Bitcoin News Roundup - February 22nd, 2015

Bitcoin News Roundup is a weekly digest email in which Jake recap the week's bitcoin news, interesting stories, and articles.

UNITED STATES

A few weeks ago, the New Hampshire House of Representatives saw a bill introduced which would compel the state to accept bitcoin for the payment of tax bills. Last week, Utah followed suit with a similar bill, although this one is merely to create a feasibility study about accepting bitcoin. Like New Hampshire's, I doubt that this will be passed into law, but it's still cool that governments are even discussing the possibility.

New York City councilman Mark Levine wants the city to start accepting bitcoin for the payment of fines and fees, too. "A Harvard graduate with a BA in physics, Levine is a member of the city's finance, education, housing and buildings, government operations, and rules committees."

+ Levine spoke to Coindesk about the bill, and said the city currently pays several million dollars per year in credit card fees for the payments of fines.

California Lieutenant Governor and former mayor of San Francisco Gavin Newsom is running for Governor of The Golden State... and accepting bitcoin for political contributions. He has a big ol' "Donate Bitcoin" button right on the home page of his campaign site.

NEW STUFF

Large payments processor Stripe has officially moved their bitcoin payment system out of beta and made it available to merchants using the service. The change won't be automatic, merchants have to activate it in their preferences, but this could lead to some big name companies accepting bitcoin in the future (here's some examples of companies that use Stripe).

+ And they're doing it right, too. Legacy payments through Stripe cost the merchant 2.9% + a thirty cent fee. Merchants will only have to pay a 0.5% fee for bitcoin transactions.

Only two months after their initial product launch, hardware wallet manufacturer Ledger raised a EUR 1.3 million funding round this week. Read more about the fundraising, along with Ledger's vision and roadmap in this blog post.

+ First of its kind: Ledger also released a demo video of the world's first "virtual hardware wallet" running on a cell phone.

Dell expands bitcoin payments to the UK and Canada.

HACKS, THEFTS, & SHUTDOWNS

Early bitcoin poker room Seals With Clubs abruptly announced their closure this week. In the announcement, they emphasized that no data or user money was lost, and all users will be able to withdraw funds currently held by the site. SWC spokesman Bryan Micon later revealed in a video blog that the decision to close the site was made after his home was stormed by armed agents of the Nevada Gaming Board and he was placed in handcuffs, although he was charged with no crime.

Canadian exchange CAVIRTEX has also announced its closure. No funds were lost and users will be able to get their money out.

Chinese altcoin exchange Bter.com lost more than 7,000 bitcoins this week. The site's operators claim they were hacked, but don't rule out the possibility of it being an inside job.

+ Bter tweeted that they will take whatever measures necessary to make users whole again, up to and including selling the site.

Two bitcoin ATMs were stolen in Amsterdam. Newer bitcoin ATMs handle private keys remotely, so one cannot steal bitcoins by stealing the machine itself. The thieves were likely after the cash inside the machines, or they mistakenly thought they could steal bitcoins from them.

+ Meanwhile, a bitcoin ATM operator in Vermont received a cease & desist letter from the state's Department of Financial Regulation.

READS

Two books I picked up this week: The Age of Cryptocurrency (4.9/5 stars on Amazon) is by WSJ columnists Paul Vigna and Michael J Casey. You may remember the glowing Saturday Essay the WSJ published a few weeks ago... it was an adapted excerpt from this book.

And also The Death of Money: The Coming Collapse of the International Monetary System (4.4/5 stars on Amazon), by James Rickards, author of Currency Wars. Rickards' language may be a tad on the sensationalist side, but he makes for a good devil's advocate to mainstream opinions such as financial institutions being "too big to fail," or that the US Dollar is immune to shock-events that have plagued other currencies.

Drug Policy Alliance: Silk Road was Safer Than the Streets for Buyers/Sellers

"People use drugs. They get those drugs from someone else. In order to consume drugs, someone had to buy them, and someone had to sell them. We don’t have to like it, but we do have to acknowledge the reality of it. Our entire approach to responding to that reality has thus far been a dismal disappointment. Silk Road was, in the most basic sense, a product of our failed war on drugs—a response to our woefully inadequate way of managing not only drug use, but also drug demand and drug sales."

For the miners/chip designers out there: Faster SHA-256 ASICs using Carry Reduced Adders

Some interesting data analysis of "Willybot," a mysterious trading robot that methodically purchased large quantities of BTC on the Mt.Gox exchange in the months leading up to the site's implosion.

BITS & PIECES

This past Thursday, CNN aired an hour-long episode of Inside Man, in which Morgan Spurlock (of Supersize Me fame) attempts to live on bitcoin for a week. He encounters a few hiccups along the way, but the documentary is, overall, an objective look at bitcoin: it has its faults and its uncertainties, but it also does what it's supposed to do really well. Watch it on YouTube

+ CNN Money also added a big ol' apparent bitcoin ticker to their markets homepage. Yet another example of the mainstream media warming up to bitcoin.

The US Marshals Service is auctioning off another 50,000 of Ross Ulbricht's bitcoins on March 5th. After this auction is completed, the USMS will have 44,000 coins left to sell.

Last October, I helped Vice Media shoot this short documentary on a bitcoin mining farm in Dalian, China. They recently published it. Motherboard: Inside The Chinese Bitcoin Mine That's Making $1.5 Million a Month

Princeton University is now offering an online lecture series about bitcoin and other cryptocurrencies. Here's the first lecture, it's about an hour long.

Version 0.10.0 of the bitcoin reference code was released this week. Notable improvements to the code include a faster sync time (down to ~8 hours vs. the days it previously took) and dynamic transaction fees. More details on floating fees here.

+ And an in-depth explanation of all the code changes. YouTube

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Bitcoin News Roundup - February 1st, 2015

Bitcoin News Roundup is a weekly digest in which Jake recap the week's bitcoin news, interesting stories, and articles.

COINBASE EXCHANGE

Last week I linked to a countdown timer that Coinbase put up on their website, titled "Lunar," containing the text "to the moon" in the page source, and accompanied with some epic space music from Interstellar. Needless to say, there was a lot of hype surrounding the countdown. A few hours before the timer hit zero, it was revealed that the new product was a fully-compliant exchange product, to be available in 25 states around the US (you can see a map of available locales here).

The exchange is differentiated from Coinbase's core service by the addition of an order book and API trading capabilities -- aimed more at those interested in active trading than the consumers who simply want to buy and sell bitcoin that Coinbase has traditionally targeted. From what I've seen, it looks like a really nice platform, but unfortunately it's not available in my home state and I am not able to even view the interface from my account.

Until now, most Americans interested in trading bitcoins have been forced to do so on overseas platforms, so the emergence of a regulation-compliant, US-based trading platform with backing from major financial institutions seems to be a pretty significant development for bitcoin.

+ Video: Coinbase founder & CEO Brian Armstrong discusses the exchange on Bloomberg.

TREZOR DRAMA

Czech Republic-based Satoshi Labs made waves when they first launched the Trezor, a fully open source hardware wallet that, at the time, was the first of its kind. The Trezor was an immensely popular product among those in the bitcoin world looking for an easy and secure way to store their bitcoins offline. A little more than a week ago, an anonymous Chinese company calling themselves BWallet announced their clone of the Trezor (literally copying the Trezor circuit design and firmware source code -- and adding a few suspicious lines of code along the way) that they sell for a third of the price.

Sketchy? No doubt. But it was also entirely allowed under the LGPLv3 software license that Satoshi Labs had released the Trezor under, so the emergence of a cheap knockoff clone device should have been seen as an inevitable progression for the company. The reaction from Satoshi Labs, however, managed to alienate the community in a very short amount of time. Satoshi Labs founder Marek "Slush" Palatinus posted a scathing review of the device - full of valid points, mind - slamming the BWallet for being insecure and sold under intellectually dishonest terms.

What really upset people, though, was when Satoshi Labs quietly changed the software license of the Trezor to the less-open and far more restrictive Microsoft Reference Source License. Not only did they change the license of the code for future iterations, but they attempted to scrub history by retroactively applying the change to previous releases of the code on GitHub, which would give the false impression that the Trezor had used this license all along.

The bitcoin community has a long tradition of strongly defending libertarian principles and Free & Open Source Software, so the backlash against Satoshi Labs for changing the license should have come as no surprise to anybody. Many in the community decried the decision as being hasty and emotionally-based. After being slammed for days on online message boards, Satoshi Labs gave in to the pressure, reverting the license change and apologizing: "When exactly this happened, we reacted by changing the license, while keeping the auditability and security of the device unaffected. This reaction was perhaps emotional and impulsive, but it was a genuine statement of how we felt about the matter. Our ideals were being crushed."

For what it's worth, the Trezor is still the frontrunner when it comes to hardware wallets (although I've really been enjoying my new Ledger Wallet), and although Satoshi Labs may have handled the whole situation poorly, I have to respect that they listened to the desires of their customer base and reverted the license change. Further, the BWallet really is a cheap and sketchy copycat, and likely posed no existential threat to Trezor's business.

READS

"Furthermore, the growth of any Bitcoin business is limited ultimately by the growth of Bitcoin itself. Since the number of coins is strictly capped, the currency must grow with its price. This means that few businesses, if any, can be expected to earn a much better return than the coin itself over time. Entrepreneurs should therefore invest in coins, not businesses, because coins are where the profit is. In addition, if Bitcoin fails, then the Bitcoin businesses fail—so Bitcoin is less risky than any Bitcoin business too. Thus, Bitcoin entrepreneurs should be less interested in making money than in making bitcoins into money. An entrepreneur who follows that precept should generally be expected to be more successful than otherwise because the potential for Bitcoin itself is so much greater than any Bitcoin business he could invest in." The Correct Strategy of Bitcoin Entrepreneurship, by Daniel Krawisz.

"Besides, even if the algorithm is safe, there is always the danger of waking up to the realisation that one’s bitcoin stash was e’looted during the night. And if one entrusts one’s stash to some company with better firewalls and computer security, what happens (in the absence of a bitcoin Central Bank) if that company goes broke or simply disappears into the Internet’s darker crevices (with its customers’ bitcoins)?" No one has ever lost money that they kept in a bank, right? Greece's new minister of finance slammed bitcoin in an essay called Bitcoin and the Dangerous Fantasy of "Apolitical" Money. For a country plagued by central bank-created financial strife, I find this just a tad rich.

"Kurzweil suggests that the progress of the entire 20th century would have been achieved in only 20 years at the rate of advancement in the year 2000—in other words, by 2000, the rate of progress was five times faster than the average rate of progress during the 20th century. He believes another 20th century’s worth of progress happened between 2000 and 2014 and that another 20th century’s worth of progress will happen by 2021, in only seven years. A couple decades later, he believes a 20th century’s worth of progress will happen multiple times in the same year, and even later, in less than one month. All in all, because of the Law of Accelerating Returns, Kurzweil believes that the 21st century will achieve 1,000 times the progress of the 20th century." Not bitcoin related, but a fascinating read nonetheless: The AI Revolution: The Road to Superintelligence

BITS & PIECES

A bill introduced to the New Hampshire House of Representatives would require the state to start accepting bitcoin for tax payments. This thing probably doesn't have a chance in hell of becoming law, but then again, if anywhere were going to pass something like this, it would be New Hampshire.

Coin Center, a Washington D.C. bitcoin think-tank (the fact that this even exists still kind of amazes me), published the results of their first Bitcoin Public Sentiment Survey. The survey was completed using Google Consumer Surveys (which was actually one of the most accurate polling tools in the 2012 US presidential election), and found that 65% of Americans are still "not at all familiar" with bitcoin. The Center plans to repeat the survey monthly to track long-term changes in awareness and opinion.

Reddit let go of their in-house cryptocurrency engineer, Ryan Charles. That kind of dashes my hopes for seeing the currency natively integrated with the site. Bummer.

United States representative Bob Goodlatte (R-VA) stated publicly (apparently) that he owns bitcoin and uses Coinbase.

According to a leak by the Wall Street Journal, Ripple Labs is finalizing a $30MM Series B funding round. And an Israeli startup building on top of the blockchain, Colu, raised a $2.5MM round. This brings the amount of funding in the digital currency space for 2015 to more than $100 million, already a third of the 2014 total.

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