A fundamental aspect of any sovereign economy is the right to mint and value a currency. In the United States, the Constitution lays this out clearly. Section 8 permits Congress the right to coin money, and Section 10 denies the states or anyone else that right. Creating a physical alternative to the U.S. dollar isn’t just difficult, it’s outright illegal.

Then came Bitcoin. What makes Bitcoin so unique (and legal) is that it is a digital currency and, thus, never minted. While its popularity has grown substantially in the past two years, the currency has actually been floating around since 2009, when it allegedly was created by clandestine developer Satoshi Nakamoto. Since that time, the currency has gone from little more than a theory to being worth as much as $1,200 per Bitcoin. At time of publication, it was trading just below $500.

Bitcoins are created through a process called “mining,” and they only exist in a computer file known as the blockchain, which is akin to a complex puzzle. After a computer works on the blockchain for a certain amount of time, a piece of the puzzle is solved, releasing 25 Bitcoins (rate halves in mid-2016) to the solver.

Seems easy, right? Buy a bunch of computers and get to mining! While this is how it worked early in Bitcoin’s existence, it isn’t quite that simple any longer. Part of the genius of Bitcoin is how elegant it is as a functioning monetary base. As more Bitcoins come into existence, the blockchain puzzle becomes progressively more difficult. The monetary base of Bitcoin was built to grow by 3% annually. This number was not chosen randomly: A 3% inflation rate is considered a healthy target for developed economies, and is near the figure targeted by central banks around the world.

As Bitcoin’s popularity has exploded in the past two years, the mining has grown exponentially more difficult and expensive. Whereas in 2009 it was possible to utilize a standard home PC for mining purposes, today it takes highly specialized kits to mine profitably. One has to remember, computers cost money and run on electricity. So, if you are running a non-specialized PC, it may cost $100 in electricity to mine $25 worth of Bitcoins. While some hobbyists still engage in such operations (I tried it myself), it is obviously far from a sound business.

To seriously mine Bitcoins it takes a minimum of a $5,000 investment. Companies like Butterfly Labs build specialized graphic cards designed specifically for blockchain hashing. These cards cost several thousand dollars and are typically back-ordered for months. To be in the “business” of Bitcoin mining requires an entire fleet of this equipment, which can easily cost $100,000 or more. To further complicate mining, this equipment typically is obsolete in six to 12 months, meaning further capital outlays are constantly needed to stay profitable. Entrepreneurs who have been successful at mining have significant capital, both intellectual and dollar denominated. Cheap access to power also helps—different parts of the country can have widely varying kilowatt costs.

If it is not profitable for the average person to mine Bitcoins any longer, then why has it exploded in popularity? The answer is twofold in my mind. First, and most importantly, central banks around the world have done very little to build confidence in paper currencies since the financial crisis in 2007. Furthermore, countries around the globe have taken on dramatic amounts of debt over the past seven years, resulting in an increase in the debt-to-GDP ratios of every developed market, and most of them have even doubled.

Open exchange rates have made fiat (paper) currencies viable since the removal of the gold standard in 1971. If one country practiced irresponsible monetary policies, the exchange rates punished them and devalued their currency. But what happens when everyone acts irresponsibly? Bitcoin is what happens.

The second reason Bitcoin has become so popular is that it has caught the attention of the investing community. The virtual currency has turned into a haven for speculators due to the extreme volatility of its exchange rate; at times it has doubled in the span of just a few weeks.

By design, there is a finite amount of Bitcoins that will ever be mined (20,999,839.77, to be exact). With a constrained supply, hedge funds have looked to corner the market on Bitcoin and have accumulated substantial holdings in the currency.

This environment is what has made Bitcoin a viable currency. It is in its infancy and there is still much that can go wrong. Two of its most recent hiccups were Mt. Gox (a large exchange and bank for Bitcoin) going bust, and a March 2014 IRS ruling that Bitcoin and other virtual currencies will be treated as property for IRS purposes, not currency.

...


http://www.nerdwallet.com/blog/finance/advisorvoices/bitcoin-virtual-currency/

The operator of an exchange for the virtual currency Bitcoin has pleaded guilty to running an unlicensed money transmitting business.

Charlie Shrem from BitInstant.com admitted the charges in a New York federal court hearing.

Another Bitcoin trader, Robert Faiella, also pleaded guilty.

Both were arrested in January, accused of selling more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.

The site was shut down last year and its alleged owner was arrested.

The two traders admitted the charges as part of a deal struck with US prosecutors in order to settle the allegations against them.

Bitcoin exchanges are services that allow users to trade bitcoins for traditional currencies.

Mr Shrem had been accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to buy drugs anonymously.

The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.

The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.

...
http://www.bbc.com/news/business-29072886

It has been close to a year since the peer-to-peer decentralized digital currency bitcoin topped $1,000. Soon after the price collapsed to half that value, financial experts and banking officials called for the virtual currency’s utter demise. Of course, bitcoin is still here, and it could eventually transform into the “Internet of money.”

Andy Yee, a Google policy advisor for its Asia-Pacific division, published an article for the Internet Policy Review that put forward the case that there are various segments of the bitcoin economy that should be aimed for regulation that is modeled on current digital frameworks.

When separating the digital currency ecosystem into an assortment of layers, Yee argued businesses that connect with consumers and investors should face some level of regulation. However, developers and users would be weak targets considering the broader nature of the Internet.

The article further discussed any future regulations that are installed by governments or the bitcoin industry itself should not prevent innovation in this sphere but still take into consideration the numerous concerns that law enforcement agencies, consumer safety proponents and financial regulators have.

Here is what Yee wrote in the paper:



....


http://www.coinbuzz.com/2014/09/03/google-analyst-thinks-bitcoin-internet-money/

Sorry guys. EgoPay said they are working on it but did not provide an ETA. It's out of our control. You may want to consider other means of deposit such as bank wire and Ripple network.

On August 11, 2014, the Consumer Finance Protection Bureau (“CFBP”) issued a consumer advisory warning customers of the potential risks associated with virtual currencies. A copy of the CFBP press release can be read here.

Created with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, CFPB, which began operations on July 21, 2011, was tasked with the responsibility of regulating both banks and nonbank institutions which offer financial products or services to ensure that these institutions comply with federal consumer financial protection laws. Under the Dodd-Frank act, CFPB is authorized to supervise all banks with more than $10 billion in assets as well as all sizes of nonbank mortgage companies, payday lenders, and private education lenders. Dodd-Frank also grants CFPB the power to regulate nonbank institutions in other consumer financial services markets.

CFPB’s consumer advisory does two things. First, it provides consumers a series of warnings and risks to be considered prior to entering into the virtual currency marketplace. According to CFPB, among the issues that consumers should be aware of prior to entering the virtual currency market include: 1) virtual currency is not a legal tender, not backed by any government, and digital wallets used to store such currency are not FDIC insured; 2) the exchange rate for virtual currency vis-à-vis fiat currency is very volatile and virtual exchanges may also charge additional mark-ups and fees for exchange and wallet services; and 3) digital wallets are the target of cyber-attacks and hackers and loses may not be recoverable.


....

http://www.jdsupra.com/legalnews/bitcoin-regulatory-update-cfpb-issues-40275/

Yes we relaxed the verification requirements for users who do not touch real FIAT currencies. Now no documents needed if you limit your activities to BTC, USD.LakeBTC, and EgoPay USD.

Bitcoin is catching on at U.S. online merchants including Overstock.com and Expedia, as customers use a digital currency that just a few years ago was virtually unknown but is now showing some staying power.

Though sales paid for in bitcoin so far at vendors interviewed for this article have been a fraction of one percent, they expect that as acceptance grows, the online currency will one day be as ubiquitous as the internet.

"Bitcoin isn't going anywhere; it's here to stay," said Michael Gulmann, vice president of global products at Expedia Inc. in Seattle, the largest online travel agent. "We want to be there from the beginning." Expedia started accepting bitcoin payments for hotel bookings on July 11.

Until recently a niche alternative currency touted by a fervent group of followers, bitcoin has evolved into a software-based payment online system. Bitcoins are stored in a wallet with a unique identification number and companies like Coinbase and Blockchain can hold the currency for the user.

When buying an item from a merchant's website, a customer simply clicks on the bitcoin option and a pop-in window appears where he can type in his wallet ID number.

Still, broad-based adoption of bitcoin is at least five years away because most consumers still prefer to use credit cards, analysts said.

"Bitcoin is a new way of making payments, but it's not solving a problem that's broken," said George Peabody, payments consultant at Glenbrook Partners in Menlo Park, California. "Retail payments aren't broken."

There are also worries about bitcoin's volatility: its price in U.S. dollars changes every day. On Wednesday, bitcoin was up 0.4 percent at $514.09.

That risk is borne by the consumer and the bitcoin payment processor, such as Coinbase or Bitpay, not the retailer. The vendor doesn't hold the bitcoin and is paid in U.S. dollars. As soon as a customer pays in bitcoin, the digital currency goes to the payment processor and the processor immediately pays the merchant, for a fee of less than 1 percent.



....

http://www.abs-cbnnews.com/business/08/30/14/bitcoin-shows-staying-power

http://www.wired.com/2014/08/hal-finney/


Some bitcoin enthusiasts have used their cryptocurrency to travel around the world. Others have spent it on a trip to space. But the very earliest user of bitcoin (after its inventor Satoshi Nakamoto himself) has now spent his crypto coins on the most ambitious mission yet: to visit the future.

Hal Finney, the renowned cryptographer, coder, and bitcoin pioneer, died Thursday morning at the age of 58 after five years battling ALS. He will be remembered for a remarkable career that included working as the number-two developer on the groundbreaking encryption software PGP in the early 1990s, creating one of the first “remailers” that presaged the anonymity software Tor, and—more than a decade later—becoming one of the first programmers to work on bitcoin’s open source code; in 2009, he received the very first bitcoin transaction from Satoshi Nakamoto.1

Now Finney has become an early adopter of a far more science fictional technology: human cryopreservation, the process of freezing human bodies so that they can be revived decades or even centuries later.

Just after his legal death was declared Thursday at 9 a.m., Finney’s body was flown to a facility of the cryonics firm known as the Alcor Life Extension Foundation in Scottsdale, Arizona. As of Thursday night, Finney’s blood and other fluids were being removed from his body and slowly replaced with a collection of chemicals that Alcor calls M-22, which the company says are designed to be as minimally toxic as possible to his tissues while preventing the formation of ice crystals that would result from freezing and destroy his cell membranes.

Over the next few days, the temperature of his body will be slowly lowered to -320 degrees Fahrenheit. Eventually, it will be stored in an aluminum pod inside a 10-foot tall tank filled with 450 liters of liquid nitrogen designed to keep him in that state of near-complete suspended animation. “That’s where he’ll remain until such time as we have technologies to repair the problems he had such as ALS and the aging process,” says Max More, Alcor’s director and Finney’s friend of many years. “And then we can bring Hal back happy and whole again.”

No human, to be clear, has ever been revived from a state of cryonic freezing. Many scientists consider the idea impossible. But Finney’s wife Fran says that doubters never stopped her husband from exploring a technology that intrigued him.

“Hal respects other people’s beliefs, and he doesn’t like to argue. But it doesn’t matter to him what other people believe,” says Fran, who alternatingly spoke about her husband in the present and past tense. “He has enough confidence in how he figures things out for himself. He’s always believed he could find the truth, and he doesn’t need to convince anyone.”

In fact, Finney and his wife both decided to have their bodies cryonically frozen more than 20 years ago. At the time, Finney, like Alcor’s president More, was an active member of the Extropians, a movement of technologists and futurists focused on transhumanism and life extension. “He’s always been optimistic about the future,” says Fran. “Every new advance, he embraced it, every new technology. Hal relished life, and he made the most of everything.”

Finney was also an avowed libertarian and well-known figure within the cypherpunks, another early ’90s, mailing-list-centered group focused on empowering individuals with encryption, preserving privacy, and foiling surveillance. Finney created the first so-called “cypherpunk remailer,” a piece of software that would receive encrypted email and bounce messages to their destinations to prevent anyone from identifying the sender. He also became the first coder to work with Phil Zimmermann on Pretty Good Privacy or PGP, the first freely available strong crypto tool, and designed the software’s “web-of-trust” model of verifying PGP users’ identities.


https://bitcointalk.org/index.php?topic=155054.0

Thank you for your inquiries. We support USD deposits via EgoPay. However, our volume is so high that EgoPay needs more time to catch up. So if the "submit" button is disabled, users will have to wait and come back later. They are working on this issue and did not give us an ETA yet.

Yes our AML/KYC policies need to verify ID documents before any withdrawal is approved. You are absolutely right. But we also support bank wires, and staying compliant can best protect all users' assets. We may add tiered verification in the future.

Should you have any further questions, pls just contact us.

Earlier this month, Simon Fraser University confirmed that it is considering accepting Bitcoin at bookstores and dining services on its campuses in the Vancouver area.



Today (August 28), SFU made its first official foray into Bitcoin, announcing it is now accepting donations with the digital currency.

That makes it the first Canadian postsecondary school to take donations in this manner.

Alumnus Scott Nelson, cofounder of dana.io, and Simon Fraser Bitcoin Club president Mike Yeung are SFU's first Bitcoin contributors, donating the equivalent of $6,000.

“We are embracing Bitcoin because it is innovative, open source, entrepreneurial and fits well with SFU's mission to engage the world,” Yeung said in an SFU news release.

“Bitcoin can be moulded in ways that can benefit people (in every part of the globe and every segment of society) in many ways,” Yeung, who is also the founder and CEO of Saftonhouse Consulting Group, added. “And those benefits can only be realized when Bitcoin is driven by community efforts and the passion of those with vision and determination – the very traits that SFU breeds and supports.”

SFU students Laurie Macpherson and Lauren Shandley will use the money from the first Bitcoin donation for their humanitarian co-op project in India. They will work with a social enterprise that helps girls who are victims of human trafficking.

The university has added a "Donate with Bitcoin" option to its "Ways to Give" page. Bitcoin donors must fill out a separate form in order to receive a tax receipt.


http://www.straight.com/blogra/717196/sfu-becomes-first-canadian-university-accept-bitcoin-donations

Don’t go burning your cash or cutting up your credit cards anytime soon. While awareness of bitcoin and other virtual currencies is on the rise, Americans don’t seem in any hury to actually use them. The WSJ reports that a new survey, from the Conference of State Bank Supervisors and the Massachusetts Division of Banks, found that just over half of those surveyed knew of bitcoin and other currencies, yet just 3% had said they used it.

The CSBS survey was taken in May, and questioned 1,000 online consumers.

The WSJ offers up these survey findings:


...

http://blogs.barrons.com/focusonfunds/2014/08/27/psst-have-you-heard-of-this-bitcoin-thing/

Thank you. Any comments/feedback/criticisms are welcome

we are in CoinDesk BPI: http://www.coindesk.com/price/
and listed in several leading data sites including: http://bitcoincharts.com/markets/, http://bitcoinity.org/markets/lakebtc/USD and http://www.coinometrics.com/exchange/LakeBTC

Users can deposit forint bills in the machine and receive Bitcoins, the digital currency that is gaining traction around the world. If the user has a Bitcoin wallet, the QR code can be read on the device. Anyone who does not have the Bitcoin wallet mobile application can print out a sheet of paper with a QR code representing the purchased units.

Bitcoins were invented for trade on the internet. They are not issued by a central bank, but are valued based on demand. They are currently valued at around $508, but their value has fluctuated widely, reaching $1,147 last December.

This Bitcoin ATM was created by a firm called Lamassu and is locally owned and operated by Barnabás Debreczen.

...

http://www.bbj.hu/budapest/atm-in-budapest-dispenses-bitcoins_84133

just click the ticker on the top left corner, and type any letter. A dropdown list will show up ...

As a matter of fact, LakeTrader is developed by LakeBTC, a "Big Four" bitcoin exchange.

This tool only works for LakeBTC and no other API keys are needed.

It's actually quite intuitive. Just click the "Indicators" icon on the top, and select the TA you like.

It could be a network issue. Please contact customer support if this problem persists.

It is no secret that today, almost all modern banks operate on the basis of fractional reserves. To put in simpler terms: banks only has in their vaults a small percentage of the money that their customers gave them; if a large enough number of customers of a specific bank want to get their money back, the bank wouldn’t be able to meet the demand. Before there was modern central bank system, the bank could either have to borrow or file for bankruptcy. The central banks by design had infinite ability to lend, for they can legally conjure up money from thin air – there is a reason that modern currencies are called fiat money.

The Bitcoin world doesn’t have central banks, and this fact even appeal to some of its supporters with libertarian inclinations. Among these people, a widely-held belief is that bailing out insolvent banks is no different from highway robbing; if a bank screws up, the argument maintains, it should face the consequences alone, rather than letting all economy participants across the system to share the pain in the form of debased per unit currency value.

However, without a central bank system, a fractional reserve system can be risky. This is illustrated by the many failed banks in history and most recently, the spectacular fall of Mt. Gox. Before it became clear that the Bitcoin exchange was insolvent, users traded under the false assumption that they were trading their own bitcoins, when the reality is they were just trading in “Goxcoins”, which is just thin air. Later it is discovered that the exchange had lost tens of thousands of its customers’ coins; the cause remains a mystery to this day.

The collapse of Mt. Gox has great implications on the Bitcoin world. It shakes many people’s confidence in exchanges and security of the digital currency. Inevitably this has been factored into the price levels and employed by many Bitcoin critics – it is arguable that the psychological cost is even higher than the lost bitcoins.

In the aftermath, there was increasing demand for the exchanges to have 100% reserve ratio. In response, a cryptographic proof of reserve system was introduced to enable exchanges to prove that they can handle a Bitcoin version of run on the bank. Last week, OKCoin, a China-based Bitcoin exchange announced that they had passed a proof of reserve audit with its reserve ration of 104.86%. This means that the exchange has 4.86% in excess of the amount it owes its customers. While this is ensuring for OKCoin customers, it may not be a good thing for Bitcoin if you treat it as an economy system.

The benefit of fractional reserve banking is that it has positive effect on the economy by allowing banks to extend credit to people who are in need of it, provided the borrowers agree to pay back with an interest. In the Bitcoin world, such activities are rather discouraged. On one hand, the exchanges, which serve like banks in the sense that they are both custodians under obligation to safekeep customers’ assets, have to let all the coins sleeping in wallets in order to stay 100% solvent; on the other hand, market demand for coins in the market goes unmet.

A good solution for the problem at hand would be for the entire industry to agree to a certain reserve ratio, say 80%. This would cap the maximum risk, while giving the exchanges certain flexibility to engage in lending activity – one obvious benefit will be speeding up the circulation and increasing liquidity. Given that not all users have the same risk tolerance, they should be allowed to either opt for a zero-interest but full reserve account, or a fractional reserve but interest bearing one.

....

http://www.forbes.com/sites/ericxlmu/2014/08/24/why-there-should-be-a-bitcoin-central-bank/

Would you like to pay for your morning coffee with your credit card or your bitcoin wallet?

If San Francisco-based start-up Shift Payments has its way, you'll soon be able to switch from real money to digital currency when paying with a single card.

The company is beta testing 100 cards with friends and family members. It allows users to make purchases with accounts from Coinbase—a bitcoin exchange—and Ripple—a digital payment exchange protocol that can support real and digital currency.

While the card does not currently access bank or credit accounts (just bitcoin accounts for now), co-founder Meg Nakamura says Shift Payments is trying to make that happen soon.

"We are having conversations with U.S. banks to see if we can get them comfortable," she said. "They are very, very interested. It's just a timing issue. So we are building out the product with the partners we have right now."

Users download a mobile app with the card, which they use to switch between currencies and accounts. The company takes a small percentage of each transaction.

"We modeled this after Coin," said Nakamura, referring to the digital payment card that consolidates multiple credit cards into one Bluetooth device. "We really like this gadget and hope to be able to work with it, but we don't have that hardware right now so we're doing it with a mobile app. It's the software solution to what could become hardware."

Nakamura hopes the company will become valuable to banks in addition to spenders.

"Unlocking this value is interesting for the banks because it means more transactions for them," Nakamura said.


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http://www.cnbc.com/id/101937441

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If Bitcoin is a bubble, it is a bubble that began deflating on November 29 2013. At its proudest moment the price of one unit of the much-ballyhooed virtual currency was $1,242, which meant the value of all the Bitcoins in the world was just under $14bn.

These days it trades mostly in a range of $450-$650 a coin and at a market cap of $6.5bn. The jury is still out on whether the Bitcoin technology will prove robust and the currency itself will find mainstream use. If the answer to either question is no, then no amount of hot air is likely to keep the price at current levels.

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But even as the Bitcoin price decays, there is another candidate for the bubble label: the market for the specially designed computers that hold the Bitcoin network together and “mine” for newly minted coins.

Nicolas Courtois, a senior cryptography lecturer at University College London, has calculated that at least $1bn has been invested in this “mining equipment”, and some miners, who wish not to be identified, suggest that could be a modest estimate.

Prices for the latest computer hardware have been chased higher because investors have required faster and faster machines to make narrower and narrower profits mining for Bitcoin.

Mr Courtois estimates a majority of investors are making a loss.

“It has been a very bad experience for most investors and a jackpot for a few lucky ones,” he says. “The bottom line is that the production of mining machines was much higher than expected and advertised.”

.....

http://www.ft.com/cms/s/0/140813c0-2938-11e4-9d5d-00144feabdc0.html