Bitcoin News Roundup - March 29th, 2015

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

WALL STREET

"Nasdaq OMX Group Inc. has agreed to provide New York-based startup Noble Markets with core technology to power a new marketplace aimed at allowing companies and institutional investors such as hedge funds to trade bitcoin and related digital-currency assets.

According to a joint statement provided to The Wall Street Journal, Noble’s platform will use Nasdaq’s X-stream trading system, a high-tech system for matching market participants’ orders that is used by more than 30 exchanges and marketplaces worldwide. Nasdaq will also provide marketing support."  WSJ

+ Noble Markets CEO John Betts on CNBC.

Former NYSE CEO Duncan Niederauer has joined NY-based bitcoin derivatives platform TeraExchange in the role of advisor. TeraExchange previously received approval from the CFTC to move forward with their platform, but has not yet received specific approval for their bitcoin derivative products.

Barry Silbert's Bitcoin Investment Trust (Ticker: GBTC) finally went live this week, making it the first bitcoin ETF to hit the market. At the time of this writing, no trading activity had occurred yet. GBTC quotes on WSJ.

Bloomberg: Stock Exchanges are Beginning to Take Bitcoin Seriously

ADOPTION

For the past several months, there have been rumours that PokerStars, the world's largest online poker room, was preparing to accept bitcoin deposits. In February, the company even denied those rumours. PS still has not caught the bitcoin bug, but thanks to a partnership between payment processor Neteller and BitPay, users can now use bitcoin to make deposits into their accounts. Neteller also offers prepaid MasterCard debit cards which can be topped up with bitcoin.

BitNet, the bitcoin payments processor that was founded by former Visa and bank executives announced this week a partnership with payments processor Cardinal Commerce. The partnership will give all Cardinal merchants the ability to enable bitcoin payments. Cardinal counts among their customers "international retail giants such as Lenovo, Toshiba, GameStop, Tiffany & Co., and Urban Outfitters. It also includes leading travel companies such as Delta Airlines, Orbitz, Travelocity, and Hotwire."  Last week Rakuten integrated bitcoin payments with BitNet. Keep an eye on these guys!

AROUND THE WORLD

Senior Hong Kong legislator Leung Yiu-Chung says that there is no need for legislation to regulate bitcoin at this time. Several months ago, a group of scammers in Hong Kong used the premise of selling their clients bitcoins to steal millions of dollars, which led some in the HK government to call for more regulation.

"Swedish bitcoin exchange BTCX, has been requested by the local Tax Authority to disclose transaction history of the company's 20,000 customers. The exchange is taking the Swedish Tax Authority to court, arguing that by doing so, all its clients' identities would be disclosed." 

Startups from more than sixty countries applied to this year's Barclays Accelerator program in London. Only ten were accepted. Of those ten, three of them are focused on bitcoin or blockchain technology. According to Coindesk, Barclays was heavily involved in the selection process, with finalist applicants having to do a Q&A session with as many as thirty employees of Barclays.

READS

"Welcome to DoctorX’s Barcelona lab, where the drugs you bought online are tested for safety and purity. No questions asked." Fascinating article: Inside the Deep Web Drug Lab

"Traditional payment infrastructure was built before the Internet existed, in a world where a lot of people and physical resources (land, buildings) was owned by central parties (e.g. a bank) to monitor and facilitate transfers of value. There hasn’t been an efficient, standardized way for banks across the world to communicate with each other and for developers to interact with." We Deserve Better Payment Products

"As for China, the government here neither endorses nor prohibits bitcoin. The only official government policy regarding bitcoin is that traditional banks and financial institutions are not allowed to deal with bitcoin directly. Private ownership and trading of bitcoin is legal." An interview with Robert Kuhne from Chinese bitcoin exchange Huobi

"Since day one Bitcoin has had a rarely discussed but fundamental rule called the first seen rule. The first seen rule says that given two transactions or blocks that build off the same dependency, whichever one the node saw first wins." This essay by Mike Hearn gets really technical, but is very interesting.

BITS & PIECES

A video demonstration of OpenBazaar multisig escrow. This project is looking really good.

"Global institutions, including the International Monetary Fund (IMF) and the World Bank, have endorsed a China-led international bank, despite opposition from the U.S." CNBC

France imposes new restrictions on using cash, requiring ID for any cash transaction of more then €1,000. Reuters

The Australian Federal Government is set to institute a new tax on bank deposits.

DBS Bank is holding a hackathon for "blockchain enthusiasts".

The EFF filed a second round of comments on New York's proposed BitLicense regulation.

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Bitcoin News Roundup - March 22nd, 2015

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

RAKUTEN

E-commerce giant Rakuten announced this week that they now accept bitcoin for all purchases on their United States based websites, which include Buy.com. Just a few days after the announcement, they also enabled bitcoin payments on their German and Austrian sites. The really big news will be when Rakuten opens up bitcoin payments on their Japanese site.

Rakuten will use upstart bitcoin payments processor Bitnet, which was founded by former Visa execs and raised a $14.5 million Series A funding round last October (Rakuten is an investor in the company as well). Signing such a major client could help Bitnet rise the ranks as a competitor to companies like BitPay and Coinbase.

Late last month, Rakuten CEO Hiroshi Mikitani said at a conference in Tokyo that his company was "thinking about" and "would probably accept" bitcoin payments in the future, but I was surprised with how quickly it actually materialized. With more than $5bn in annual revenue, Rakuten is the eighth-largest internet company in the world, and now among the largest companies to accept bitcoin.

EVOLUTION MARKET

"Evo Market," as it was known, was apparently the largest and most popular darknet market in the wake of Silk Road (and then the second Silk Road) being shut down by authorities. This week, users of the site were burned to the tune of at least $12 million, when the anonymous (or not?) operators of the site decided to "exit scam" their users -- they pulled the plug on the site and kept the tens of thousands of bitcoins held in escrow and in user accounts. The Guardian has more.

A lot of people got burned and were shocked at this turn of events, but it should be a no-brainer that handing control of your bitcoins to anonymous black market operators is playing with fire. The concept extends to other centralized services as well, with countless bitcoin sites having either lost or stolen customer funds over the years. This would be a good place to hammer home the point that if you don't control your private keys, your bitcoins are not really yours. Multi-signature bitcoin technology will eventually make such events technologically impossible, but the sites that have currently implemented it are few.

+ Another bitcoin service, Coinapult, was hacked to the tune of 150 BTC this week.

STUFF

In their annual 10-K filing with the SEC, Overstock revealed that they have purchased a 24.9% stake in a registered broker-dealer, "as part of our efforts to develop and license software to trade cryptosecurities using the Bitcoin network and its protocols."

+ Probably part of Overstock's decentralized stock-exchange project, Medici. Going from an online retailer to taking on Wall Street is quite a pivot!

Mastercard's 10-K repeatedly cites cryptocurrency as a potential future competitor. ("Rapid and significant technological changes could occur, resulting in new and innovative payment methods (including cryptocurrencies) and programs that could place us at a competitive disadvantage and that could reduce the use of MasterCard products.")

San Francisco-based Bitreserve announced a partnership with Mexican billionaire Ricardo Salinas-Pliego, possibly to make some kind of entry into the Mexican remittance market. Bitreserve was launched by CNET founder Halsey Minor just four months ago. In that time, they claim that their reserves have grown by more than 1000%. Here's a really cool page they put up to visualize some data from the site.

MORE STUFF

Credit-Suisse published this brief on bitcoin which concludes, "bitcoin has a future in certain areas and countries."

The UK government has announced that it will begin regulating bitcoin exchanges, and at the same time has pledged 10 million GBP to fund research on digital currencies.

+ Her Majesty's Treasury published this report on the benefits and risks of digital currencies. The paper's conclusion begins by saying, "The government is committed to increasing banking competition in the interests of all customers. Encouraging greater innovation in payments, which provide the plumbing for the banking sector, is central to this. The government intends to create a world-leading environment for the development of innovative payments and financial technology."

BITS & PIECES

Amazon Prime users can now stream The Rise and Rise of Bitcoin documentary for free.

In an apparent landlord dispute, the World Bitcoin Association, which runs the New York Bitcoin Center, filed for bankruptcy this week. The center, which remains open during this dispute, is located just one block off of Wall St. and is right next to the New York Stock Exchange.

The Victorian government in Australia is to sell 24,500 bitcoins seized from a Silk Road vendor. As far as I know, this makes Victoria the second government to sell bitcoins.

Intel catches up with IBM and looks to hire a researcher to investigate blockchain tech.

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Bitcoin News Roundup - March 15th, 2015

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

TWENTY ONE

An ultra-stealth bitcoin company by the name of 21 Inc. (formerly 21e6, a reference to the total number of bitcoins that will ever exist) announced the close of a whopping $116 million funding round this week. The company is tight lipped about what exactly they plan to do, but there's a lot of speculation that it has to do with bitcoin mining and building an "internet of things" infrastructure. The list of investors is pretty interesting, too:
21’s lead investors include U.S. venture-capital heavyweights Andreessen Horowitz and RRE Ventures, along with Chinese private-equity firm Yuan Capital, with a strategic stake going to chipmaker Qualcomm Inc. through its venture-capital unit.

Additionally, Khosla Ventures and Data Collective have invested in 21, as well as chief executives and founders from various tech companies, including PayPal co-founders Peter Thiel and Max Levchin, eBay Inc. co-founder Jeff Skoll, Dropbox Inc. CEO Drew Houston, Expedia Inc. CEO Dara Khosrowshahi and Zynga Inc. co-founder Mark Pincus.

To date, this is the biggest funding round ever for a bitcoin company (second is Coinbase's $75MM raise announced earlier this year), and puts the amount of VC money invested in the bitcoin space in 2015 at around $200MM, already nearly two thirds of 2014's totals. I think it's very likely that 2015 will see more than half a billion dollars of investment into companies in this space.

21 Inc. founder Balaji Srinivasan started the company in early 2013, became a partner at Andreesen Horowitz during the fundraising process, and has now jumped back to 21 to lead the firm full time.

+ Watch this really good talk Srinivasan gave at Y Combinator's Startup School 2013 on the topic of "Silicon Valley's Ultimate Exit." [16:29]

OTHER SIDE OF THE COIN

As tensions continue to rise in Europe and a new 60bn EUR QE round began on Monday, the Euro edges closer to US dollar parity, sitting at just under $1.05 at the time of this writing. This is continuing a year-long downward trend that has seen the EUR lose more than 25% of its value. Other major world currencies such as GBP (-11.4%), JPY (-16.5%), and CHF (-13.2%) have also seen their USD exchange rates tumble over the past year, while the Chinese yuan has remained relatively stable. Many are quick to point out bitcoin's volatility, but even major world currencies are not immune to dramatic swings in price. Chart

As the BRICS countries look to knock down the global US Dollar hegemony, China gears up to launch its own international payments network to rival SWIFT.

+ Meanwhile in New York, SWIFT hosted a panel on the disruptive power of digital currencies earlier this month. There's nothing concrete to report, but it's interesting to know that many of the world's top financial institutions have their eyes on bitcoin right now. SWIFT is also hosting bitcoin panels in Copenhagen and London.

One of ApplePay's main selling points was supposed to be its security, but it turns out that storing your payment credentials (your private keys, if you will) in the cloud is a bad idea: As many as 6% of ApplePay transactions may be fraudulent. I like what Marc Andreesen had to say about using credit cards on the internet in this 2014 interview with the Washington Post:

E-commerce would've gotten built on top of this, instead of getting built on top of the credit card network. We knew we were missing this; we just didn't know what it was. There is no reason on earth for anybody to be on the Internet today to be typing in a credit card number to buy something. It's insane, because — which is why you have all these security problems, the Target hack and all this crazy.... And these high fees, this high fraud rate. It doesn't make sense online to have a payment mechanism that requires you to hand over your credentials to make a payment. That's just an invitation to fraud and identity theft. It's just stupid.

COOL STUFF

Bitcoin is going to the moon! Or at the very least, to low-earth orbit. Bitcoin core developer Jeff Garzik finally signed a deal this week to build the first 24-unit constellation of "BitSats," small cube satellites that will host bitcoin full nodes in space. These nodes can play an important role in helping to make the bitcoin network more secure.

"For individuals, threshold signatures allow for two-factor security, or the ability to split signing control between two devices so that a single compromised device won’t put your money at risk. For businesses, threshold signatures allow for the realization of access control policies that prevent both insiders and outsiders from stealing corporate funds. As I mentioned previously, and as discussed at length in our paper, Bitcoin’s built in multisignatures are insufficient as they have serious anonymity and confidentiality drawbacks." A new paper released this week by Stanford & Princeton researchers outlines a new way to increase the security of bitcoin transactions and key storage.

"The Bitcoin protocol has proven itself to be a versatile platform for innovation, yet there are still limits to what we can do with it. As an example, we cannot send arbitrary messages across the network. This is by design ― we want it to send value from person A to person B as efficiently as possible and not be bogged down storing information that is not needed for consensus." Here's an interesting new protocol to keep an eye on. Subspace is an online messaging project that seeks to be secure and anonymous (no metadata), using a P2P network similar to Bittorrent or Bitcoin.

Cryptosteel is a durable way to store a private key (or any other information written in alphanumeric characters). It's not available yet, but I had a chance to see one in person last week, and was very impressed.

ADOPTION

Partnering up with Polish bitcoin payment processor InPay, T-Mobile Poland now accepts bitcoin for the purchase of mobile phone credit. And, doing it totally right, they even give users who pay with bitcoin 20% more credit for the same amount of money.

Intuit launches PayByCoin in Australia, a service which will allow small businesses using the QuickBooks accounting software to accept bitcoin payments from their customers, and integrates with BitPay to convert the BTC into AUD.

A partnership between Bitcoin ATM manufacturer BTCPoint and Spanish bank Banc Sabadell has turned 10,000 existing ATMs into bitcoin cash-out machines overnight. It seems that currently the ATMs only offer single-directional service, but whereas typical one-way bitcoin ATMs have been buy-only, this new network is sell-only (for now). This could be a very good way for travelers with bitcoin to avoid expensive currency exchange fees.

BITS & PIECES

"The recent net neutrality victory at the FCC is not a silver bullet. We can expect costly court challenges, complicated enforcement, and the risks that come with entrusting a large government bureaucracy to manage a technological problem. More competition would be a better solution—and that’s where Bitcoin could help." Opinion: Bitcoin May Be What Gets Us Real Net Neutrality | Wired

Watch this talk by James D'Angelo on the blockchain and it's multitude of uses. This is part two of D'Angelos "Bitcoin 101 - A Million Killer Apps" series. 34 minutes & 40 seconds long.

California's state assembly introduced a bill which, if passed, would ban all "unlicensed" bitcoin businesses. "So for the next wave of entrepreneurs building technology in the bitcoin or blockchain space, the state is poised to say that in order to start your company or release your technology, you must pay $5000 for a license and tens or hundreds of thousands in legal and compliance fees, not to mention requirements such as informing them of your educational background and 10 years of past addresses. That might be awkward for the 21 year old college dropouts working on a cryptocurrency startup."

+ And Utah's proposed legislation which would force the state to do a feasibility study on the acceptance of bitcoin for taxes and fees actually inches closer towards law, reports CoinTelegraph.

Keanu Reeves and Alex Winter, also known as Bill & Ted, have collaborated for the first time in more than twenty years to produce Deep Web, a documentary about the Silk Road and Ross Ulbricht/Dread Pirate Roberts. The film premieres later today at SXSW in Austin. Winter wrote, produced, and directed the film, and Reeves narrates it.

In January I wrote that I gave GAW three months before they were exposed as a scam and things came tumbling down. The nail's not in the coffin yet, but CoinFire reveals that GAW is under investigation from multiple departments of the US Gov't, including the IRS, FTC, and the DHS. Meanwhile, GAW's homebrew turd "PayCoin" is down more than 90% since it's launch 3 months ago.

A Goldman Sachs report published this week calls bitcoin "a megatrend," says it will shape the future of finance, and cites Bitpay, Coinbase, and Ripple as the three top firms in this space. The report goes on to describe how newcomers will capture at least 20% of the consumer-to-consumer remittance business, and drive fees from 6% to around 2.5%. I'm still hunting for a copy of the actual report, but for now this article will have to do. Contrast that with another report published by Goldman a year ago, which had a much more pessimistic take on BTC.

+ Former JP Morgan global head of commodities Blythe Masters is now on board the bitcoin train, as the CEO of her own bitcoin startup. Choo choo!

Goof of the Week: Prominent bitcoin news site CoinDesk launches an online shop... that only accepts credit cards or PayPal. CoinDesk founder Shakil Khan is one of BitPay's earliest investors, having led their first big investment round two years ago. The decision to launch without being ready to accept bitcoin payments is baffling, to say the least.

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Bitcoin News Roundup - March 1st, 2015

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

MEGA

In a move reminiscent of that time WikiLeaks had all donation methods shut down (except for bitcoin, of course), United States Senator Patrick Leahy (D-VT), who previously wrote & sponsored legislation that would enable China-style web censorship in the United States, applied just a bit of senatorial muscle to Visa & Mastercard (who in turn leaned on PayPal) to effectively block all legacy payments to one of the world's largest cloud storage providers, New-Zealand based Mega.

TorrentFreak writes: "While many of the sites covered [in a report about "shadowy cyberlockers"] might at best be considered dubious, the inclusion of Mega.co.nz – the most scrutinized file-hosting startup in history – was a real head scratcher. Mega conforms with all relevant laws and responds quickly whenever content owners need something removed. By any standard the company lives up to the requirements of the DMCA." 

So what's the issue then, if Mega complies with legal requests to remove copyrighted content? The problem, according to occasional Batman actor Leahy, is that Mega encrypts all files uploaded to it in a way that not even Mega can view them; meaning that users have the ability to store copyrighted content that may or may not have been legitimately obtained. Leahy, who has received nearly half a million dollars in political contributions from the film, TV, and music industries in the last five years alone, seems to take issue with the fact that the powers that be are, well, powerless to snoop a user's private files and discover whether or not they are hosting the intellectual property of others before they distribute the link. Leahy is essentially disagreeing that people deserve to be secure in their persons and papers... and all this for a company that is not even based in the United States.

This is, as one Reddit commenter put it, like kicking a hornet's nest. Mega has more than fifteen million customers around the world, many of them presumably using the site precisely because of it's unique end-to-end file encryption feature*. Mega has been accepting bitcoin since 2013, but in an excellent real world example of the cryptocurrency's durability, the only way left to purchase services from Mega is using BTC. The ever-flamboyant founder of the site, Kim Dotcom tweeted "Let's give Bitcoin a boost :-) #Mega" shortly after PayPal dropped them and immediately before the bitcoin price received an actual boost [see the price spike on the 27th above]. A mainstream site that accepts only bitcoin is a pretty exciting prospect!

* Before anyone pulls the ol' "if you don't have anything to hide..." card, file encryption is beneficial for a number of reasons. Check out this great TED talk about why privacy matters. And if you want to look at the numbers, 99.7% of files stored on Mega are less than 20MB in size (i.e., way too small to be films or TV shows).

MO' FIAT MO' PROBLEMS

Somalians living in the United States have lost their primary avenue of remitting money back home. I think it's unlikely that bitcoin swoops to the rescue in this case, as there is very little bitcoin infrastructure for money receivers to convert BTC to local currency in Somalia, but perhaps this event poses an opportunity for someone to develop a bitcoin solution for this particular remittance corridor.

Things aren't looking so good for Venezuela right now: With inflation soaring to a rate of 68 percent, the Venezuelan authorities are seeking to manage the economic crisis with a complex web of three official exchange rates. For instance, some basic goods are imported at rates of 6.3 and 12 bolívars to the dollar, but a new floating rate of about 171 was introduced last week, effectively reflecting a devaluation of nearly 70 percent.

"In what has been dubbed the "SwissLeaks" case, serious allegations have been made against the Swiss division of British-based banking giant HSBC. The bank is accused of systematic involvement in tax evasion and money laundering to the tune of more than 100 billion euros. Jan Fritsche discusses how the tax evasion and money laundering practices worked." DW

+ In contrast to HSBC's long and storied history of helping criminals launder billions of dollars and getting away with slap on the wrist fines, here's what happens when a normal person attempts to launder small-time money: men with guns drawn will kick down your front door and arrest you.

J.P. Morgan Chase & Co. is preparing to charge large institutional customers for some deposits, citing new rules that make holding money for the clients too costly, according to a memo reviewed by The Wall Street Journal and people familiar with the plan. MarketWatch

Tim Draper's son, Adam, had his bank account hacked and a $50,000 wire sent to the hacker. Surprise surprise, once the money left his bank's hands (Wells Fargo), he was pretty much screwed as far as getting it back goes.

The ECB is set to kick off a new round of quantitative easing, to the tune of more than a trillion euros.

WHAT'S NEW?

This is not your father's "Got Milk" ad campaign: A consortium of bitcoin insiders, including the Bitcoin Foundation, BitFury, BitGo and Tally Capital, hired avante garde ad agency TheAudience to rebuild the currency’s reputation among the general public. WSJ BitBeat

Japanese e-commerce giant Rakuten founder & CEO Hiroshi Mikitani said at a conference in Tokyo that the company is "thinking about" and "probably will" accept bitcoin payments in the future. Rakuten Super Logistics U.S., an American subsidiary of the company, already accepts bitcoin, but the parent company is the largest online retailer in Japan and ranks among the largest in the world by sales. WSJ

Ecuador has begun issuing new "digital dollars"... essentially a state-issued digital currency. The same bill that authorized the creation of the centrally-controlled funbux also banned bitcoin and other digital currencies. In a country with a nearly ten percent illiteracy rate, and fifteen million people, only 8,000 have bothered to sign up for the new currency.

RE/MAX London has partnered with GoCoin to accept bitcoin for property rentals.

BITS & PIECES

Ryan Kennedy, also known as Alex Green, who previously absconded with more than three thousand bitcoins from an exchange he was running, was arrested and held briefly in the United Kingdom earlier this week in relation to the case.

JP Morgan is looking to hire people knowledgeable in bitcoin. And so is Intel.

Same day wire transfers are now available on Coinbase.

+ Coinbase also published these comments on the latest BitLicense revision.

TAILS, the secure variant of Linux favored by privacy advocates around the world, now comes pre-packaged with the Electrum bitcoin wallet.

Here is lecture #2 from Princeton's bitcoin class on YouTube.

Video: How BitPesa Brings Financial Inclusion to Kenya.

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