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Author Topic: 2013-06-17 (Russia) Kommersant: A lot of money out of nothing  (Read 1394 times)
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June 17, 2013, 06:25:56 PM
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1 long main article + 4 subpieces in Kommersant, The Businessman, a nationally distributed daily newspaper published in Russia mostly devoted to politics and business.

http://www.kommersant.ru/doc/2213241

English via Google:

Quote
A lot of money out of nothing
The crisis and the currency wars have led to the increasing popularity of virtual cryptocurrencies.

The problem of rapid development in recent years, virtual currencies came to the global level - it discuss the World Bank, the European Central Bank, the U.S. Treasury and the Federal Reserve. Experts agree that, due to global economic problems and financial crisis, people are increasingly trying to save money, turning to virtual kriptovalyutam. Last penetrate into the real world: for virtual money can buy and sell goods and services. Now the question arises whether to regulate the foreign exchange market, and how.

Causing Financial Crisis

On Friday, the World Bank held an event called "Virtual Currency: legal aspects and regulatory issues." The event featured presentations and speeches were made by the representatives of the World Bank, the ECB, the Fed, the U.S. Treasury, Thomson Reuters experts about the "new phenomenon." The emergence of peer to peer kriptovalyut many researchers explain the consequences of the financial crisis in 2008. In 2009, the payment system was created Bitcoin, using the same currency. The author of the program is considered to be a Satoshi Nakamoto, however, this name is a pseudonym. He created a computer program that can now be downloaded from the system. In fact, this program is the client, which is when you start the User's computer to solve some mathematical problem. At the end of the calculations on the user's account is charged a Bitcoin.

Inability to fake transparency of the system is ensured. The way coins is simple and clear to all market participants: the user creates a virtual coin that comes to his account (wallet). An anonymous user account created to serve only one operation is, in fact, and the bank, of which the network as much as and market participants. Regulator system performs only the algorithms used in the program. Its function - to ensure system uptime. No one can freeze the account of the client, but also to cancel the erroneous payment is also impossible.

The main feature of Bitcoins is that they are not tied to any of the existing state currencies. However, they can easily be exchanged for dollars or euros. Bitcoin value is determined solely by the ratio of supply and demand. Impairment of their mortgaged algorithm saves a limited number of coins that can be produced - 21 million at the moment, "produced" about 11 million Bitcoins, the system is attracting more and more users. The success of Bitcoin has provoked growing interest not only to those who want to participate.

In 2011, there was still some kriptovalyut such Litecoin. It is a system based on the same Internet protocol that Bitcoins. The main difference - the speed of the confirmation of the transaction: the use laytkoinov can save time compared with Bitcoin. The maximum number of laytkoinov - 84 million, with 20% of this volume is "produced." According to experts, the value of laytkoinov already in circulation, up to $ 50 million

The American company OpenCoin created the world's first distributed currency exchange Ripple, are used along with the state and a new electronic currencies - Ripple. At the moment there are about 100 billion Ripple, the majority of which belongs to the very OpenCoin. As the CEO of OpenCoin, soon the company will distribute 40 thousand to 2 thousand people Ripple. Exchange will be used to see Bitcoins, and the cost of payments for the transaction will be only $ 0.00001. Conditional tax needs, as the site says Ripple, only in order to protect against DDos-attack.

The market comes out of hiding

During the five years of its existence the market for virtual kriptovalyut increased several times. Total volume of Bitcoins only real money is now estimated at about $ 1.4 billion Anton Emelyanov, one of the developers of the project Litecoin, in an interview with "Kommersant" reported that kriptovalyuty build momentum throughout the past year. In March BitPay (online service, offering a variety of payment methods using kriptovalyut) has announced that the volume of transactions crossed the threshold of $ 5 million per month. Analyst at research firm Yankee Group Jordan Mackey believes that virtual currencies are becoming "more and more a proven method of payment," especially for cases such as the purchase of online games and applications without the use of credit cards, bank accounts or open a special purse where it is necessary to make real money. Another advantage of virtual money analyst at Yankee Group believes the low cost and high speed of payments.

The surge of interest to consumers kriptovalyutam led to the fact that in the spring the U.S. Treasury issued a statement in which he said about the need for accountability systems that implement the exchange Bitcoins for dollars or vice versa. Virtual currencies like Bitcoin in a statement the Ministry of Finance equal to the usual payment systems, which means that they must submit to the authorities for the reporting of all financial transactions.

However, according to the Association of Bitcoin, such a comparison is inappropriate. Moreover, the user's interest is largely due to the anonymity and decentralization, of the system. Any attempts to change the principles of operation of such virtual currency can cause it to crash. Jerry Brito, director of the Program on Science and Technology Policy Research Center at the Mercato at George Mason University (Fairfax, Va.), said that the issue of regulating the most important thing - that "the authorities have built a system of regulation so as not to spoil the innovative potential, which are a virtual currency. "

Mr Brito said that one of the reasons for the dramatic growth in popularity of virtual currency in the world in 2011-2013 was the European debt crisis, especially at the time of an exacerbation in Cyprus. Indeed, in April on the news from Cyprus to freeze deposits there Bitcoin exchange rate against the dollar rose sharply, setting a record value - $ 266. Then replaced by a sharp rise in prices plummeting: less than half a day Bitcoin devalued twice. Bidding had to shut down to allow investors to move away from the shock. But such fluctuations Bitcoin is not much impact on the trust the users of the currency on the next day quotes went up again.

The path to the real world

Since the beginning of the year there are more messages that consumers often prefer to use a virtual currency, paying them for goods and services. The first known case of acquisition of goods for Bitcoins is buying pizza by one of the official forum - he paid 10 million Bitcoins. Then, in 2010, the Bitcoin exchange rate to the dollar was negligible, and in 2013, the buyer would be able to afford much more, having the more than $ 1 million in the beginning of this year, a resident of Canada Taylor Moore is selling his house for Bitcoin 6750. The money the seller bungalow of 280 square meters. m promised to spend on several online projects without deleting them support in the popular virtual currency.

Came to light even the first child, "bought for Bitcoins." In California, Dr. Terence Lee, a specialist in artificial insemination has become actively introduce Bitcoins as a means of payment for his services. For a long time he could not find a customer who has agreed to pay Bitcoins. Then he placed an ad on the test for male fertility in exchange for 15 Bitcoins (when they cost under $ 5) and received the first response. Dr. Li appealed to the family, which he helped to conceive of three children, and they agreed to do it a fourth time. Cost of services including 50-percent discount, which was proposed by the professor, was about $ 1 million, which were converted into 30 Bitcoins. Thus, the whole procedure of conception was carried out on virtual money. In early June, the founder of the Cambridge pub chain Individual Pubs Limited Stephen Earley decided to implement pay Bitcoins in one of their establishments. Bitcoins are now taking in all the bars in the network.

As the popularity of virtual currency among consumers interested in her and major players of the financial market, such as PayPal and Western Union. April 30 in an interview with The Wall Street Journal, John Donahoe, CEO of eBay, using the payment system PayPal, said the company is considering a variety of options to enable Bitcoin payment system. "This is a new, advanced technology, so - yes, we are closely watching her. Maybe a few ways to include the currency in PayPal", - said the head of eBay. Executive Vice President, Western Union, David Thompson said that "if Bitcoin will continue to gain popularity and enjoy even greater international fame, we can find a way to incorporate into our Bitcoin payment system."

Feeling the consumer interest in virtual money, other companies have decided to organize their own virtual currency. In May, the world's largest online retailer Amazon has released its own virtual currency - Amazon Coins. It can be used only for purchases inside the store, and so far only for the purchase of applications to the tablet Kindle Fire, produced contains Amazon. Online retailer immediately gives users a bonus - 500 coins, the dollar exchange rate which currently stands at 100:1. Thus, on account of the buyers initially is $ 5 and is offered to wholesale buyers get a discount of 10%. Such a strategy intended by management should help Amazon compete with Google Play Store and Apple App Store, and the currency is the stimulating element.

However, Amazon Coins can not be considered true virtual currency. "It's just coupons - says Anton Emelyanov. - The same as all the coupons that you can find in any grocery store. Resorted to such practices, many companies releasing their own" money "that can be used to obtain discounts . Actually, they are only pushing shoppers to spend more. Such marketing schemes have nothing to do with decentralized kriptovalyutami that can be used anywhere and for any purpose. "

We have

In Russia the use kriptovalyut currently not very common. "Bitcoin is interesting only in that it is possible to" get ", but the more Bitcoins are generated, the process becomes more complicated: Now" booty "1 Bitcoins may take up to a year, depending on the capacity of the processor - told" Kommersant "has experience" mining "Bitcoins IT-specialist Vladimir Bolotskih. - In practice, the more you spend on electricity." Basically, this tool is popular among those who started the "mine" Bitcoins at the beginning of the emergence of this kriptovalyuty and managed to save them.

Give examples of Russian online stores that take Bitcoins as payment for purchases, difficult, and experts. "While alone Bitcoins are interesting as a tool, no one knows who they really are issued and used, and the demand from Russian merchants on these electronic money, we do not observe," - says the former commercial director of payments aggregator "Money Online" Andrei Smirnov. "While not everyone understands what to do with the regulation of transactions with kriptovalyutami, but the danger of this market because of its small size at the moment is not," - said the Chairman of the Association "Electronic Money" Victor Hon.

Because of the lack of regulation of this tool is not widespread, said chairman of the board of directors of the payment system "Golden Crown" Nikolai Smirnov. In particular, in late May, the creators of anonymous payment system Liberty Reserve by the U.S. authorities was charged with laundering $ 6 billion, "Kriptovalyuty are not official and generally accepted - it carries legal risks, and therefore both the demand and supply for operation with them is negligible "- concludes Mr. Smirnov.

In Mail.ru Group said that "in general, a curious idea" has not received much support. To use this currency must be well aware of all the risks - loss, unregulated areas (if the coin is stolen, no one will be on your defense), problems with rising prices of "hardware" and the need to continuously update, including a growing number of users, the limitations of the real goods that can be bought for quasi-currency, says the head of a venture fund "Layf.Sreda" Vladislav Solodkiy. According to him, the Bitcoin is largely remains the lot of IT-specialists - this subculture, and economic experiment, caused by an outdated financial system after the crisis of confidence falls as the banks, resulting in the growth of p2p-lending, and to the national currency, which provokes interest in the quasi-currency.

However, kriptovalyuta can still be a real alternative to traditional means of payment. In December 2012 one of the oldest e-currency exchangers Bitcoin-Central.net received a banking license in France, recalls Mr. Solodkiy. After detecting the number IBAN (International Bank Account Number) exchanger can function as a normal bank, converting all bank payments to the account, in Bitcoins and vice versa. After all the legal intricacies of the bank's clients will be able to make a payment card, with Bitcoins tied to a bank account holder will be automatically converted into euros and dollars at the current exchange rate. But the system will lose its trump card - anonymity.

Cyril Sarhanyants, Olga Shestopal, Roman Rozhkov
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June 17, 2013, 06:37:04 PM
 #2

it's spreading.
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