Most of us never saw the Internet in its raw form.  We didn’t start using the Internet until innovators sitting in garages, dorm rooms, and small businesses began finding ways to make money by making the Internet easier to use. 

First news reports of reading news papers on the "internet"
There was a time when in order to use the Internet you had to really understand IP addresses, how the DNS worked, and you had to buy really expensive time online.  But individuals and teams found ways to bring us what we wanted and needed so that the Internet was something we could get value from.  Interfaces that made the 1s and 0s make sense. Google, Yahoo, AOL had to be created.  Hardware capable of processing huge amounts of information had to be manufactured.  Someone had to invent and then manufacture personal computers, cell phones, and mp3 players. Companies like Apple, Microsoft, and many others cropped up. 

All of the major tech companies were started by people who then hired tens of thousands of smart people and the economy roared forward.  We can expect this level of innovation with making cryptocurrencies useable in everyday life because we know that the Bitcoin system needs innovation to make it easier for regular consumers to use it.  We need websites, mobile apps, security measures, point of sale machines, and all sorts of tracking software.

3.    If Bitcoin innovators in the U.S. are forced to deal with regulations like banks do, innovation will happen where regulations are not as fierce.

People all over the world want this technology and the U.S. does not have claim to all of the smart innovators that know how to build elegant user interfaces, or apps that will go on the latest smartphones. 

If the people building innovations that make the Bitcoin system easier to use are regulated like banks, we won’t see innovation flourish here.  If regulation is crushing, why wouldn’t a smart kid from India or China start their Bitcoin company abroad.  Even if they were educated in U.S. universities, their loyalties will likely end at graduation if their opportunity to make money is easier elsewhere. 
Since at a minimum, we can all agree that Bitcoin will give value to people in places with wild currency fluctuations, we also agree that there are innovations that need to happen to make the system easier/cleaner to use- then we should be rushing in to protect the innovators from regulation otherwise U.S. entrepreneurs won’t stand a chance against competitors that can build what people want and need without being accountable for the (what some would call “onerous”) U.S. banking regulations. 

4.     Non-profits are primed to be the earliest organizational Bitcoin adopters: 

The Sochi Olympics have proven to us that cryptographic currencies are a highly effective way of raising money (great work Doge!).  And I know that a lot of people think that this is a novelty act, but I don’t think so.  People donate money because donating allows us to be the people we want to be.
I know many development directors who are pushed to go looking for high value donors.  The current thinking is that it is easier to get one $100,000 donor than 20,000 $5 donors.  But that is old thinking.  The internet will allow us to connect millions of people to causes- and Bitcoin (or Dogecoin) will allow people to give small amounts (like $1-$5) knowing 2 things:

1.   My donation is going directly to the people I am sending it to.

2. All of my donation will get there because I am not paying any credit card fees.

This is probably the subject of an entire other blog but it should suffice to say that every non-profit in the world should be learning about the system and putting up a Bitcoin wallet public address right away.  It is only upside because wallets are free, education is always helpful, and if you get a donation your organization has that much more money.  

To close out this post, as I was walked to the door and shook hands with my host- I have to say I felt hopeful.  I know a lot of people are doubtful of what regulators will do and how it could all suffocate the Bitcoin system.  But I can tell you that I felt heard in that meeting.

I don’t think either person in the meeting is going to go buy a Bitcoin any time soon, but I think they listened and saw the logic that so many of us see.  These kinds of conversations are important because it is a lot easier to get people on board with good reasons then it is to fight with people over misconceptions.  As a member of the Bitcoin community I was excited to share this story with all of you.

Roger Ver is Betting on MtGox’s Solvency

Posted 2 hours ago 

Roger Ver MtGox
Roger Ver speaking at LeWeb 2013. Photo via LeWeb13.
Roger Ver, also known as Bitcoin Jesus, is looking to buy MtGox bitcoins from people who believe the Bitcoin exchange may be insolvent. As reported yesterday, people are already selling their MtGox bitcoins at discounted rates on a new exchange that popped up overnight. Ver made a post on thebitcointalk forum where he stated his interesting in purchasing at least 100 bitcoins from other MtGox users. It’s interesting to see this bid of confidence from Ver after so many people in the Bitcoin community have been bashing MtGox for the past few days. Perhaps this statement from Ver will calm down some of the hysteria that is going on with MtGox customers right now.
An Insider’s Perspective
It’s important to remember that Roger Ver actually got to take a peak at MtGox’s books a few months ago. When people first became worried about MtGox’s possible insolvency, Ver released a video on YouTube where he talked about the traditional banking system’s inability to keep up with the demand from MtGox’s customers. This video is over seven months old at this point, but it goes to show that Ver might actually have some facts to back up his apparent belief that MtGox is solvent. You can watch Ver’s old statement on MtGox below:

 What Do We Really Know?
If MtGox’s fiat withdrawal delays are due to problems with the traditional banking system and their Bitcoin withdrawal delays are due to transaction malleability, then perhaps the Bitcoin community has overreacted to the recent MtGox press releaseBitstamp also decided to suspend Bitcoin withdrawals on their exchange, so MtGox is definitely not alone when it comes to transaction malleability issues. At the end of the day, perhaps a poorly implemented Bitcoin client is what’s really to blame for the issues at MtGox. It seems that bad PR, rather than insolvency, could be the real problem at this exchange.

New Jersey slaps MIT Bitcoin hackers with subpoena — and they’re fighting back

New Jersey slaps MIT Bitcoin hackers with subpoena — and they’re fighting back
By Eric Blattberg,
The MIT students behind Bitcoin mining programTidbit won the “most innovative” award at a recent hackathon.
But they will soon face a ruling from another kind of judge: one employed by the state of New Jersey.
In early December, a few weeks after the hackathon, the New Jersey division of consumer affairs issued a subpoena to 19-year-old Tidbit developer Jeremy Rubin. The subpoena demanded he turn over everything related to Tidbit: all versions of the source code, all Bitcoin wallets associated with Tidbit, all agreements and communications with third parties, the name and IP addresses of everyone who mined Bitcoins using Tidbit, and so on. It explicitly asked for “all documents and correspondence concerning all breaches of security and / or unauthorized access to computers” by Tidbit.

Utopia Drug Marketplace Shutdown

Posted 15 hours ago 

Utopia Drug Marketplace
Today another illicit deep-web marketplace was shut down, this time by Dutch authorities.  Five men were arrested in connection with the Utopia drug marketplace, and 900 bitcoins  seized from their homes.  Dutch prosecutors claim two of the arrested were also involved in the “Black Market Reloaded” illicit marketplace that went offline late last year.  Utopia had only been online for nine days, but already had over 13,000 listings including guns, drugs, and murder-for-hire.  The dutch announcement of the seizure brags, “Nobody is untouchable – this mission is a clear message to anyone who thinks they may commit crime with digital anonymity.”

Operation Commodore

“Commodore,” the code-name for the undercover investigation, had officers purchasing thousands of ecstasy pills, raw MDMA, and cocaine.  Additionally, one of the undercover officers had been  approached to conduct a murder-for-hire, and met the customer in person to receive a deposit for the hit.  How exactly these transactions led to the closing of the entire website is still unknown, but authorities eventually discovered the site’s servers in Germany (Bochum and Dusseldorf), and left their calling card on the homepage to warn other criminals.

“Nobody is Untouchable”

The warning from Dutch authorities seems a little naive while at least two dozen illegal markets remain online within the deep-web, but the spirit of the words is not false.  As long as millions of “anonymous” customers can purchase illegal substances, so too can undercover agents.  Bitcoin, of course, is far less anonymous than popular media decried it, and marketplaces multiply like heads of a hydra.  What appears to be unfolding in the deep-web is the same old cat-and-mouse game played out in the streets.  Common users and small-time players are busted and rolled until finally the police capture the king, only to watch two more move up.  To those seeking freedom from what they see as oppressive governments, Utopia is just another failed promise aborted by reality.  The same technology that the infamous “Dread Pirate Roberts” claimed would set us free, has only provided another platform for authorities to chase across.