Crypto-Currencies Will Destroy The Banksters' Monopoly On Money
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Earlier this week, a Bitcoin user in Pennsylvania reportedly received a letter from his bank, Firstbank, asking him to stop sending money to Coinbase, a popular wallet for storing the virtual currency.
“We respectfully request that you no longer perform transactions with this company or other companies of this kind,” the letter says. “If there should be a reoccurrence of this type of activity, we will regretfully be forced to close your account.”
Bitcoin is not illegal. It’s been praised for its many legal uses by the people in the FBI, Treasury Department, and Congress. Investors have plunged millions into startups providing Bitcoin services. So why would Firstbank be worried about one of its customers using a Bitcoin wallet?
In fact, banks around the country from MasterCard to the Internet Credit Union are still wary of the virtual currency. Even Bank of America’s analysts, who believe Bitcoin could become a “major means of payment,” are worried about a crackdown. That’s because many Bitcoin companies that should be registered with the federal government or state money transmitter authorities, aren’t. And because of legal ambiguities, many banks would rather be safe than sorry.
wired.com / BY ROBERT MCMILLAN / December 12, 2013 5:32 PM
What is the center of the Bitcoin universe? With a completely decentralized digital currency like Bitcoin, it’s hard to say, but today, Silicon Valley took a serious step toward claiming those bragging rights.
That’s because one of the Valley’s most important venture capitalist firms, Andressen Horowitz, made the biggest bet yet on a Bitcoin company, dropping $25 million on Coinbase — a company that’s trying to make it easier for consumers and merchants to use the digital currency.
It’s the largest-ever investment in a bitcoin company. And it’s a sign that bitcoin may be becoming a Silicon Valley phenomenon. “Bitcoin is going to be as big as the Internet,” Andressen Horowitz’s Chris Dixon told The New York Times today.
Bitcoin already has an active community in New York City, the country’s financial capital. That’s where early companies such as BitInstant and Coinsetter started. But lately Silicon Valley has been making a serious play for Bitcoin.
businessweek.com / By Joshua Brustein / December 12, 2013
(Updates second paragraph to reflect Fidelity’s decision to end its participation with SecondMarket.)
If you want to bet long on Bitcoin, what better way than to put some in yourretirement account?
SecondMarket, a finance startup that has helped people invest in privatetechnology companies, has been gathering the virtual currency into the BitcoinInvestment Trust. It has been buying Bitcoin for several months and currently holds about $70 million worth. About 90 people have invested in the trust. While SecondMarket makes direct investment available only for accredited investors or financial institutions, it also has worked out arrangements with several self-directed IRA platforms, including Pensco and Entrust, so that people can use their retirement accounts to invest in Bitcoin in increments as low as $25,000. Fidelity had also been involved but says it has decided to end its participation with the SecondMarket program.
pcworld.com / By Jeremy Kirk / Dec 12, 2013 5:48 PM
If you get a spam message advertising an application called “Bitcoin Alarm,” the name may tell you all you need to know.
The desktop Windows application sends price alerts by SMS to a mobile phone. But closer examination of its code turned up several suspicious traits that indicate it may try to steal the virtual currency, wrote Kenny MacDermid, a research analyst with security company Arbor Networks.
Bitcoin’s skyrocketing value this year has drawn wide interest from investors as well as from cybercriminals. Bitcoins are secured by public key cryptography, and if the private key for a bitcoin is obtained, the virtual currency can be stolen in a flash.
MacDermid received three spam messages in one day promoting Bitcoin Alarm.
”I ignored it the first two times, but they must have really wanted me to look at it, so who am I not to oblige?” he wrote.
siliconangle.com / By MELLISA TOLENTINO / DECEMBER 12TH, 2013
Coinbase is proving the Bitcoin is here for the long haul. The cloud-based Bitcoin service raised a $25 million Series B funding in a round led by Andreessen Horowitz, with participation from existing investorsUnion Square Ventures and Ribbit Capital. With this round of funding, two new members will join Coinbase’s board, Andreessen Horowitz’s Chris Dixon and Union Square Ventures’ Fred Wilson.
“The designers of the Web built placeholders for a system that moved money, but never successfully completed it. Bitcoin is the first plausible proposal for an economic protocol for the Internet,” Dixon stated.
Aside from Dixon and Wilson, Gavin Andresen, the head developer of Bitcoin, joins Coinbase as an advisor.
“Coinbase has become a critical piece of the Bitcoin infrastructure in the U.S., giving people a trustworthy and easy way to buy, sell, trade and store bitcoins. The best part of my job as Chief Scientist of the Bitcoin Foundation is interacting with the brilliant people at Coinbase and other startups all over the world who are working hard to make Bitcoin accessible to everybody,” Andresen stated.
gigaom.com / by Chris Albrecht / December 13, 2013
Instagram shminstagram. Rather using this week’s Gigaom Show to discuss the messaging app we already saw coming, we turned our attention to much hotter topics. Jeff Roberts breaks down whether the $25 million dollar investment in Coinbase is a turning point for Bitcoin. Then Austin-ite Stacey Higginbotham clues us into AT&T’s new plan to offer cheaper broadband in exchange for the telco snooping on your searches. Finally we round out the episode with a discussion about Verizion’s monster new LTE network and deep discussion on the ability to unlock one’s phone.
bloomberg.com / By Ben Moshinsky / Dec 13, 2013 5:40 PM GMT+0800
Trading Bitcoins could bleed you dry, theEuropean Union’s top banking regulator said as it weighs whether to regulate virtual currencies.
Thefts from digital wallets have exceeded $1 million in some cases and traders aren’t protected against losses if their virtual exchange collapses, the European Banking Authority said today in a report warning consumers about the risks of cybermoney.
Virtual currencies such as Bitcoin have come under increased scrutiny from regulators and prosecutors around the globe. China’s central bank barredfinancial institutions from handling Bitcoin transactions last week and German police arrested two suspects in a fraud probe into illegally generated Bitcoins worth 700,000 euros ($963,000).
reddit.com/r/Bitcoin / by gemusan / December 12, 2013
I am one of the cofounders of Honey, a browser extension that automatically searches and applies coupon codes for online shoppers at checkout. I’m also a fan of bitcoins and its disruptive potential.
One of the biggest weakness of bitcoins at the moment is the lack of merchant support – especially large online retailers like Amazon. Unfortunately, it’s a hard sale to get merchants to introduce a new payment concept to people who are about to checkout — this could cause people to abandon the cart to go off to read about what this “bitcoin” thing is. Unless there’s compelling evidence that the reward is greater than the risk, merchants like Amazon will not take that chance.
We have an idea for adding a feature in Honey that can help prove the value of bitcoin as a payment method to giants like Amazon. The user experience goes like this:
You are checking out on Amazon
If you have Honey installed, you will see a “pay with bitcoins” button on the page
Hit the button and you will be asked to pay the total in bitcoins. The payment is sent to Honey
When the bitcoin payment is confirmed, Honey applies an Amazon gift card in the exact amount to your shopping cart
Your balance is now $0 and you complete the purchase
coindesk.com / By Emily Spaven / December 13, 2013 at 12:00 GMT
The Federal Council of the Swiss government is to write a report on the dangers of bitcoin, examining the effects it could have on Switzerland’sfinancial system and society in general.
Jean Christophe Schwaab of the Swiss Socialist Party submitted the request for the report in a postulate back in September.
At the time, he said he had submitted the request because he was concerned about the potential of bitcoin and other virtual currencies.
Luzius Meisser, president of Bitcoin Association Switzerland, said Schwaab’s postulate takes a wholly negative perspective, focusing on the risks of bitcoin and ignoring the opportunities.
This is why the Parliamentary Group for Digital Sustainability (ParlDigi) recently created a subsequent postulate, which asks for any report the Federal Council creates to include information about the benefits of digital currency.
dealbook.nytimes.com / BY JULIA WERDIGIER / DECEMBER 13, 2013, 7:07 AM
LONDON – The European Union on Friday added to a string of recent warnings about the safety of using and investing in Bitcoin, the virtual currency that is not issued by any government.
The union’s banking authority said consumers needed to be aware that they were not protected through regulation when paying with Bitcoins. The digital currency is vulnerable to hackers, might lose its value and any misuse could prompt law enforcement agencies to close Bitcoin exchange platforms and keep consumers from accessing their investment, the European regulator said.
“Currently, no specific protection exists in the E.U. that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business,” the European Banking Authority said, adding that it was looking into whether such currencies could and should be regulated.
libertyblitzkrieg.com / Michael Krieger / December 12, 2013
Meet Mike Caldwell. He is the maker of what seems to be the most popular physical bitcoins on the market, the Casascius coin. All Mr. Caldwell does is have people who want the coins produced send him a certain quantity of bitcoin and then for a $50 fee he puts the private key on a physical coin and sends them back. For this horrible crime of ingenuity and creativity, the U.S. government naturally, has decided to target him. Because they are too busy ignoring the real financial crimes happening out out there…
Mike Caldwell spent years turning digital currency into physical coins. That may sound like a paradox. But it’s true. He takes bitcoins — the world’s most popular digital currency — and then he mints them here in the physical world. If you added up all the bitcoins Caldwell has minted on behalf of his customers, they would be worth about $82 million.
Basically, these physical bitcoins are novelty items. But by moving the digital currency into the physical realm, he also prevents hackers from stealing the stuff via an online attack. Or at least he did. His run as the premiere bitcoin minter may be at an end. Caldwell has been put on notice by the feds.
“On an individual basis, we allowed an investor to invest in that Bitcoin Investment Trust,” said Rob Beauregard, director of public relations at Fidelity, in a telephone interview Thursday morning. “We are no longer allowing that.”
The firm is not commenting on why that was allowed, and added “reviews are going on.”
libertyblitzkrieg.com / Michael Krieger / December 12, 2013
As I tweeted at the time, I think Bitcoin began phase two of its growth and adoption cycle upon the conclusion of the Senate hearings last month (I suggest reading: My Thoughts on the Bitcoin Hearing).
I think phase two will be primarily characterized by two things. More mainstream adoption and ease of use, as well as increasingly large investments by venture capitalists. In the past 24 hours, we have seen evidence of both.
First, yesterday we heard that Fidelity will allow its clients to invest in Bitcoin through SecondMarket’s fund in their IRAs. Today, we learn of the biggest investment in Bitcoin to-date. A $25 million infusion into San Francisco based Coinbase by several VC firms, led by Andreessen Horowitz. Coinbase also announced that it has added core Bitcoin developer Gavin Andresen as an advisor. Coinbase now has 600,000 user wallets and is adding an incredible 10,000 new customers per day.
nasdaq.com / By Lior Alkalay / December 11, 2013, 02:46:02 PM EDT
If one could describe the digital currency in human terms, Bitcoin would probably be labeled the rock star of the currency world. Of late, digital currency, or Cryptocurrency as some fans like to call it, has become the rising star of the currency world, skyrocketing akin to lightning speed, despite being plagued by scandal.
Now FX investors ask, is this digital currency worth considering as an investment despite all the scandals? Or is it just a transient phenomenon that could disappear as quickly as it came, with future dreams of a digital currency sinking into the abyss? For the answer to those questions, we first must understand why Bitcoin gravitated in value in the first place, what problems it now faces and how they could be tackled?
Bitcoin as a Concept
For many, Bitcoin is a way to invest in the future of digital business and hence the reason they are drawn to it. However, the origin of the attraction to Bitcoin started as a parallel banking system to the one we traditionally use. With many freelancers and other individuals working for people located all across the globe, the Bitcoin system allows them to make international money transfers with ridiculously low costs, enabling those who are engaged in international trade to avoid often hefty fees charged by traditional banks.
Indeed, it is a significant factor to consider, a shadow banking system with almost no fees, meshing seemingly perfectly to the digital age where all payments and services are done internationally and online.
minyanville.com / By Alex Brokaw / Dec 11, 2013 1:16 pm
Parabolic appreciation has thrown Bitcoin back into the spotlight, as Chinese demand for the crypto-currency sent it to an all-time high of $1,260 last Wednesday, up from $200 six weeks ago. A quick rise gave way to a steep dive after China announced a ban on financial institutions conducting Bitcoin transactions and Baidu (NASDAQ:BIDU) stopped accepting Bitcoin payments at the end of last week. The digital currency crashed, dipping below $600 on some exchanges. Positive guidance from Bank of America (NYSE:BAC), which said the currency could become a major form of transaction and gave it a $1,300 price target, and from Citigroup (NYSE:C) which suggested the currency could attract reserve managers as a complement to gold, didn’t buffer the free fall at the time. Although over the weekend and into this week, Bitcoin prices have recovered and are now trading in the high $900s.
Volatility like that in markets that are regulated and not plagued by questions of legitimacy, sustainability, and safety, can be troubling. In barely-regulated, decentralized Bitcoin markets, the risk is incalculable. So how are Bitcoin traders — yes, they do exist — supposed to manage? The same way investors manage turbulent established markets: arbitrage.
It’s a practice as old as markets themselves — an academic paper published in the Oregon Law Review traces put-call parity back to ancient Israel; others have found evidence of arbitrage in Mesopotamia. Bitcoin has provided no exception.
geekosystem.com / By Victoria McNally / Wednesday, December 11th 2013 at 12:51 pm
Man, Bitcoins are so old and busted. What’s the going rate now, like, $900 USD to 1 bitcoin? Laaaame. The new hotness is Dogecoin, the latest in cryptocurrency. Or, as the doges call it, “such currency.” Very coin. Wow.
Created a few days ago by a bitcoin forum user, Dogecoin works in basically the same way that Bitcoin and other forms of cryptocurrency do, which can then be used as currency by those who accept it. There are some obvious differences, of course: rather than the 21 million coins that Bitcoin will level out on, Dogecoin is programmed to tap out at 100 billion. The block time is also estimated to be 60 seconds, where the average block time for Bitcoin is currently about five minutes. And, like Litecoin, it’s encrypted with Scrypt, which means that it can’t be mined using special bitcoin-mining equipment like ASICs. Plus, it’s a doge. You know, like the meme. That’s pretty much all you need.
chinapost.com.tw / By John Liu / December 12, 2013, 12:05 am TWN
TAIPEI, Taiwan — Wayi International Digital Entertainment (華義國際), a listed company that specializes in online gaming, announced yesterday that its online store would start taking bitcoins as a form of payment next year.
Wayi said its online store WMall Online will start accepting bitcoins. As such, the company is set to become the first company in Taiwan to accept the digital currency as a form of payment. Following the announcement, Wayi’s stock price surged to NT$10.45 per share.
Wayi said that the company currently does not own any bitcoins. However, once the company starts accepting bitcoins next year, it would start accumulating this online currency. With a sufficient accumulation of bitcoins, Wayi would start selling bitcoins to the public, and the currency can be exchanged into New Taiwan dollars. There will be a 3-percent transaction fee for exchanges conducted through WMall, the company said.
columbiamissourian.com / BY JAMES GORDON / Wednesday, December 11, 2013 | 7:55 p.m. CST; updated 9:43 a.m. CST, Thursday, December 12, 2013
*UPDATE: This story has been updated to include more information about the charges that Eric Wichmann and Josh O’Steen could face.
COLUMBIA — Two MU computer science students have been accused of running an unauthorized Bitcoin mining operation on computers in the Reynolds Journalism Institute.
MU Police Capt. Brian Weimer said that Eric Wichmann and Josh O’Steen were arrested by MU police Friday on suspicion of tampering with computer data. Weimer said they were arrested on suspicion of a misdemeanor violation of the state tampering statute, though tampering can also be a class D felony.* Wichman and O’Steen were released the same day on a summons.
theweek.co.uk / Coline Covington / THU 12 DEC 2013
Supporters of the virtual currency boast of no controls and no victims – but do they just want to get rich quick?
AS FINANCIAL regulations increase by the day, so do the ways around them. The most radical yet is the virtual currency known as the Bitcoin. Instead of real money, virtual cash is stored in an online wallet lodged in the hard drive of a computer.
Created four years ago by an anonymous computer scientist – or possibly a group – using the pseudonym Satoshi Nakamoto, the Bitcoin was conceived as a way of transferring money outside traditional banking systems, thus circumventing regulatory controls.
The currency has become so popular – the exchange rate reached a peak of $1,240 per Bitcoin last weak – that even JP Morgan is getting in on the act and setting up a rival, patented computerised payment system which, like the Bitcoin, ensures account holders’ names and account information cannot be disclosed.
seattlepi.com / Rob Wile / Published 1:25 pm, Wednesday, December 11, 2013
Despite violent price fluctuations in Bitcoin, it’s becoming increasingly common for individuals to take their salary in the digital currency.
More than 1,000 people have now registered for Coinality.com, a site launched in September that advertises jobs that pay in digital currencies. At least 700 people have submitted applications for 350 positions, which can range from Chief Compliance Officer at a bitcoin trading platform, to programmers familiar with the customizable part of the Blockchain, the master ledger for all Bitcoin transactions. More than 200 people have looked at a marketing position for an independent filmmaker that pays 3 Bitcoin for three months’ work.
Although digital currency-related job postings can be found elsewhere, and individuals active in the sphere have taken Bitcoin as salaries for at least months, this appears to be the first site exclusively devoted to both.
Bonkers bankers JPMorgan Chase just did an Alexander Bell by rushing to get a patent for Bitcoin before the real inventors.
Total bankers JPMorgan Chase has filed a patent application 20130317984, for an electronic commerce system that sounds remarkably like Bitcoin. The patent is wider than the ocean and describes a “method and system for processing Internet payments using the electronic funds transfer network”,
If the patent is enforced, it will mean that each Bitcoin transaction will be a breach of the US’s super-wonderful patent laws and a percentage will have to go to JP Morgan Chase for inventing it. A similar stunt was carried out by Scottish inventor Graeme Bell who patented an idea for the telephone before Elisha Gray who actually invented it.
bizjournals.com / By Brianne Pfannenstiel / Dec 11, 2013, 2:35pm CST
Now that the federal government has recognized Bitcoins as legitimate currency, so are the law offices of Kennyhertz Perry LLC in Prairie Village.
Bitcoin is a digital form of currency that was created in 2009 by an anonymous Internet user who goes by the name Satoshi Nakamoto. And the money form is gaining momentum among users — and legitimacy under the law.
A federal judge ruled in August that Bitcoin money should be treated like any other form of currency, and in November the U.S. Department of Justice recognized Bitcoin as a legal means of exchange.
John Kennyhertz, a partner at the firm, said he first came across Bitcoin several years ago when he was working for a private equity firm in California as a possible investment opportunity.
Fast forward a few years, and his current partner Braden Perry ran into it again through his work in the financial regulatory world. The firm now represents a client who works in the Bitcoin industry manufacturing computer equipment that allows people to create the currency.
The craze was due in part to similarities between the patent and bitcoin, especially the use of the description “anonymous payment” and the open publication of payment addresses on the Internet. The virtual currency and protocol bitcoin has attracted the attention of tech companies, bankers, venture capitalists and regulators this year as its price has swung dramatically. Bank of America released a research note on bitcoin last week that highlighted its potential as a medium of exchange.
"At any rate, the spook spoke the truth: cryptology represents the future of privacy, and more. By implication cryptology also represents the future of money, and the future of banking and finance. (By "money" I mean the medium of exchange, the institutional mechanisms for making transactions, whether by cash, check, debit card or other electronic transfer.) Given the choice between intersecting with a monetary system that leaves a detailed electronic trail of all one's financial activities, and a parallel system that ensures anonymity and privacy, people will opt for the latter. Moreover, they will demand the latter, because the current monetary system is being turned into the principal instrument of surveillance and control by tyrannical elements in Western governments." - J. Orlin Grabbe