I invested min. Just to see hows going. I know that guy from Primedice. He is cool . See ya there Pthnmj.

Bitcoin Price Resilient as Antonopoulos, Andreessen Weigh in on Mt. Gox Debacle
Daniel Cawrey (@danielcawrey) | Published on February 25, 2014 at 22:16 GMT | Blockchain, Coinbase, Exchanges, Mt. Gox, News, Wallets

Andreas Antonopoulos, a leading bitcoin developer and current chief security officer at hosted wallet Blockchain.info has released a statement regarding the ongoing issues at once-leading bitcoin exchange Mt. Gox.

The announcement comes less than a day after Mt. Gox halted transactions, and amid growing reports that the once high-profile company may soon close for good.

Wrote Antonopoulos in his official response:

“I fear the worst. Everything I see makes me believe that Gox will never recover and that the funds are most likely lost.

I am devastated by the impact this will have on customers of Gox and I am angry at the irresponsible behavior of Mt. Gox and especially [CEO] Mark Karpeles that will damage the lives of many people.”

The remarks echo the increasing frustration of bitcoin supporters, who have been highly critical of Karpeles and his handling of problems at the exchange for much of the last month, and are notable as Antonopoulos, despite his critical stance to the company, had moved to ease concerns in recent weeks.

Gox’s incompetence

Antonopoulos offered a blow-by-blow account of the issues that have affect Mt. Gox in the past two weeks on his personal blog. He points out the transaction malleability issue Mt. Gox was supposedly experiencing has been a known issue since 2011:

“I publicly excoriated Gox’s incompetent and clownish management and disputed their claim that their problems were due to a ‘bug in bitcoin’.”

During this time, many exchanges were attacked via DDoS, according to Antonopoulos. The goal, he says, was to uncover other bitcoin exchanges that might be vulnerable:

“In response, some exchanges temporarily suspended withdrawals to investigate their implementations and confirm they were robust.”

Gox did develop a fix for the problem on its platform, and Antonopoulos later expressed optimism that the Japan-based exchange might be able to resume normal operations:

“As we started seeing Gox transactions posted on the public blockchain ledger, as reported on reddit and other sites, it appeared to me as if Gox might recover from their latest mess.”

The outage

The statement from Antonopoulos makes clear that he did not know in advance Mt. Gox was headed for massive failure:

“Yesterday afternoon at approximately 3pm PST, Monday February 24th, I heard unconfirmed reports that Gox was in crisis mode and their funds were mostly, if not entirely, gone. This was the first hint I had of any solvency issues.”

It appears that the writing was on the wall for Mt. Gox for some time. But Antonopoulos stated he did not believe that there was any intent of fraud by Mt. Gox CEO, Mark Karpeles.

“I stated that while I had serious misgivings about the competence of Mt.Gox executives and especially Karpeles, I had not seen any indication of bad faith or fraud in the past two years.”

Coinbase Security

As the head of Blockchain.info’s security, Antonopoulos volunteered to examine the measures put in place at Coinbase, and recounted his experience visiting the San Francisco-based hosted wallet the same night of Mt. Gox’s shutdown.

“While Coinbase publicly states that up to 97% of customer funds are in cold storage, at the time of my visit, their internal reporting tool showed that the cold storage system contained 98.8% of customer funds.”

Working into the night, Antonopoulos found that Coinbase had solid processes in place to secure bitcoin for its customers.

“Based on what I observed during my visit and my experience in security, it appears that the Coinbase system contains the expected funds and their cold storage system and process appear to be operating according to security best practices.”

Comparison to MF Global, not the end

While companies like Coinbase have procedures in place to protect bitcoin wallets, the ultimate fate of Mt. Gox is still murky.

Marc Andreessen’s venture capital firm Andreessen Horowitz has invested heavily in bitcoin startups. On CNBC this morning he liked the current situation to that of another financial fraud:


 
Despite a serious systematic failure of a major bitcoin exchange, the price of BTC has been surprisingly resilient.

Source: Bitcoin Charts
Source: Bitcoin Charts
When asked for comment, the Bitcoin Foundation offered the following statement:

“This is certainly not the end of Bitcoin. Perhaps the end of one chapter, but certainly not the end. As our industry matures, we are seeing a second wave of capable, responsible entrepreneurs and investors who are building reliable services for this ecosystem.”

CoinDesk is monitoring this developing story, and will post updates as they become known.

Mt. Gox Only Has Infuriating Announcement Left On Their Website; They Haven’t Yet Announced Their Sale
Caleb Chen  25/02/2014  Posted 6 hours ago

In light of all that was revealed about Mt. Gox last night, people have been eagerly awaiting any form of official communication from the mountain.  Most people have spent too much time looking at this leaked document claiming that Mt. Gox has lost 99% of their funds, several hundred million dollars gone over the course of God knows how long due to a Transaction Malleability leak… The same claim used in the Silk Road 2.0 heist.

Mt. Gox halted trading last night then proceeded to take down their website which up until a little while ago was completely empty.  Throughout all this, the only official word is that which you see below.


mt gox really?

This announcement is so typical Mt. Gox
 

Haven’t Yet Announced Their Sale

That’s right, if you take the leaked document at face value, then it becomes painfully obvious that Mt. Gox is in the middle of a restructuring and takeover.

The long list of complaints that people have against the leaked document include grammar errors, silly icons, and unbelievable data.  The list was very formidable when Two Bit Idiot first leaked the document last night, in fact his original posts received so many downvotes on /r/Bitcoin that I’m beginning to doubt that people even remember where the document came from.  Just as he did with the Fortress Fiasco, Two Bit Idiot again attempted to warn the Bitcoin community and was roundly denounced.  Hopefully, the next time he leaks something for us we will be more receptive.

The document allegedly came from inside Mt. Gox and obviously doesn’t read like an internal memo.  Inside Mt. Gox is where Charlie Shrem has confirmed that he saw outside advisers.  He originally promised Bitcoiners on Reddit a ray of hope by announcing that there was good news “on the horizon.”  He has since publicly apologized for getting peoples’ hopes up and revealed that he thinks what is going on at Mt. Gox is a “bail out.:”

From my personal analysis of the leaked document, and trusting Two Bit Idiot’s source, it is obvious that the document was generated by a non-native English speaker.  Which leads me to believe that Mt. Gox is currently being taken over by an established Asian firm, likely from China or Japan.  The type of firm that knows reputation is as fickle as the mob is.  It is interesting to note that there are several now-giant companies that were in dire straits that were able to completely turn around thanks to being bought out.  Notable from this list are Google, Bain Capital, McDonalds, etc.

My theory is corroborated by Mark Karpeles telling Reuters:

“We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.”

The article broke before Mt. Gox put their half-assed (correct use of the word?) announcement on their vacant website.  I assume that this is just a short announcement to belay the fears of those whom have seen the leaked document.  I truly hope that there is another more official announcement coming “soon-ish.”  Mark owes us that at the very least.

Stay tuned to CCN for more updates on this continuing fiasco.

VC Firm Makes Bid for FBI’s Seized Silk Road Bitcoins
Nermin Hajdarbegovic | Published on February 25, 2014 at 20:22 GMT | Crime, Investors, Law, News, Silk Road News, US & Canada

Investment firm Falcon Global Capital has contacted the US government expressing an interest in buying all of the bitcoins it seized from Silk Road – the online black market that was shut down by the FBI in October of last year.

The US has previously said that the coins will be liquidated, but did not say when or how the process would occur, or to whom they would be sold. The FBI holds 27,000 BTC from the seizure, which are worth around $14m at today’s exchange rates.

Whether the Falcon team is prepared to go the distance on the potentially huge transaction remains to be seen.

Huge stockpile

Falcon Global Capital’s co-founder Brett Stapper told Business Insider that he has not received an official reply from the FBI, so it is still unclear whether the government is willing to make a deal.

Stapper said:

“We have secured backing from a group of private investors to purchase all 27,000 bitcoins for 15% below the daily value.”

It should be noted that the FBI has a lot of bitcoins to sell. In addition to drug-tainted Silk Road coins, the FBI has a much bigger stash: an estimate from Casey Research puts the figure between 5% and 10% of all bitcoins in circulation.

Filling the gap

While it might not be the best time to make such a deal, with troubles at Mt. Gox slashing confidence in bitcoin, Stapper points out that Falcon Global Capital is “not your average investment fund”. He added:

“We are young, hungry, and, eager to fill the gap between Wall Street and bitcoin.”

Falcon Global Capital describes itself as an SEC Regulation D Private Investment Fund that invests “solely in bitcoin markets”. Its mission is simple – the fund wants to allow accredited investors to acquire large amounts of bitcoins, anywhere from $25,000 up to $10m, and to store them safely.

The fund points out that purchasing and storing large amounts of bitcoins is notoriously challenging, so it aims to provide a simple service that can be used by the average investor.

Silk Road gambit

Stapper’s letter to the FBI made it clear that Falcon Global Capital is prepared to offer 15% below market value for the Silk Road forfeiture.

He also offered another option: if the US Government is not interested in selling the bitcoins to the company directly, Stapper is willing to act as consultant to the government, free of charge, to find the best and most profitable way of liquidating the seized bitcoins.

Either way, it would be an ironic end to the Silk Road saga – the government selling the dirty assets below cost to legitimate corporate investors.

If the US Government gives the green light on the deal, Stapper says Falcon Global Capital plans to store the bitcoins in “an insured bitcoin vault”, courtesy of UK-based Elliptic.

Former US Treasury Secretary Calls Bitcoin an “Innovative” Solution
Pete Rizzo (@pete_rizzo_) | Published on February 25, 2014 at 21:42 GMT | Analysis, News

Former US Secretary of the Treasury under President Bill Clinton and past President Emeritus of Harvard University Lawrence Summers has indicated that he believes bitcoin to be a “very, very important development”.

As treasury secretary, Summers is said to have played an integral role in the US handling of several world financial crises, and his prior positions include serving as chief economist at World Bank from 1991 to 1993.

The remarks came after Summers’ speech at the National Association for Business Economics policy conference on 24 February, in which he addressed a wide range of financing topics from the US Federal Reserve’s quantitative easing strategy to virtual currencies such as bitcoin.

Reports indicate that there, Summers stated that he sees bitcoin as part of a broader transition in which information technology is affecting more aspects of American life.

Speaking of the pain points inherent in the current financial system, Summers said:

“It seems bizarre that at this late date, one has to pay as much as one does to use a debit card or to get cash from an ATM or to transfer money to one’s child living abroad.”

The former secretary went on to call bitcoin “an innovative approach” to reducing financial friction, and suggested that it would be only part of a larger concerted effort by the industry to attack these longstanding consumers difficulties.

‘An enormous deal’

Summers also notably compared bitcoin to other innovations that have emerged from California’s famed Silicon Valley, ones that were first written off only to turn out to be “an enormous deal”. Further, he reminded economists that they don’t necessarily have a track record for correctly predicting the outcome of technological advancements.

Said Summers:

“Very serious economists thought that the Internet was going to be no more important than the fax machine, so I’m not willing to dismiss Bitcoin.”

Rare optimism

The news is a rare bright spot in the day’s developments, as following the abrupt shutdown of services at Mt. Gox media outlets and pundits around the globe have begun to criticize bitcoin for its alleged shortcomings as a payments technology.

Supposed financial experts seem to be coming out of the woodwork to capitalize on the news.

For example, Dennis Gartman of the Gartman Letter took to CNBC to decry bitcoin as “nothing more than a scam of the first order”, though an increasing amount of industry experts are leaping to the digital currency’s defense.

When will cahouts and deposits will be up and running ?

Cashouts are taking forever again. Waiting for few hours . Many people complain. Any news on that ?

edit: Just got mine.

I got paid multiple times. And i see that u are paying evry addy in order. No exception. That is nice. Lets just hope this gets going faster. And that we get some new investors.

I only say what i hear. People are afraid to buy bitcoin coz ot its big price ups and downs. People that don't love gambling with their money think that bitcoin is to much of a gamble. Every currency needs stable rate as possible. And bitcoin is one ! I am not arguing this with u. That is my opinion and opinion of people around me in Serbia. 

It will be bad for Bitcoin if it goes that high. Will be good for traders but not goo for average user. We need Bitcoin to have stabilized rate, then it will be accepted by average men.
How good is for somebody to buy Bitcoin for lets say he wanted to buy something from dinodirect. And he doesn't buy it right away, and wakes up next day see his bitcoins are worth 1/2 price ?

Guys time for shot feadback .
Do u guys still reading this ? Don't let me posting like crazy if nobody read it .

SecondMarket’s Barry Silbert to Launch Regulated US Exchange this Summer
Pete Rizzo (@pete_rizzo_) | Published on February 25, 2014 at 18:06 GMT | Companies, Exchanges, Investors, News

Barry Silbert, founder and CEO of New York-based alternative investment marketplace SecondMarket, has confirmed he will be spinning off the entity’s bitcoin businesses into a separate organization dedicated to the exchange of digital currencies, and that this new business aims to be operational by this summer.

Silbert told CoinDesk that he will serve as CEO of the as-yet-unnamed entity, and that the new business will include Bitcoin Investment Trust, its private investment fund for high-wealth investors, and an 11-person trading desk that will support this offering.

The CEO suggests that SecondMarket will be contributing $20m in cash and bitcoin assets to the new endeavor, and that injections from other founding members could potentially increase this total by the time of its 2014 launch. He added:

“The company on day one will be well-capitalized, it will have two fast growing businesses.”

In addition to this big picture vision, Silbert also revealed detailed plans that suggest the process is in motion, and that the exchange has already cleared a number of potential hurdles on its path to market.

A new kind of exchange

The extensive plans represent a drastic shift in how bitcoins have been traditionally bought and sold through exchanges, with the company adopting a “hub-and-spoke” model that will find the exchange only interacting with formal members.

Non-members will not be allowed to facilitate transactions on the exchange, however. Silbert said he doesn’t see this as exclusionary, as such restrictions would inspire the creation of new businesses for the exchange.

Initial members are expected to include Wall Street banks, as well as bitcoin startups such as Circle and Coinbase. Silbert explained:

“If you want to buy and sell bitcoin you have to go through one of the members, and the members are all going to be regulated businesses. They’ll be banks, they’ll be MSBs, they’ll be bitcoin companies, they’ll be broker dealers. The idea is the other exchanges of the world could actually become members of the exchange.”

The result, Silbert said, would be an environment similar to the New York Stock Exchange (NYSE), where individual customers go through brokers such as Fidelity or TD Ameritrade in order to complete transactions. The idea for the market itself is based on the IntercontinentalExchange (ICE) Group.

Founded in 1997, ICE is a 24-hour, Internet-based high capacity trading platforms focused on the global commodity and financial products marketplaces.

By providing a similar environment to existing structures, Silbert hopes money services business (MSBs) and banks will be more open to dealing with bitcoin and bitcoin-related investment services.

How the exchange will work

According to Silbert, the exchange will have three main functions.

Firstly, it will focus on price discovery. Using the gold market as a model, the exchange will attempt to fix the value of bitcoin once or twice a day to allow trading to be pegged at certain values and create a true indicator for the derivatives and mining markets.

“We’re going to attempt to slow things down a bit and create a true indication of bitcon value, once or twice a day, and each of the members though they can trade all day long, or they can tie price to the spot price,” Silbert said.

The new business will also provide clearing services and have a self regulatory organization (SRO), which will ensure that all transactions properly clear with member firms and that exchange activities are governed according to input from regulators and major banks.

A shift in strategy

The news, while not entirely new to observers in the bitcoin industry, does indicate that Silbert has advanced his plans significantly since they were first released. Silbert had not previously suggested that the exchange would be a separate business entity from SecondMarket.

Silbert noted, though, that this change in strategy is not due to regulatory concerns, but is rather a “structural, branding initiative”, one that he saw as intrinsic given that SecondMarket’s core business, which extends beyond bitcoin, has its own customers and brand identity.

Silbert first revealed plans to move SecondMarket toward becoming a licensed, regulated bitcoin exchange on 7th February, when he announced it would begin allowing bitcoin users to sell bitcoins to Bitcoin Investment Trust, though no timeline was given for the proposed launch.

Stemming the Mt. Gox fallout

Silbert suggested that though he has been working on the plans for some time and has even collaborating with unnamed state regulators on the efforts, the apparent failure of Japan-based bitcoin exchange Mt. Gox inspired him to come forward with the news more urgently.

“We did accelerate the announcement with the intention to provide a counterbalance to the news so we could demonstrate to the press at least that there is an effort to fill the void of Gox,” Silbert said.

As for next step, Silbert suggested that with capital secure, the focus would be on finding founding members and formalizing the structure of the new entity’s SRO and clearing business.

I know . But i like more to know when i will lose my money. Like here. He is said 24h no deposits this will close. So i can know exactly when and why i lost money .
There i did not know that they will start new round and when! And they will take all the profit. And start again. And people will invest again for them to be rich and wait for big profit and then just start next round. Why not we will take money. And then take it again .

Here i know the risk if this guy closes i will not be mad at all that i lost my money. I will know why and when i will lost it.

Mt. Gox Statement Claims it Made Conscious Decision to Halt Transactions
Nermin Hajdarbegovic | Published on February 25, 2014 at 17:16 GMT | Companies, Exchanges, Mt. Gox, News, US & Canada

The recent revelations regarding Mt. Gox have been attracting a lot of commentary from everyone other than the exchange itself.

However, the troubled exchange has finally issued a brief statement, which is unlikely to reassure its investors.

It is now becoming apparent that Mt. Gox is about to make an announcement, and that it might be rebranded. However, a new brand identity is probably the least of its worries: for all intents and purposes, the exchange appears to be insolvent and defunct. Its latest statement reads:

Dear MtGox Customers,

 

In the event of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

 

Best regards,

MtGox Team

In addition, the statement does not explain why Mt. Gox decided to pull the plug suddenly, at 01:59:06 UTC on Tuesday. In addition, Mt. Gox support is down, too. The support page simply states: “No help desk at support.mtgox.com.”

It is important to bear in mind that Mt. Gox didn’t simply halt trading and issue the statement shortly after its decision – it went completely offline and has not issued any statements until today.

If the aim of the latest statement was to reassure customers, investors and the bitcoin community in general, it falls short of explaining what is actually happening and does not address concerns raised by many publications and bitcoin insiders.

In an email, CEO Mark Karpeles made an unofficial statement to Reuters claiming that bitcoin exchange is “at a turning point”. He added that the Japan-based company “should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.” However, these new plans are yet to emerge.

Regulators starting to take notice

The industry reaction to the virtual disappearance of Mt. Gox has been swift. Other exchanges and bitcoin businesses including Blockchain.info and Coinbase did their best to distance themselves from the exchange, issuing a joint statement earlier today.

Regulators are taking notice, too. Homeland Security and Governmental Affairs Committee Chairman Tom Carper has issued a statement on the matter, claiming that US policymakers and regulators can and should learn from the Mt. Gox incident to protect consumers:

“For months, our Committee has been calling on law enforcement, industry, and relevant regulators to come to the table and engage in meaningful dialogue to provide clear rules of the roads for entrepreneurs, investors, and consumers. Without these rules, businesses can’t be successful and consumers can’t be protected. If today’s news is true, it is a sad violation of consumer trust, whether through malicious action or simple incompetence. Regardless, it’s unacceptable.”

The chairman stressed that his staff is working closely with  federal agencies to determine what lessons can be learned from the failure and to make sure that it does not happen in the US. “Our Committee will continue to work closely with relevant U.S. government entities to steer the boat away from nefarious actors – and it’s up to legitimate, law abiding industry partners to row the boat into law abiding waters,” he added.

Fellow US regulator Ben Lawsky, New York’s Superintendent of Financial Services, also waded into the debate.

In a statement via email he maintained that while all the facts are not yet clear “these developments underscore that smart, tailored regulation could play an important role in protecting consumers and the security of the money that they entrust to virtual currency firms.”

Both Carper and Lawsky are clearly throwing the ball to bitcoin industry leaders, if not indirectly passing blame. It seems the lesson learned from the Mt. Gox demise will be a painful one, but will all regulators will reach the same conclusions?

I did not spam. I love this idea. And i just wanted to let the others know about this. I see on that ponzi120 one round 2 starting from scratch , so i don't get paid for round 1 . Fuck that ! You can check my post and tell me if that was spam or not . I want people to know about this!

Yes i think that will be loads of fun! Can't wait for pd3 , bringing loads of cool stuff in !

You coulda paid some of that investors but you took money for yourself. And DID not warn us when you will do that and why you would do that. I am never investing in this again. I am now here https://bitcointalk.org/index.php?topic=484594 .

Why Regulating Bitcoin Won’t Work
Ariel Deschapell | Published on February 25, 2014 at 14:00 GMT | Analysis, Law, Regulation, US & Canada

In recent months, bitcoin has skyrocketed in usage and popular attention. With all this increased exposure and rapidly growing business activity, the public sector was bound to get involved sooner or later.

Governments everywhere are increasingly taking steps to regulate bitcoin and other cryptocurrencies, but these responses have been anything but uniform. And, while some countries are taking a ‘hands-off’ approach, these are the exceptions to the general trend.

Canada and New York are both poised to enact new regulatory measures, Russia has been the first developed country to ban bitcoin outright, and China came pretty close to doing so back in December. While countries may be far apart in the way they tackle the issues raised by bitcoin, their fears are the same.

When Russian authorities announced that bitcoin was illegal, they outlined “laundering of money obtained through crime, as well as financing terrorism” as chief concerns, and that sentiment is echoed across many regulatory agencies.

This uniting aspiration to prevent money laundering highlights the inability of various governments to grasp how bitcoin really works, and how far out of their control it is.

Perhaps this ignorance was inevitable, due to the currency’s sudden and meteoric rise, which pressured governments to do something without giving them time to fully understand what was happening.

More harm than good

NetworkIndeed, even now it still seems impossible to predict how bitcoin and its surrounding services will continue to develop.

Nonetheless, this widespread failure to understand the fundamental principles behind the Bitcoin protocol and its implications can lead governments to make decisions that will ultimately harm economic development, while impacting criminal activity very little, if at all. One of the glaringly obvious flaws in the patriotic actions of countries like Russia to protect their citizens from terrorists and money laundering is the simple fact they cannot enforce it.

Bitcoin and all other cryptocurrencies are completely decentralized peer-to-peer systems. There is no central server to shut down, no one to catch and, crucially, no one prosecute – no one that will cause the currencies to crumble, at least.

Put simply, no government on the planet can stop me from downloading a wallet or mining client and connecting to the bitcoin network. Just ask the United States and other developed countries, who have been trying rather unsuccessfully to crack down on illegal P2P torrents over the last decade.

Hence, anyone who is intent on using bitcoin to launder funds overseas, for which it is most apt, can still purchase them from individual dealers, trusted miners, or even purchase their own mining hardware to turn that dirty money into crypto-coins.

Indeed, it’s easy enough to imagine how the bitcoin industry would develop in a permanently illegal context to serve the needs of already illegal organizations, potentially allowing them much more flexibility in both storing and moving funds around the world.

This is what scares governments, but the point they seem to miss, is that for better or worse, they can’t do anything about it.

Bitcoin and the Deep Web

Take Silk Road, the infamous anonymous online marketplace that allowed individuals to purchase just about anything with bitcoin.

Many other such markets exist in the Deep Web, and while there will occasionally be a highly publicised bust, criminal activity still continues on a massive basis. Outlawing bitcoin will not affect these already illegal operations in the slightest.

“Even in areas where bitcoin isn’t considered illegal, any regulatory hurdles will inevitably hamper innovation.”

Increasingly, we are seeing the development of ever more organized Deep Web markets, exchanges, and even private currency systems, as criminals move away from bitcoin to other, more anonymous digital currencies. Guess where most of this development seems to be occurring?

If you guessed the only developed country to fully outlaw all cryptocurrencies, Russia, you would be correct.

Another proposed regulatory measure is a ban on ‘tumblers’ – tools that allow users to confuse the source of their bitcoins. This idea, discussed in New York’s regulatory hearings, further highlights the unwillingness for traditional regulatory institutions to admit that they have no authority over the matter.

Tumblers, like illegal markets and exchanges, can be hosted anonymously from any server in the world. New York’s Department of Financial Services may as well ban the sun from setting, as they’d probably have more leverage there.

Legal trailblazers

The individuals most affected by government regulation are the ones already engaged in legal business activities and ventures – that is, those paving the way for an innovative and competitive financial future, and one with a global reach.

Outlawing bitcoin simply restricts legitimate business and drives the criminals underground, depriving the private sector at large of benefits of the cryptocurrency. Without government approval, legal businesses and users can’t take advantage of bitcoin’s speed, low costs, flexibility, and anonymity.

So, regulation would simply be driving the creation of another black market, while denying the substantial benefits of cryptocurrency to law-abiding citizens everywhere. We can already see in Canada that even naive talk of cracking down on bitcoin has dealt a crushing blow to developing startups.

Even in areas where bitcoin isn’t considered illegal, any regulatory hurdles will inevitably hamper innovation.

Countries with a more laid back approach are the ones likely to benefit most from a bitcoin-fuelled financial revolution – even if it’s still too early to tell what exactly that is going to look like.

Punishing the wrong people

This extrapolates to seemingly conventional regulations, such as requiring exchanges and other services to collect the personal information of customers.

Yes, anonymous exchanges might make it easier for those looking to launder money, but eliminating that avenue by requiring and tracking the personal information of everyone on an exchange does nothing to hinder it, either.

In a world without anonymous exchanges, bitcoin can still be traded privately from person to person, and nothing is stopping fully anonymous Deep Web exchanges and similar services from appearing. The only thing mandatory data collection would ensure is that honest individuals must go through more hurdles and lose even more privacy in the world of Big Data and growing government surveillance.

Level-headed approach

 RegulationsBut is all potential regulation bad? Of course not, there are many steps that can be taken to create more confidence within the mainstream population without severely hampering innovation or the privacy of users.

Somewhere to watch if you are looking for sensible rules in the bitcoin industry seems to be New York, where Ben Lawsky has been noticed for his level-headed approach in bitcoin talks.

One sensible requirement would be to set a standard for security in public businesses that wish to store or facilitate bitcoin conversions or escrow. Another will be to make it illegal for such a business to move, invest, or otherwise use customer funds (essentially fractional reserve banking) without explicitly stating this to customers, who have the right to take their own risks with their investments.

Requiring bitcoin companies to have a good reserve of bitcoin and publicly publish their balance sheets would offer customers some peace of mind.

Naturally all companies operating would be liable for their customers funds, if lost, which would be paid to either them personally, if personal information is recorded, or to an existing offline wallet linked to their account. All of this would help increase legitimacy, confidence, and consumer protection in the industry without negatively affecting innovation, and would also end the “Wild West” era of cryptocurrencies.

Antiquated thinking

While some will argue that all of these standards and services would probably evolve organically from a free market anyway, it at the very least gives regulatory agencies something to do that isn’t just a knee-jerk reaction, with no positive benefits for legitimate businesses and customers.

Currently, most legislators continue to think of bitcoin in antiquated terms, and that’s the problem.

Bitcoin promises to create a whole new paradigm in the game of finance – the biggest technological innovation in the field in many years.

The entire cryptocurrency ecosystem, both legal and otherwise, is evolving so quickly that government regulations can’t even keep up, let alone plan. Legislators are now preparing to make rules for circumstances that have no precedent, that can be hard to understand in their current form, and that will likely not exist tomorrow.

Bitcoin requires a whole new way of thinking, and a much more flexible approach from governments, to allow it to develop legally within the free market and to bestow its benefits on the world’s citizens.

Tnx i needed that one to . U are the man.