The problem with this technology is the so called "Comfort Factor".  Everyone wants to have a system that is user friendly and very easy to use.  
Consider what this technology is based off of, the very basic construct of a public key (your address) and a private key.

Knowing these two points, you would have to come to a conclusion that the most important factor in all of this is the private key.  If you have created your private key on a hot machine, your setting yourself up to fail and it is your own "Comfort Factor" that is the downfall.  

If you want to get the message out, the message should be loud and clear.  Do not ever create a private key on a machine that has ever or is connected to the internet.  I could take it one step further, you should never create a private key on a machine that has been on the internet or connected to the internet and also has USB activated.  If you do a little research you will see the dangers behind active USB ports.  There is a frequency hole!!  

Your currency will always be safe on the Blockchain if you and only you are proactive with your private key and create this key in a fashion where no other person in the technology field has a chance to achieve access to this key through your network.

Anytime you create an online wallet and make a key, it is like going outside and placing money on the street and putting a rock on top of it and thinking "Tomorrow it will be there".  Wallets on cell phones with private key entry, I can only shake my head even thinking about it.  

Take your money serious and stop thinking "Comfort Factor".  The security in this technology field is not easy and will never be easy.  

If you would like some more insight on how you can be proactive, I am more than happy to share some fool proof scenarios that will ensure your investment will stay safe.

February 28, 2014

Each position

　
No. 11 No. 5, Shibuya-ku, Tokyo, Shibuya 2-chome
　　　 , Inc. MTGOX
　　　　　　　　　　 Representative Director Karupuresu-Marc Mari Robeto

Notice of petition for civil rehabilitation proceedings

　
Today filed a motion for civil rehabilitation proceedings in the Tokyo District Court, the Company was accepted. In addition, from the court, and an instruction that disables a comprehensive temporary restraining order to prohibit the Company will reimburse you for the debt, to the transfer of assets, and to the collateral assets, the enforcement by creditors against the assets of the Company , so we received the order of investigation to order supervision order to order supervision by the regulatory committee, the investigation by the investigation committee, as described below, will be announced. Become a place where it becomes a situation like this, to apologize for the great deal of worry and inconvenience of everyone user, regarding. Everyone of the other parties concerned, so sorry truly, deeply apologize. Our company, so we are in full compliance with the instructions of the court, future property will continue to be conservation properly.

Ki

Reasons and circumstances that led to the petition and our financial condition
We have to determine is as follows, and is said to be in a situation of insolvency the company's financial position to be aware of (1) the present time.

Total assets   　　　　　3,841,866,163 yen
Total current liabilities   　　　6,501,119,371 yen
In the background of current liabilities (2) The Company has increased, causing loss of bit coin, that the disappearance of the deposits can be considered, for this, hit with full force in the elucidation of the truth by, for example, requested an investigation by experts You. For trouble with the impetus of the complaint are as follows.

By the unauthorized access to early February 2014, to exploit a bug in the system of bit coin, transactions (withdrawals bit coin) remittance of bit coin does not complete successfully, and also increased, by the unauthorized access to successfully exploited such bug , that may have been pulled out improperly bit coins were found.
　　it can be seen that then, bit coin of mass were gone by the investigation of the Company, the exact circumstances are not known still, but by February 24 or about 2014, bit coin holdings of transaction history on the user approximately 750 000 bit coin, and that nearly all of the approximately 100 000 bit coins are carriers bit of coin transaction history on our own is gone've found is. The Company believes the possibility that the bugs have been stolen by the abuse is high bit coin that is no longer, now, consider the criminal complaint, and we ask the expert procedures.
　　In addition, the 24th month, that there is a discrepancy heavily in the total amount of deposits to a financial institution that manages the total amount of deposits of reality from the user, such deposits, deposit balance is insufficient to significantly (subject to change high amount of money is under investigation, but about 2.8 billion yen at maximum) were found. Because it is expected the Company is currently investigating the cause of the problem, including the damage caused by hacking by a third party, then the problem is probably more than one, you need to investigate a huge deal in the past in order to find the cause there. Therefore, at this time, the cause of the problem is not possible to do also confirm the amount of deposits that are insufficient for the deposits and balances the total number of bit coin, let alone gone.
Since the discrepancy deposit balances and deposits balance and loss of bit coin above is discovered, it is determined that business operations of normal is difficult, the Company, our site (Japan time) in the middle of the day of the 25th month I stopped across the board access to.

For submission of complaint or submission (3) offense report, and ask the expert has already launched an investigation and study. Then, the proper criminal punishment is carried out, and we strive damage recover as is achieved.
In addition, the present invention is not limited to Japan, the survey of each relevant authorities and investigation on this matter, we will continue to cooperate fully.
In order to perform a high payment as possible to everyone creditors, it is necessary to explore the possibility of being able to stay in business, we select the playback procedure.
In addition, it is that through the legal bankruptcy proceedings, you go through the effort of reconstruction while doing their accountability under the supervision of the court, but also for our, you need even on the industry of bit coin will develop healthily I am and understanding.
Future, to be able to repay as much as possible to everyone of creditors, because it is committed to strive investigation of the case, recovery of damages, the recovery of the business, you would like to ask for your understanding in civil rehabilitation proceedings of the Company, for your cooperation.

Summary of petition
February 28, 2014 (1) monkey standing Date
(2) a court of competent jurisdiction Tokyo District Court
(3) complaint agent Baker & McKenzie law firm (Foreign Law Joint Enterprise)
　　　　　　　　　　lawyer Hideyuki Yamamoto, the end of wealth Junko
　　　　　　　　 legal professional corporation Yodoyabashi-Yamagami Joint
　　　　　　　　　　lawyer Shinomiya Akio, the Kawai Kazumasa
(4) Supervisory Nagashima Ohno & Tsunematsu Nobuaki Kobayashi lawyer
(5) Same as above investigation committee
26 years (6) Case No. Heisei (re) No. 12 rehabilitation proceedings alleged incident
For more information, please contact
(is scheduled March 3, 2014 (Mon) opened), is an inquiry to the company as more information, please contact, as follows, the Company, so that we can set up a call center If you have, I ask to have you call the call center or less.

　　
(Japanese) telephone number 03-4588-3921
phone number 03-4588-3922 (English-speaking)
10:00 to 17:00 Monday to Friday Hours

　　　
In addition, I ask to have you refrain from inquiries to the office of supervisor and research committee.
Or more


[Translation from the Japanese]
February 28, 2014

To anyone concerned
Mark Karpeles
Representative Director
MtGox Co., Ltd.
2-11-5 Shibuya
Shibuya-ku, Tokyo

ANNOUNCEMENT REGARDING AN APPLICATION FOR COMMENCEMENT OF A PROCEDURE OF CIVIL REHABILITATION

MtGox Co., Ltd. Made today an application for commencement of a procedure of civil rehabilitation (minji saisei) at the Tokyo District Court. This application was accepted on the same day. Further, MtGox Co., Ltd is under several orders issued by the Court:. a preservative order prohibiting it from paying its debts, transferring its assets or establishing security over its assets, an order establishing a comprehensive prohibition of forced attachment of its assets by its creditors and a supervisory order ordering supervision by a supervisory committee In Consequence, MtGox hereby informs you as FOLLOWS.
We first Express Our most sincere Regrets and Apologies for this situation and for Causing so much Inconvenience to all users and Our Other interested Parties. We Will Respect fully the Above Orders and Maintain Our assets with all the necessary care.

Financial situation, reasons and timeline leading to this application
. (1) As of now, the liabilities of MtGox Co, Ltd exceed its assets and its financial situation is as follows:

Total amount of assets    3,841,866,163
Total amount of current liabilities    6,501,119,371
.. (2) The increase of current liabilities may be linked to a loss of bitcoins and customer funds These are now investigated by an expert and all efforts are made to discover the truth This application was prompted by the following troubles:

At the start of February 2014, illegal access through the abuse of a bug in the bitcoin system Resulted in an Increase in incomplete bitcoin Transfer transactions and we Discovered That There WAS a Possibility That Bitcoins had Illicitly Been Moved through the abuse of this bug.
As a result of Our internal Investigation, we found a large That Amount of Bitcoins had Disappeared. Complete Although the extent IS not yet known, we found That Approximately 750,000 Bitcoins DEPOSITED by users and Approximately 100,000 Bitcoins Belonging to U.S. had Disappeared.
We Believe That There IS a high probability That Were THESE Bitcoins stolen as a result of an abuse of this bug and we Have Asked an Expert to look at the Possibility of a Criminal complaint and undertook proper Procedures.
On the same day (24th), we found out large Discrepancies Between the Amount of Cash Held in financial Institutions and the Amount DEPOSITED from Our users. The Amounts Are Still under Investigation and May Vary but They approximate JPY 2.8 billion.
We Are Investigating the Causes of Problems THESE. Since There Are probably a Variety of Causes INCLUDING Hacking by Third Parties, we need to Investigate a Huge Amount of Transaction Reports in order to ESTABLISH the Truth. As of this date, we can not confirm the exact Amount of missing deposit Funds and the Total Amount of Bitcoins Which Disappeared.
Once we discovered that bitcoins had disappeared and the discrepancies between cash funds and deposit balances, we judged that it would be difficult to continue our activities normally and we therefore closed our site at noon on the 25th (Japan time).

(3) Regarding the Filing of a complaint or report Damages, an Expert HAS Been mandated and Investigations Have started. We Will make all Efforts to Ensure That Crimes Are punished and Damages Recovered.
Further on we Will Cooperate fully with inquiries from Authorities and Investigations related to this matter, in Japan or overseas.

In order to increase repayments to our creditors, it is necessary to explore the possibility of having MtGox Co., Ltd. Continue its business. This is why the civil rehabilitation procedure has been chosen, Rebuilding MtGox Co., Ltd under the supervision of the Court in a Legally organized procedure while giving proper Explanations Will not BE for the Sole Benefit of the company but for the whole of That bitcoin Community.
All Efforts Will Now BE made ​​to restore the business and recover Damages to Repay Debts to Creditors. We Hope for the understanding and cooperation of all.

Outline of the application
(1) Application date February 28, 2014
(2) Jurisdiction Tokyo District Court
(3) Counsel of applicant
Baker & McKenzie (Gaikokuho Joint Enterprise)
Attorney-at-law Junko Suetomi
Attorney-at-law Hideyuki Yamamoto
Yodoyabashi & Yamagami Legal Professional Corporation
Attorney-at-law Akio Shinomiya
Attorney-at-law Kazumasa Kawai

(4) Supervisor Nagashima Ohno & Tsunematsu
Attorney-at-law Nobuaki Kobayashi
(5) Investigator idem
(6) Case no. 2014 (sai) 12Civil rehabilitation commencement application

Contact information
. A Call Center HAS Been established to respond to all inquiries The Call Center IS Planned to start on March 3, 2014 All inquiries to MtGox Co, Ltd SHOULD BE made ​​to the telephone number Following:...
Telephone number +81 3-4588 -3921 (in Japanese)
Telephone number +81 3-4588-3922 (in English)
Working hours Monday to Friday 10am to 5pm (Japan time)

Please refrain from contacting the office of the supervisor / investigator.

Ask the exchange to provide its security and risk concept, this will show you if they are a good or bad exchange. 
Regulation would force transparency to their security procedures.

True cold storage would mean they would have had to setup clean systems and generate a wallet addresses only for that machine and its retrospective customer, ensuring that this clean machine never had or would have a network connection to the net.  

My conspiracy theory:

Since I doubt Mt Gox was buying hardware and operating systems to ensure utmost security, they cut corners and probably were using esx and working with snapshots.  Which really was not cold storage because the esx server was online, making it easy for them to open the network bridge to pass the transactions.  
 

I have translated their official standpoint a couple weeks back.  Here it is again:

Here is the complete document.  I have not translated the risk part they have added but will follow up.

This is the official standpoint of Bitcoin (BTC) by the German federal financial supervisory agency.  (BAFIN - Bundesanstalt für Finanzdienstleistungsaufsicht)

Bitcoins (BTC):  Supervisory review and risks for users
Jens Münzer, BaFin
19.12.2013

For some time now media articles have been piling up dedicated to care and special characteristics of Bitcoin (BTC).  Germany's federal financial supervisory agency would like to convey by request from authorities, consumers and businesses with this document its official position and assessment of Bitcoin (BTC). 

In addition, this article provides an overview of the possible risks to which the users of Bitcoins (BTC) will be exposed.  This refers to Bitcoin (BTC); the contents however are transferable to other similarly structured digital currencies without a central administration, such as LiteCoin, PPCoin and corresponding clones.

Bitcoins (BTC) are a virtual currency whose transactions and balances are managed in a decentralized network.  By cryptographic calculations can in principle any network user participate in the creation of money.  A central bank that performs this function in real currencies, therefore, does not exist.  Debuted in 2009, a number of goods, services, IT applications or Activities can now be purchased with Bitcoin (BTC). 

Virtual Currencies:  The European Banking Authority EBA published in mid-December, a reference to virtual currencies.

http://www.eba.europa.eu/-/eba-warns-consumers-on-virtual-currencies

Nature of Bitcoins:

Bitcoin (BTC) is based on the idea of a non-governmental substitute currency with a limited money supply.  Unlike Fiat currency that can be issued indefinitely by central and commercial banks, creation of new Bitcoins (BTC) occur via a mathematical procedure within a computer network.  The network solves complex crypto graphical tasks (Mining).  Due to the increasing complexity of the tasks, the Bitcoin (BTC) supply increases more slowly, until it finally reaches the maximum number of 21 million.  There is just over 12 million Bitcoins (BTC) in circulation as of the end of 2013.  Bitcoins (BTC) are divisible, so that smaller units can be transferred as a Bitcoin (BTC). 

The Bitcoin (BTC) project has been implemented as open-source software, making the application freely available to everyone.  Any potential user can download client programs, by means of which it can participate in the Bitcoin (BTC) network.  The network functions as peer-to-peer; in turn all users are facing each other as equals.  There is no central controlled authority that generates controls, manages, or carries out transactions of Bitcoins (BTC). 

Existing Bitcoins (BTC) are assigned to so-called addresses.  These consist of a randomly generated series of letters and numbers.  Each user can generate multiple addresses, which in turn Bitcoins (BTC) may be associated with these addresses.  These addresses are managed by the user’s wallet files that contain the addresses and the respective private and public key pairs that are used to authenticate Bitcoin (BTC) transactions within the network.  The user can transfer within the network to and from their addresses Bitcoin (BTC) with other users.  The user needs to communicate outside the network the respective destination addresses.

The Bitcoin (BTC) with its respective addresses and transactions are publicly visible in a central file called the block chain.  Based solely on the address visible in the network you cannot know who holds this address.  Once transactions are initiated they are generally not reversible.  In addition to the transfer of Bitcoins (BTC) within the network, it is also possible to transfer wallet addresses and keys physically between people by being passed around on mediums. 

Regulatory classification

BaFin (German federal financial supervisory agency) has qualified Bitcoin (BTC) as legally binding financial instrument in the form of units of account in accordance with § 1, paragraph 11, sentence 1 of the Banking Act (KWG).  These are units that are compared with foreign currency and not denominated as legal tender.  This includes value units, which have the function of private cash in ring swap transactions, as well as any other currency substitute that is used under private law agreements as means of payment in multilateral transaction circles.  For this it is not crucial to have a central issuer.

Bitcoins (BTC) are not electronic currency within the meaning of the Payment Services Oversight Act (ZAG), since there is no issuer, the Bitcoin (BTC) does not have grounds for a claim against its outputs.  This is in digital currencies different which has a central point behind it, for example, Liberty Reserve.  Bitcoins (BTC) are not legal tender and therefore not varieties of foreign currencies. 

Bitcoins (BTC) can be used to offset debt contracts between involved parties.  By the delivery of Bitcoins (BTC) customers obtain the desired performance in the form of a purchase item, a service, a legal tender or other commercial market trade.  The commercial use of Bitcoins (BTC) can therefore trigger a license requirement under the Banking Act (KWG).  If you do not hold this license it is a criminal offense according to § 54 KWG. 

Authorization requirement

The mere use of Bitcoin (BTC) as a substitute currency for cash or legal currency for participation in the economic cycle in the exchange business is not an activity requiring a license.  The provider can make them pay his services with Bitcoin (BTC) without providing banking transactions or financial services.  The same applies for the customer.  Likewise, the mining of Bitcoin (BTC) in itself is not a permit-requiring business, since the Miner of the Bitcoin (BTC) is not self-issued or placed.  The sale of prospected or acquired Bitcoins (BTC) or its purchase is generally not subject to authorization. 

When other circumstances are added, the permit requirement may be triggered.  This is the case if Bitcoins (BTC) are not only mined, bought or sold in order to participate in an existing market, but a special contribution is made to obtain or create a market.  Due to the additional service element, it is then requiring a permit for proprietary trading in accordance with § 1, paragraph 1 No. 4 of the Banking Act.  This is the case when a person is in the market which advertises that they regularly purchase or sell Bitcoins (BTC).  Another example is mining pools that offer a commercial share of the revenue from mined and sold Bitcoins (BTC) by the provision of computing power by the end user. 

Several authorization rules

If the Bitcoin (BTC) itself is a commodity, several authorization rules in particular to broking services are concerned.  This is in accordance with § 1 paragraph 1 sentence 2 No. 4 of the Banking Act, the multilateral trading system, investment and acquisition services and the already described proprietary trading (§ 1, paragraph 1, sentence 2 No. . 1-4 KWG).  The commercial trade in Bitcoin (BTC) is currently done mainly through so-called Bitcoin (BTC) platforms, which are often referred to as Bitcoin (BTC) exchanges.  Under these terms, these medians bring together many different business models.  When it comes to the issue of the license requirement, it must be differentiated according to the technical implementation and the particular configuration of the contracts and transactions.

Financial commission business

The one who buys and sells in his own name professionally Bitcoins (BTC) for the account of others, operates a broking services which a permit is required.  The purchase or sale of Bitcoins (BTC) is carried out for the account of others, if the economic advantages and disadvantages of this business affect the client.  Furthermore, the activity of the commission business under the Commercial Code is sufficiently similar, individual rights and responsibilities may vary from the typical commission business.  In Bitcoin (BTC) platforms the required broking services permit is in compliance when:

•   the member of the platform is authorized to issue the execution of the order by the number and price of the deal
•   the relevant participants and their trading partners are not known and the Bitcoin (BTC)-platform occurs not as a representative of the participants, but in his own name
•   meet the economic advantages and disadvantages of business participants to transfer the money on platform accounts or Bitcoin (BTC)transferred to their addresses
•   Bitcoin (BTC) platform is obliged to account to the participants about the execution of transactions and to transfer procured Bitcoins (BTC)

Multilateral Trading Systems

Bitcoin (BTC) platforms that do not perform broking services, then it is usually the operation of a multilateral trading system.  A multilateral trading system brings the interests of a large number of people buying and selling financial instruments within the system according to the provisions laid down together in a way that result in a contract concerning these financial instruments. 
This means in the case of Bitcoin (BTC) platforms that have a set of membership rules, the Bitcoin (BTC) trade between members and messages on completed transactions are present.  A trading platform in the technical sense is not necessary.  Multilateral means that the operator brings together only the parties to a potential transaction in Bitcoin (BTC).  As interest in the purchase and sale are also indications of interest, orders and quotes.  A variety of people primarily means that it does not require a mandate to mediate in individual cases.  The interests need to be merged according to the rules and standards by software or protocols for conclusion of the contract, without the parties deciding whether to enter into a Bitcoin (BTC) business with a particular contracting party.  Whether the contract is then handled within the system, is of no importance. 

Multilateral trading systems are therefore used in particular at Bitcoin (BTC) platforms that adjust provided Bitcoins (BTC) by a set price threshold at which a trade is to be conducted, or where transactions through the Bitcoin (BTC) platform are secured through escrow services, and then released once the payment has been confirmed. 

Brokerage and proprietary trading

In the offering of locally structured classified web directories of persons offering Bitcoins (BTC) to buy or sell in their place of residence, it is investment and acquisition services.  Providers that exchange as "bureaux de change" legal currencies directly in Bitcoin (BTC), satisfy the conditions of proprietary trading.  In the past Bitcoin (BTC) platforms either had nonexistent or unclear service plans or usually did not provide general business conditions. 

The license requirement in total is on a legal level a very complex issue. Potential providers should therefore seek early assessment of the BaFin for their planned activities in order to clarify whether those subject to supervision.

Here is a little conspiracy theory:

I bet Apple is designing their own wallet.  They seen the patent requests from Google and they can not be outdone.  Do the math.

They do not need to release right now, they have multiple patent requests inplace for their new wallet.  They would not be raising patent requests for fun.

Do you actually believe a company like Google, which is expanding in multiple sectors is just going to go to sleep on this one.  Think again.  It is going to happen.  Google will not be left behind or outdone.  It is the technology not the currency. 

E-Bay, Pay Pal, Amazon, and so on will be forced to take part either in the short or long term.  Google is building their own form of a wallet for Bitcoin and once they hit the market with their new toy, everyone else is going to be forced to act or risk being left behind.  I believe the question is not fixed on; if they will take it, the question is when will they take it.

Either play the game or risk being left behind and trying your best to play catchup.

RT has run this story

http://rt.com/business/bitcoin-warning-russia-bank-280/

I am interested in what types of fee's they will implement for this service.

I am sorry to say Germany has not recognized Bitcoin as legal tender.  I will add the point of how they classify Bitcoin and will add the whole document I translated for general information.

BaFin (German federal financial supervisory agency) has qualified Bitcoin (BTC) as legally binding financial instrument in the form of units of account in accordance with § 1, paragraph 11, sentence 1 of the Banking Act (KWG).  These are units that are compared with foreign currency and not denominated as legal tender. 

Here is the complete document.  I have not translated the risk part they have added but will follow up.

This is the official standpoint of Bitcoin (BTC) by the German federal financial supervisory agency.  (BAFIN - Bundesanstalt für Finanzdienstleistungsaufsicht)

Bitcoins (BTC):  Supervisory review and risks for users
Jens Münzer, BaFin
19.12.2013

For some time now media articles have been piling up dedicated to care and special characteristics of Bitcoin (BTC).  Germany's federal financial supervisory agency would like to convey by request from authorities, consumers and businesses with this document its official position and assessment of Bitcoin (BTC). 

In addition, this article provides an overview of the possible risks to which the users of Bitcoins (BTC) will be exposed.  This refers to Bitcoin (BTC); the contents however are transferable to other similarly structured digital currencies without a central administration, such as LiteCoin, PPCoin and corresponding clones.

Bitcoins (BTC) are a virtual currency whose transactions and balances are managed in a decentralized network.  By cryptographic calculations can in principle any network user participate in the creation of money.  A central bank that performs this function in real currencies, therefore, does not exist.  Debuted in 2009, a number of goods, services, IT applications or Activities can now be purchased with Bitcoin (BTC). 

Virtual Currencies:  The European Banking Authority EBA published in mid-December, a reference to virtual currencies.

http://www.eba.europa.eu/-/eba-warns-consumers-on-virtual-currencies

Nature of Bitcoins:

Bitcoin (BTC) is based on the idea of a non-governmental substitute currency with a limited money supply.  Unlike Fiat currency that can be issued indefinitely by central and commercial banks, creation of new Bitcoins (BTC) occur via a mathematical procedure within a computer network.  The network solves complex crypto graphical tasks (Mining).  Due to the increasing complexity of the tasks, the Bitcoin (BTC) supply increases more slowly, until it finally reaches the maximum number of 21 million.  There is just over 12 million Bitcoins (BTC) in circulation as of the end of 2013.  Bitcoins (BTC) are divisible, so that smaller units can be transferred as a Bitcoin (BTC). 

The Bitcoin (BTC) project has been implemented as open-source software, making the application freely available to everyone.  Any potential user can download client programs, by means of which it can participate in the Bitcoin (BTC) network.  The network functions as peer-to-peer; in turn all users are facing each other as equals.  There is no central controlled authority that generates controls, manages, or carries out transactions of Bitcoins (BTC). 

Existing Bitcoins (BTC) are assigned to so-called addresses.  These consist of a randomly generated series of letters and numbers.  Each user can generate multiple addresses, which in turn Bitcoins (BTC) may be associated with these addresses.  These addresses are managed by the user’s wallet files that contain the addresses and the respective private and public key pairs that are used to authenticate Bitcoin (BTC) transactions within the network.  The user can transfer within the network to and from their addresses Bitcoin (BTC) with other users.  The user needs to communicate outside the network the respective destination addresses.

The Bitcoin (BTC) with its respective addresses and transactions are publicly visible in a central file called the block chain.  Based solely on the address visible in the network you cannot know who holds this address.  Once transactions are initiated they are generally not reversible.  In addition to the transfer of Bitcoins (BTC) within the network, it is also possible to transfer wallet addresses and keys physically between people by being passed around on mediums. 

Regulatory classification

BaFin (German federal financial supervisory agency) has qualified Bitcoin (BTC) as legally binding financial instrument in the form of units of account in accordance with § 1, paragraph 11, sentence 1 of the Banking Act (KWG).  These are units that are compared with foreign currency and not denominated as legal tender.  This includes value units, which have the function of private cash in ring swap transactions, as well as any other currency substitute that is used under private law agreements as means of payment in multilateral transaction circles.  For this it is not crucial to have a central issuer.

Bitcoins (BTC) are not electronic currency within the meaning of the Payment Services Oversight Act (ZAG), since there is no issuer, the Bitcoin (BTC) does not have grounds for a claim against its outputs.  This is in digital currencies different which has a central point behind it, for example, Liberty Reserve.  Bitcoins (BTC) are not legal tender and therefore not varieties of foreign currencies. 

Bitcoins (BTC) can be used to offset debt contracts between involved parties.  By the delivery of Bitcoins (BTC) customers obtain the desired performance in the form of a purchase item, a service, a legal tender or other commercial market trade.  The commercial use of Bitcoins (BTC) can therefore trigger a license requirement under the Banking Act (KWG).  If you do not hold this license it is a criminal offense according to § 54 KWG. 

Authorization requirement

The mere use of Bitcoin (BTC) as a substitute currency for cash or legal currency for participation in the economic cycle in the exchange business is not an activity requiring a license.  The provider can make them pay his services with Bitcoin (BTC) without providing banking transactions or financial services.  The same applies for the customer.  Likewise, the mining of Bitcoin (BTC) in itself is not a permit-requiring business, since the Miner of the Bitcoin (BTC) is not self-issued or placed.  The sale of prospected or acquired Bitcoins (BTC) or its purchase is generally not subject to authorization. 

When other circumstances are added, the permit requirement may be triggered.  This is the case if Bitcoins (BTC) are not only mined, bought or sold in order to participate in an existing market, but a special contribution is made to obtain or create a market.  Due to the additional service element, it is then requiring a permit for proprietary trading in accordance with § 1, paragraph 1 No. 4 of the Banking Act.  This is the case when a person is in the market which advertises that they regularly purchase or sell Bitcoins (BTC).  Another example is mining pools that offer a commercial share of the revenue from mined and sold Bitcoins (BTC) by the provision of computing power by the end user. 

Several authorization rules

If the Bitcoin (BTC) itself is a commodity, several authorization rules in particular to broking services are concerned.  This is in accordance with § 1 paragraph 1 sentence 2 No. 4 of the Banking Act, the multilateral trading system, investment and acquisition services and the already described proprietary trading (§ 1, paragraph 1, sentence 2 No. . 1-4 KWG).  The commercial trade in Bitcoin (BTC) is currently done mainly through so-called Bitcoin (BTC) platforms, which are often referred to as Bitcoin (BTC) exchanges.  Under these terms, these medians bring together many different business models.  When it comes to the issue of the license requirement, it must be differentiated according to the technical implementation and the particular configuration of the contracts and transactions.

Financial commission business

The one who buys and sells in his own name professionally Bitcoins (BTC) for the account of others, operates a broking services which a permit is required.  The purchase or sale of Bitcoins (BTC) is carried out for the account of others, if the economic advantages and disadvantages of this business affect the client.  Furthermore, the activity of the commission business under the Commercial Code is sufficiently similar, individual rights and responsibilities may vary from the typical commission business.  In Bitcoin (BTC) platforms the required broking services permit is in compliance when:

•   the member of the platform is authorized to issue the execution of the order by the number and price of the deal
•   the relevant participants and their trading partners are not known and the Bitcoin (BTC)-platform occurs not as a representative of the participants, but in his own name
•   meet the economic advantages and disadvantages of business participants to transfer the money on platform accounts or Bitcoin (BTC)transferred to their addresses
•   Bitcoin (BTC) platform is obliged to account to the participants about the execution of transactions and to transfer procured Bitcoins (BTC)

Multilateral Trading Systems

Bitcoin (BTC) platforms that do not perform broking services, then it is usually the operation of a multilateral trading system.  A multilateral trading system brings the interests of a large number of people buying and selling financial instruments within the system according to the provisions laid down together in a way that result in a contract concerning these financial instruments. 
This means in the case of Bitcoin (BTC) platforms that have a set of membership rules, the Bitcoin (BTC) trade between members and messages on completed transactions are present.  A trading platform in the technical sense is not necessary.  Multilateral means that the operator brings together only the parties to a potential transaction in Bitcoin (BTC).  As interest in the purchase and sale are also indications of interest, orders and quotes.  A variety of people primarily means that it does not require a mandate to mediate in individual cases.  The interests need to be merged according to the rules and standards by software or protocols for conclusion of the contract, without the parties deciding whether to enter into a Bitcoin (BTC) business with a particular contracting party.  Whether the contract is then handled within the system, is of no importance. 

Multilateral trading systems are therefore used in particular at Bitcoin (BTC) platforms that adjust provided Bitcoins (BTC) by a set price threshold at which a trade is to be conducted, or where transactions through the Bitcoin (BTC) platform are secured through escrow services, and then released once the payment has been confirmed. 

Brokerage and proprietary trading

In the offering of locally structured classified web directories of persons offering Bitcoins (BTC) to buy or sell in their place of residence, it is investment and acquisition services.  Providers that exchange as "bureaux de change" legal currencies directly in Bitcoin (BTC), satisfy the conditions of proprietary trading.  In the past Bitcoin (BTC) platforms either had nonexistent or unclear service plans or usually did not provide general business conditions. 

The license requirement in total is on a legal level a very complex issue. Potential providers should therefore seek early assessment of the BaFin for their planned activities in order to clarify whether those subject to supervision.

ArticMine your insight and direction are right on point.  If I may take it one step further.  This service you provide can be as little as setting up the system that allows you to be the point of access for many that are not fortunate of having access to the system.  Provide a service that goes in direct contradiction to Western Union and your local bank branch. 

Take for example Europe.  There are many Africans that come to Europe and work and perform business and use systems such as Western Union to move cash flow back and forth for the set fee Western Union see's fit.

Check out your countries regulation on crypto currency and set up your new point of access.  This technology opens the door for endless possibilities.

If you want to build up a network with Europe, send me a PM and we could talk about further possibilities.

Thank you both for your feedback. 

If the blockchain allows for addresses that never get connected to the net, then this makes for a very seriously secure method to store bitcoins.  I am only looking at this from the point of view of storage.  A secure save haven where coins can be saved in the blockchain without any possibilty from the end user to loose these coins because the clean host never once is connected to the internet.

I know this goes against the principle of using BitCoin as a method for consumation of products.  People are looking for security when it comes to there savings and if this can be guaranteed in this fashion, then I say BitCoin is a great place to plan for the future.  Retirement funds and such.

One point I would like to make about the online generator:

It is in the net and who knows who sees it, I think when you generate using the Javascript site a little voice in the back of your head has to be asking "Who is watching".

Does anyone know at what point the wallet.dat is created?

Is this file created by the msi package process or is this file created when the blockchain has been downloaded?

I have a hypothesis that I need a little help with.
From my understanding each BitCoin wallet creates blocks of 100 addresses.  These addresses are unique to each wallet (or not?). 

My scenario runs as follows:

I have a clean system that has undergone a complete NTFS formating of all partitions.  To ensure security integrity all partitions have been reduced to one main partition.  The host is installed with Win 7 64 bit.  All drivers are installed excluding the network driver.  This will ensure no possible connection to the internet.  I have then installed the BitCoin-QT client.  I create a new address.  I then create my private key and secure my wallet.  This makes all necessary changes to the wallet and its security settings.  Now I have this address which was generated from the wallet without connecting to the blockchain.

To the question:

Can the address generated by the wallet be used in the block chain without every having the BitCoin-QT wallet connected to the network?

Can I send BitCoins to a generated address without having the wallet ever connect to the internet?

Using a virtual machine is great for securing your wallet.  Ensures a clean system.  I use VMWare with no network devices activated.  I can create keys without ever worrying about security holes.  Create a snapshot without keys, save it, then create key, save snapshot, return to old snapshot and create other keys.  You will always keep everything seperated, this ensures higher security without having to go out and buy extra systems.

Another way to perform emission trading.  Companies buy credits with BitCoin.
Take it a step further and invest in futures, increasing the help with planned pollution.