Poloniex Leaves New York Due To BitLicense

Another Bitcoin business is leaving New York due to the BitLicense. Poloniex the U.S. based Altcoin and Bitcoin exchange is shutting its doors to New York residents on August 8. Customers of the site have been issued an email warning letting them know they must remove funds if they reside in NY.

Also Read: Ben Lawsky's Revolving Door

“In accordance with the New York State Department of Financial Services, Poloniex will no longer be allowed to provide services to residents of the State of New York starting on August 8th, 2015. If you are a resident of New York, please take appropriate measures to withdraw your funds by 11:59pm Eastern Daylight Time on August 7th, 2015. For more information or for further assistance, please contact our support staff by going to poloniex.freshdesk.com.”
— Poloniex Bitcoin Exchange

With the BitLicense full steam ahead lead by Ben Lawsky and lawmakers people are starting to worry about this stifling innovation and business. On the 24 of June the BitLicense was adopted by New York legislation and is now recognized by The New York State Department of Financial Services (NYDFS). Businesses operating with Bitcoin and virtual currencies must apply for the license within 45 days from its initial announcement. August 8th is the deadline for all Bitcoin companies to comply. The transcript reads:

"Any person engaged in virtual currency business activity that fails to submit an application for a license within 45 days of the effective date of this regulation shall be deemed to be conducting unlicensed virtual currency business activity."
— BitLicense Transcript

Shapeshift the crypto exchange based in Switzerland has also halted services in the State of New York due to the BitLicense. Founder Erik Voorhees believes the license is unethical, and exposes personal user information. Following this decision Voorhees created Please Protect Consumers a website that is against mass data collection and the sharing of personal user info. Voorhees company was applauded by many in the Bitcoin community to be the first to not comply with the state's regulations and data collection. Notably Andreas Antonopoulos tweeted out to fans after this announcement his perception of what Shapeshift did:

“Kudos to ShapeShift for refusing to become a honeypot of PII just to satisfy NY regulators.” — Andreas Antonopoulos via twitter

Recently former Superintendent of Financial Services of the NYDFS, Ben Lawsky who introduced the BitLicense stepped down. Lawsky has been a staunch supporter of its regulations has been accused of setting it up for his own newly created legal firm, The Lawsky Group. The group is said to be working directly with cryptocurrency and online security so its not a very far fetched allegation. However in an interview with American Banker Marc Hochstein Lawsky denied this accusation from the community. Lawsky says since leaving his post he is unable to work with anything BitLicense related which is against the law. Covering his recent resignation in the interview he does counter this argument, although it raises the question of his prior work and huge pushing for the license itself which seemly looks rather crony to the eyes of many Bitcoin supporters. Lawsky told Hochstein:

“The rules are very clear. I can't work at all for life on anything I ever worked on. If anyone said 'I want to hire you to help get a BitLicense from DFS', no can do.”
— Ben Lawsky Interview

Given that Lawsky in the same rebuttal still said he would work with Cryptocurrency related situations he had left himself a loophole in regards to the law he created. With the clock ticking faster towards August 8th many wonder if more businesses will refuse to operate with New York. It seems that regulations created by the BitLicense and Lawsky’s team are far too harsh for some companies to deal with.

The data collection is believed by the community to be unethical. With revelations given by Edward Snowden it's no wonder why the public is not too pleased with data collection this day in age. Cronyism as well is rampant in this country perverting capitalism in the worst of ways. The mixing of corporation/business and law is very crony when its meant to help the creators of the License. The community is not happy with Lawsky creating a handbook of laws created by fallible men and then suddenly starting a cryptocurrency law firm and his denial was not well received. It will be interesting to see what businesses use Lawsky's new legal firm or if he becomes boycotted in the same fashion as his recently created BitLicense.

“Financial regulators and policymakers need to recognize that when it comes to digital currencies and other new payments technology – the genie is already out of the bottle.”
— Ben Lawsky BitLicense Speech June 3, 2015

Eyes are watching for more companies to follow suit with Shapeshift, and Poloniex’s measures. The Genie is out of the bottle, yet many Genies are also leaving the bottle of New York state and its heavy regulation. Other harsher regulatory states such as California is also looking to enforce law on the virtual currency as well.

Do you think the BitLicense is cronyism? Let us know in the comments below.

Images courtesy of Shutterstock, reddit and Redmemes

Apple Pay: Same Old Ball & Chain

Bitcoin and the blockchain is entirely different technology. Not like the standard financial payment systems of the past. Bitcoin doesn't hold you credit or debit information. The blockchain doesn't need your address or even your name. Bitcoin can be used in a multitude of fashions and the wallet Circle Financial added NFC technology through Droid devices this year. OneBit, another BTC wallet has entered its alpha stage which brings NFC implementation to virtually any credit card. This company along with BitPay has been a leader in motivating point of sale services in the crypto space.

Apple Pay rolled out in the UK last week with an unexpected surprise. Users with paired phones and watches according to a report by London July 17 having been getting double charged. The question remains is Apple Pay a centralized server really a disruptor of the old financial system?

Apple Pay introduces contactless payments through its server holding your credit-debit information. The system much like its counterparts the credit cards offer no exclusive features besides being contactless. Apple's so called innovation is based on two things: 1] the popularity of Iphones is always growing. 2] the phones and watches use standard NFC technology and encrypted chips.


With Bitcoin paper payments can also be made. A service called Bitaddress.org can generate a random key set for its users to create multiple bitcoin paper wallets. With this feature Bitcoin can act exactly like cash. Apple pay has no way of being this pseudo-anonymous, no cash like feature will be coming in the near future. If it did, surely it would be patented and not at all open-source.

Bitcoin is completely decentralized. Centralized banks, and credit card services can be frozen, just ask Greece. The blockchain never glitches or stops working like Wall Street. It runs 24/7 with no issues like users being paired together. Its fees are currently the lowest of any payment system in existence. Just last year millions of dollars were sent for the low fee of 4 cents. Apple Pay cannot say this as it charges its financial issuers heavy fees causing some banks to push Apple away from its merchant services.

When Apple pay started in the UK last week it limited its transactions to 20 pounds, in some cases some people were allowed 30. Bitcoin does not limit the amount of transactions or wealth you can send. It is entirely reserved on your behalf (unless you hold it with a third party) and will always work for you. Apple also outlines a number of requirements for its UK user base. Bitcoin has no restrictions like this in its protocol, wherever the cryptocurrency is accepted it works. When it comes to financial disruptors Apple clearly follows the old ball and chain financial system of the past. It is very much tethered to it, and most likely will always be. Apple is known for being ‘patent-hounds’ in the industry and very closed-source.


Is Apple Pay a medium of Innovation? Let us know in the comments below.

Images courtesy of 9to5Mac and Crypto-graphics.com

Hewlett Packard Shows Interest In Bitcoin

It seems the company Hewlett-Packard (HP), is showing strong interest in Bitcoin and the technology behind it. The company tweeted out a HP blog article saying “ With Bitcoin, the contract is the entire transaction. Period.” The tweet leads to a written blogpost called “The Technology Behind Bitcoin Could Replace Lawyers, Too.” with a great deal of descriptive narrative on blockchain technology and smart contracts.

The financial system has changed and HP has recognized this. In the HP post the company says that we've all heard the “hype” of bitcoin, however their company believes the tech behind it is the “real promise.” Namely the blockchain and its ability to service smart contract management. The writer states:

“In Bitcoin, the contract is the transaction itself: one party sending another funds. But in commercial banking or investments, smart contracts could execute unknowably complex contingencies based on the terms of the contract, all in real-time, with total transparency to the agreeing parties.”

The company refers to the technology as “warp speed” in comparison to the financial and legal system of today. Wall Street, bankers and lawyers being said to be reaping in “small fortunes” on what the blockchain could do for free. Blockchain transactions are recorded on the longest ledger on the internet and cannot be tampered with. This keeps transactions very transparent to run and watch. Who watches the watchmen? Well, the blockchain does of course.

Hewlett-Packard showing support for Bitcoin and it's underlying technology shows the company has a keen interest in the protocol. On October of 2015 HP is expected to split from its product enterprise of computers, printers and services into two factions. The result will lead to two different publicly traded businesses. With many speculating that HP will focus vastly into the service and networking arena, the concept of Bitcoin could help them.

HP believes that Bitcoin is something Fortune 500 better look at. With quite a lot of innovation going into the technology it's only a matter of time that Fortune and others do notice. If just “ two nerds” succeed in this venture of making smart contract peer-to-peer and accessible. It's only a matter of time before “legions” of law officials and financial firms get disrupted. Not only the financial and legal industry of the past but also circumventing the IRS as well. 

“The question is: if two nerds on the Internet hold a transaction, does anyone care? The Fortune 500 had better. Innovators in the block chain space are experimenting with ways to use the protocol in B2B payments without all the usual limits on transaction volume. If they succeed, credit card companies, payments processors, and legions of accounting and law firms would be devastated.

That'll cost jobs but save billions for companies and individuals alike. But it also will increase the speed of transactions at all levels of the economy. With that kind of uptick in volume, the IRS might end up being the most disrupted entity of them all.”

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2015 Q1 Bitcoin VC Investment Trumps The Numbers For All of 2014

In the first quarter of  2015, Bitcoin venture capital investment has already exceeded that of 2014. BitFury, the Amsterdam mining operation, has announced that its third round funding has exceeded 20 million dollars from investors. The company had previously acquired 20 million last summer in an investment round.

Also read: Bitcoin in Review: Interesting Trends in Q1 of 2015

BitFury plans to open up another location in Georgia as a vehicle and data center to stay ahead of the game in mining operations. The business itself has received roughly $60 million in venture capital since its inception in 2011. Investors from this round include: DRW Venture Capital, iTech Capital, and the Georgian Co- Investment Fund. 

The first quarter of 2015 VCs dropped a whopping $229 million into Bitcoin-related startups and ventures. This investment growth has doubled in size over one year in contrast to 2014 reports. Many attribute these investments to the same enthusiasm the Internet had in the early 90s. 

 Invested In By The Finest

Circle  recently closed a $50 million funding round; 21 inc jumps over Coinbase’s 2015, giant-sized investment funding by receiving $121 million in total funding. However, Coinbase made headlines with its respectful $75 million in its start up in the beginning of the first quarter. 

Learn about how to buy Bitcoin!

According to a report from Coinspeaker, 21 Inc. is building “new technology that is expected to facilitate worldwide bitcoin adoption and promote bitcoin mining.” Although the company has been a very mysterious, it has offered a “toaster” to its constituents in a revenue share trade. Even though these gifts come strikingly different the company has been invested in by Silicon Valley’s finest. Including: Peter Thiel, Qualcomm Ventures, Data Collective, Khosla Ventures, Yuan Capital, and RRE Ventures.  

BitFury is a company to watch, as it has overtaken its rival, KnCMiner, which raised $29 million in funding. Eyes are clearly watching Bitcoin mining and its data operations. The data stored with these companies and its analysis is said to be worth millions. Start ups like Augur and Truthcoin are just now digging into the ideas of prediction markets and how powerful they will be.

It's an exciting time in the land of crypto. With the continued flow of venture capital going into it, Bitcoin has a lot of prospectors. Everyday, the habitat is getting larger and spreading into uncharted territory. People are starting to trust math and probability over the uncertainty of human error. Financial Tech and encryption protocols like Bitcoin are disrupting the existing finance market -- showing no mercy. Banks can't keep up to these new financial innovators.

Do these disruptors help the banks or continue their way without them? Let us know in the comments below!

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Images: Shutterstock, BitFury

Patrick Byrne Says T0.com Will be Able to Replace Wall Street

Overstock was the first international company to welcome Bitcoin and its technology. A few weeks ago, the company announced it was issuing the world's first "crypto bond." This bond would be traded on a Bitcoin-based technology trading platform currently being developed by the company.

Now, in an interview for a leading digital financial media company, The Street, Overstock CEO Patrick Byrne revealed the name of the new and long-awaited platform – T0.com. The new Platform will bring the security and transparency of cryptographic technologies to capital markets.

Byrne said the new developments made by Overstock using the Bitcoin technology will give the new platform the ability to replace Wall Street:

"We have started building things that replace what Wall Street does. It does them far cheaper, and with far more transparency, and without any of the opportunity for rigging."

Overstock has filed a registration with the Securities and Exchange Commission, seeking permission to possibly issue a public crypto security. While Byrne has been critical of the SEC in the past, he thinks the agency has improved, and he'll be interested to see whether the SEC decides to approve Overstock's crypto technology plans.
Byrne said:

"Ten years ago I came out and made some very bold claims. By 2004, I knew there was a bunch of bad stuff going on. I started talking about it publicly. I became the object of sort of a mass Wall Street campaign of spin and vilification and distortion of everything I said. And then 2008 came and everything I said happened."

Overstock’s CEO is a strong believer in this new technology and is willing to use it no matter the costs. He stated that if the U.S. government tried to stop him, he would promptly take the technology to Asia or Europe where there is interest. There have been several companies interested in the technology and in working with Overstock; however, Byrne believes that he will freely operate in the USA.

Even though there’s still very little information about the new platform, it is expected to beat other trading exchanges and power financial transactions.

Wall Street is waking up to the idea that new technologies are a potential threat to business and is now showing a lot of interest on the Bitcoin technology. And that's why at this point Overstock's technology is years ahead of the technology used by Wall Street companies.

Further announcements about the platform are expected to be released by the end of this summer.

What can T0.com do for Bitcoin? Let us know in the comments below!

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Chicago Bitcoin Center: Chicago's Bitcoin Incubator

Bitcoin is growing. Adoption rates are rising in every major city and Bitcoin business keep popping up in those cities. Cryptocurrency and financial tech are capitalizing globally. This precedence is taking place in the city of Chicago at a vast rate. Chicago is home to 4,300 financial trading businesses and generates close to one quarter of the world’s derivative trading volume. On July 11, Chicago's Bitcoin Center added a bitcoin-focused incubator launched at 1871.

Also read: Ben Lawsky's Revolving Door

Ben Lawsky's Revolving Door

BitLicense is extremely controversial in the Bitcoin community. Not only is it the first comprehensive body of Bitcoin regulation in the United States, but it is also the most restrictive. BitLicense was created by the New York Department of Financial Services (NYDFS), with Benjamin Lawsky -- the Department’s superintendent -- leading the charge.

Also read: FBI Director Calls for Decryption Tools to Combat "Going Dark," Bitcoin Users Affected

The Bitcoin community has vilified Lawsky because of his leadership role in BitLicense. Since the beginning, Lawsky and his associates at the NYDFS have touted their ability to engage with the community and produce safe legislation that preserves innovation in New York’s digital currency space. However, the community sees the Department’s actions in a different light. Bitcoiners admonish Lawsky for being stubborn and inflexible, failing to seriously take their opinions into consideration. These sentiments are not without reason, either; although BitLicense has been revised twice, most of the major stipulations that irk the community are still firmly in place in the final draft.

What’s more is that Lawsky has recently announced his plans to leave the NYDFS and start a private consulting firm in the near future. What will he be consulting on? Naturally, Lawsky’s firm will focus on helping digital currency companies navigate New York’s virtual currency regulatory environment -- the one Lawsky created.

This move has made Lawsky out to be even more of a Bitcoin villain. Not only did he oversee what many people consider to be the death of Bitcoin in New York, but now he is trying to profit from it in the private sector. Given that a large bulk of the digital currency community come from libertarian backgrounds, there is a lot of outrage surrounding the construction of Lawsky’s revolving door.

BitLicense alone is bad enough. It’s requirements are so restrictive and its reach is so extensive that it could affect the entire US Bitcoin economy -- and possibly digital currency businesses across the world. The bloated regulation has already claimed its first victims; ShapeShift and Eobot have cut off their services to New York, and BTCGuild is shutting down completely -- citing BitLicense as a partial reason.

These initial service suspensions and closures is grim foreshadowing of what faces the New York digital currency economy. BitLicense is so restrictive that only the biggest, wealthiest, and most well-connected Bitcoin companies will be able to operate in New York -- whose large, finance-driven economy otherwise offers a promising Bitcoin market. Even if smaller companies do manage to meet BitLicense’s requirements, the cost of doing so will put them at a marked disadvantage against larger competitors with more resources and influence.

Now, Lawsky is adding insult to injury by injecting a layer of cronyism into an already depressing regulatory landscape in New York. Of course, the idea of giving compliance guidance to budding businesses is not bad; if there must be regulation, people might as well help each other navigate it. However, Lawsky is offering advice on how to deal with the burden that he created.

The moral implications of such an action are undoubtedly questionable. As mentioned above, it is one thing to help fellow entrepreneurs navigate an unfortunately brutal regulatory environment. But to profit from the very burden that you orchestrated is under-handed, greedy, and morally and politically corrupt. Intentionally or not, Lawsky is making Bitcoin businesses worse off for his own personal gain. If Lawsky truly wanted to help firms in New York, he would have fought for their freedom to innovate instead of profiting from their struggle and misery.

With this new consulting firm, the possibility of a cronyist and elitist Bitcoin economy in New York is much more likely to come to fruition. Essentially, Lawsky is providing the top firms with a direct link to the NYDFS. With his political connections and intimate knowledge of BitLicense, Lawsky is equipped to open the floodgates for companies that wish to use the law against competitors. In public choice theory, this phenomenon is known as regulatory capture, where private firms use their resources to influence the government in their favor.

Unfortunately, Lawsky’s questionable transition from the public to private sector is nothing new, It happens all the time in the mainstream economy. Regulators spend several years crafting new legislation or beefing up existing laws only to take jobs helping companies get around those same rules. Then, after a few more years, they reenter the bureaucracy and get to work making the web of regulation even more ensnaring. Banking, health care, agriculture, energy, or anywhere else, the revolving door exists wherever there are rules telling firms what they can and cannot do.

Of course, there must be some balance between ensuring that customers know what they’re buying and avoiding suffocating companies with rules. However, attempting to strike that balance means that there will always be predators around to derive personal benefits from the laws. It is discouraging that politicians and bureaucrats seem to desire that personal gain more often than wanting to preserve that balance between anarchy and intervention.

How can we achieve the right mix of regulation and laissez-faire without creating the revolving door? Public choice economists have tried to find an answer to that question for decades, and so far it seems like they have been unsuccessful. Maybe it’s impossible to get the perfect mix, perhaps we just have to accept the fact that there will be corruption and cronyism as long as the government tries to tell people what to do.

But maybe it’s possible that laissez-faire is better than a system of corrupted consumer protection. Although it isn’t politically feasible, experimenting with a hands-off approach might reveal that the spontaneous order produces market-based consumer protection. If such experiments confirm that hypothesis, then the antics of Lawsky and countless other bureaucrats will be rendered unnecessary. Whether or not we will ever get to conduct free market experiments, though, remains to be seen.  

What do you think about Lawsky's plans to create a private BitLicense consulting firm? Let us know in the comments below!

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Disclaimer: The views are of the author and not necessarily those of Bitcoin.com
Images: Pixabay, Wikimedia Commons