BitMesh: Offering Internet Connectivity In Exchange For Bitcoin

BitMesh is a service that allows users to share internet connectivity and bandwidth. With the use of Bitcoin micropayments servers in the network gain incentive to share. The development team is lead by Andrew Donley, founder and CEO, Christopher Smith, CTO/Chief Technology Officer, and Christian Lunoe, COO/Chief Operating Officer. The team has a working prototype server, and users who wish to buy and sell internet connections will be able to join the BitMesh network.

“BitMesh’s “ Wi-Fi Marketplace” allows people to leverage existing devices to share their internet connection with peers in exchange for monetary incentives.”

BitMesh in a very basic description is a Mesh Network sharing economy using Bitcoin as a medium for both the buyer and seller. The service offers prepaid bandwidth offered by clients for essentially anyone in need of internet service. Offering more inclusion and choice in the world of Internet services. BitMesh is leading the pack in innovation with its unique form of Mesh Net technology.

Bitcoin.com had an in depth discussion with BitMesh to get a crisp visual of what they are doing, the services they are developing, and Mesh Nets in general:

Bitcoin.com: The phrase “ All Mesh Networks Are Not Created Equal”, would you agree with this?

Christopher Smith, CTO/Chief Technology Officer: "Equal" is a word with many definitions. Certainly different networks have different sizes, topologies, speeds, bottlenecks. It's all about which details you choose to blur out.

We take a more loose definition of "mesh network" than some others. Network topologies exist on a spectrum, with purely decentralized P2P architectures on one end, and completely centralized star topologies on the other (see image). When we call ourselves BitMesh, it is because we intend to push internet topology in the decentralized direction. We aren't ideologically attached to a specific topology, because we don't claim to know what the right topology for the internet is. In fact, we don’t think anyone really knows what the right topology is, because it’s constantly changing. Instead, we want to decrease the internet's viscosity, to lower the barrier to entry to becoming a reseller of connectivity, so the internet can morph more easily and find its own equilibrium more quickly. Right now extending internet infrastructure generally requires very deep pockets and a long vision. We hope to make it easier. The equilibrium will probably still involve some nodes being bigger and more connected than others. Very few, if any, distributions in life are perfectly uniform, so we aren't trying to force the internet into any particular set of ideology-boxes. We just want to make it bigger and better.

BC: Can you explain to our readers how BitMesh operates by offering incentive to share bandwidth?

Christian Lunoe, COO/Chief Operating Officer: BitMesh’s “ Wi-Fi Marketplace” allows people to leverage existing devices to share their internet connection with peers in exchange for monetary incentives. A seller is a user who has an existing internet connection or excess bandwidth capacity and is willing to share that with other users within the network. Buyers are users who are willing to pay for the privilege of connectivity, whether it be for a few minutes or a few months. BitMesh’s adaptive pricing encourages sellers to offer the highest quality connection to areas that have the most demand, while it also encourages increased buyer activity with a diminishing marginal cost of connectivity.


BC: Can you describe the Marketplace?

Christian Lunoe: BitMesh’s “Wi-Fi Marketplace” enables machine-to-machine transactions. That is to say that there is no need for human interaction to negotiate a contract or facilitate payments. This creates a low-friction user experience for both buyers and sellers.

As the marketplace and user base grows, BitMesh will evolve the platform from a series of individual hotspots to a true mesh network where buyers can take advantage of a competitive market. Sellers compete on price and quality of service and traffic is routed through multiple nodes within the network to deliver internet connectivity.

Christopher Smith: Using micropayment channels, we can automatically meter your bandwidth usage, so that buyers only pay for what they use. Essentially it’s a kind of trustless escrow technology that allows many payments to be made securely off chain, and only posting the summed result to the blockchain. The result is very high resolution payments with very low overhead.

This also allows for the possibility of peak-load pricing, to allow prices to reflect the scarcity or abundance of bandwidth to maintain a high quality of service.

BC: Developing mobile ad hoc networks and mesh networks has recently grown in size globally. Why do you think Mesh Networks are gaining more attention?

Christopher Smith: I think globally, the internet is moving towards a more decentralized model.The benefits of being able to easily communicate with other humans are tremendous, as communication is often the biggest bottleneck in working together with people. “Information wants to be free”, as they say. On the other hand, nature is full of hierarchies of scale, from the structure of galaxies to structure of the neocortex, so I don’t expect to see all internet hierarchies wiped out anytime soon. The centralization bottlenecks will be burned up until they are at least as useful as they are costly.

Christian Lunoe: Through the BitMesh “Wi-Fi Marketplace,” we are able to incentivize users to help extend the infrastructure of the internet. While most commonly think of an application of our technology in densely populated urban areas, there is immense value in extending connectivity to rural, underserved populations. Our ideal state is to have “power sellers” who develop business models wherein they use our platform to extend the reach of the internet to the fringe, and beyond.

 "A certain amount of decentralization of the internet is crucial to the integrity of the blockchain, because otherwise Sybil attacks become very easy for the central star-points. On the other hand, I don't think it's necessary or even desirable for the internet to be "pure-mesh". If it took more than 10 minutes for a block to be routed and transmitted across the globe, it might make it difficult to arrive at consensus. It's a complex issue."



BC: Do you think these Networks will overthrow traditional networking and communications?

Christian Lunoe: Mesh networks and traditional networks will coexist. We cannot ignore the value of the existing infrastructure that has been built, and the value that the backbone provides. That said, when the business model of traditional networks would lead to little or no investment in communities that would not provide a large ROI, we think that BitMesh, and mesh networks overall, provide immense value.

Christopher Smith: “Overthrow” is a dramatic word. I think of it more as evolution. Old things decay and get consumed by new things, but I don't think this will mean all hierarchies and backbones will be annihilated. The internet would be a lot slower if we had no backbones, and that infrastructure takes energy to create and maintain. I think that feature is going to stick around, at least for the immediate future.

I do expect that monopolies are going to be harder and harder to maintain, and that's a good thing for everybody in the long run.

BC: Cjdns is being used in a few networks abroad, does BitMesh use this?

Christopher Smith: BitMesh does not currently us Cjdns, although we may integrate it in the future. Andrew (CEO & President of BitMesh) and I are both super nerdy and into that sort of thing, but we've been focusing on making a simple platform and marketplace for an average user without the extra configuration requirements of Cjdns.

Christian Lunoe: We don't want to create additional friction for new buyers and sellers, many of whom may discover BitMesh’s marketplace incidentally out of need more so than curiosity. That's an important philosophy to our company. Everything we’re building is designed to create a robust, inclusive network of everyday users.

BC: Would you say Mesh Networks offer Inclusion to technology and open source data?

Christopher Smith: There’s already billions of devices around the world that could be routing but aren’t, and we think that’s an interesting opportunity. If a community is already oriented around technological inclusivity and open source principles, then making networks more “meshy” will encourage those principles.

BC: In Hong Kong, during the protests last year ‘Firechat’ was used. How do you feel about Mesh Networks bypassing governments? Can BitMesh also achieve this?

Christopher Smith: We think the internet is wonderful and don't want anybody to be able to shut it off, regardless of who they work for.

BitMesh could be used in similar situations, but it's not a panacea. Freedom will not come with a single technology or in a single leap, but we think better communication will help a lot.

BC: Micropayment channel technology. Is it incentive enough to globalize the Mesh Network idea?

Christopher Smith: We think if each piece of internet infrastructure can pay for itself in proportion to how valuable it is to the network, then that will encourage a healthier internet.

One of the major selling points of micropayment technology to us is that it can keep the difference between what has been paid and what has been received arbitrarily small, reducing the incentive for either party to fraud the other.

BC: Some would say Mesh Nets are crucial to Bitcoin and the survival of the Blockchain. Would you guys agree with this?

Christopher Smith: A certain amount of decentralization of the internet is crucial to the integrity of the blockchain, because otherwise Sybil attacks become very easy for the central star-points. On the other hand, I don't think it's necessary or even desirable for the internet to be "pure-mesh". If it took more than 10 minutes for a block to be routed and transmitted across the globe, it might make it difficult to arrive at consensus. It's a complex issue.

What do you think of the integration of Bitcoin and Mesh Networks? Let us know in the comments below.

Images courtesy of Shutterstock and Redmemes 

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.”

The Great Big Block Size Debate

Since core developer Gavin Andresen announced his proposal to the Bitcoin community to increase the block size many have been in high debate. The question is when the March 2016 date arrives will consensus be met? With miners, exchanges, core developers and the community in such an uproar it's hard to say.

Bitcoin is an open source protocol. Its core development is headed by Wladimir J. van der Laan, Gavin Andresen, Jeff Garzik, Gregory Maxwell, and Pieter Wuille. Among these five developers the code has seen others such as Peter Todd contribute to the Bitcoin code. Roughly 259 individuals have added to the the protocol and its core. Between them all and other voices over 7,400 commits have happened.

“I am - in general - in favor of increasing the size blocks: as technology grows” — Pieter Wuille, Developer

This leads to another important question. Does everyone take part in this system and have a final say in the code? The answer as of now would be yes. Gavin does indeed influence the Bitcoin project to an extent. Widely recognised as the main developer behind the scenes, and all five of them have great and different opinions. However if any of the five core developers chose not to seek consensus, or were to change any core aspect of the client they would fail. It would undermine the work of many, and there would be many disagreements. Not just from those who have contributed code but also wallet servers, miners and mining pools, and exchanges. March 11, 2013 is a perfect example of miners refuting a hard fork. Bitcoin is a peer to peer system and completely open source.

Over the course of this discussion many in the community had a lot to say about Gavins proposal and his following blog posts. Blog posts which addressed certain arguments against his idea showed Andresen has been committed to this change. People like Peter Todd, Mike Hearn, and Andreas Antonopoulos had very strong opinions from the get go. Todd and others stating from the get go of Andresens proposal that not all the developers agreed with the increased block size. Arguments such as higher fees, and centralization are core issues with the increase. Positives of increasing the size include faster transaction times, and various scaling fixes.

“Block size is a question to which there is no answer, but which
certainly has a LOT of technical tradeoffs to consider.”
— Gregory Maxwell, Developer

These debates have fueled many different Bitcoin clients appearing to the public. Such as Bitcoin XT run by developer Mike Hearn. Bitcoin XT acts as a test net for the Bitcoin core and is increasing its block size as we speak. Even Andresen has expressed the intentions of adoption in a SourceForge message saying Bitcoin Core users would be asked to adopt the new changes and then approach the miners. Mike Hearn currently leads and has full commit access to XT.

Bitcoin Core is not really changed in drastic ways. There have been a bunch of hard and soft forks throughout its existence. Developer van der Laan said the core is changed in a “non-controversial and janitorial” manner. Two of China's largest exchanges BTCChina and Huobi have been against the 20mb increased proposed by developers. Some miners and various pools have also disagreed with the Increase. Various pools from China have requested an 8mb increase rather than the 20. The increased number of megabytes has been all over the map in this heated debate.

A higher limit can be phased in once we have actual use closer to the limit and make sure it’s working OK. — Mike Hearn Developer

On June 22nd core developer Jeff Garzik had an interesting discussion with another fellow developer Pieter Wuille. Posted to reddit Jeff shows the public his discussion. Peter writes:

Some people have called the prospect of limited block space and the development of a free market a change in policy compared to the past. I respectfully disagree with that. Bitcoin Core is not running the Bitcoin economy, and its developers have no authority to set its rules. Change in economics is always happening, and should be expected. Worse, intervening in consensus changes would make the ecosystem more dependent on the group taking that decision, not less.

This completely ignores reality, what users have experienced for the past ~6 years.

Jeff responds with: "Change in economics is always happening" does not begin to approach the scale of the change.

For the entirety of bitcoin's history, absent long blocks and traffic bursts, fee pressure has been largely absent.

Users & market are forced through a second period of chaos and disruption as the free market is rebooted again by changing the block size limit.

The average user hears a lot of noise on both sides of the block size debate, and really has no idea that the new "let a fee market develop" Bitcoin Core policy is going to raise fees on them.

It is clear that - "let the free market develop, Right Now" has not been thought through - Users are not prepared for a brand new economic policy - Users are unaware that a brand new economic policy will be foisted upon them” — Jeff Garzik Bitcoin, Developer

A week ago Jeff has proposed to increase the Bitcoin Core block size to 2mb. The Linux expert and self described libertarian has often given his views publicly to redditors. Currently blocks are created every 10 minutes and only hold 1mb of transaction data. If core developers reach an agreement, Garzik and several others want to initiate BIP 102 a fallback plan if consensus does not meet around the entire network.

"All that has to do be done to change bitcoin to a new economic policy - not seen in the entire 6 year history of bitcoin - is to stonewall work on block size.

"Closing size increase PRs and failing to participate in planning for a block size increase accomplishes your stated goal of changing bitcoin to a new economic policy."

"no [code] change"... changes bitcoin to a brand new economic policy, picking economic winners & losers. Some businesses will be priced out of bitcoin, etc.

Stonewalling size increase changes is just as much as a Ben Bernanke/FOMC move as increasing the hard limit by hard fork. — Jeff Garzik, Developer

Needless to say the debate is not over. Many are worried that consensus may never be reached with all the disagreements. With accusations flying everywhere, and the supposed use of sock puppets one would wonder if a conclusion can be met. A lot of people are skeptical of the proposed upcoming hard fork, and offer different alternatives showing testing as example.

However many are also positive about increasing the the block size and show in test net environments why the increase works as well. Increased transaction time could make global remittance solutions possible with Bitcoin. A smaller block size may not be adequate to handle such commitment. Although there's also the voice of ‘If its not broke, don't fix it’ which is also represented in this argument.


Do you see consensus reached by March 2016? Let us know in the comments below.

Images courtesy of Twitter and Redmemes 

Backpage Sues Chicago Sheriff

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Moneypacket.org Lets Users Send Bitcoin By Email

A new open source project called Moneypacket.org allows you send Bitcoin through email. Released to the public on June 12, founder Eric Woods a developer for IBM Watson,  posted his project to reddit answering questions AMA style throughout the thread. Most redditors were quite pleased with the project giving it a 92% approval rating.

"I hope moneypacket.org helps in the adoption process, especially because people can receive their first bitcoins in an email without doing anything (no wallet set up, etc). Long term, I suspect people will become comfortable with wallets and addresses."

The project is a client side website which allows users to create files called “ Money Packets”. These packets act like digital envelopes holding Bitcoin. The files Woods says can be stored on a hard drive, sent via Dropbox, and standard email. Eric recommends only sending small amounts of BTC as the project is still in alpha period.

Woods released version 0.22 which he says tightens security adding features such as:

-HTTPS/SSL/TSL

-BIP38 encryption

-Strict password requirements

-Increased SJCL encryption

-Warning features

Bitcoin.com spoke with developer Eric Woods to get a little insight on his project. Woods got into the Bitcoin space in 2013 and had his “a-ha” moment when he started researching it intensely. 

Bitcoin.com: When did you come up with the idea to develop a platform which sends BTC by mail?

Eric Woods: A few months ago. I think people understand files and word documents and email attachments, but bitcoin wallets and QR codes remain elusive. So it seemed like something was missing. I wanted a file on my desktop to contain bitcoins in the same way that a word document contains text.

So I put together a minimum working prototype, which worked better than I expected. Then I built the actual website. I put untold time, energy, and lack of sleep into it. When it finally launched, I showed it to my family and it completely failed the “mom usability test”. So I threw it all away and started over on version 0.2, which is the site’s current iteration.

BC: How many people work with you on this project?

EW: Just me so far. I’m open to collaborate with creative people, wherever that may go.

BC: How does Money Packets work?

EW: The website generates a bitcoin private key using bitcore, encrypts it with the user’s password using SJCL or BIP38, and saves the encrypted output to a downloadable file format called a “money packet”. In essence, a money packet is just an encrypted private key which the website knows how to import and export.

Funds can be claimed by importing the money packet, entering the password to decrypt the private key, and forwarding the funds to a bitcoin address or a new money packet.

The important thing is moneypacket.org is 100% open source and browser-side. That means the entire site runs locally in your browser, so there’s no account sign up or trusted third party holding your funds. That’s the key difference from other services in this space, where you have an account and trust them with your money.

BC: Do you think that more services like this will appear in the near future?

EW: Yes, in fact I’ve already seen posts about other client-side web wallets in development. I think the concept resonated with the community because it’s a good way to build web-based services while honoring the trustless nature of digital currency. I welcome these services to come. They'll strengthen the overall ecosystem, which in turn gives bitcoin value, so we all win.

BC: Do you think your service benefits adoption?

EW: I think adoption will continue naturally, and I see no need to rush it. It just takes time, time for technical progress, and time for people to become more familiar with these concepts. I think we’ll eventually reach a tipping point where the value and usability of digital currency speaks for itself and it becomes the new norm.

I hope moneypacket.org helps in the adoption process, especially because people can receive their first bitcoins in an email without doing anything (no wallet set up, etc). Long term, I suspect people will become comfortable with wallets and addresses.

BC: What happens when you send the email with attached BTC and it goes unclaimed or unopened?

EW: It can be thought of like handing off a baton. During the hand off, both the sender and receiver have access to the same pool of funds. If the receiver never collects the funds, the receiver may take them back at any time, or the funds could sit there as a joint account.

BC:Is there a minimum or maximum limit to bitcoin sent by your service?

EW: There is technically a lower limit to prevent the transfer of “dust", but I’ve sent as little as $0.002 (1/5th of a cent) from a money packet. Consider the network transaction fee is ~$0.03.

There is no upper limit, but I recommend using the service for small amounts only. It’s still alpha software under active development, and there may be security holes I don’t know about. For large transactions, direct transfer between wallets will always be more secure.

BC: Do you have to comply with any regulatory policy?

EW: Being 100% client-side, I never touch user funds. That bypasses most regulatory policy.

BC: What can we expect from the future of your service?

EW: Mobile is very important (I recommend using a desktop today). I’d like to support HD key generation so keys are never re-used. I want to improve the import process so users can add arbitrary notes to their money packets. That along with other tweaks in functionality, usability, and security (like GPG integration) and I have an immediate path forward!

Do You Think Sending Bitcoin By Email Helps Adoption? Let us know in the comments below.

Images courtesy of MoneyPacket & REDMEMES

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

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

Legal Fears Slow Ross Ulbricht Appeal Fundraising

Editor's Note: This article has been updated to correct an inaccuracy. The Crypto Show is a radio show -- not a podcast -- which is broadcast on 89.1 FM in Austin, Texas. We have also added Lyn Ulbricht's and Cody Wilson's comments regarding Ghost Gunner's legality.

The Crypto Show, a popular cryptocurrency radio show, began a StartJoin crowdfunding campaign for Ross Ulbricht’s appeal in June 2015. Since the beginning of the campaign, complications related to one of the offered prizes have resulted in the Crypto Show’s campaign being removed from StartJoin.

According to Danny Sessoms, StartJoin removed the Ross Ulbricht appeal fund campaign from its site due to the Crypto Show offering a Ghost Gunner from Defense Distributed as an auction prize:

“Based on a few things that were said it was obvious that the legal department didn't want to be involved with us because of our top prize The Ghost Gunner. I don't blame StartJoin or the other platforms that turned us down. It's a ridiculous PC world we live in where business's (sic) have to fear their every move for some sort of legal or social backlash. We could have easily dropped the Ghost Gunner and sell it separately but why should we[?]”

The Ghost Gunner is a CNC milling machine manufactured by Cody Wilson’s organization, Defense Distributed. Although the machine is capable of creating a number of things, Wilson and his organization have marketed the Ghost Gunner as an at-home gun building machine. Lyn Ulbricht has commented that the Ghost Gunner is perfectly legal, while Cody Wilson has said that the only places his product cannot be legally sold are Syria, Iran, and North Korea.

Nevertheless, this machine has garnered controversy in the media, with publications drumming up fear of criminals using the Ghost Gunner to produce untraceable firearms that will be used to harm people. Due to this fear, FedEx and UPS refused to ship the Ghost Gunner.

The Crypto Show has not let its problems with StartJoin put a damper on the fundraiser. Rather than trying to take the initiative to another crowdfunding site, the Crypto Show decided to host the fundraiser on its website, with auction participants and donators sending money directly to the FreeRoss.org.

Many items -- donated by figures in the Bitcoin community -- are up for grabs. Here are some of the items on the list:

• Cody Wilson: a Ghost Gunner signed by Cody
• Roger Ver: $1000 worth of advertising on Bitcoin.com
• Kirk & Lyn Ulbricht: 1 week in a Bamoo beach house in Costa Rica
• The Crypto Show: 3 months of advertising, banner ads, and a 60 second audio commercial
• Jeff Berwick: two tickets to Anarchapulco 2016
• Alex Winter: a signed BluRay copy of the Deep Web documentary
• Adam Kokesh: a free copy of FREEDOM and a sticker to all donators

In addition to the auction, the Crypto Show is putting on an online garage and bake sale, with 100% of the proceeds going to FreeRoss.org.

Earlier in 2015, Ross Ulbricht was convicted of being the mastermind behind the infamous Silk Road dark net marketplace. Ulbricht was sentenced to life in prison for his crimes. Ulbricht’s defense team and family believe that he was not given a fair trial, and are pursuing an appeal in hopes of getting a second trial. The defense team's strategy -- if given a second trial -- will involve leveraging the recent guilty pleas of two former federal agents, who admitted to stealing Bitcoin from Silk Road during the investigation. One of the agents, Carl Force, even admitted to extorting Ulbricht.

If you are interested in learning more about Ross Ulbricht’s story and conviction, visit FreeRoss.org.

To participate in the Crypto Show’s auction and garage/bake sale, visit the show’s website.

Was Ross Ulbricht given a fair trial? Let us know in the comments below!

Images: Rolling Stone, The Independent

China's Bleeding Stock Market

While many eyes are watching Greece, another large market bleeding. China's stock market opened on Sunday, July 5, 2015, following an incredible three week plunge, losing $2.36 trillion in market value. Many investors wonder if the losses in Chinese markets will billow outwards towards other countries.

Also read: Gold Takes a Backseat to Bitcoin During Greek Debt Crisis

Frederic Neumann of HSBC Holdings in Hong Kong said:

"What happens in China will turn out to be far more consequential than any sting that Greece may deliver over the coming weeks or months."

With 1.4 billion people and the world's second largest GDP, financial experts think that China's problems might have global consequences. "What happens in China will turn out to be far more consequential than any sting that Greece may deliver over the coming weeks or months,'' said Frederic Neumann, at HSBC Holdings in Hong Kong. The Shanghai Composite and Shenzhen Composite have both plunged about 30% from their highs over the course of this month. Government officials in Beijing are putting forth measures to ease the financial burden.

The Chinese government has offered a credit line to encourage leverage margin trading. In addition to this effort with other businesses, they've shown commitment to buy billions in stock and new IPOs. Officials stated that China’s central bank will give capital to China Securities Finance corp, in trade for the company to offer margin lending. The practice is “high risk” and allows users to purchase stocks with borrowed money.

On July 7, commodities across the board hit a low. Silver dropped under $15 USD, showing a significant drop in the past six months. Crude oil fell 4% and Bitcoin dropped from a high of $275 USD down 5% over the course of Monday evening. When commodities drop this low, the typical reaction is to buy in anticipation of heightening economic hardships.

With China’s markets floundering, the people of the country may turn to safe-haven assets like Bitcoin to keep their wealth safe. In a Goldman Sachs sponsored analysis called “The Future of Finance,” the bank claims that 80% of exchanged Bitcoin is traded for Yuan. The Chinese bitcoin surge comes from lack of confidence in the Chinese economy. The yuan has weakened against the strengthening dollar and capital outflows increased at record rates.

China has had problems in the past with the PBOC warning the country about cryptocurrency. There currently is no explicit ban on buying, selling, or owning bitcoin. The central bank of China has classified the digital currency as a commodity. Without any regulatory commision on the subject, trading continues at full speed.

With countries surrounding Greece buying Bitcoin at vast rates, the question remains: will China follow suit, hedging the cryptocurrency?

Images courtesy of Shutterstock and Bloomberg.com