BITCOIN NEWS EVRYDAY! From multiple sources.

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Luxembourg Opens Dialogue with Bitcoin Businesses in New Statement
Pete Rizzo (@pete_rizzo_) | Published on March 11, 2014 at 22:20 GMT | Europe, Regulation

The Commission de Surveillance du Secteur Financier (CSSF), the government body responsible for financial regulation in Luxembourg, has issued a release detailing its treatment of digital currencies as well as its expectations for bitcoin businesses.

Issued on 14 February, the communique included familiar consumer protection warnings, but also featured a unique invitation for interested entrepreneurs.

The CSSF encouraged these individuals to contact its officials about facilitating digital currency-related commerce in the country as a first step toward entering the market, and suggested Luxembourg will operate on a case-by-case basis with its decisions.

Read the statement:

“Interested persons who would like to establish themselves in Luxembourg in order to carry out an activity of the financial sector [...] shall define their business purpose and their activity in a sufficiently concrete and precise manner to allow the CSSF to determine for which status they need to receive the ministerial authorisation.”

Michael Jackson, partner at Luxembourg-based Mangrove Capital Partners, spoke to CoinDesk about his conversations with Luxembourg’s regulators, who he characterized as fundamentally different from others around the globe due to their positive first response to regulation.

Said Jackson:

“[They're saying] we’re open, we’re very to people coming here and explaining their businesses. We don’t have any problem with a bitcoin business, as long as it does what it’s supposed to do and behaves properly.”

Research from the Law Library of Congress, corroborated by BitLegal, suggests this is the first time Luxembourg has issued any statements regarding the treatment of digital currencies.

CSSF says bitcoin is money

Coming in at just one page, the communique nonetheless provided a broad overview of the CSSF’s thinking on digital currencies.

The CSSF noted it does consider digital currencies to be money, as they are accepted as a means of payment by “a sufficiently large group of people”. However, the CSSF did not define digital currency as legal tender.

The release went on to explain how digital currencies like bitcoin are different from other forms of electronic money, and reiterated concerns raised by the European Banking Authority (EBA) and European Securities and Market Authority (ESMA) about their use. Though, notably it did not call for unique laws for bitcoin businesses.

Bitcoin in Luxembourg

Though not a native of the country himself, Jackson indicated that Luxembourg’s bitcoin community has been in open dialogue with domestic regulators for some time.

Despite the positive statements, Jackson said regulators in Luxembourg have their concerns, even if they’re open to dialogue. He stressed that the bitcoin community suffers a communication gap with regulators that has held back discussions, though he sees this latest announcement as a step forward.

“There are many different models, some people are running exchanges, some people are doing transaction processing, all sorts of things, and all of these different business models have different licensing regimes. So, the first thing that you’re going to have to do is sit down.”

Influence

Gary Cornelius, an admin for the Bitcoin Luxembourg Facebook group, suggested that the statements may not have much domestic impact, as the bitcoin business scene remains small. Coinmap indicates the local business community amounts to only a few bitcoin-accepting merchants.

Still, Jackson expressed optimism that Luxembourg’s decision would carry weight in the broader European and global communities. He noted that Luxembourg’s willingness to discuss the matter may resonate given that it is a financial center of Europe.

The statements come at a time when some in the EU, like France’s Minister of Economy and Finance, are calling for broader cooperation on digital currency regulation.

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So u only need to post number of the first news post.
You can find number here:

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ponsored Article: Execoin – Scrypt ASIC Resistant

 William Blackwell  11/03/2014  Altcoins, Mining, News, Reviews, Sponsored Stories
Posted 1 hour ago
Execoin is a new altcoin is a new altcoin with a promising future. To appreciate the role and value of Execoin, we need to understand the significant changes that are about to sweep the scrypt altcoin domain.

Execoin represents a move away from the generic scrypt altcoin formula – and for good reason. The developers have taken care to analyze existing trends in scrypt mining and, in response, have implemented a progressive variation of the scrypt algorithm to ensure Execoin’s longevity and value. Their work is a significant departure from the standard scrypt implementation and distinguishes this coin from its peers.

Takeaway

Execoin is scrypt ASIC resistant and has built-in multipool resistance. These features secure Execoin’s network and protect its value. It is expected that Execoin’s value will increase as a wave of generic scrypt ASICs sweeps the altcoin market and forces GPU miners to migrate to a few ASIC resistant cryptocoins. Execoin has a clean altcoin design with several innovative features and is ideally positioned for the coming changes in the altcoin market.

 

Generic Scrypt

The scrypt algorithm, introduced to the altcoin domain by Litecoin, was intended to protect Litecoin from the hashing onslaught of ASICs.

The rise of Application-Specific Integrated Circuits (ASICs) was inevitable as special purpose devices were developed to progress FGPU and GPU hashing to the logical next step. This, especially, made sense for Bitcoin, which had by then, achieved a hash rate of 160 TH/s and a massive difficulty target, necessitating entire datacentres dedicated to it’s mining.

Hence, a major design objective of Litecoin was to cater to those GPU miners, whom, despite their significant investment in hardware, were left high-and-dry by the hashing leap imposed by ASICs. By introducing scrypt, Litecoin was able to give GPU mining rigs a new lease on life. The proliferation of Litecoin clones – scrypt altcoins – could be directly attributed to that historical dynamic.

 

How many GPU rigs are mining Bitcoin? It’s an ASIC-only zone now. – Execoin developer

 

Scrypt ASICs

A year later, it’s apparent that a new breed of scrypt-capable ASIC is rising and that it threatens scrypt mining in the same way that ASIC had changed Bitcoin mining in 2013. The Execoin team have smartly anticipated the coming scrypt ASIC boom and their design implementation of Execoin can both take advantage of the coming scrypt hashing leap, as well as make Execoin resistant to the new breed of ASICs.

Progressive-N Scrypt

By basing Execoin on a scrypt innovation, called Progressive-N Scrypt, the coin developers effectively cause Execoin to set its scrypt memory requirement higher than the current ASIC operational level. This means that when more powerful scrypt ASICs are released they will be unable to mine Execoin.

Additional ASIC resistance is implemented via customized binaries of the most popular mining applications, such as cgminer and CUDAminer. These combined innovations ensure that Execoin can only ever be mined via GPU devices and with compatible GPU mining software. The ASIC resistance is total and pervasive.

Bigger, Better?

In the case of Bitcoin, once ASICs came on the scene, their adoption increased the network hash rate and ramped up difficulty as the Bitcoin protocol adapted to the higher rate at which blocks were being found. Most GPU miners found themselves unable to compete at the higher hash rate imposed by ASICs and hence their mining was either unprofitable or pointless. As we saw, Litecoin came to fill the gap by introducing the scrypt algorithm which, at the time, was resistant to that generation of ASICs.

Litecoin’s sourcecode is the basis of most altcoins out in the wild. This includes Dogecoin, Auroracoin, Worldcoin, and so forth. The generic scrypt algorithm is, therefore, what has protected the most popular altcoins from first generation ASIC mining. However, when the new generation of scrypt ASICs is made commercially available, the uptake of these devices can be expected to skyrocket. Manufacturers will drive down prices in an effort to compete for their share of the sizeable scrypt mining market. We say “sizeable”, because the purchasing power of this market is evident from the fact that it stripped the retail sector of AMD R9 series GPUs in 2013, and almost derailed AMD’s Gaming card marketing strategy, thereby temporarily giving Nvidia a lead in the gaming GPU race.

As happened with Bitcoin before, the ASIC ramp-up will once again leave GPU miners in a void, as their ASIC’ed fellow miners take most of today’s popular altcoins to new dizzy hash rates and levels of difficulty. It is in this scenario that Execoin is positioning itself by implementing the newer generation ASIC resistance early and ensuring that it will present a value proposition to GPU miners, going forward. I asked the Execoin team for their thoughts about developments in the GPU domain:

CCN: What does the Execoin team think about developments in High Bandwidth Memory and what are your expectations for Nvidia and AMD’s GPU race?

Execoin: AMD and Nvidia… both players are interested in the growing cryptocoin market and especially in GPU mining to stay profitable. So the ASIC threat is a problem for them too. High Bandwidth Memory is a significant technological improvement that will impact mining speeds. Technologies will go forward and the race will keep going to give us more powerful and sophisticated GPUs. However, even the most powerful, sophisticated and advanced GPUs won’t threaten the decentralized nature of crypto currencies’ networks as much as ASICs do, so GPU mining will stay our safe zone in the future.

Multipool Mining

Execoin’s designers also made provision for the “multipool mining” phenomenon, whereby groups of powerful miners focus their efforts on a few, select altcoin pools, mine large volumes of coins; and then dump these in the market. The result for the target coin is often a drastic reduction in market value as well as detrimental effects on the hash rate and difficulty, often rendering the mining pool useless. From the Execoin communique:

In addition, when a powerful multipool switches to another coin it leaves the previous coin’s network with higher difficulty and lower actual hash rate and this negatively impacts reliability and security of the network.

 

When a large and powerful multipool cartel of miners moves in, there is also the major risk of a 51% attack on the specific altcoin’s network. Execoin has implicit protocol protection which resists multipool attacks, and this renders the coin more secure and better able to sustain its market value. I asked the Execoin developers about their specific strategies to deal with multipool mining.

CCN: Multipool mining has been an unpleasant, yet, unavoidable part of scrypt-based altcoins since their inception. Can you talk some more about the multipool resistance you have
implemented in Execoin… do you, for example, use Kimoto Gravity Well?

Devs: In fact, we understand the importance of KGW, especially for a coin which is not backed by huge mining power yet. That’s why we are already in the final stage of its testing and KGW will be implemented in Execoin in the next few days. Benefits of KGW go far beyond the multipool resistance and KGW does not provide absolute immunity to multipools, since any ordinary scrypt coin with KGW still can be multipool-mined. For example, in standard KGW implementations, the minimum number of last blocks which contribute to the evaluation of the new per-block difficulty is 144 blocks, so a standard scrypt coin with KGW is suitable for very short cycles of mining on a not-so-large multipool.

The whole idea of multipool implies that the same miner, with the same parameters on the miner’s side, can mine any scrypt-based coin. Multipool switches currencies and this process is completely transparent and requires no interaction on the miner’s side. However, Execoin requires custom miners with custom parameters and those miners are not compatible with multipools. Therefore, unlike other coins with KGW, Execoin’s approach is not to mitigate consequences of multipooling, but to make multipool mining impossible with Execoin at all.

Good Prospects

Execoin will be coming into its own during the rest of 2014. The stronger the ASIC onslaught, the better for Execoin. This makes it a strategic coin for both mining and investment. The Execoin team discussed this in some detail:

CCN: Execoin is one of a new breed of coins that are positioning for the coming scrypt ASIC invasion. The Execoin team have clearly analyzed current market trends and what you see has led you to make a value proposition for the event horizon when many keen and dedicated GPU-based rigs will be pushed out of their comfort zone. Do you see it this way? And which other coins do you see as your competitors (so to speak) in this new market reality?

Execoin: Well, it’s obvious that the newer ASICs for scrypt coins will significantly change the cryptocoin market and this process has already begun. How many GPU rigs are now mining Bitcoin? It’s an ASIC-only zone now. We’re constantly seeing new announcements of more and more powerful scrypt ASICs and we expect a massive invasion starting by this fall. En Masse migration of GPU mining operators to Execoin and other ASIC-proof coins will start this summer/fall and will keep going with each new release of ASICs. This process cannot be stopped since millions of dollars have already been invested into scrypt ASICs, so scrypt coin mining will be completely occupied by them – it’s just a matter of time. Regarding other coins that could share the new market we can name Vertcoin, of course!

CCN: Given your market positioning, your defensive strategy of resistance, and the high probability that the market will play into your hand in the coming months and years,
can you summarize why you believe Execoin will thrive?

Execoin: Execoin is one of the very few ASIC-resistant coins, it’s fast, reliable, solid-coded, has dedicated development team and we’re doing our best to let people know about it and about the future of the crypto market ahead of the new ASIC invasion. Execoin is likely to be successful as one of the first coins offering an alternative to the all-ASIC world. We would like to focus our further development on real-world applications for Execoin, so that it would be accepted in many places as a method of payment.

Summary

Execoin has a clean altcoin design with several innovative features and is ideally positioned for the coming changes in the altcoin market. Execoin is a recommended Buy-and-Hold for altcoin investors and we advise miners to download custom binaries for their favourite miner from the project website and to point their rig at p2pool here or configure their own p2pool node with Execoin configuration settings

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The Bitcoin Foundation: Some Questions

 PJ Delaney  11/03/2014  Bitcoin, Bitcoin Regulation, News, Security 7 Comments
Posted 13 hours ago

http://www.cryptocoinsnews.com/wp-content/uploads/2014/03/bitcoin-foundation-300x187.jpg

bitcoin foundationI’ve just spend a pleasant evening, nursing a cold beer, looking over The Bitcoin Foundation’s posts and educating myself as to who exactly these people are and what they are bringing, or at least claiming to bring, to the table. Now, I’ve never claimed to be the sharpest knife in the proverbial drawer and for that particular reason I’ve decided that I will take this task slowly and stop to ask a few questions whenever I happen to find myself starting to feel confused. Clearly, the foundation has been put there for our betterment and for that reason I hope you will bear with me on this short journey of discovery.

The foundation’s website states the three primary objectives for fulfilling Bitcoin’s mission to achieve its potential.

Bearing in mind the three stated objectives of: Standardising Bitcoin, Protecting Bitcoin and Promoting Bitcoin and accepting that “Cryptography is the key to Bitcoins success. It’s the reason that no one can double spend, counterfeit or steal Bitcoins. If bitcoin is to be a viable money for both current users and future adopters, we need to maintain, improve and legally protect the integrity of the protocol.” Here is the first question:

The problem of Transaction Malleability has been known about since 2011, so why did the foundation not move to address this issue before the criminals began to exploit it during 2013?

Under the title of “What I hope the Foundation will accomplish“, Jon Matonis states: ” There’s a huge amount of support for the Foundation from many of the people who matter to Bitcoin’s future: Charlie Shrem, Mark Karpeles, Gavin Andersen and Jon Matonis are all starting out on the Board of Directors”. Unfortunately, Mark Karpeles resigned in 2014 as a result of the spectacular collapse of Mt Gox and his far from glorious role in that collapse and that Charlie Shrem resigned following an alleged link to illegal drugs trading. I am pleased to state that the two other directors, Jon Matonis and Gavin Andersen are people of the highest moral character, but:

Bearing in mind the importance of the foundation, (self stated!), how carefully did the Foundation select it’s directors and did anyone check the history of the newly appointed directors, Karpeles in particular?

It has been alleged that in 2011, Mt gox made an appeal to the community that 400,000 bitcoins had gone missing and asked for help. It was decided to provide that help. 150,000 of the missing bitcoins were recovered in 2012 and the plan was to continue this support in 2013 but the sudden, and somewhat unexpected, increase in Bitcoin price during 2013 raised the cost of fixing the problem from a somewhat manageable $3M to a completely unmanageable $15M. A blogger posting on Reddit, disclosed in November that he, could deposit coins with Mt Gox and then withdraw more than he had deposited. Question number 3:

Had the Foundation been bailing Mt gox out since 2011, if so, how much in total was spent? Who was told, who made the decision and was that decision influenced by Karpeles status within the Foundation and how much in total was lost?

During the collapse of Mt Gox and accepting the volume of the losses:

Did the foundation have access to make withdrawals on a priority basis when other investors were being denied this right?

Finally, as we have gone through a period of monumental losse, and poor publicity,  a period affecting ordinary investors:

What actions will the Foundation undertake, going forward, to ensure a future for not only the Foundation, but also Bitcoin; what have we learned from the Mt gox debacle?

I would be grateful to have these small points addressed to ensure that confidence is restored and knowledge gained.

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Singapore Bitcoin ATM Producer Tembusu Gets $300,000 Seed Funding
Jon Southurst (@southtopia) | Published on March 12, 2014 at 01:03 GMT | Bitcoin ATM, Companies, News, Startups, Technology

Singapore bitcoin ATM producer Tembusu announced today it has closed its seed funding round and raised over S$300,000 (US$236,600), just one and a half weeks after launching its first machine and after the company itself was valued at S$5.1m (US$4.02m).

Company spokesman Jarrod Luo said the extra capital would form the bulk of the working capital the startup requires to “fulfil its outstanding machine orders in a timely fashion”, including stockpiling raw materials and expanding its team.

Tembusu was the first company to open a bitcoin ATM in Singapore, and it is also the first to design and manufacture its machines there. It is also Asia’s first home-grown bitcoin ATM producer, having just beaten South Korea’s Coinplug to launch by a couple of days.

At press time Singapore has six active bitcoin ATMs, with several companies racing to increase that number. Another Singapore company, Bitcoin Exchange, launched a Lamassu ATM in a busy Singapore shopping mall right after Tembusu’s release.

Numoni, another local company that specializes in micro-transaction processing and prepaid mobile phone payments, launched four bitcoin-dispensing machines in the same week.

Features

The Tembusu machines feature advanced physical Know Your Customer (KYC) and anti-theft measures such as ID and thumbprint scanning, and the company says it offers a variety of additional anti-money laundering (AML) features in its machines depending on the jurisdiction where each is located.

The ATMs are one-way only, meaning customers may only exchange cash for bitcoins, but apparently can be adapted to dispense cash. They also have the capacity to dispense other cryptocurrencies if the demand is there.

Tembusu1

The company says customizability and flexibility are two of its key selling points, allowing machines to be shipped anywhere in the world.

Tembusu also offers flexibility with its pricing and financing options, saying it is even possible, under certain conditions, to deploy a machine for no down payment at all.

Regulation and tax

Bitcoin startups and bitcoin ATMs have been allowed to flourish in Singapore thanks to the city-state government’s liberal attitude towards cryptocurrency so far. An announcement on 21st February by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said bitcoins are not viewed as legal tender by his ministry or regulators the Monetary Authority of Singapore (MAS).

He also warned this hands-off approach extended to consumer protection, of which there is none, and that the government would continue to investigate any need for regulation.

MAS regards bitcoin ATMs as ‘vending machines‘ as long as they are cash-to-bitcoin only.

Singapore’s Tax Authority, the Inland Revenue Authority of Singapore, has also issued its own guidelines on how it intends to tax bitcoin business and transactions, basically saying it regards cryptocurrencies not as money but as goods for sale like any other. ‘Sales’ of bitcoin and bitcoin transactions for other goods and services will be subject to GST, and Singapore does not have a capital gains tax for any investment class.

About Tembusu

Tembusu Terminals Pte Ltd. is a joint-venture between cryptocurrency consultancy firm Estates General and software/hardware development firm Red Steed Studios, who together are looking for technological solutions to known bitcoin challenges, and new ways to introduce cryptocurrency use to the general public.

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FanDistro Takes Bitcoin for Indie Music
Danny Bradbury (@dannybradbury) | Published on March 12, 2014 at 05:37 GMT | Companies, Lifestyle, News

Fresh from a $700,000 angel round, indie music sales site FanDistro has started taking bitcoin for downloadable online music sales.

FanDistro, a site that helps bands sell their music while also rewarding their fans with merchandise, previously only took PayPal payments, but is now working with Coinbase as a merchant, said CEO Michael Penfield.

“We’re encouraging people to use bitcoin, and philosophically we love bitcoin. We think it’s something fantastic for the music industry,” said Penfield, who turned on the function a couple of weeks ago.

The biggest benefit for musicians are the low transaction fees, he said. “There are a few things from a musician’s perspective that make the coin attractive, but probably the most important thing is the lack of transaction expenses. We’re working through Coinbase and with the typical size of our transactions there is no fee.”

Two phases

Penfield is introducing bitcoin support in two phases. The first and current phase will see bitcoins exchanged immediately for fiat currency, meaning that Coinbase takes all of the currency risk. This is a common way for the payment processor to work, and forms the basis of its arrangement with some large customers, such as Overstock.

In the future, though, Penfield hopes to open up the option for musicians to hold a balance in bitcoin, furthering his commitment to the crypto currency.

For now, bitcoin support at FanDistro focuses almost entirely on music sales (although there is also a tool for converting photographs into silkscreen templates, and fans can pay for those in bitcoins, too.

Over time, however, bitcoin could work its way into other areas of the business.

“The next phase for us is to bring brands into the equation, and they can be very local when you’re dealing with a local band,” he said. “We’re in negotiations with several brands to start sponsoring bands. Those transactions are dollar-based at this point, but at some point we’d make those bitcoin-optional too.”

Most if not all of the sites selling independent music to date seem to have been built around the currency first. But these bitcoin-centric sites are looking at it the wrong way, Penfield suggests.

“When an artist has fans in Eastern Europe and they have bitcoin that they want to use, the artist isn't going to lose that sale.”

Instead, he is using bitcoin as a “defensive move” to help shore up revenues for bands who may have fans in other countries, where sending money can be prohibitively expensive.

Local bands often have surprising pockets of followings in different parts of the world. For example, his band, Chasing Day, tours the East Coast, but that isn’t where the biggest concentration of listeners comes from. Instead, he has concentrations of fans in Greece, Italy, and – highest of all – England. “I have no explanation for why. I have never been to any of those places,” he said.

Typically, bands can catch on in unpredictable places because of a single taste maker, who may happen to hear its music and tell their friends locally. Whatever the reason, he says, “when an artist has fans in Eastern Europe and they have bitcoin that they want to use, the artist isn’t going to lose that sale.”

Cryptocurrency seems to be a big interest for many musicians, who Penfield suggests an “independent-minded”. Such is the case for Josh Maitland, an engineer in Ontario, who is trying to raise four bitcoins to finish recording an album with his band, Willow Smoke. The self-described “swamp rock” artist is a working producer with his own recording studio.

All five members of Willow Smoke are engineers, who converted a remote cabin to off-grid electricity to record part of their album.

“With bitcoin, there are no fees,” Maitland said. “There is no middleman. That’s the reason that I decided to take this route.”

FanDistro’s $700,000 funding round is unrelated to the bitcoin announcement, insists Penfield. It was the result of two years of effort, and the entire amount came from a single angel investment group. Penfield wouldn’t reveal its name.

He was also tight-lipped on the amount of bitcoin taken in the first couple of weeks, although he said that band sign-ups to the site had increased.

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Chicago Court Freezes Assets of Mark Karpeles in the US
Nermin Hajdarbegovic | Published on March 12, 2014 at 10:30 GMT | Crime, Exchanges, Law, Mt. Gox

A Chicago judge has reportedly frozen all US-based assets controlled by Mark Karpeles, the CEO of the now defunct bitcoin exchange Mt. Gox.

US District Judge Gary Feinerman made the decision to freeze Karpeles’ assets, along with assets belonging to companies tied to both Mt. Gox and Karpeles, according to the Wall Street Journal. The order is temporary, but the assets will remain frozen for at least two weeks.

This move doesn’t appear to be directly related to the exchange’s Chapter 15 bankruptcy proceedings. It is, in fact, the result of a prior lawsuit filed against Karpeles by Mt. Gox customers seeking compensation. It is not yet a class action, but it might soon become one.

As reported yesterday, Chapter 15 bankruptcy will not stop the case from moving forward and the asset freeze proves it is going ahead.

Will the asset freeze help customers?

Courts impose asset freezes in situations like this to secure plaintiffs and make sure the defendants don’t funnel money elsewhere. However, in this particular case it probably won’t go a long way toward reassuring customers, as Karpeles’ holdings in the US appear to be limited.

In court, lawyers for exchange customers alleged that Karpeles is moving funds which are claimed lost by Mt. Gox. One of the attorneys involved in the case, Jay Edelson, argued that every day the customers wait there will be “less and less money”. Christopher Dore, another Edelson attorney, said:

“The main thing we hope to achieve is to finally see what the web of things that Karpeles has put together over the last few years and to start unwinding it as to where things are and what happened.”

The asset freeze targets bank accounts used by Mt. Gox and Karpeles, as well as servers located in the US. However, even the judge admitted there might be no assets to freeze. “It may turn out there are no such assets,” Feinerman said.

More questions than answers

Judge Feinerman has scheduled a status conference for 20th March. Lead plantiff’s lawyer Jay Edelson said he is looking to question Karpeles under oath immediately, Bloomberg reports.

“We can finally get some real answers,” Edelson said.

Attorney Steven Woodrow believes the court order could freeze between $2.1m and $5m in assets controlled by Karpeles. In its Chapter 15 filing Mt. Gox claimed to have approximately $63.9m in liabilities and $37.7m in assets.

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Finnish Firm Transforms Web Kiosks into Bitcoin ATMs
Kadhim Shubber (@kadhimshubber) | Published on March 12, 2014 at 11:53 GMT | Bitcoin ATM, Companies, News, Technology

Bitcoin ATMs are on the march across the globe, with machines recently being launched in Dublin and London.

In addition to the well-known manufacturers like Robocoin and Lamassu, however, other companies are trying to hop on the ATM bandwagon, including one Finnish company that’s taking a slightly different approach.

Deltacom Finland Oy, founded in 2001, is a family business based in Helsinki. The small company was started by father and son team Timo and Mika Reinikainen in 2001 and operates web kiosks around Finland.

Now, though, they’re converting them to enable bitcoin purchases under a new company, Hotbutler.com, part-owned by Mika and backed by American capital from unnamed investors.

Following the money

So far, four kiosks in Helsinki are running a beta version of Hotbutler.com’s web app, which streamlines the bitcoin-buying process.

The kiosks (Mika rejects the term ‘ATM’) are of the sort you find in airports all over the world – they were originally places to surf the web, make VoIP calls and send emails. That business model changed when Mika realised the potential for profit in bitcoin:

“When we saw figures from Robocoin ATMs in Vancouver, the one million dollar turnover in one month, we decided to concentrate on bitcoin.”

At the moment the duo are experimenting. Depending on how the first month’s trading pans out, they plan on launching the app on at least 10 more kiosks. The plan is to stick to bitcoin for at least six months, but after that other cryptocurrencies may be added, starting with litecoin.

Ideally, said Mika, they want to install the app on the 16 kiosks they operate in Helsinki’s international airport, but airport officials have so far been reluctant:

“The problem is that the officials in charge don’t really understand bitcoin. So far they have been saying ‘no’ just to be on the safe side. It is a lot of work to educate and persuade people.”

Reluctant spokesman

It’s a battle that bitcoiners all over the world have been fighting. Like in other countries, the Finnish central bank has warned consumers of the perceived risks with using bitcoin: “they just keep saying the same thing over and over again,” said Mika.

The coverage of bitcoin in the popular press has been on a par with that in the UK and US, he said. And as the company behind Finland’s first bitcoin ATMs, he finds himself having to account for all of bitcoin’s sins:

“It is funny how I have to defend bitcoin itself, instead of defending our business. [...] if you get involved with bitcoin you automatically become a spokesman for bitcoin whether you like it or not.”

Growing pains

The company is a joint venture between “Finnish and American associates”, whom Mika declined to name just yet. Hotbutler.com might acquire Deltacom, he said, and he is waiting until all of the details are ironed out.

Mika is a part-owner of Hotbutler.com, but said that his American partners are the “people with the capital”.

Mika said he is unconcerned by the recent turbulence in the bitcoin world, comparing the current situation with the “growing pains” of the web in the ’90s, culminating in the bursting of the dotcom bubble:

“People actually thought that the internet would no long exist tomorrow because so many internet-related companies went belly up. Now I can see the same paranoia with bitcoin.”

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Perseus Telecom Launches Digital Currency Initiative, Integrated Exchange
Nermin Hajdarbegovic | Published on March 12, 2014 at 13:28 GMT | Companies, Exchanges, News, Technology

Perseus Telecom has launched a new initiative with the aim to provide industrial-strength security for bitcoin exchanges, e-commerce, online gaming and multimedia sites.

Perseus started accepting bitcoin payments just last month. The company is a provider of high-speed communications used by hedge funds, trading firms and media organisations in major financial hubs from London to Tokyo.

The company’s Digital Currency Initiative (DCI) is being introduced just weeks after the Mt. Gox failure and Perseus seems to think that no crisis should ever go to waste. In fact, it is hoping to capitalise on bitcoin security concerns.

In addition to the initiative, Perseus and Atlas ATS also announced the launch of a globally integrated bitcoin exchange.

Mt. Gox is a learning opportunity

Perseus Telecom EMEA head of business development Carl Weir described the Mt. Gox collapse as a “learning opportunity.”

“The goal of DCI is to make sure that there is financial institution level security, KYC, and trading available and secure in multiple regions, hence Perseus’ role in this.”

Perseus points out that other bitcoin exchanges view the Mt. Gox failure as the result of a new industry undergoing a shakeout. Failures are not uncommon in immature, unregulated markets or technologies, it adds.

Perseus has teamed up with Atlas ATS and Strevus Inc. The latter hopes create one or two US-based currency exchanges. Appropriately, New York State announced that it would start accepting applications for digital currency exchanges earlier this week.

Security should be a top priority

The Mt. Gox collapse is viewed by many as the end of an era. As the bitcoin ecosystem matures, it is likely that regulation and security will play a bigger role, and this is exactly where Perseus sees a market opportunity.

“With DCI, we’re ensuring that anti-money laundering and know your customer rules are in place, and can be reported to regulators should they require it. In addition, bitcoins should be placed in cold storage, so that users whether financial institutions or individuals, don’t lose their bitcoin,” said Weir.

“If someone hacks the exchange site, there’s a layer within the trading environment which automatically rejects inconsistent code, which means it doesn’t get to the trading system.”

Atlas ATS is contributing multi-tiered software that allows it to control access and limit exposure on all levels. Even if an attacker penetrates the web tier, that won’t be enough to interfere with the core matching engine, which is disconnected from servers that actually store bitcoins. Most bitcoin holdings will be kept in cold storage.

First exchange officially launched

Perseus and Atlas ATS aren’t wasting time. The companies have announced the launch of a globally integrated bitcoin exchange in New  York, Hong Kong and Singapore. Their goal is to facilitate bitcoin trading by large financial institutions. Perseus CEO Jock Percy said:

“Now, institutional investors and banks can see that there are known players with the right pedigree engaged in bitcoin.”

The Wall Street Journal points out that Perseus’ high-bandwidth lines are used to connect securities exchanges to execution platforms around the world. Percy highlights that the company’s clients have expressed demand for such services, but they were concerned about regulatory compliance and risk.

Percy also took a swipe at existing bitcoin exchanges, saying most of them reside on cloud-based servers that are inherently glitchy, while the Atlas ATS platform will be located in a robust, dedicated network.

Soft launch

The Atlas ATS platform has already been soft-launched and it handles about 10,000 transactions a day. Atlas ATS CEO Shawn Sloves said integration across multiple locations will improve liquidity by creating a global order book that circumvents the existing bitcoin trading environment.

He described the current environment as regionally focused and fragmented and said it was not “Wall Street grade.”

Sloves expects daily trading to hit 100,000 transactions by the end of the year and he is basing his prediction on demand expressed by institutional clients, not bitcoin enthusiasts. This is what should set the platform apart from existing exchanges.

The big fish are coming and the Mt. Gox collapse is just blood in the water.

[MICRO]

Travel Keys Lets You Pay For 5000+ Luxury Villas With Bitcoin
Pete Rizzo (@pete_rizzo_) | Published on March 12, 2014 at 13:05 GMT | Lifestyle, Merchants, News

Travel Keys, a travel broker that operates a network of more than 5,000 luxury villas in the Caribbean, Europe and around the world, is now accepting bitcoin as a payment method.

Travel Keys announced the decision on 7th March, becoming the latest luxury villa business to accept digital currency.

Bobby Gibson, the company’s CEO, spoke to CoinDesk about the decision, noting that as an avid follower of “anything and everything ‘tech’”, he’s been monitoring bitcoin for a few years.

From there, all it took was demand from guests. Said Gibson:

“Nothing gives our team more satisfaction than telling our guests ‘Yes!’. When the request from one of our international clients was received to pay for their villa in bitcoins, we were more than happy to oblige.”


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Founded in 1991, Travel Keys indicates that its travel professionals and partners handpick and personally inspect each luxury villa on its network. Booking prices range from a few hundred dollars to upwards of $5,000 a night.

Once there, guests are provided concierge services, local hosts and a team of support advisors that have earned Travel Keys respectable marks from travel review services like TripAdvisor.

Selecting a service

Gibson said that Travel Keys has opted to ink its merchant processing deal with San Francisco-based Coinbase. Using this service, Gibson’s funds are converted into whatever currency his international homeowners require.

The result, Gibson suggests, is savings along the payment chain. Guests get fast, low-cost transactions, while any operational savings reaped by Travel Keys is reinvested in the customer experience.


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Despite these benefits, though, Gibson said widespread bitcoin adoption in the travel industry isn’t yet likely. As an example, he named the most recent insolvency of Japan-based exchange Mt. Gox as an event that could push business away in the short term.

However, he was still optimistic about the future:

“I envision the bitcoin community rallying together to address these incidents, perhaps putting preventative exchange regulations in place, and BTC becoming a mainstream currency that travel companies would be well advised to embrace.”

More currencies possible

Though Gibson is just started accepting bitcoin, he indicated that he’s open to taking other digital currencies as well.

“If a client requests it, and it’s a proven reliable form of transmitting funds at minimal cost to the guest and/or the homeowner then I don’t see why not,” Gibson said.


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As for the success of the program, Gibson was unwilling to provide details on his bitcoin buyers and their transactions.

Part of the value in booking with Travel Keys, he said, is the confidentiality you enjoy.

[crazylittlebaby]

#22

1KHRzTXE66Bmrjo2LdTu2MhkpdpcTG4U3d

 

[MICRO]

#22

1KHRzTXE66Bmrjo2LdTu2MhkpdpcTG4U3d

 

Nice . I sent . We will keep this going .

[MICRO]

Bitcoin price:


Average:

[crazylittlebaby]

Thanks! Keep this up 

[MICRO]

Inside Bitcoins NYC Names Circle, Blockchain CEOs as Keynote Speakers
Pete Rizzo (@pete_rizzo_) | Published on March 12, 2014 at 14:00 GMT | Events, News

Inside Bitcoins New York has announced its keynote speakers for this year’s conference to be held from 7th to 8th April at New York’s Javits Convention Center.

Headline speakers at the event will include Circle’s Jeremy Allaire, who will give the opening keynote; and Blockchain‘s Nicolas Cary, who will present the afternoon keynote on the 7th April.

In addition to these notable speakers, a second event track has been added to day two of the event, which will be dedicated to exploring the financial issues associated with bitcoin.

Alan Meckler, CEO of event organizer MediaBistro, spoke to CoinDesk about the latest additions to the event, indicating that they provide further evidence of his organisation’s dedication to putting quality first.

“We don’t skimp on the intellectual side. We’re building a seminar of high intellectual capital first, and the exhibits follow.”

Also added to the event’s lineup was SecondMarket’s Barry Silbert, who is slated to speak as part of a panel discussion on Wall Street on 8th April; and the Bitcoins Trading Cafe, sponsored by Bitcoin Center NYC, which will provide a relaxed area for bitcoin buyers and sellers to interact through the conference.

Return to New York

The event marks the second time Inside Bitcoins will hold an event in New York, after its debut in July of last year. That event ran for one day and garnered more than 150 attendees and four exhibitors, Meckler said.

By comparison, this year’s Inside Bitcoins New York will mirror the industry’s growth over the last year. Meckler estimates that close to 1,000 attendees could be present, with an additional 1,500 to 2,000 people touring the exhibits.

Still, despite the smaller turnout, Meckler was quick to recall the importance of last year’s event to his own personal evolution on bitcoin:

“I just could not believe the enthusiasm and interest that I was seeing, and I’ve been in the trade show and seminar business for almost 40 years. The closest thing I’ve ever seen was the beginnings of the Internet.”

New programs added

The initial events planned for Inside Bitcoins can already be seen on the event website, but new attractions have also been announced.

These new conference sessions will include:

“A Startup Perspective: Building a Trading Platform from Scratch”, to feature Coinarch’s Luke Jones
“Bitcoin Merchant On-Ramp”, helmed by GoCoin founder Steve Beauregard
“Bitcoin in the Cloud”, hosted by CloudHashing COO Benjamin Gorlick
“Bitcoin Comes to Mainstreet”, featuring eGifter CEO Tyler Roye
“Beyond Bitcoin: BitShares Delves Into Digital Shares”, by BitShares.org CEO Daniel Larimer
“Megawatt Mining”, by Data Center Crypto-Consultant Eric Doricko.
Continued growth

Though a second track may seem like a big step for the show, Meckler said this will pale in comparison to what Inside Bitcoins is likely to feature in 2015, when he predicted as many as four or five tracks could be running simultaneously. Furthermore, Meckler said next year could feature as many as 100 to 200 companies in 100-square-foot booths.

Speculation aside, tickets are still available for this year’s event, although early-bird prices will be gone soon.

CoinDesk readers can get a 20% discount on full conference passes by entering the code BCSponsor20 at the checkout.

Disclosure: CoinDesk is a sponsor of Inside Bitcoins New York.

[MICRO]

Goldman Sachs: Bitcoin Isn’t a Currency But Underlying Tech Holds Promise
Nermin Hajdarbegovic | Published on March 12, 2014 at 15:58 GMT | Analysis, Companies, Investors, News

A new Goldman Sachs report on digital currencies has found that while bitcoin is not a practical currency, its underlying ledger technology could hold promise.

The top-of-mind report, entitled ‘All About Bitcoin’, appears to have been compiled recently and it is possible Goldman Sachs commissioned it following the highly publicised Mt. Gox collapse.

The report outlines the basics, citing bitcoin’s advantages and shortcomings, backed by statements from critics and supporters.

The main difficulties facing bitcoin, according to Goldman’s Dominic Wilson and Jose Ursua, include the notion that it is not a very good store of value, a fact which will present a major roadblock to its adoption as a medium of exchange.

In addition, Head of Goldman Sachs commodities research Jeff Curie believes bitcoin’s attributes make it a commodity rather than a currency.

Bitcoin could reduce costs but …

However, Goldman Sachs’ IT Services equity analyst Roman Leal, estimates that the use of bitcoin could save up to $200bn a year, based on current trading volumes.

He also cautions that direct comparisons of different costs might be misleading, as bitcoin’s cost advantage could be diminished if “conventional players” are forced to compete.


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His concerns are echoed by those of security specialists and scholars. Improving security will add more expenses and simply maintaining the block chain could become a lot more expensive and demanding. Currie points out that the size of the block chain has increased to 15GB from 10GB in six months.

More regulation, more security and more hardware is needed – and none of it comes cheap.

The Libertarian model doesn’t work

Eric Posner, Professor of Law at the University of Chicago, believes bitcoin would not work as a substitute for fiat currency, as governments need to control the money supply.

“One of the most appealing aspects of a decentralized currency for some people – and even perhaps a motivation for its creation – seems to be freedom from government or central bank control, as reflected in the libertarian mindset,” Posner points out.

“But it is wrong to think that people would be better off if we lived in a world in which the government did not control the money supply. Control over the money supply is an extremely valuable attribute of government that allows it to navigate and minimize or avoid economic problems like recessions or, maybe, asset bubbles.”

Posner argues that monetary policy can be misused, but then again governments can misuse the military too. It is a simple argument – if a government is planning to harm its own people, it may as well use physical repression to do so, not money.

He also points out that bitcoin is not completely autonomous, as it relies on the Bitcoin network. People who operate the network can change the money supply. Most of them are not economists or monetary experts.

“I find that unsettling and I think most people would feel the same way,” Posner adds.

Posner also points out that a single world currency simply wouldn’t work, as it would prevent governments from using monetary policies at their own discretion. He cites the Eurozone as a good example – what works for Germany doesn’t exactly help Greece and vice versa.

Bitcoin isn’t a currency, but it has plenty of potential uses

Goldman Sachs market researcher Dominic Wilson and Jose Ursua pointed out the main ways bitcoin differs from standard fiat currencies, and why they don’t consider bitcoin a ‘currency’ in the true sense of the word.

However, Wilson and Ursua also point out that bitcoin shows more promise in terms of its payments technology than as a stable store of value, which is what many bitcoin entrepreneurs have been saying all along.

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The researchers concluded that bitcoin could have a significant impact in terms of innovation on payments technology and it might force existing players to adapt to it or co-opt it.

“The fundamental obstacles to bitcoin being used more broadly in the payments system are arguably not insurmountable, though connections with the conventional banking  system are ultimately essential to its functioning,” the researchers argue.

“The absence of derivative markets makes it harder to manage and hedge risk around bitcoin’s value, but it is possible to imagine how those could ultimately develop.”

Volatility remains the biggest concern, as the volatility of bitcoin exceeds that of other currencies by an order of magnitude. Goldman Sachs found that the volatility of bitcoin stands at 108.1%, roughly 20 times higher than major national currencies like the dollar and euro. Interestingly, Goldman Sachs researchers used CoinDesk data to gauge bitcoin volatility.

Imact on payments industry, potential savings

Goldman Sachs IT Services analyst Roman Leal also believes existing payment providers will have to adapt or co-opt bitcoin, in what he describes as “co-opetition.”

Leal points out that the bitcoin network could solve some of the pain points involved in the current payments system, but only in theory. Bitcoin could make money transfers as seamless as email, businesses could have the same fees regardless of purchase amount and travellers would not have to pay cross-border fees.


GS-payments2

Leal also looked into hypothetical savings and came up with very encouraging numbers. Based on 2013 volumes, up to $200m could be saved in remittances, retail and e-commerce. The biggest savings would come to remittances, with an average fee of 8.9%.

“Bitcoin gateway service providers such as BitPay and Coinbase, which enable merchants to accept bitcoin payments, typically charge a fee of about 1%. At face value, the annual net savings if all electronic payments were conducted in Bitcoin could potentially add up to over $150 bn in retail point of sale and $12bn in e-commerce fees per annum based on global 2013 purchase volume.”

“Using this math, merchants generating $1 million in annual purchase volume would save at least half in payment processing fees by accepting bitcoin, with small merchants even better off,” Leal concluded.

Consumers could also see plenty of savings. Money transfer networks like Western Union tend to charge high fees of up to 10%, so bitcoin transactions could reduce fees tenfold. In addition, reducing fees could allow merchants to transfer part  of their savings to consumers.

However, Leal also cautions that the bitcoin cost advantage might not last. Just as merchants could pass their savings on to consumers, bitcoin providers might be forced to pass the expenses of more regulation and security down to their users.

Balanced and mostly positive

In addition to its own researchers and scholars, Goldman Sachs also tapped a number of bitcoin advocates and critics, as well as industry veterans. Coinbase’s Fred Ersham outlined how bitcoin payments operate and how bitcoin operators make their money.

IT specialist Ken Hess criticised the “pie-in-the-sky” ideology pushed by some bitcoin advocates, but even he admitted bitcoin could be a decent payments platform.

On the whole, the report is quite extensive and it merely reiterates the argument that bitcoin could complement fiat currencies rather than replace them. It also promotes the idea that Bitcoin could be a viable and cost-effective payments platform.

Turning the hypothetical ‘could’ into reality is something else entirely. Goldman Sachs envisions a future with more regulation and more security, but more regulation is not something that many in the bitcoin community desire at this point.

However, institutional investors will not get on board without a bulletproof regulatory framework and the collapse of Mt. Gox is bound to silence many critics.

[MICRO]

Chinese Exchange Huobi to Commence Trading Litecoin
Jon Southurst (@southtopia) | Published on March 12, 2014 at 15:31 GMT | Altcoins, Companies, Exchanges, Litecoin
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China’s busiest bitcoin exchange, Huobi, has announced it will start trading litecoin on 19th March, however, the company’s users can begin uploading litecoins to their accounts starting today.

Huobi is said to be finalizing tests for implementation before regular trading commences.

The litecoin price on BTC-e took a sudden leap earlier today – very likely as a result of the Huobi announcement.


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Huobi co-founder Jun Du said the company only considered implementing litecoin after careful deliberation and would provide the same business support and services it already does for bitcoin.

A company user survey in January showed that about 20% of bitcoin investors also had money in litecoin. Furthermore, the frequency of searches for ‘litecoin’ as a keyword on Chinese search engine Baidu showed that the currency had achieved acceptance by a large number of investors in China.

When litecoin is traded on Huobi, Du said, it will have a chance to shed its ‘shanzhai’ (loosely translated as ‘cheap copy’) image in the minds of Chinese investors.

Explained Du:

“Huobi as a platform has a duty to be responsible to its investors to be open, fair, safe and professional in its operations, but also in picking out quality products for its users to trade.  Thoughtlessly including products that are not high quality would be irresponsible to our users.

An analogy is how more and more investors have quit the local A-share equities market in favor of the more selective and regulated Hong Kong and New York stock exchanges to better protect their economic interests.

Because Litecoin has achieved acceptance by a large number of investors, has good liquidity and value, and has been able to withstand the tests of the markets, Huobi has decided to launch litecoin trading.”

Huobi’s move follows BTC China’s similar decision, announced a week ago, which implemented litecoin trading “effective immediately” with 0% fees, and trumpeted the fraternal relationship between the company’s CEO Bobby Lee and litecoin inventor Charles Lee.

Du also mentioned something litecoin and other altcoin proponents often claim: that competition in the cryptocurrency field is both welcome and healthy.

“Bitcoin’s open source nature,” he said, “means that it is a technology that wishes to be improved upon, and welcomes progress, [and its aim is] to change the entire global financial system to build an open, decentralized and safe currency system.”

“Digital currencies so far are still embryonic in their development, and bitcoin has pointed the way. However, digital currency systems need competition, and fear of competition will only make room for flaws, and in fact is antithetical to the open-source nature of bitcoin.”

As to whether this means Huobi will support other digital currencies in future, Du said the options were wide open.

“Huobi’s goal is to be a ‘professional digital currency exchange platform’,” he said. “So as long as a currency has enough liquidity and sufficient value, our operational department will consider including it on our platform. As soon as the market is sufficiently mature, we will put it online for trading on Huobi.”

Under pressure

Litecoin will now be traded on some of the world’s largest cryptocurrency exchanges. The late Mt. Gox was long said to be working on a litecoin implementation, and BTC-e has always been the coin’s most popular market.

Singapore-based payment processor GoCoin announced the altcurrency as an option for merchants in January.

Pressure will now be increased on Slovenian exchange Bitstamp to introduce alternatives to bitcoin, which has been on the cards for around a year now.

There is also Coinbase, the US-based bitcoin converter and payment processor that has actually employed Charles Lee since July last year.

Huobi’s news was well-received by litecoin fans on forums like reddit and Litecointalk. Despite the attention heaped upon dogecoin lately, litecoin remains the world’s third most valuable cryptocurrency (after Ripple’s XRP) with a current market cap of $440,913,597.

Accessible coin

Litecoin is often touted by supporters and its creator as ‘silver to bitcoin’s gold’, the rationale being its larger overall quantity and a lower value making it more psychologically accessible to new investors.

One litecoin is now worth 0.027 BTC, or $17.16. Despite bitcoin’s Satoshi-level divisibility of a millionth, the thought of buying one whole coin for less than $20 still carries a certain appeal.

It is also accepted by a number of merchants and charities, including Songs of Love and the Go Vap orphanage in Vietnam.

This story was co-authored by Rui Ma and Jon Southurst.

[MICRO]

Inside North America’s ‘$8m-a-Month’ Bitcoin Mining Operation
Pete Rizzo (@pete_rizzo_) | Published on March 12, 2014 at 17:01 GMT | Companies, Mining, News, Technology

In a perfect world where mining difficulty was lower, bitcoin prices were higher and a warehouse full of mining rigs could be run by one man, Dave Carlson, the owner of North America’s largest bitcoin mining operation, could be earning $8m a month.

However, just like reports of bitcoin’s death, reports of Carlson’s personal earnings are, unfortunately for him, exaggerated.

With the mainstream media continuing to paint bitcoin as a modern-day gold rush, Carlson’s rags-to-riches story has been of particular interest, even if it hasn’t always been put in the proper context.

To be fair, though, estimates of his potential earnings don’t seem unlikely when you consider he went from driving a $300 Honda to presiding over a million-dollar company in just under a year, and that bitcoin mining is still widely misunderstood.

Still, when the facts are examined, Carlson’s business is no less impressive.

To get to the truth of his story, CoinDesk spoke to Carlson about the increased attention his Washington-based warehouse operation (he won’t reveal the exact location) is receiving, how he built the company and how it earned $8m a month when bitcoin prices were near their peak.

Carlson summed up his transition, saying:

“I used to spend long hours connecting cables, assembling rigs and configuring servers. I now have a core technical team that covers facilities, assembly, deployment, optimization and management. I spend most of my time working on the larger picture issues the company faces regarding future growth and operations.”

Of course, that explanation doesn’t tell the whole story.

Humble origins

Carlson said he first got involved with bitcoin mining when he started an online mining supply company MegaBigPower “like most bitcoin miners”, from his basement. From there, he said his ambitions evolved with his interest.

Carlson credited his current operation’s success to the bitcoin mining community, who tipped him off that he lived near some of the cheapest power in the country and helped guide him toward large-scale industrial mining.

BusinessWeek indicates that his warehouse is now powered by an array of Bitfury-designed rigs. Bitfury, an influential and still largely anonymous chip designer, was a key early supporter of Carlson as well.

However, while technology played a role, Carlson also needed capital, which he would receive in part from Leszek Rychlewski, of Poland-based scientific research center BioInfoBank, who he credits as integral to his success.

“[Rychlewski] has provided incredible guidance as well as funding along the way. If it weren’t for his bold risk taking and generosity, I wouldn’t have had the chance to take this concept into reality.”

Constructing the warehouse

Though Carlson now has a successful business to his name, this wasn’t always the case. He recalls that when he first began his mining operation he had to share an office with 30 GPU rigs for mining litecoin – not exactly an ideal scenario given their heating and cooling needs.


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Now, Carlson looks back on this test of will as his research and development stage.

“LTC was $2 and I was selling it all to pay rent, but I needed to work in a real world setting to test my math around power and cooling requirements. I learned enough to know I needed to move to a different setting.”

Soon, he upgraded to a 2,000-square-foot warehouse space powered by 30 tons of air conditioning. In his current space (which he estimates is 10 times larger) Carson upgraded to fans in order to pull air out of the building, citing problems with AC units. He now estimates these fans move 150,000 cubic feet per minute.

In case you’re not familiar with the terminology, Carlson has an anecdote that paints the picture of this type of fan power.

“Before we added more intakes, you could barely open the door, and the insulation was literally being sucked off the ceiling,” he said.

Managing structure and supervision

Carlson indicated that his operation also thrives on a network of partners, including investors BioInfoBank and PicoStocks, which manufacture the chips and boards. Explained Carlson:

“My business model is to do construction and hosting, so I take very little risk up front in return for a revenue share. I sell shovels basically.”

He is also helped by large internal tech team that has optimized his warehouse topography, an important factor given that servers can easily become overloaded. Further, he uses Linux and open-source monitoring software to keep his eye on key processes that could indicate systemic problems.

Said Carlson: ”My biggest fear has always been having a silent, slow and undetected leak that could result in a large loss over time.”

Another tip Carlson revealed is his use of simple board design to keep production costs low. For example, his rigs do not require liquid cooling, and he doesn’t use fans on the boards, stating that everything is cooled by air movement.

“Due to these factors we expect to remain competitive and be able to mass-deploy until the market pushes margin-per-chip down closer to a few dollars. This could happen faster than we would like, so of course we work on a better chip.”

Carlson estimates that the operation costs more than $1m, and now involves 15 people. The end result was 1 petahash of mining power that is fully paid off.

Increased collaboration

Of course, with interest in bitcoin on the rise, Carlson knows he needs to keep his operation sharp to maximize profit, though he sees less competition and more collaboration.

For his part, this is an initiative that Carlson is willing to lead:

“I’m not well connected to the other big miners out there, but I hope to establish an industrial mining consortium this year that will seek to educate and set agenda, especially with respect to regulatory efforts.”

As for repeating his model for another alternative currency, Carlson isn’t convinced there’s a clear market leader.

“Until another coin is created that has its own unique value proposition, the alts will remain as transfer mechanisms for mining bitcoin. If any of the alts really start to pop, you can expect we’ll be building a mine for it.”

[MICRO]

Lord & Taylor’s Pounce Trial Could Be First Step in Bitcoin Plans
Pete Rizzo (@pete_rizzo_) | Published on March 12, 2014 at 18:16 GMT | Companies, Lifestyle, Merchants, News

A few months have passed since Overstock became, arguably, the most high-profile retailer to accept bitcoin. While only a handful of major brands have followed Overstock’s lead, that doesn’t mean its decision isn’t having an impact.

As evidence, Ryan Craver, senior vice president of corporate strategy at Hudson Bay Co., told CoinDesk that Overstock’s continued bitcoin sales were a key reason he decided to test the waters with bitcoin, albeit through a business partner.

Lord Taylor

On 10th March, it was revealed that Hudson Bay Co., which operates major brands like Lord & Taylor and Hudson’s Bay, would begin accepting bitcoin through omnichannel mobile shopping app Pounce.

Together, Lord & Taylor and Hudson’s Bay have more than 100 locations in the US and Canada.

Founded in 2012, the innovative mobile app allows customers to make purchases simply by scanning their smartphone over images in magazines and catalogs.

Pounce has inked a deal with Coinbase to accept bitcoin on behalf of its extensive list of clients, which include Macy’s, Ace Hardware and Toys “R” Us, among others.


It may surprise many readers to learn, however, that Pounce was encouraged to accept bitcoin by Craver, who was prompted by continued requests from Lord & Taylor and Hudson’s Bay customers.

A bitcoin news follower since mid-2013, Craver suggested that this could be just the beginning of his company’s work in the sector.

“We thought Pounce would be the best potential partner, that way we could figure out how large an audience we could truly have with bitcoin, and from there, make a determination about whether we roll this out on our mobile apps, our core site or even in stores.”

Craver notes that while he’s optimistic, ideas are still in their early stages. After all, Hudson Bay Co. won’t be accepting bitcoin payments directly, but both companies have high expectations for the deliverables this trial will return.

Project goals

Craver told CoinDesk that, his personal interest aside, he is still evaluating the business impact bitcoin could have on his brands. This means that so far he’s been following Overstock’s progress, and that he has had discussions with Coinbase.

However, Craver’s interest can also be seen as part of a larger experiment with omnichannel commerce.

pounce

Announced on 24th January, Hudson Bay Co. has seen what it considers a high level of success from its initial Pounce trial. Craver estimates Pounce users register seven engagements every time they use Pounce to browse its catalogs.

In turn, for Avital Yachin, CEO of Pounce, bitcoin arms his product with another incentive to appeal to early-tech adopters.

How buying works

Speaking to CoinDesk, Yachin was equally excited about brining bitcoin to Pounce, and provided a step-by-step overview of how the buying process will work with his app.

First, he said, users download the Pounce application. From there, they can browse products on the app itself or scan a Pounce-enabled printed catalog to shop or save products for later.

One of the biggest selling points for Pounce, however, is its one-click buying.

“You need to enter shipping and payment information, but this needs to be done only once. Once you have your payment information, you can then connect your Coinbase wallet [...] and you can continue purchasing through the app without typing your payment or shipping information again.”

Success so far

Yachin declined to provide hard figures for how well Lord & Taylor and other merchants are attracting bitcoin buyers, but indicated that a high percentage of new users are downloading Pounce and then connecting their Coinbase wallets to the app.

Said Yachin: “So far, we’re pretty happy with the results.”

Craver affirmed that this could be just the beginning of his company’s work with bitcoin as well.

“I think down the line, if we feel the attraction, we’ll need to evaluate it as a potential payment method.”

[MICRO]

Bank of Mexico Restricts Banks from Bitcoin Use, Reports Suggest
Dan Palmer | Published on March 12, 2014 at 19:32 GMT | News, Regulation

Following a number of statements by other central banks regarding the dangers of digital currencies, the Bank of Mexico has issued its first statement on the issue, reports say.

The bank warned the public via a statement on its website about the “the inherent risks of acquiring these assets and using them as substitutes for conventional methods of payment”, though most notable were potential restrictions for domestic financial institutions.

Translations of the statements suggest that financial institutions regulated in Mexico “are not authorized to use or carry out any operations with [digital currencies]“.

Specifically mentioning bitcoin and litecoin, digital currencies, the bank said, “are not legal tender currency in Mexico, since the Bank of Mexico does not issue nor back them”. Furthermore, “their use as a form of payment is not guaranteed, since businesses and anyone else are not required to accept them”.

Like other central bank warnings, the bank felt it necessary to warn users of the perceived links between digital currencies and crime, saying, “In other jurisdictions, they have been allegedly used in illicit operations, including fraud and money laundering”.

Bank restrictions

The restrictions on financial institutions, while potentially indicating that domestic banks may be discouraged from dealing with digital currency businesses, are similar to past statements from China, which barred its payment processors from using bitcoin in December.

However, Ben Peters, CTO at Mexican bitcoin exchange Bitso, is not overly concerned:

“My understanding,” he told CoinDesk, “is that the announcement from the Bank of Mexico is very similar to that made by other countries – in essence consisting of a warning to the public, and a restriction on financial institutions from dealing directly in Bitcoin.”

“After consultation with our legal council, we do not believe this impacts on our business directly, nor would it in principle have any effect on banking relationships with bitcoin-related companies.”

Regulation rumors

Pablo Gonzalez, CEO of Bitso agreed that the statement is nothing to worry about just yet.

“This is the first announcement from the Bank of Mexico regarding bitcoin or other cryptocurrencies,” he said. “They are warning the public, letting them know that the use and acquisition [of digital currencies] can have a high risk of depreciation and monetary losses.”

However, the bank’s wording might hint at things to come regarding cryptocurrencies and regulation. Gonzalez points out that:

“They state that the Bank of Mexico, along with other authorities in Mexico, will closely observe their development and infiltration in the country, and, if deemed necessary, they will look into regulating these virtual assets.”

Global impact

In recent months, there have been a host of similar warnings from central banks around the world, with some recent examples being Cyprus, the Philippines, and Hungary.

The statements from Mexico, while negative, could eventually give way to an understanding. For example, Russia seemed to have banned bitcoin, only to backtrack, saying it was merely investigating how best to deal with digital currencies and avoid their use in crime.

Most recently, the US seemed to be reversing its negative stance, as New York has indicated it will have regulation in place for bitcoin exchanges by the second quarter of 2014.