Its very hard (nearly impossible) to rely defend against strong ddos attacks or whatever. I hope they find some good solution.

SecondMarket CEO Barry Silbert Talks Big Picture Vision for Bitcoin Investment Trust
Pete Rizzo (@pete_rizzo_) | Published on March 20, 2014 at 21:29 GMT | Companies, Investors, US & Canada

Bitcoin Investment Trust shares now available on SecondMarket
SecondMarket CEO Barry Silbert made news on 19th March when he revealed that Bitcoin Investment Trust, his private investment vehicle for high net-worth investors, would open its doors to the general public as soon as Q4 2014.

The news surprised many, especially given the struggles reported by Cameron and Tyler Winklevoss, whose Winklevoss Bitcoin Trust has been waiting in regulatory limbo since July 2013 while it waits for SEC approval.

In initial reports, Silbert discussed his intent to list the fund on OTC, an electronic marketplace that offers investors trading through regulated broker dealers, and to leverage his existing bitcoin businesses to bypass more restrictive regulations.

Speaking to CoinDesk, Silbert expanded on the news further, offering up a detailed view of how the expansion of Bitcoin Investment Trust (BIT) can be expected to take shape, and how these offerings would complement the separate bitcoin exchange that he has applied to run in New York.

How trading will work

The Q4 launch date would be the earliest the company could launch such an initiative, Silbert said, due to unique requirements it needs to meet to remain exempt from the US Securities and Exchange Commission’s approval process.

The bitcoins that will be made available to general investors will be drawn from those who have held funds with the BIT for more than one year.

At this point, Silbert said SecondMarket will send out stock certificates to the tenured investors, who will be allowed to sell their bitcoins to the public market or redeem them on a monthly basis.

Explained Silbert:

“The people who have already invested, when they decide to sell, they can do so to the public market. So, the amount of shares available to the public market will be dependent on the existing shareholders’ desire to sell shares.”

SecondMarket will continue to source bitcoins for BIT through private sellers, but only high net-worth investors will be able to buy these funds.

SecondMarket’s bitcoin exchange

Silbert also sees the BIT’s expanded goal benefitting from a relationship with the regulated bitcoin exchange he plans to launch this summer.

Silbert, who will serve as CEO for both SecondMarket and the new exchange, indicated that the BIT team currently needs to source the bitcoins for every purchase a new investor makes. Given that the minimum investment is $25,000, this can be challenging, even with the “couple hundred relationships” his team has established.

As such, Silbert projects that the exchange will serve as one of the potential sources of bitcoins for BIT, though he expects some separation between the entities.

“That’s not to say they have to or they will [source bitcoins from the exchange], but they will have that opportunity.”

Ahead of the competition

Because Silbert expects to be able to bypass SEC approval for the plan, SecondMarket also gains a key advantage in that it will be able to enter market far before any competitors.

Explained Silbert:

“Unless there’s another vehicle out there that has launched and has investors that have held shares for longer than 12 months, then we don’t see competition.”

Still, Silbert doesn’t exactly see this competitive advantage as a good thing, adding that he is in favor of the market providing many safe, regulated ways for consumers to access bitcoin.

Hurdles to launch

Though the plan sounds promising, Silbert also revealed that there are a number of steps SecondMarket needs to go through before BIT is allowed to expand its customer base.

First, Silbert said, SecondMarket is in need of market maker support that will come in the form of banks and brokerage firms that are needed to list a fund on OTC. At least one entity in either group would need to put their support behind the initiative.

Next, SecondMarket would require sponsorship from either a law firm or a bank. Then, there’s a formal application process with the OTC, all steps that Silbert cautioned will take time.

However, what is clear, is that if he does succeed, the US bitcoin market could look substantially different by the year’s end.

Mt. Gox May Still Hold $118 Million (200,000 BTC) in Funds, Report Suggests
Pete Rizzo (@pete_rizzo_) | Published on March 20, 2014 at 18:52 GMT | Companies, Exchanges, Law, Mt. Gox

A new report suggests that Mt. Gox, the now-bankrupt Japan-based exchange said to have lost 850,000 BTC in customer funds may actually still be in possession of 200,000 BTC ($118m at press time).

The news, published by Yahoo Japan, allegedly comes from the exchange’s bankruptcy lawyer who suggests the bitcoins were found on 7th March in a wallet used by Mt. Gox prior to June 2011.

The 200,000 bitcoins would equate to just over 23% of the entirety of the funds presumed lost by the company in the wake of widespread theft that is said to have occurred on the exchanges for a period of several years. Given the date, these funds may be separate from that money, however.

Though the release does mention that the funds were found, it does not clarify as to whether the company still has access to any bitcoins inside.

Neither Chris Dore, a partner at the Edelson law firm, nor Ted Charney, the lawyer overseeing the Canadian class action, could be reached for comment to verify the report.

Asset freeze relaxed

The revelation that Mt. Gox may still have bitcoins in its possession notably coincided with an additional report that suggests a US judge relaxed restrictions on the movement of Mt. Gox Co. and CEO Mark Karpeles’ assets on 20th March.

That report suggests that Jay Edelson, the lawyer for the US class action, received a letter from US District Judge Gary Feinerman that allows for small amounts of the entities’ assets to be converted back into USD.

This is reportedly a bid to “track its movement and possibly discover assets belonging to Mt. Gox’s American affiliate, Karpeles and another business he owns.”

No connection between the two events has been established.

Speculation runs wild

The news led to wild speculation on reddit as to how the recovered funds would be used, especially in light of the fact that several class action lawsuits are so far suing the exchange for restitution and damages.

Some reddit users expressed optimism that the funds might be used to prop up the exchange’s bitcoin reserves so that it could resume operations, thereby ensuring former users received a greater return.

Screen Shot 2014-03-20 at 1.53.17 PM

Notably, the 200,000 bitcoin figure is similar to the 180,000 BTC reported to be moving in the blockchain earlier this March.

Those funds, however, were said to be rapidly splitting in what appeared to be an automated fashion, while the most recent report suggests the newly uncovered funds had potentially been inactive.

Impact uncertain

Still, for those who lost funds, the discovery of new bitcoins is unlikely to do anything to stem lawsuits.

As noted by Fortune, former customers of the exchange are not creditors, and would not benefit from repayment via the sale of any assets by Mt. Gox or its related entities in either a liquidation or a rehabilitation.

As such, the lawsuits remain likely the only way these individuals will be able to retrieve any lost money from the exchange.

For creditors of the exchange, the path ahead is less certain, as Mt. Gox may be stuck waiting for approval for its proposed rehabilitation for six months or longer, and even then such actions may be blocked in favor of liquidation.

I also got paid. And ofc i will stay with this even if it was for free .

Saxo Bank CEO: Bitcoin is an Opportunity for Early Adopters
Pete Rizzo (@pete_rizzo_) | Published on March 20, 2014 at 18:39 GMT | Europe, News

Saxo Bank CEO and co-founder Lars Seier Christensen made headlines in his native Denmark earlier this month when, in his typically outspoken fashion, he revealed his support for bitcoin in an interview with online news site Business.dk.

It was then Christensen acknowledged he has not only bought bitcoins, but that his online investment company is currently exploring bitcoin’s potential use. Unsurprisingly, the announcement that set forth a flurry of conversation about the potential impact Saxo Bank’s stance could have on the perception of bitcoin in Europe and abroad.

However, while some in the bitcoin community were quick to view Christensen and Saxo Bank as potential industry leaders that could expand the popularity of the currency, Christensen is eager to take a more moderate view.

Speaking to CoinDesk, Christensen indicates that he and his company are only trying to analyze bitcoin with an unbiased mind:

“I wouldn’t say we’re taking a lead on it. I’ve taken a personal interest in understanding the space better. [...] We haven’t made that decision yet, but at least we’re not dismissing it out of hand for regulatory reasons or other reasons that banks would completely ignore it.”

Saxo Bank offers customers the ability to trade 179 forex currency pairs, more than 2,500 investment funds and futures contracts in currencies, gold and oil, among other offerings. Founded in the early ’90s as service broker Midas, Saxo Bank had a market value of about $3.6bn as of 2011.

Bitcoin exploration

Though the original report suggested Saxo Bank may be experimenting with bitcoin, Christensen indicates that its plans are currently in an exploratory phase. Saxo Bank’s interest in bitcoin, therefore, extends presently to analyzing whether it could be the next area of interest and innovation.

Christensen said the bank has no plans yet to adopt bitcoin into its platform, though he seems to recognize the potential of such a move:

“I think there’s an opportunity there for banks that are early adopters. [...] The bitcoin community is fairly enthusiastic one, so I’m sure there’s some business to be won and some goodwill to be achieved, plus some interesting opportunities for other clients.”

Personal investment

Due to his libertarian leanings, Christensen indicates that he was aware of bitcoin as far back as two or three years ago, though he didn’t pay much attention to it until the financial crisis in Cyprus last year.

Said Christensen: “I thought what happened in Cyprus was a pretty shocking thing and probably an omen of what is to come more and more often in the future. So, it was interesting to see the attention bitcoin got around the time.”

Christensen later purchased bitcoin through BitcoinNordic, a Denmark-based bitcoin buying and selling service, in order to gain “practical experience” with the digital currency. However, Christensen suggests he was more intrigued by the novelty factor of the technology, noting that it has so far led to several interesting dinner conversations.

As an investment, Christensen reports that he hasn’t had much luck with bitcoin, noting that he quickly learned bitcoin was a two-way market. Christensen notes he bought in prior to the bankruptcy of major Japan-based bitcoin exchange Mt. Gox, and the subsequent decline in bitcoin’s value.

‘Paradigm shift’

Overall, however, Christensen said he believes there is a lot about bitcoin that he finds personally appealing. This includes the 24/7-style of the market, which he notes doesn’t exist elsewhere, as well as its position as a currency free from central bank control.

Said Christensen:

“I think it’s a bit of a paradigm shift. I was in Israel [recently] and they had this beautiful historical collection of coins, and it struck me that this model has been the same for several thousand years so that it might be time for something new to come by.”

Christensen also added that he sees the political appeal of bitcoin: “At the end of the day, my general observation is that the private sector is a lot better at most things that the public sector, so why shouldn’t that also be the case with money?”

The comments suggest that though Christensen indicates his company isn’t “close to doing anything with bitcoin”, this stance may be subject to change.

Was This $200 Vending Machine the World’s First Bitcoin ATM?
Roop Gill (@roopgill) | Published on March 20, 2014 at 15:48 GMT | Bitcoin ATM, Lifestyle, News

As a part of a university project in 2012, student Max Albrecht designed a cryptocurrency vending machine that converted €1 coins into bitcoin.

This low-tech version of a bitcoin ATM was built with a modest budget of €150 (around $200 at today’s prices). Furthermore, it was created not as part of a tech, business or computing course, but as an art installation.

To create his ATM, Albrecht bought a second-hand vending machine that cost him roughly €80 ($110). He printed out both private keys and links to individual online wallets, put the paper slips in small cardboard boxes, and put those in the vending machine.

A customer would simply need to insert a coin to get a voucher for their euro’s-worth of bitcoin, which was stored on easywallet.com. The printout also explained what to do with the link, so that newbies could become familiar with bitcoin transactions.

With bitcoin ATMs now popping up all over the world, Albrecht is wondering if his creation was in fact the world’s first bitcoin ATM.

Inspired by crisis

While studying Fine Arts at Bauhaus University in Weimar, Germany, one of Albrecht’s assignments was to create an installation that fit the theme of ‘Panta Rhei’ (‘Everything Flows’).

As a part of the course, the students took an excursion to Greece, which had recently been hard hit by the financial crisis. Keeping both of those aspects in mind, Albrecht came up with the concept of the bitcoin vending machine.

“The instability of the euro was part of my inspiration at the time. I thought it would be nice to have an artwork that could address the fact that we have a currency in Europe which is dwindling.”

While the Euro was getting weaker in 2012, bitcoin was ‘soaring’ at $9 apiece. People were starting to hear about bitcoin, but there weren’t many places to spend it at the time.

btm-9

So, Albrecht added a feature to his installation that would allow users to send their euro’s-worth of bitcoin to WikiLeaks.

When the vending machine was first exhibited, Mastercard and PayPal had blocked donations to WikiLeaks, making bitcoin one of the few ways to send funds to the organisation.

During the initial exhibition at the student union bar in Bauhaus, almost 30 people traded their euros for bitcoin. However, Albrecht says that his installation was not about finding a practical solution for converting currency to bitcoin, it was more of a statement.

He said:

“My favourite story about the art project is from a friend of mine who told me, ‘your artwork works because last night I had to explain to some dude in a bar at 3am what the f*** is bitcoin’.”

High-tech newcomers

Albrecht knows that his two-year-old invention is clunky compared to the more practical and advanced solutions on the market now.

Notable amongst these are Robocoin and Lamassu, which have quickly become two of the world’s most popular manufacturers. While Lamassu’s machine only allows users to convert cash to bitcoin, Robocoin’s converts both ways.

atm

Both Lamassu and Robocoin showcased their ATMs at the Bitcoin 2013 conference in San Jose.

Lamassu started selling last October and sold 100 units in just three months. The company’s ATMs are now installed across the globe in places like Helsinki, Bratisalva and even Zurich, where Albrecht currently lives and works at the Zurich University of Arts.

His original vending machine, however, is still in Weimar where it was first conceived. Albrecht continues to supply the bitcoin, which he buys in Switzerland, while his friend Killian Ullmann physically refills the vending machine in Germany.

New machine planned

Even though there are other, more practical conversion solutions around, Albrecht quite likes the simple novelty of his machine.

“I really like this low-tech version of [an ATM] because this can go on forever. It’s not hackable and it doesn’t need electricity.”

He intends on installing a version in Zurich in the future, where members of the bitcoin meet-up group have encouraged him to do so. Albrecht also says he may start to incorporate QR codes and paper wallets, rather than the paper “coupons” used since 2012.

He also wonders if his invention was the first ever bitcoin ATM. Construction took place in July 2012, whereas Robocoin and Lamassu didn’t launch until the following year.

If there aren’t any other contenders, maybe Albrecht should get the title.

Bitcoin Payments Startup Coin.ph Launches with Two Major Filipino Merchants
Pete Rizzo (@pete_rizzo_) | Published on March 20, 2014 at 16:30 GMT | Asia, News, Startups

When daily deals giant MetroDeal, the Philippines’ number two e-commerce website, seemingly went live with a bitcoin payments option last week, it was a clear sign that major merchants in the 97-million-strong nation were beginning to take the digital currency seriously.

However, it turns out, that MetroDeal’s bitcoin payments test only told part of the story.

Coins.ph, the bitcoin payment service powering MetroDeal’s checkout, officially launched today by adding yet another major Philippines-based merchant to its roster – angel-funded flash deals startup CashCashPinoy.

Such quick merchant network growth may be surprising, especially given that major merchants in developed countries have been relatively cautious about signing up to similar services.

However, Coins.ph co-founder and Silicon Valley entrepreneur Ron Hose suggests that the Philippines and other Southeast Asian markets could be prime locations for the expansion of bitcoin.

Explained Hose:

“Less than 5% of people in Southeast Asia have credit cards – the rest end up paying for online transactions next day in line at the bank or COD, a huge pain for both customers and online merchants. Bitcoin solves a real problem here – increasing conversion and lowering transaction cost for the merchant, and providing far more access to customers.”

So far, major merchants, it seems, see this value proposition as well.

Meet the merchants

CashCashPinoy websiteMetroDeal went live with the Coins.ph service on 20th March, although, as previously reported on CoinDesk, MetroDeal had been testing services prior to the launch. CashCashPinoy has not yet enabled bitcoin payment, but Hose indicated that it would do so before the week’s end.

Statistics from web data provider Alexa indicate that both merchants have a sizeable following with local shoppers. MetroDeal is the second most-visited e-commerce site in the country, drawing more than 1.2 million unique shoppers each month.

Likewise, CashCashPinoy is a top 200 website in the country, with more than 575,000 unique monthly visits.

Regulatory environment

To date, the Philippines stands in stark contrast to its Asian neighbours in the way it seems to be approaching bitcoin regulation, a potentially positive sign for Coins.ph.

Though the Philippines issued its first warning on 10th March, it stopped short of the more aggressive statements made by Thailand – which may have ruled exchanges illegal – and Vietnam, which blocked certain financial institutions from working with the currency in late February.

About Coins.ph

Founded in 2013, the company will initially focus on growing bitcoin’s merchant network in Asia, but Hose is expecting quick growth that will allow it to expand, in part due to the high costs of providing payment by other means.

Said Hose:

“At present, it’s too expensive to bank or give credit to [the] remaining 95% of the population with traditional methods. We founded coins.ph because we see bitcoin opening a huge opportunity to provide cheaper, better financial services for millions of people in Asia.”

Hose previously founded Tokbox, a web video communications company, later acquired by Spain-based telecommunications conglomerate Telefonica. His Coins.ph co-founder Runar Petursson has extensive experience with high-frequency trading systems.

SEC Making Inquiries Into MPEx, SatoshiDice
Jon Southurst (@southtopia) | Published on March 20, 2014 at 14:37 GMT | Bitcoin Gambling, Law, News, Regulation, US & Canada

The US Securities and Exchange Commission (SEC) is investigating bitcoin securities exchange MPEx and gambling site SatoshiDice, according to an email exchange posted online yesterday.

The news could have implications for other bitcoin equity exchanges and the people investing with them, especially if they are US residents. Dealing only in bitcoin, the platforms function otherwise as unregulated stock exchanges and usually do not require any identification from users.

A SEC representative sent an email request to MPEx operator Mircea Popescu of Romania. Popescu, known as ‘MP’ to the bitcoin community, is widely known for his outspokenness and offered a lengthy defence of bitcoin in his responses to the SEC’s request.

He was contacted by Daphna Waxman, an attorney with the Enforcement Division of the United States Securities and Exchange Commission, on 14th February with a request to release a list of all investors in SatoshiDice before its sale in July last year, and an account history for Erik Voorhees, the site’s original owner.

Jurisdiction issues

It is not clear if MPEx has broken any rules or even whether the US SEC has any official jurisdiction over a company based in Romania, as Popescu pointed out in the conversation. However it can certainly apply extrajudicial pressure, and Waxman requested he “voluntarily provide” the information instead. After denying Waxman a telephone conversation he wrote:

“As you’re soliciting private information you will have to sufficiently establish your authority to do so, which includes defeating specific challenges of jurisdiction that on a cursory examination seem to bar the institution you claim to be associated with from making these specific requests.”

The SEC has concerned itself for some time over whether bitcoin-denominated stock exchanges are illegal, according to a Bloomberg report.

On reddit, users expressed concern that other bitcoin exchanges such as Havelock Investments, their customers, and high-profile bitcoin personalities might be on the US authorities’ radar as well. Waxman requested Popescu identify SatoshiDice’s pre-July 2013 shareholders by “name, address, or BTC address”.

Gaming

SatoshiDice, which Voorhees founded and sold for 126,315 BTC ($11.5m at the time) to an undisclosed party in July last year, is not currently listed on MPEx or any other exchange.

The simple bitcoin betting game of chance has proven wildly popular, even though online gambling is illegal for US residents – at least when it involves what the authorities call ‘real’ currency.

Australia May Extradite Alleged Silk Road Moderator to US
Daniel Cawrey (@danielcawrey) | Published on March 20, 2014 at 00:08 GMT | BitInstant, Companies, Crime, News, Silk Road News

An Australian man prosecutors allege was one of the moderators of now-defunct online black market Silk Road will likely be sent to the United States for trial soon.

Peter Phillip Nash, a former prison employee in Wacol, Queensland, is said to have operated via nicknames that included “Batman73″ and “Samesamebutdifferent”, on the notorious illicit goods marketplace that boasted an estimated $22m in annual sales.

If the charges are true, Nash was one of the key actors working on Silk Road.

According to the US District Court Southern District of New York indictment from December 2013, his role in the black marketplace was to:

“[Provide] guidance to forum users concerning how to conduct business on Silk Road, and [report] any significant problems discussed on the forum to the site administrators and Ulbricht.”

Nash, 41, waived his extradition rights on Wednesday in the Brisbane Magistrates Court, according to a report from the Australian Associated Press.

He faces prosecution on narcotics and computer hacking charges in the US.

The accused

The case of Peter Phillip Nash is one of  many associated with Silk Road’s demise and subsequent legal proceedings. Four alleged UK users of the site were detained soon after the seizure and arrest of Ulbricht.

Two other people accused of working for Silk Road have been charged with the same narcotics and computer hacking crimes as Nash. Andrew Michael Jones, 24, of Virginia, and Gary Davis, of Ireland are also included in the indictment along with Nash.

Charlie Shrem, co-founder of BitInstant, is perhaps the most notable bitcoin industry figure arrested in connection with Silk Road activities. He is being charged, along with conspirator Robert M. Faiella, with conspiring to commit money laundering and operating an unlicensed money transmitting business.

US prosecution continues

Now that Nash has waived his extradition rights, he is one step closer to being sent to the United States. The Queensland attorney general, however, needs to approve the process of Nash going to the US to await trial.

In February, Silk Road’s alleged mastermind Ross Ulbricht, known as ’Dread Pirate Roberts’ was indicted on charges related to computer hacking, drugs and money laundering.

Ross Ulbricht was originally arrested in October 2013 and the Silk Road site was seized and taken down by the FBI at that time. Nash had apparently been working with Ulbricht since early 2013, moderating Silk Road’s discussion forums.

Silk Road depended on two new digital technologies in order to facilitate illegal trade. One was Tor, a proxy service that anonymizes its users. The other was bitcoin, although its psuedononymous nature meant that the FBI used it in order to coordinate sting buys, gathering information on criminal activity.


Defense

A number of people have been supporting the cases of those accused of being involved in Silk Road’s impropriety.

Lyn Ulbricht, the mother of Ross Ulbricht has recently been trying to raise funds for her son’s defense. Friends and family raised $1m in bail for Ulbricht last year.

However, US Magistrate Judge Kevin Fox decided to turn down the bail request last November.

A defense fund for Charlie Shrem has also reportedly been set up.

Shrem is currently free on $1m bail and is under house arrest. He faces a lengthy legal road defending alleged Silk Road deeds, much like that of Peter Phillip Nash.

Canadian Bitcoin Exchange Loses $100,000 in Unorthodox Attack
Pete Rizzo (@pete_rizzo_) | Published on March 20, 2014 at 03:13 GMT | Exchanges, News, US & Canada

Ontario-based bitcoin buying and selling service Canadian Bitcoins has revealed that it was the victim of an unusual attack last October that resulted in the loss of 149.94 BTC ($100,000).

The Ottawa Citizen reports that an unidentified scammer contacted a technical support agent at its now former web hosting service, Granite Networks, claiming to be owner James Grant. Using only the owner’s name, the thief was allegedly able to have the site reboot into recovery mode, allowing him to bypass all protections on the server.

The media outlet indicates that it has obtained a text copy of the chat transcript between the web hosting company and the male suspect, and that the results are particularly damning for Granite Networks.

The newspaper concluded:

“At no point during the nearly two-hour-long conversation was the caller asked to verify his identity.”

The news follows several high-profile attacks that were more sophisticated in nature, including most notably the loss of millions in customer funds by now-bankrupt Japan-based exchange Mt. Gox and the theft of 12.3% of Poloniex’s bitcoins earlier this March.

Stemming the damage

While security remains a top concern across the entire bitcoin industry, it seems Canadian Bitcoins‘ additional protections stood up to the purported lapse in judgement by the support operator.

Grant only kept a portion of his company’s bitcoins in a hot wallet, housing the rest in a cold storage wallet locked in a safety deposit box.

Since learning of the theft, Grant said his firm has paid for the loss out of its own pocket, and that he has moved his computer equipment out of the facility.

Grant published a full response to the article on 18th March, emphasizing that no customer data was affected during the breach, and stating that it has requested a full accounting of the incident from Granite Networks’ parent company Rodgers Communications.

Further action

Rogers Data Centres told the Citizen that it is cooperating with the investigation, but that the security issue is not indicative of larger problems at its company.

“The situation surrounding this customer is unique to this customer, and does not apply to any other customer of Rogers Data Centres. Rogers has been fully co-operative with authorities in the investigation.”

It has offered Grant a credit for the error. Grant is said to be contemplating legal action, but did not confirm or deny the reports in talks with CoinDesk.

Reaction to the theft on reddit was mixed. Some users were irate over Granite Networks’ seemingly negligent actions, while others suggested this provided more evidence that bitcoin businesses need to move away from relying on cloud services were funds may be susceptible to theft.

About Canadian Bitcoins

The company was an early bitcoin startup, launching in July 2011. Grant had previously accepted bitcoin at his web hosting and voice over Internet protocol (VOIP) company Lightbox Technologies, and founded Canadian Bitcoins to provide a simple, straightforward way to buy and sell bitcoins using $CAD at rates pegged to an exchange, though Canadian Bitcoins does not function as an exchange.

Canadian Bitcoins accepts only cash, delivered to its office or through express mail, or direct deposit for its bitcoin orders.

When Will Bitcoin Be Truly Inclusive?
Danny Bradbury (@dannybradbury) | Published on March 20, 2014 at 03:35 GMT | Analysis, Bitcoin Foundation, Companies

If bitcoin is the great leveller, then why is it still mostly driven by people who are young, white, tech-savvy, and with full access to banking services?

This month, the Bitcoin Foundation has been quietly setting up a committee for Financial Inclusion. The aim, says committee head Andreas Antonopoulos, is to increase awareness and education about bitcoin’s potential role in that area.

Around 2.5bn people in the world don’t use formal or semi-formal banking or financial services, according to the World Bank. But Antonopoulos – a luminary in the bitcoin space, and the chief security officer of Blockchain.info – points out that many of those that are ‘banked’ are not given access to full financial services such as stock markets and trading exchanges, and (relatively) easily transferrable money.

“There is a vast gap between that and the privileged, international liquid banking that only a billion enjoy,” he says.

He wants to help everyone outside that category, which he describes as “the other six billion”. But he’s starting with a smaller target group.

“I’m under no illusion that we will address extreme poverty. There are a large number of people who find themselves outside the privileged banked, but they are still part of the 2bn people on the internet,” he says. “They can be helped. Immediately.”

Bitcoin could be a big part of that, he says. The lack of centralized control means that the conventional barriers – the high prices, and the slow processes – disappear.

Antopoulos sees applications in key areas that could bring immediate benefits to large communities. The biggest is remittances. Today, it costs large amounts of money for migrant works to send home their $414bn in annual earnings to developing countries. “That situation is incredibly unbalanced. The poorest places in the world have the highest fees,” he laments.

The second is microfinancing, where small amounts of money (by western standards) are given to local entrepreneurs. Conventional payment systems make that difficult, Antopoulos says. “Between the lenders and the borrowers, there is an enormous amount of overhead that is the aggregation and distribution and management of the funds over international borders.”

A bitcoin-enabled microfinance economy could help with that, by forcing out centralized payment systems that can lead to corruption, reducing the social impact of the capital.

Not there yet

So, how far has bitcoin come so far in solving these problems?

“It’s an underdeveloped market,” says Ben Jones, founder of the blog Bitcoin Microfinance, and a member of the team at the Bitcoins Berlin startup incubator and consulting firm. He argues that remittances will happen first.

“We have seen some other charity projects. It would be cool if a micro lending platform like Kiva would do bitcoin. We will definitely see some companies moving into the remittance space,” Jones believes.

The technology for cheap mobile remittances is already there. Safaricom has experienced huge success with M-Pesa, its mobile money movement system, which works well using low-cost phones. 43% of Kenya’s GDP is handled that way, say reports.

The problem with M-Pesa is that a centralized system, privately controlled, without the ability to easily transfer money abroad, points out Jones. But it’s still significant, as an example of a solution that came from outside the traditional technology community in the developed world.

“M-Pesa was an exception and it was because people really needed a solution. There wasn’t any room to dramatically improve the hardware,” says Jones.

That’s another problem for bitcoin. Most wallets need smartphones to work, and there’s a dearth of those in developing markets. That’s one reason why Pelle Braendgaard developed Kipochi Wallet. This wallet is HTML5-based, making it lightweight, and it can run on pretty much any phone with a web browser, including some feature phones, he says.

More importantly, it lets you send and receive bitcoin simply using a phone number, mimicking (and integrating with) M-Pesa, but allowing for international payments.

Braendgaard sees other challenges for bitcoin among the unbanked, though, and one of the biggest is regulatory, particularly in South Africa.

“Banks are fairly open, but they’re still a little bit nervous about what the government is saying,” he says, speaking to CoinDesk from a Johannesburg banking conference where he was promoting bitcoin.

The other challenge is liquidity. It has to be easy to transfer bitcoin into something usable at a local level (at least until everyone in a village is using bitcoin).

Africa is a good example of underdevelopment here. There are hardly any exchanges there, and more must be developed to help the currency grow.

However, those exchanges that do run will have a tough time hitting the unbanked target market in that region because of tough anti-money laundering laws, Braendgaard muses.

There are of course other areas with large numbers of unbanked or ‘semi-banked’ people, where bitcoin is needed. 65% of Latin America’s adult population has no banking, while 67% of those in the middle east and 58% of southern Asians are unbanked.

In some of these countries, though, governments have taken a hard line in some of these places, too. India, for example, has millions of unbanked, and a government that has frowned on the cryptocurrency in the past.

One of the other challenges to bitcoin’s development is its origin. As bitcoin activity grew, it was seized by a familiar crowd: younger people, from the developed world, with easy access to and familiarity with technology. There will be outliers, of course. But just look at the average bitcoin conference: speakers are mostly from the developed world, with the same kinds of access.

This is a common issue, says Andrea Castillo of the Mercatus Center at George Mason University, who co-authored a primer on bitcoin for policymakers.

“Individuals who share these hobby interests often—but not always—have other things in common: background, education, gender, etc. This is generally how the Bitcoin experiment grew,” Castillo says.

But it doesn’t have to be that way forever. “We can’t change the past. But we can affect the future through outreach and open innovation,” she adds. “The Bitcoin community, for its part, welcomes all who wish take part in this peaceful experiment. This attitude is very helpful, and I believe it will continue to drive successful outreach to new demographics going forward.”

Antonopoulos and his as-yet-unnamed team will be a good example of that. But their work to educate and provide access to bitcoin must be matched by grassroots activity among the “other six billion”. Where will that come from?

Developments such as M-Pesa show that it is already happening, as developing markets like Africa leapfrog payment systems in the west with these first-generation mobile payment systems.

The follow-up grassroots activity is likely to come from the same kinds of tech-driven communities, only in developing markets. In Kenya, for example, bitcoin users fit a certain demographic, according to Braendgaard. “Not necessarily rich, but maybe someone who’s a 22 year-old Kenyan computer nerd. You get a lot of them, and most of the users of the service fits in the 20-30 year-old category, but African,” he says.

The same is true in China, another highly-regulated space where there is a strong demand for bitcoin, says Singapore-based Calvin Soh, co-founder at alt coin marketing firm Humint.

“The data from China is it’s 95% male, from tertiary education levels up. They all tend to be professionals, 25 to 45 and savvy enough to understand the current financial system,” he says. “These are the new early adopters, with the knowledge who see the potential or are comfortable with the risks. That is the psychographic mindset.”

Grass roots

Those are the people with the most potential to kickstart bitcoin services in the developing world that could bring new financial power to those without it.

In subsaharan Africa, where eight in ten people are unbanked, Pelle is already trying to find services that will enable Africans to bootstrap their own exchanges.

Significantly, he has had many enquiries from Somalia, where there isn’t much regulation. The Somalis have been international money transfer for hundreds if not thousands of years via Hawala, a network of traders who relay money on behalf of their clients.

These traders have already been digital for a long time, using various channels from SWIFT transfers through to M-Pesa. It’s an example of how communities outside bitcoin’s traditional sphere are already doing things for themselves.

Pelle adds that these kinds of innovative communities will jump on bitcoin or a variation thereof, as it surfaces more in these large, unbanked communities. “I half joked that the minute the Somali money traders in Eastleigh (Nairobi’s Somali neighbourhood) learn how this works, they’ll be having bitcoin sitting next to dollar bills there,” he says.

Tech-savvy leaders in unbanked communities are already using bitcoin and other related services. For that to expand, regulations have to allow it, and technology access has to improve. But Antonopoulos, as is fashionable these days, likens the early era of bitcoin to the first years of the Internet.

“It started as a white male military project,” he says. “But I don’t think that any of the Egyptian bloggers who used it to start a revolution are particularly worried that DARPA built it.”

That will take a while to unfold, but if and when it does, the cryptocurrency will become – in practice, rather than just in theory – more than a revolutionary financial tool for a bunch of young white guys.

SecondMarket Will Open Up Private Bitcoin Fund to All Investors
Nermin Hajdarbegovic | Published on March 20, 2014 at 11:44 GMT | Investors, News

SecondMarket is planning to open up its private bitcoin investment fund to ordinary investors. The change should be in place by the fourth quarter of 2014, the Wall Street Journal reports.

SecondMarket launched its Bitcoin Investment Trust (BIT) last September, but it was reserved for private investors with $1m in assets and incomes above $200,000.

The trust buys and sells bitcoins and allows investors to place bets on the value of bitcoin without owning any coins directly. The company currently has $54m in assets under management.

SecondMarket now seems to be looking to expand the fund by opening it up to all investors – a move probably brought on by impending competition.

The Winklevoss effect

Tech entrepreneurs Tyler and Cameron Winklevoss filed a bitcoin investment fund with the US Securities and Exchange Commission (SEC) in July 2013. However, the trust is not yet up and running.

The Winklevoss Bitcoin Trust is likely to be an exchange-traded fund (ETF) open to all investors.

The Winklevoss twins also recently launched a new blended bitcoin price index. Called the ‘Winkdex’, this will be used to determine the value of bitcoins in their trust.

Winklevoss chief legal counsel Kathleen H. Moriarty told CoinDesk that the ETF should be approved by the end of the year.

Different approach

This deadline gives SecondMarket plenty of time to play with. However, instead of creating an all-new ETF, the firm has decided to transform the BIT into an open fund available to ordinary investors.

SecondMarket plans to enlist the support of OTC Markets and trade the fund on an electronic marketplace operated by them. To bring all this about, SecondMarket needs approval from OTC Markets, as well as the Financial Industry Regulatory Authority (FINRA).

If the proposal is approved, the fund could become publically available as early as the fourth quarter of 2014, so it could start trading before the Winklevoss Bitcoin Trust.

One way of circumventing the SEC’s preapproval process is simply to publically list the fund’s existing investors after a 12-month lockup expires this September. This move should save significant time and make the fund publically available as soon as the process is complete – that is, in the early fourth quarter of this year.

The Winklevoss twins might not be so quick to the finishing line, as the ETF process takes slightly longer. Therefore SecondMarket believes it will be the first firm to publically offer a regulated bitcoin fund.

Tyler Winklevoss believes his fund will be a safer option, though, as it will trade on a fully regulated exchange and it will have to jump through more hoops to meet regulatory standards.

Going public

So far ordinary investors have been unable to make bitcoin investments on the regulated, open market. Their only way of investing in bitcoin was directly, through bitcoin exchanges.

This approach, though, favours speculators and tends to keep many investors away, especially institutional investors who cannot invest in unregulated markets.

However, in recent weeks several investment firms have moved to enter the bitcoin space and bring bitcoin investments to a much wider audience – namely ordinary investors who would rather not deal with bitcoin exchanges.

Just this week, Pantera Capital teamed with Fortress Investment Group, Benchmark Capital and Ribbit Capital to launch the Pantera Bitcoin Partners investment fund. Pantera Capital says it is shifting its investment focus solely to bitcoin ventures.

And, earlier this month, Perseus Telecom announced the launch of a globally integrated bitcoin exchange and the Digital Currency Initiative, which aims to bring financial industry-grade security to bitcoin trading. The company has teamed up with Atlas ATS to integrate multi-tiered security into its platform.

Coinbase Hires Big Names From Amazon and Facebook to Bolster Security and Business Development
Daniel Cawrey (@danielcawrey) | Published on March 20, 2014 at 10:24 GMT | Coinbase, News, Startups, Wallets

Coinbase is adding some notable technology veterans to its team, it says.

The new faces at the company – former Facebook security director Ryan McGeehan and Todd Edebohls, Amazon’s former director of business development & sales – will bring with them extensive experience in the areas of security and business development.

When asked for comment, the San Francisco-based company issued a statement regarding the new team members, which have yet to be formally announced:

“These hires represent Coinbase growth, momentum and commitment to security. As an industry it shows bitcoin is growing up, attracting top talent.”

Coinbase co-founder Fred Ehrsam told TechCrunch: “The industry is continuing to evolve. We’re attracting very, very top talent from prior rocketships that were successful.”

Fraud prevention

The addition of McGeehan is a confidence builder for Coinbase’s hosted wallet service.

The company faces a lot of risk in terms of security and, with the company hosting over a million wallets, there’s a lot at stake.

Immediately after the Mt. Gox collapse, Coinbase invited Andreas Antonopoulos, a noted bitcoin developer and head of security for Blockchain.info, to check its security procedures.

Antonopoulos came away satisfied with Coinbase’s practices, but McGeehan’s new role as Director of Security Incident Response will bring to Coinbase more expertise in this area and should further reassure users and investors that the company is doing the right thing.

Merchant draw

Todd Edebohls
Amazon’s Todd Edebohls
Along with Coinbase’s role as a consumer-friendly wallet, it also provides merchants with bitcoin payment options. The company’s payments API is used by a number of companies and organisations alongside normal POS systems.

Recently, the company has added technology-focused customers to its portfolio, such as Mint, Fiverr and Glyde. Big Fish Games is also a recent notable addition in the casual gaming sector.

The hiring of Edebohls as a business development executive should help the company bring new merchants on board and perhaps see its business expand into unchartered terrain.

Quick growth

Coinbase’s success and ability to attract talent can be attributed to a number of factors. A banking partnership with Silicon Valley Bank and a stable method of bitcoin exchange carried out via Bitstamp have helped turn Coinbase into a bitcoin business leader in the US.

Verified Coinbase members with a US bank account are able to use ACH transfers to move fiat into bitcoin relatively easily. Furthermore, Coinbase’s ‘Instant Buy’ feature, when used with a US credit card, allows customers to obtain bitcoin immediately.

These key component have piqued the interest of venture capitalists and Coinbase raised $25m in a Series B round last December, led by Silicon Valley VC firm Andreessen Horowitz.

McGeehan says he is starting in April. Edebohls already lists himself as VP for a “to be announced” company on his LinkedIn profile.

ATM Industry Association Publishes Report on Bitcoin ATMs
Jon Southurst (@southtopia) | Published on March 20, 2014 at 13:38 GMT | Analysis, Bitcoin ATM, Companies, News

The ATM Industry Association (ATMIA) has published a report titled “An Introduction to Bitcoin ATMs”, providing the industry’s first in-depth view of bitcoin and its implications for the ATM world.

The ATMIA commissioned the report, which was written by Tremont Capital Group, a leading consulting firm specializing in the ATM industry.

“We’ve been asked as an industry body to comment on the significance of bitcoin and digital currencies to the ATM and cash industries,” said Mike Lee, the association’s CEO.

“This paper is our first report of many which will enable us to draw some logical conclusions about how bitcoin will affect payments and regulations in future.”

Bitcoin overview

The report’s comprehensive analysis was conducted by ATM industry expert Sam M Ditzion and offers an overview of bitcoin’s history, how the currency works and significant landmark events and controversies. It goes on to cover the evolving regulatory landscape, and the expanding role of bitcoin ATMs.

The report further provides a summary of the current major players in the bitcoin ATM space, with a focus on the US and Canada, but also with reference to Singapore-based companies.

While several years have been devoted to building bitcoin’s basic infrastructure, the report says, the focus is now on consumer awareness and managing bitcoin’s reputation as a credible payment system.

Much of its growth is expected from younger generations, an increasingly powerful segment under-served by the ‘traditional’ finance industry, it adds.

Implications for the industry

According to the report, the growing popularity of bitcoin ATMs is due mainly to ease of access, compared to the often cumbersome procedures required by online exchanges and risks often associated with anonymous in-person trading.

It acknowledges that the bitcoin ATM industry is still in its infancy, and that many new companies will attempt to enter the space over the coming year.

Compliance with local regulations, wherever machines are located, presents a significant challenge to operators, both in bureaucracy and cost. There are also the technical challenges of ensuring machines have sturdy connections to ensure transactions are secure and reliable.

The report provides a rundown of regulations in various North American jurisdictions, including financially significant US states and Canada.

Overall the report’s tone is cautiously optimistic, although it stresses that the bitcoin ATM industry is still nascent and there are many issues that need to be resolved further to attract more deployers.

Growth industry

Bitcoin ATMs have become a booming industry in the past six months, with machines produced by at least six different companies operating live in many countries around the world at present, and several more to come online shortly.

They range in type from simple cash-to-bitcoin vending machines to full two-way exchange platforms – some offering security and compliance features, such as palm vein scans and ID recording.

About ATMIA and Tremont Capital Group

ATMIA is an independent, non-profit trade organization which promotes ATM use and convenience worldwide, while also protecting the ATM industry’s reputation and assets, and providing networking opportunities for its members. The association has chapters in all regions of the world.

Tremont Capital Group is the leading provider of business strategy consulting, research, and merger & acquisition advisory services to the ATM and related industries.

The proprietary research report is available free to all ATMIA members, or for purchase by non-members until April 30th at a discounted price of $145.00 USD (regular price $195.00).

$500,000 Villa Sold in What May be Biggest Bitcoin Purchase on Record
Pete Rizzo (@pete_rizzo_) | Published on March 19, 2014 at 22:24 GMT | News

Online bitcoin-only luxury marketplace BitPremier has completed the sale of a fully managed villa at the deLMango Villa Estate in Bali, Indonesia, in what may be the largest reported bitcoin transaction to date.

Founder and CEO Alan Silbert indicates that the 3,000-square-foot villa sold for more than $500,000, though the exact price paid by the buyer was not revealed.

Silbert, brother of SecondMarket CEO and BitPremier investor Barry Silbert, indicated that the sale is “by far the largest” completed to date via the marketplace, which was launched last May.

Further, he sees the purchase as proof that bitcoin buyers will be increasingly willing to diversify their assets with other investment opportunities.

Explained Silbert:

“This definitely validates the business model. It shows that bitcoin users want to buy things that are unique, and that are above and beyond t-shirts and electronics.”

The sale was finalized in late February.

More details

Speaking to CoinDesk, Silbert did not reveal many more details about the buyer, mentioning only that the individual was an early bitcoin adopter based in the US.

Said Silbert: “He’s been in the bitcoin community for at least a couple years.”

As for the house sale, Silbert indicated that due to Indonesia’s unique laws regarding the ownership of real estate by foreigners, the buyer is technically purchasing a long-term lease.

The property boasts an intricate design that blends the indoors and outdoors with open-sided rooms, a dedicated dining pavilion and a private pool.

In addition, the villa features two modern bedrooms and two bathrooms.

The buyer will earn income based on the performance of the rental unit and villa as a whole, Silbert said.

Bitcoin’s biggest transactions

The $500,000 sale price would trump the $103,000 paid for a Tesla Model S in December, believed to be the largest single consumer purchase conducted in bitcoin.

However, it falls well short of the $147m mystery transaction, later revealed to be the product of a Bitstamp audit, that is the largest single transaction ever.

About BitPremier

An online marketplace that connects bitcoin buyers and sellers, BitPremier has hosted a range of exotic items on its forum, including most recently a pair of Wooly Mammoth tusks that were put up for sale for the asking price of $175,000.

BitPremier facilitates communication between both parties, who remain anonymous until the terms of the deal are settled. Funds are then held in escrow until the buyer confirms an item has been delivered. BitPremier then sends funds to the seller, with a 5% fee deducted from the proceeds.

The website is currently listing other notable items such as a 16-inch pearl necklace valued at $10,000; a Paris property with a view of the Eiffel Tower listed for €4.6m; and a 1969 Boss 429 Mustang being offered for $290,000.

Yes somebody trying malleability attack again.

Some people from Bosnia can't get in on site, also .

Bankrupt Bitcoin Mining Company Alydian to Sell 218TH/s of Mining Power
Pete Rizzo (@pete_rizzo_) | Published on March 19, 2014 at 21:38 GMT | Mining, News, Technology

Enterprise-scale bitcoin mining company Alydian, the CoinLab-backed company that filed for bankruptcy in November, has revealed that it will sell its bitcoin mining systems in the runup to its eventual shutdown.

The Seattle-based company has since settled with all of its creditors, and the sale marks the end for what was CoinLab’s first startup launched in August of last year.

Alydian director of engineering, Robert Batten, indicated that the company is now accepting bids for three mining systems with a combined 218TH/s output, for $5,000/TH to interested buyers.

Batten said that though the systems may not be new models, they still represent a great investment opportunity for the right buyer or buyers looking seriously for a quick way into the bitcoin mining business.

Explained Batten:

“[The equipment is] a small step behind the current state-of-the-art [systems], but it will still make money in its lifetime. It’s not obsolete to the point where there’s no value.”

What’s for sale

The company offered a number of details about the available equipment. For example, the mining systems are configured as 1TH/s rackmount systems in 19-inch racks, and each system uses roughly 6kW of power. The systems were custom-built by Alydian engineers.

The systems are currently installed in three different data centers in the Pacific Northwest, according to Batten, and are ready to go for buyers. Alydian was headquartered in Seattle, but had its engineering offices in Portland, Oregon.

Said Batten:

“[Buyers] wouldn’t need to pick up the components or do anything like that. They’d essentially just have to point the miners at their specific bitcoin back-end services.”

The systems have contracts with two hosting companies. The rigs are being sold as is and on location.

Making an offer

Alydian indicated that all offers are subject to review and approval by the company, though Batten could not comment as to the eventual use of the funds. The minimum sale price of $5,000/TH includes the extra equipment and parts.

The final purchase price can be paid in bitcoins or USD. Offers for the company’s mining systems should be submitted to Batten from 19th March through 5pm PDT on 25th March. Interested buyers can contact Batten via robert@coinlab.com.

+1 There. PrimeDice.com is the best.

BitPay Opens Offices in San Francisco and New York
Emily Spaven (@emilyspaven) | Published on March 19, 2014 at 17:18 GMT | BitPay, Companies, News

BitPay has expanded its operations by opening offices in San Francisco and New York.

The bitcoin payment processor is headquartered in Atlanta, but the new offices will help the company to bring in new business and offer operational support to the merchants it currently works with.

“BitPay has many merchants accepting bitcoin throughout Silicon Valley so we are thrilled to extend our exceptional sales and customer support by opening an office in San Francisco,” said Paige Freeman, VP of sales at BitPay, adding:

“We look forward to expanding into various markets both here in the US and internationally.”

BitPay now employs 31 full-time workers across the world, with 22 of these employees located at the company’s headquarters in Atlanta, six in Argentina, two in San Francisco and one in New York.

Freeman will be joined in the San Francisco office by John Dreyzehner, the leader of BitPay’s Client Operations on the west coast. In New York, Andy Goldstein has taken up the role of regional sales manager, bringing with him 15 years of experience at Visa where he was a senior business development leader for its Merchant Sales and Solutions group.

BitPay recently announced that it works with over 26,000 merchants, having surpassed the 10,000 mark just six months ago.

Its partners range from blog platform WordPress and leading Middle Eastern music streaming platform Anghami to UK computer retailer Scan and basketball team the Sacramento Kings.

So far, the company has received $2.7m in angel and capital funding, with the investors including Founders Fund, A-Grade Investments, Bitcoin Opportunity Fund and CoinDesk’s founder Shakil Khan.