BITCOIN NEWS EVRYDAY! From multiple sources.

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San Jose Earthquakes Soccer Team Embraces Bitcoin
Nermin Hajdarbegovic | Published on April 3, 2014 at 11:27 BST | BitPay, Companies, Lifestyle, Merchants

In a ground-breaking move, Californian soccer team, the San Jose Earthquakes, will start accepting bitcoin payments in the upcoming US season.

The Earthquakes’ president Dave Kaval told SiliconANGLE that fans will be able to use bitcoin to pay for items from the team’s merchandise store and to buy tickets. However, hotdogs and popcorn don’t appear to be on the list just yet.

Winning titles

The ‘Quakes’ are a major soccer team, having already won two Major League Soccer Cup titles back in 2001 and 2003. However, they aren’t the first major US sports team to accept bitcoin. The NBA took that honour in January, when the Sacramento Kings became the first major sports team in the US to accept bitcoin.

“In May, we are actually taking bitcoin in our stadium for merchandise, hopefully for concessions as well, but definitely for merchandise,” Kaval told SiliconANGLE.

Kaval pointed out that the ultimate goal is to produce a seamless commerce experience using mobile platforms. Concessions will be a bit trickier, as mobile POS systems will be necessary, but sooner or later Quakes fans could be smearing mustard from their bitcoin hotdog on their bitcoin season ticket.

Teething problems

San Jose Earthquakes

The team was apparently forced to push back bitcoin adoption after it ran into problems with two payment processors that went out of business. The Quakes then tapped BitPay.

Kaval said his team did a bit of research and decided to use BitPay due to its professionalism and robust payment solutions.

Interestingly, the Earthquakes are planning to move to a new stadium next year, which seems to have been a factor in the team’s decision to try out bitcoin payments. The team hope to employ a number of new technologies in the new facility.

And, of course, technology sells: it’s good for your image, it garners great publicity and the kids love it. The Quakes were quick to recognise this, along with the Sacramento Kings.

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CrowdCurity ‘Capture the Coin’ Contest Rewards Bug Finders With Bitcoin
Daniel Cawrey (@danielcawrey) | Published on April 3, 2014 at 13:18 BST | Bitcoin protocol, Companies, Crime, News, Startups, Technology

Crowdsourced IT security startup CrowdCurity has created a new bug bounty programme with a unique twist.

Titled Capture the Coin, the programme is inspired by the well-known capture the flag game, and aims to reward security researchers for locating private bitcoin keys hidden within the front-end of web platforms.

CrowdCurity is testing the idea on its own website to start with, and is kicking it off as a competition with bitcoin for prizes.

Jacob Hanson, CEO of CrowdCurity, told CoinDesk:

“We find it an interesting approach to basically test the security of our own platform.”

How it works

For the contest, CrowdCurity created three paper wallets that store the bitcoin offline. Each is in different amounts, based on the perceived value of the possible security intrusion that the vulnerability represents.

The private keys to those wallets, however, are hidden within their website’s code awaiting discovery – for those with sufficient skills.

There are three different rewards: the 1.5 BTC Nakamoto Reward, the 1BTC Dorian Reward and the 0.5 BTC Scytale reward. furthermore, each has its own clues to aid the researchers, which are detailed on the company’s blog.

Each reward is for a very specific vulnerability, making this a rather different bug bounty programme than normal. For example, Google’s bug reward scheme has a chart it uses to calculate rewards.

CrowdCurity wants to experiment with a more competitive reward style with Capture the Coin.

Said Hansen:

“[With bitcoin] you can put a monetary value on vulnerabilities. Most companies give away prizes based on levels, but Capture the Coin offers better granularity and adjustments for rewards programs.”

Monetizing vulnerabilities

In the differing bitcoin amounts, CrowdCurity has set a specific a value for vulnerabilities of differing hardness levels. For example, the first place 1.5 BTC Nakamoto Reward should be one that’s a significantly tougher nut to crack, since only CrowdCurity should already know about it.

Hansen believes that creating a marketplace for vulnerabilities by using private keys for bitcoin wallets could change the way that security researchers compete in bug bounty programmes:

“We have different amounts in each of these different private keys. The different amounts correspond to the criticality of the bugs that the company actually sees in the system.”

And if someone finds the private key, possession of the wallet is instant. There’s no waiting for someone to decide on a reward like in regular bug bounty schemes.

Security transparency

The block chain’s ability to publicly display all transactions means that, in theory, future security systems using Capture the Coin-style cryptocurrency rewards could offer more transparency.

Hansen says the block chain is, “an intrusion detection system where we can monitor bitcoin addresses and see if private keys are being used”.

Most intrusion detection systems in IT security are passive in nature – designed to wait for a certain threshold to be violated, and then a warning notification is issued.

With block chain-based transaction monitoring, a more reactive system might be possible to quickly mitigate an intrusion.

Explained Hansen:

“Being able to monitor movements on [a bitcoin] account is actually a very reactive system. You can build a certain chain of reactions once you see a certain movement take place [on the block chain].”

Never 100% secure

CrowdCurity’s main business strategy has been crowdsourcing IT security rewards to get results, instead of paying expensive consultants for time, which it views as a disruptive industry approach.

The latter is a model that the company says many bitcoin companies are using, which make up around a half of CrowdCurity’s current customer base.

No business is ever completely protected against security threats, and because thefts and security breaches are on the rise, innovative methods to help thwart intruders are necessary.

53% of mid-size and larger businesses spent more on security in 2013. Source: TechTarget
53% of mid-size and larger businesses spent more on security in 2013. Source: TechTarget
Capture the Coin is CrowdCurity’s test to see how bitcoin can help harden front-end web security as part of its business.

“Hopefully in the future we will be able to provide this as a service to customers,” said Hansen.

Cryptocurrency-based security

Using cryptocurrency to incentivize and make security issues more transparent seems like a logical extension of CrowdCurity’s crowdsourcing business model.

Private keys for bitcoin wallets embedded in websites could end up being used as ‘honey pots’ – an IT security tactic designed to entice possible thieves in order to track down them and catch them in the act.

And the tracking method for this honey pot could use the power of the block chain’s ledger, something that has not been possible before.

Said Hansen:

“Now we have programmable money. And you can do this kind of stuff in security that could not be done earlier.”

“You can’t do this with PayPal. You can’t do this with regular money. It’s very, very interesting,” he added.

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London’s Iconic O2 Venue to Host Bitcoin Fight Night
Emily Spaven (@emilyspaven) | Published on April 3, 2014 at 13:53 BST | Events, News

A number of kickboxers will go head-to-head in London’s iconic O2 venue on Saturday (5th April), fighting for a prize of £5,000 in bitcoin.

Some 18 fighters from across Europe are taking part in the Bitcoin Fight Night, which is being held in the indigO2, within The O2 venue.

A rather familiar face will also be taking to the ring – broadcaster and bitcoin enthusiast Max Keiser. He’s competing in a celebrity bout against a professionally trained fighter who is a big supporter of Jamie Dimon, the chief executive of JP Morgan Chase.

Organiser Patrick Carroll explained:

“We originally came up with the idea of a Bitcoin Fight Night while attending a bitcoin meet up group run by CoinScrum in central London.”

He said over 700 tickets for the event have been sold so far, but he expects over 1,000 people to show up on the day.

“We are very much looking forward to seeing everyone this Saturday and expect it to be the biggest UK-based bitcoin gathering to date,” Carroll concluded.

indigo2

Free meetup

A free bitcoin meetup is taking place at the indigO2 before the fight night, featuring a panel debate titled ‘How Bitcoin Can Fight Back Against the Hackers’.

The panel discussing the issues faced by digital currency will be chaired by bitcoin fan and co-founder of feathercoin Chris Ellis and will comprise of:

Ben Dyson – bitcoin sceptic and founder of Positive Money

Greg Davies – head of behavioural finance at Barclays PLC

Gautam Dhillon – founder of the Treasury Outsourcing Company and former employee of Lloyds Bank & JP Morgan Chase

Michele Seven – freedom advocate

Kristov Atlas – philosopher, computer scientist researching bitcoin security and author of Anonymous Bitcoin.

Josh Walker ­­– bitcoin and maths enthusiast

The panel discussion will begin at around 15:00 (BST), with the fight night starting at 19:00 followed by a VIP after-party at 22:30.

Tickets are priced from £29.75 – £45.75, but those who attend the CoinScrum event are entitled to half-price tickets (£15) and entrance to the VIP party if they RSVP before the event.

Sponsorship

The event is being sponsored by Firestartr.co, which provides seed-stage capital and aids startups in their early stages.

Firestartr.co is increasing its activity in the digital currency space and recently led the Bitstamp audit, which required the creation of the largest single bitcoin wallet and transaction in history.

Cécile Baird, head of operations and portfolio at Firestartr.co, said: “In order for bitcoin to grow stronger, it’s weaknesses needs to be tackled. The CoinScrum panel event will confront the tough issues that need to be solved.”

“Thanks to the location and support we can reach out to a wider audience beyond the bitcoin community and include sports fans too,” she added.

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Chicago Sun-Times Becomes First Major US Newspaper to Accept Bitcoin
Pete Rizzo (@pete_rizzo_) | Published on April 3, 2014 at 17:26 BST | Coinbase, Companies, Lifestyle, News, Technology

Following its successful test with bitcoin micropayments provider BitWall back in February, the Chicago Sun-Times has announced that it has partnered with San Francisco-based bitcoin startup Coinbase to accept bitcoin payments.

That test saw the newspaper receive more than 700 bitcoin donations over a 24-hour trial period in support of the non-profit Taproot foundation, which offers pro-bono service work to organisations tackling social problems.

The announcement makes the Sun-Times the first US newspaper to accept bitcoin as a payment option, a move that editor in chief Jim Kirk indicated was in line with its digital-first promotional strategy.

Said Kirk:

“Our goal is to keep the Sun-Times current and evolving with changing technology. Accepting bitcoin payments is one of many ways we are working to stay digitally focused.”

The company indicated that it chose to partner with Coinbase as it would offer subscribers the quickest way to begin paying for content with bitcoin.

Chicago bitcoin preview

Sun-Times subscribers can now pay for subscriptions with bitcoin here.

BitWall test

The announcement that the Sun-Times would partner with Coinbase is particularly surprising given that the major newspaper had partnered for a test with BitWall earlier this year.

It is not yet clear how the Sun-Times partnership with Coinbase would affect the companies potentially moving forward with a micropayments partnership. Notably, the Sun-Times appears to only be accepting bitcoin subscription payments through Coinbase.

In contrast, the BitWall partnership tested payments on individual articles.

Bitcoin’s role in publishing

The Chicago Sun-Times is certainly not unique in accepting bitcoin, as many bitcoin blogs and news sites accept formal donations. Earlier this year, it was reported that Dutch newspaper NRC Handelsblad would also begin experimenting with bitcoin micropayments.

Further, if bitcoin is able to reach its goal of becoming a reliable micropayments service, content publishers will be among those that benefit the most, meaning the Sun-Times is likely to be far from the last major newspaper to implement bitcoin payments.

However, some developers have raised questions about bitcoin’s ability to handle such transactions.

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Bulgarian Bitcoin Tax Guidance May Leave Money-Laundering Loophole
Pete Rizzo (@pete_rizzo_) | Published on April 3, 2014 at 19:21 BST | Crime, Europe, Regulation

Bulgaria’s National Revenue Agency (NRA), the government organisation in charge of administering state taxes and social security contributions in the eastern European nation, has issued new taxation guidelines for digital currency.

In a 2nd April post, the NRA indicated that income from the sale of digital currencies such as bitcoin will be treated as income from the sale of financial assets and taxed at a rate of 10%.

Effectively, earnings from bitcoin trades will be taxed on the same level as ordinary income and corporate income in Bulgaria.

Explained the NRA:

“Taxable income … is the sum of the gains realized during the year specified for each transaction, reduced by the amount of losses realized during the year designated for each specific transaction.”

This differs from guidance from the US Internal Revenue Service, which called for digital currency to be taxed as property, thereby allowing capital gains taxes to be imposed on each trade.

One source in Bulgaria suggested that the guidelines merely prevent its citizens from declaring bitcoin as non-taxable income, and that gains realized on purchases are not subject to taxation.

Timing and impact

The release comes in advance of the NRA’s 30th April 2013 tax deadline, and includes guidance on where bitcoin gains should be reported on tax forms.

Perhaps most notably, however, the announcement does not seem to have big-picture implications for how digital currencies will be classified or regulated. The NRA’s announcement compares bitcoin as a financial instrument, not a currency.

Further, Stamen Gorchev, founder of Bulgaria-based bitcoin informational website Hash.bg and member of the newly launched Bulgarian Bitcoin Association, stressed that the guidance amounted more to an ad-hoc announcement, and that the NRA has no legal authority to determine the status of bitcoin.

Bulgaria’s Financial Supervision Commission has reviewed the matter, but does not have the authority to determine the legal status of a currency in the country, according to Gorchev.

He indicated that the FSC sent a letter to the National Bank asking for regulation on the matter in August, 2013.

Money-laundering risk?

Gorchev indicated that the move was perhaps motivated by a desire on the part of the NRA to reduce the risk that citizens would use bitcoin to avoid tax payments, however, he suggests this intent may backfire.

He notes the NRA does not require taxpayers to submit documentation that proves income from bitcoin trading, and that this comment has been raised on social media outlets by the local community.

As a result, Gorchev explained, this could cause problems for the local government:

“It’s a very easy way for someone in Bulgaria who gets some dirty money just to sell some bitcoins, pay the back tax for it, and this way, it’s very easy to launder money.”

Income targeted

Gorchev indicated Bulgaria’s guidance differs from the recent IRS guidance in that it mostly covers those who earn income from trading digital currencies.

Explained Gorchev:

“If a miner sells bitcoins, he must pay tax on the sale price and he cannot subtract the cost of producing the bitcoins.”

Furthermore, Gorchev indicated that gains realized on bitcoin purchases aren’t taxable:

“If you buy one bitcoin at $500 and then later purchase goods for $600 with this bitcoin, you are not liable to pay taxes on the realized gain of $100.”

Regulation to follow?

A member of the European Union since 2007, the announcement is notable as it illustrates how different states are approaching taxation and regulation in lieu of formal guidelines from higher authorities.

For example, on 25th March, Denmark declared that it would not tax gains and losses from casual bitcoin trading, a different approach than that announced by Bulgaria yesterday.

The news notably follows calls from member state financial officials for the EU to take action on regulating bitcoin, and as more European countries – such as Greece and Lithuania – indicate that they are looking for the EU to take a leading position on the matter.

Still, Gorchev indicates that Bulgaria is likely to wait for such guidance from the EU as opposed to issuing its own regulation.

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Tipping Platform Patreon ‘Exploring Bitcoin Integration’
Jon Southurst (@southtopia) | Published on April 4, 2014 at 05:17 BST | Companies, News

Online tipping and funding platform Patreon is planning to accept bitcoin “hopefully soon”, allowing fans to make regular micropayments to their favorite online artists.

Founded in 2013, Patreon has to date raised more than $2m in seed funding, and is one of a host of recent startups looking to help content creators recoup revenue otherwise lost to online middlemen like YouTube.

The announcement comes courtesy of an email the company sent to reddit user ‘camponez‘, who wrote to Patreon to enquire about bitcoin integration, and received the following reply:

“Thanks so much for your note! We are actually exploring bitcoin integration right now.”

“Be sure to follow us on Twitter @patreon because we will be making the announcement of when it is live on there!”

Patreon co-founder, musician Jack Conte, confirmed the message in a reply to the thread:

“It’s true, we’ve been talking about bitcoin for months. my co-founder, Sam, already built most of the code, but it’s not pushed yet. We’re fixing some bugs and tweaking. don’t know when it will happen. hopefully soon.”

How Patreon works

Patreon is different to other project-funding sites like Kickstarter, focusing instead on creators who release a stream of smaller, regular works. Rather than raise a large sum of money for one big project, Patreon allows donors to set up payments closer to $1-10 to be paid out whenever their favorite artist or creator releases a new work; such as a YouTube video, podcast, web comic or even a news article.

Patrons have full control over the regularity and size of their payments, with monthly maximums. The system also allows creators to set rewards and perks for their patrons, such as tutorials, Google Hangouts or concert tickets.

Conte demonstrates how the system works in a video here, which also shows he gets over $4,000 in tips for every video he releases from his 1,200+ ‘patrons’.

Bitcoin advantage

To use Patreon either as a Creator or a Patron, you need to sign up for an account (or use a Facebook login). Currently, Patrons must have either a credit card or a PayPal account, limiting the number of potential tippers.

Of course, any artist with a web presence can simply publish a bitcoin address or QR code image to collect 100% of all tips. In fact, this is probably better for one-off payments, since it requires a benefactor to actually visit your site and enter each tip manually.

With Patreon, payments can happen regularly and automatically without the need for a special visit, so if you make regular releases, signing up might well pay off.

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eBay Adds New ‘Virtual Currency’ Category to US Site
Jon Southurst (@southtopia) | Published on April 4, 2014 at 10:57 BST | Companies, Merchants, News

eBay’s main US site has introduced a category for ‘Virtual Currency’, with listings for dozens of bitcoin and altcoin-related activities – including shares in mining operations.

Although eBay is still not accepting bitcoin as an official payment, any recognition of the currency is significant since eBay is the parent company of PayPal, the payments firm long earmarked for disruption by many bitcoin fans.

The popular online auction site and marketplace quietly included the category in its ‘Category Changes‘ list for April under ‘Coins and Paper Money’.

At press time there were multiple entries for bitcoin and altcoin trades, Mining Hardware, and ‘Mining Contracts’, where investors are invited to buy per-gigahash shares in existing and proposed cryptocurrency mining operations. Search results revealed hundreds of mining-related listings not yet categorized.

One listing selling dogecoins had in its description:

“This will be shipped via USPS, UPS, FedEX, or the shipping method of your choice. Note to eBay: these are NOT being emailed.”

There are, however, other listings promising the coins will be sent electronically. The ‘Mining Hardware’ and ‘Mining Contracts’ subcategories also have some currency sales listed with Auction and ‘Buy it Now’ options.

This is not permitted on eBay’s UK site, which has had a ‘Virtual Currency’ category since February but stipulates listings must be classified ads.

ebay
Virtual Currency listings on Ebay.com
eBay has a colorful history with digital currencies, appearing often in ‘Will they or won’t they?’ stories throughout bitcoin’s recent history.

A filing to the US Securities and Exchanges Commission (SEC) in early 2014 referred to bitcoin as a ‘potential competitor’ to PayPal, which usually charges a 2-3% fee on transactions it processes.

eBay has also applied for patents in the last few months that suggest an interest in digital currency exchange and other payment ‘tokens’.

Previous listings

Reactions to the new ‘Virtual Currency’ category on reddit were a mixture of optimistic and wary, with many claiming the company has added it before, only to remove it at a later stage. This could have been due to eBay’s overseas subsidiary sites, like the UK, adding the listing before the US one.

PayPal has also appeared to toy with the idea of accepting bitcoin in some form. President president David Marcus remarked in an April 2013 interview that he found digital currencies “truly fascinating” and added “We’re kind of thinking about it”.

eBay president John Donohoe has also mused on the possibility of PayPal integrating bitcoin “one day” in interviews, giving no commitment beyond saying “we’re looking at bitcoin closely”.

Potential pitfalls

There may also be concerns at the number of bitcoin mining share listings on eBay. Many of these deals have ended in tears as hardware manufacturers fail to deliver on time, or under-deliver on the kinds of profits investors were expecting due to the exponential increase in the network’s hashing speed requirements.

The sheer number of listings under the category could create a potential customer relations nightmare for eBay, should buyers find themselves dissatisfied with purchases, scammed outright, or have refund claims disputed.

Even the Virtual Currency page itself has a large banner advertising the “eBay Money Back Guarantee – Get the item you ordered or get your money back”.

Trading digital currencies themselves on eBay could also be a minefield, exposing sellers to credit card chargebacks and PayPal claims after the coins have changed hands.

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Neo & Bee Share Price Plunges to 0.0001 BTC as Trading Resumes
Daniel Cawrey (@danielcawrey) | Published on April 5, 2014 at 01:17 BST | Companies, Investors, News, Startups

Cyprus-based bitcoin savings and payment network Neo & Bee resumed trading on Havelock Investments today amid turmoil surrounding the company and its CEO.

At 5PM EST on 4 April, buy and sell orders for Neo & Bee on the private bitcoin-only investment exchange platform resumed after six days of suspended trading.

Neo & Bee saw high volume at the outset of resumed trade activity, with a plunge in prices from 0.002 BTC ($0.89) down to 0.0001 BTC ($0.05).

Source: Havelock Investments
Source: Havelock Investments
Questionable activity

On March 28, Havelock halted trading of the NEOBEE fund on its site due to what was then referred to as “questionable trading activity”.

Havelock Investments made an announcement earlier today that the ticker name for Neo & Bee would be changed from NEOBEE to NEOBEEQ.

In the announcement, Havelock noted it has not received an update from Neo & Bee as of yet:

“Financial information on the status of the company [Neo & Bee] has not been released. The units of this Fund will continue to trade even if the company will file for bankruptcy.”

About Neo & Bee

Founded by Danny Brewster, Neo & Bee is a savings and payment processing infrastructure for bitcoin, and started doing business in Cyprus with plans to expand to the larger European market.

Neo is the company’s banking arm, with physical branches. Bee is the payments portion of the business, thus the Neo & Bee name as two separate functions working together as one organization.

Danny Brewster. Source: Twitter
Danny Brewster. Source: Twitter
However, the company has been experiencing turmoil as of late. On 31 March, the company’s shares were suspended from trading on Havelock due to some strange trades. Brewster, the CEO, made a statement on 2 April in order to reassure the company’s investors.

The Cyprus Mail reported on 4 April that Brewster was facing fraud charges stemming from two customers that claim they never received bitcoin that they had paid for from Neo & Bee. Brewster has made it known to the bitcoin community that he is currently not in Cyprus.

About Havelock

Havelock Investments bills itself as a bitcoin-based source for “private companies looking for venture capital”, according to its website.

Source: Havelock Investments
Source: Havelock Investments
Since the NEOBEEQ trading symbol went live for Neo & Bee trading, the Havelock site has been experiencing intermittent outages with CloudFlare proxy placeholders often taking the place of active webpages.

The two largest companies currently on Havelock by market cap are Crypto Financial, which provides fiduciary services within the cryptocurrency industry, and an ASICMiner shares fund.

Havelock Investments makes money via fees on its all-bitcoin platform. There is a a 0.4% trading fee and it also charges users 0.0010BTC, with 0.0005 BTC being paid as a network transaction fee, for withdrawals.

This story is still developing. CoinDesk will monitor and provide updates as new details become known.

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Bitcoin Regulation Roundup: Rumours, Court Cases and Taxing Times
Jason Tyra (@tyracpa) | Published on April 5, 2014 at 12:38 BST | Analysis, Asia, Crime, Europe, Exchanges, Law, News, Regulation, South America, US & Canada

Regulatory attitudes towards cryptocurrencies around the world are shifting. Hardly a day goes by without a central bank issuing a warning on the digital currency. However, it’s not all bad news – as some authorities are taking a much more positive approach.

In CoinDesk’s regulation roundup, Certified Public Accountant and ACFE Certified Fraud Examiner Jason Tyra examines the most significant digital currency news from the world’s regulators and law courts over the past two weeks.

USA: Bitcoin is property, says IRS

tax

The US Internal Revenue Service issued a notice in late March that classified bitcoin as property for purposes of taxation, clarified that mined bitcoins are taxable at the time they are received, and specified that bitcoins received in connection with a trade or business or as wages are subject to withholding and/or payment of Medicare or social security taxes.

The reaction among US bitcoiners was mixed. Treatment as a capital asset grants access to preferential capital gains rates for bitcoins held longer than a year and a day, but imposes the burden of tracking basis and gain for every bitcoin received or spent.

This is good news for US taxpayers using bitcoin as a store of wealth, but terrible news for those who might use it as a means of exchange.

The subtleties and implications of the IRS notification are likely to fuel debate among US bitcoin enthusiasts for months to come: for example, the IRS did not specify whether taxpayers exchanging bitcoins for other crypto-currencies would be entitled to defer taxable gain under like-kind exchange rules.

Rejection of non-functional (otherwise known as ‘foreign’) currency treatment by the IRS has also created uncertainty as to the implications, if any, for FinCEN’s designation of bitcoin as a monetary instrument.

Texas

USA: Texas following NY example?

The Texas Department of Banking released a letter this week addressed to “virtual currency companies operating or desiring to operate in Texas” that declared that, “because cryptocurrency is not money under the Money Services Act, receiving it in exchange for a promise to make it available at a later time or different location is not money transmission” in the state.

However, since the Texas Department of Banking is a state-level agency, its declaration has no impact on FinCEN’s federal registration requirements.

Texas has aggressively cultivated a business-friendly climate in recent years, poaching a number of high-profile companies from higher tax and higher regulation states. Austin, Texas is especially well known as a progressive hub for technology companies, including many bitcoin startups.

USA: If bitcoin isn’t money, can it be laundered?

On 1st April, the attorney for Ross Ulbricht, alleged mastermind of the now defunct contraband trading site known as Silk Road, submitted a motion to dismiss some of the charges against his client on the grounds that “bitcoins are not money”, thus obviating the possibility that money-laundering statutes could apply.

Denmark: Yippee, no taxes

tax take 2

After months of delays, Denmark declared last week that bitcoin trades by individuals are exempt from taxation in that country.

The Danish taxing authority based its decision on the novel idea that bitcoins cannot be considered ‘real’ money, essentially rendering bitcoin activity (gains and losses alike) a non-event from a tax perspective. However, bitcoin-related businesses will be subject to normal income tax rules on gains booked in the normal course of business.

At the time of the announcement, Denmark was thought to be the only country in the world that has definitively taken a pass on taxing bitcoin. Early reactions by European bitcoiners were positive, though the wider implications of the announcement have yet to be seen. If bitcoins are not ‘real’, do they still enjoy protection as private property?

palace

Bulgaria: Tax loophole?

Taking the opposite position from Denmark, the Eastern European nation of Bulgaria announced this week that bitcoin trading would be subject to ordinary income and corporate income tax rates, but did not issue regulations requiring gains to be documented or reported, raising the issue of potential money laundering through digital currencies.

In response, one commentator, Bulgarian enthusiast Stamen Gorchev, suggested that the country might join other EU members in looking to European regulators to draft more comprehensive regulation.

Bulgaria’s announcement means that bitcoiners now have the full spectrum of potential tax treatments available to them in western countries, creating potentially lucrative transfer pricing opportunities for companies with the resources to exploit them.

china

China: Rumours of bank crackdown

Bitcoin isn’t really banned in China, or is it? Rumors of an imminent crackdown in China continue to dog bitcoin, as well as altcoins.

Just as much of the appreciation in price during the latter half of 2013 was attributed to wider adoption and investment by the Chinese, possible regulatory action by the Chinese government or central bank have also been blamed for bitcoin’s recent decline.

Though the precise reason for the allegedly imminent crackdown is not known, bitcoin’s fungibility is likely to threaten capital controls to some extent in the nominally Communist state.

Additionally, its network is thought to be highly resistant to the kind of government control and censorship that have long plagued Chinese internet users.

tree

Colombia: Bitcoin ban?

Colombia’s Ministry of Finance, in cooperation with the country’s central bank and Superintendancy of Finance, may ban bitcoin transactions, according to a report by Colombian publication El Tiempo.

Colombia recently joined the growing list of nations that have warned their citizens away from bitcoin, advising citizens that they are not backed by the Colombian central bank.

The government’s objection is unlikely to relate to bitcoin’s novelty, as the South American country is not known for the kind of financial innovation that is likely to be a destabilizing influence on its economy. Rather, the issue is likely to be bitcoin’s potential criminal uses.

Colombian security forces continue to struggle with the twin issues of narco-trafficking and Communist rebels, both of whom may see value in bitcoin as a means of payment for illicit transactions.

However, barring Colombian banks from handling bitcoin-related business is unlikely to have a significant impact on organizations that are essentially international in their conduct of business (narcotics for export and weapons for import).

man

Isle of Man: No licence required

On 26th March, the Isle of Man has announced that its licensure requirements do not apply to bitcoin exchanges operating there.

The Financial Supervision Commission, the Isle of Man’s financial regulator, confirmed in a written statement that bitcoin exchanges are neither investment businesses nor money transmission services as defined by current law.

The island is a self-governing dependency of the United Kingdom, and its citizens are nominally British citizens. Furthermore, it is known as an offshore haven due to its unusually low tax rates, which include a cap on tax payable by individuals and a corporate tax rate of 0%.

Liberal banking and tax rules have made offshore banking a large part of the island’s economy.

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Unofficial Apple iOS Store to Allow Bitcoin Wallet Apps
Jon Southurst (@southtopia) | Published on April 5, 2014 at 15:35 BST | Companies, News, Startups, Technology

Note: The activities described in this article involve running software on iOS devices that is experimental and that has not been approved by Apple.

Please use caution and install software only from third-party developers you are sure you trust, especially if your device already has bitcoin wallet, banking, or other sensitive apps installed.

__________________________________________________________

A mobile app development team says it has found a novel workaround to Apple’s bitcoin wallet ban and strict App Store regulations: Its own native app store that allows users to download and install any app they like on an iOS device.

Developer Andrew DeSantis first announced the new store, a product of the Birmingham, Alabama, company Avalonic he co-founded with business partner Tyler Evans, on Twitter and reddit today.

If it works as he claims and his legal advice is correct, it could represent a breakthrough for both iOS and bitcoin users.

Introducing the Bit Store from Avalonic on Vimeo.

Still in beta

At the moment, the independent app store, still an invite-only beta, has a focus on bitcoin solutions and is even called the ‘Bit Store’. It does not require the device to be jailbroken, and the apps available are not web-based, instead using a combination of HTML5 to render app interfaces and back-ends written in C.

The plan is for the store to include all kinds of apps in time, with bitcoin serving as the payment system. The apps themselves will be cross-platform and will function on any mobile platform once a version of the store is released for it.

The Bit Store beta currently has just a few simple apps available, including a bitcoin wallet and a news aggregator/company directory. The ‘Wallet’ app uses the Coinbase API to send and receive bitcoins to any address, with values denominated in BTC or USD.

Avalonic Cross-Platform Bitcoin Wallet from Avalonic on Vimeo.
Cross platform

DeSantis told CoinDesk he came up with the idea for the Bit Store about six months ago, while he was trying to develop an app to run on iOS, Android and Windows Phone. Doing so required expertise in those platforms’ three different programming languages: Objective C, Java, and C#.

“About six months in I found it took a lot of effort to do, and it was unnecessary,” he said in Avalonic’s introductory video.

Reaction to his announcement on reddit was overwhelmingly positive with wishes of good luck and requests for other cryptocurrency apps like litecoin and dogecoin.

Some, however, expressed skepticism that Apple would allow such rampant freedom of choice to continue for very long.

Walled garden

Apple is protective of its closed infrastructure, and could use both engineering and legal means to prevent circumvention, especially if it becomes popular. There’s also the 30% commission Apple receives from all sales on its own App Store, now a substantial revenue stream.

DeSantis wrote that he had actually worked for Apple in the past, learning enough to reverse engineer the system to install unofficial apps using protocols intended for enterprise, but staying within Apple’s legal guidelines.

Originally intending only to develop an independent and cross-platform app platform, he switched his focus to bitcoin after Apple banned wallet apps from its own store.

Said DeSantis:

“I used to work for Apple, was even flown out to the mothership in Cupertino. As a part of training, we learned about all of the iOS protocols. After I quit I had the idea for a multi-platform store and by knowing everything that was legally possible on the iPhone I was able to figure out how to install apps without having to install apps.

It took nine months of work and wasn’t originally intended for bitcoin, but after they removed Blockchain from the App Store it seemed like a perfect fit!”

He added that he hadn’t signed any agreement prohibiting the work he’d done, that it was a new technique no-one had tried before and that his company had been in contact with lawyers for months to discuss possible scenarios.

Possible moves against Bit Store

From plugins that circumvented iTunes copy protection to iOS jailbreak techniques, Apple has previously played cat-and-mouse games with ‘creative’ developers that often ends with the developer moving on to something less frustrating.

It must be said, though, in the case of iTunes DRM it ended with Apple changing its policy by abolishing copy protection in most cases.

DeSantis doesn’t seem particularly concerned about Apple’s technical moves to block the Bit Store either, saying it would be difficult to modify iOS as it exists now to do so. He has back-up plans even if Apples tries:

“Apple can’t prevent our store’s existence because, on iOS, Safari allows applications to be installed to the the home screen. In the event that the implementation we currently have in place is compromised by an update we will modify our code to circumvent the update.

If our seamless implementation is still disabled by such a future update, which while possible isn’t likely to happen in the near future due to the damages this would cause to existing software that has existed since iOS 4, we would revert to an app store that you install with the ‘install to home screen method.

If we can install our store to the home screen, then we can install apps exactly, if not very similar, to how we are installing them now (without having to click ‘install to home screen’). Finally adding one extra step to the app install process will not remove the cloud platform we have created, our bitcoin wallet, the hardware access or the notification features.”

He went on to explain why he regards the Bit Store as legal under Apple’s own rules as they pertain to web applications, which users have always been free to add to their iOS Home Screens.

“Apple’s own documentation states that, ‘A web application is designed to look and behave in a way similar to a native application.’ Although we are taking our implementation a few steps further than the average ‘web application’, in the end we could revert back to such a state and maintain our platform.

Side loading apps on Android are nowhere near as elegant as our iOS install process. This has not stopped third-party app stores from existing on Android and we believe the same will hold true for iOS in the absolute worst case.”

[zolace]

Coindesk is a great source for bitcoin news, More of them would be great though.

[MICRO]

Coindesk is a great source for bitcoin news, More of them would be great though.

They basically post all the news only they http://www.cryptocoinsnews.com/ have some different news and don't copy i will be adding them to .

[MICRO]

European Bitcoin ATM Maker PayMaQ to Market €1,000 Models
Stan Higgins | Published on April 6, 2014 at 15:15 BST | Bitcoin ATM, News, Technology

A new line of low-cost bitcoin ATMs has been launched by PayMaQ in major European markets.

PayMaQ is pitching its PayBitcoin ATM as a more affordable solution for individuals and small businesses interested in hosting a digital currency exchange point. One unit costs just under €1000 after VAT and shipping, offering a retail cost savings when compared to $5,000 Lamassu units and $20,000 Robocoin machines.

The PayBitcoin ATM is PayMaQ’s second model, following in the footsteps of a first version that CEO Luis Borrell acknowledged suffered from limitations, including the need for skilled maintenance on a regular basis.

The company has since turned to the development of a cheaper option that it believes is easier for business owners to maintain.

Speaking to CoinDesk, Borrell explained:

“Nowadays, there are new people who want bitcoins and they need easy and nearby access to bitcoins. PayBitcoin … is designed for any person who has a store, gym or similar business in which [they] can offer [it] to their customers buying bitcoins at the moment.”

The company is funding the project via Indiegogo.

Ease of use

The Bitcoin ATM business model seeks to solve a major barrier for consumers that want to start using bitcoins: acquisition.

As such, Borrell put the emphasis on the ease-of-use of PayMaQ’s models:

“This model of ATM can be acquired and operated by any person easily. Logically it has some limitations, but we think it is a good product to extend bitcoin around the world.”

Borrell sees the need for a simple way to get bitcoins as part of the process of broader market adoption:

“Traditional banks charge 1-3% fees of every transaction with credit cards. People will be able to pay with bitcoins in any store, restaurant and in any business in general with no commissions or fees.”

First, however, customers need an easy method of exchange. And since Internet bitcoin exchanges aren’t yet able to provide this service, Borrell believes his units will have a powerful value proposition.

Competition

The market for bitcoin ATMs is seeing more competition, including the launch of the Lamassu ATM earlier this year. Competition is also heating up in the UK and Southeast Asia, and with its low price point, PayMaQ could become competitive in the global market.

For Borrell, this means he also has to consider how his company will compete not just now, but down the road:

“We have plans for the near future. We are now developing new solutions for stores, in a way that they will be able to accept payments in bitcoins. We are continuously developing new products.”

Part of this process includes the development of security measures for the ATMs. Borrell said that security is important but pointed out that the same risks face consumers who use other currencies as well.

“For PayMaQ, security is very important. But we think that the bitcoin market is not different from the traditional market. We don’t see an extra problem in security – you have to implement security updates continuously. It is a part of our work.”

Rising interest in Bitcoin ATMs

Barcelona-based PayMaQ opened its doors in 2005. According to co-founder and Borrell, it originally sold payment systems. After hearing from customers that wanted to deploy ATMs, PayMaQ moved toward developing bitcoin ATMs.

A bitcoin ATM remotely syncs with an online exchange, allowing users to conduct fiat-to-bitcoin or bitcoin-to-fiat transactions and withdrawals without the hassle of creating a personal account and making an in-market purchase and with different levels of know your customer (KYC) and anti-money laundering (AML) compliance.

PayMaQ’s models are one directional and offer little in the way of compliance features, meaning operators who are able to cut costs with its units will have additional considerations to make to ensure their lawful use.

[MICRO]

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-Don't buy tickets in less than 30 min before draw, so i can post final list on winners page for everybody to check.
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Link: http://bitcoinlottery.co.nf/

[MICRO]

The US Tax Man Speaks For The First, But Not Last Time
Brian Klein (@http://www.twitter.com/brianeklein) | Published on April 6, 2014 at 14:25 BST | Law, News, Regulation, US & Canada

Brian Klein is partner at the litigation boutique Baker Marquart LLP and chair of the Bitcoin Foundation’s legal advocacy committee.

Klein has co-authored this piece with Jay Weill, a partner at Sideman & Bancroft in San Francisco representing people and entities in both civil and criminal matters involving the IRS. Weill was the former Chief of the Tax Division at the US Attorney’s Office in San Francisco.

__________________________________________________________

Death and taxes are the two certainties of life, so the old saying goes. On 25th March, three weeks before the US 15th April tax filing deadline, the US Internal Revenue Service (IRS) finally issued guidance regarding the taxation of bitcoins and other digital currencies in what the IRS, in typical IRS-speak, calls Notice 2014-21.

One could almost have believed that the IRS had forgotten about bitcoins and other digital currencies. But really, everyone should have seen this day was coming. Indeed, it was long overdue.

The IRS could have treated digital currency as either currency or property. It chose to treat it as property, imposing the general tax principles relevant to property transactions on those of digital currency. This means that digital currencies will be taxed as ordinary income or as assets subject to capital gains taxes, depending on the circumstances. The choice has far-reaching tax implications that will affect anyone who uses digital currency.

In the notice, the IRS co-opted FinCEN’s definition of digital currency:

“Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.”

It goes on:

“The sale or exchange of convertible digital currency, or the use of convertible digital currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability.”

This is very understated. The tax consequences are far-reaching and depend on how one uses digital currencies. The following provides a thumbnail sketch of certain tax consequences for US taxpayers.

Employers and employees

Employee wages in digital currency are subject to federal and state income tax withholding, and by law should be reflected on both employers’ and employees’ tax returns. Such payments are required to be reported to the IRS on your business and payroll tax returns and must further be reflected on IRS Forms W-2 issued to each employee and filed with the IRS. In turn, the employee must report to the IRS and state tax authorities the wages he or she receives in digital currency on his or her personal tax returns.

For each, the reported amounts – the wages reported paid or received and the payroll taxes withheld – will be calculated using the fair market value of the digital currency in US dollars on the date paid or received.

Independent contractors

Businesses paying independent contractors with digital currency must report amounts on Form 1099 – the document used to report other forms of income than wages or salaries – and supply the forms to tax authorities and their independent contractors.

Like employees, independent contractors are taxed in the same manner as if the amounts were received in US dollars. They must report amounts received as income on their tax returns and pay self-employment tax.

Investors

The IRS’ treatment of digital currency as property is a boon to taxpayers holding it as a long-term investment – that is, holding it for more than a year. This is so because when investing in or undergoing transactions in foreign currency, the gains are taxed at the ordinary income tax rate; whereas with digital currency treated as property, the taxpayer can benefit from the lower capital gains tax rate.

Moreover, like any other commodity, if the digital currency loses value instead of making gains then the taxpayer can claim a capital loss, which would help lessen the tax bill. The character of gain or loss generally depends on whether the digital currency is a capital asset in the hands of the taxpayer.

According to the IRS, if the taxpayer holds digital currency as capital – such as stocks or bonds or other investment property – gains or losses are realized as capital gains or losses. But where such currency is held as inventory or other property mainly for sale in a trade or business, then ordinary gains or losses are generally incurred.

Miners

Taxpayers who obtain digital currency through mining must include the fair market value of the digital currency, as of the date of receipt, when reporting their gross income on tax returns.

This creates an enormous task for frequent miners who have to go back and see what the values of the bitcoins were on the dates they were mined. If the mining activities make up a trade or business, and the miner is not an employee, then the net earnings resulting from the activities constitute self-employment income that’s subject to self-employment tax.

Exchanges

When an exchange sells digital currency to a customer as a part of a trade or business, its gross income will equal the value for which the digital currency was sold.

Catch-all for payors

Any disposition of digital currency is a taxable event, including the use of digital currency to acquire another asset, to pay for services, in retail transactions and investments where the merchandise received or investment has a higher value than the payor’s basis in the digital currency.

And, payments made using digital currency are subject to the same tax reporting and backup withholding as other payments made in property.

The character nature of the tax

The IRS notice left many unanswered questions as well.

For example, any person or business that receives more than $10,000 in one transaction or a series of transactions must identify the person involved to the IRS via Form 8300. Since digital currencies, like bitcoin, are not recognized as currencies by the IRS, does a car dealer have to report an automobile purchased with bitcoins?

US individual and business taxpayers alike should consult with their tax advisors about the implications of their particular digital currency transactions. They will now have to track their digital currency purchases in order to correctly prepare and file their 2013 tax returns due on 15th April, as well as potentially amend 2012 and earlier tax returns.

The IRS notice also invites comment from the public. Undoubtedly, the IRS will receive an extensive amount of feedback. In light of the path the IRS chose, one that requires extensive tax compliance efforts, the IRS should expect much of it to be extremely negative – and rightfully so.

[Lordoftherigs]

change the name of this topic to ''copy pasting coindesk news''

[MICRO]

change the name of this topic to ''copy pasting coindesk news''

Heh yeah i am sorry was supposed to be multiple sources , but they cover all news, only other that i can do is http://www.cryptocoinsnews.com/ and i will add them soon, now im busy with my website.

[MICRO]

Mark T Williams on the Flaws and Opportunities of Bitcoin
Pete Rizzo (@pete_rizzo_) | Published on April 7, 2014 at 04:29 BST | Analysis, Lifestyle, News

Mark T Williams isn’t shy when mentioning his “steed” – the unassuming white bicycle parked in front of the Noodle Street cafe in Boston, Massachusetts, shining in the sun near some melting remnants of the winter’s snow.

He diverts attention to it: wanting me to know that it’s a choice model; that it would be complemented should the right person stop eating their pad thai, look through the smudgy window above our corner table and notice it. He goes on about it, telling me it’s just one of his bikes, that the others are built for snow, for harsh conditions.

If it’s his way of directing questions away from himself, it isn’t exactly effective. You can surmise a lot about a person, particularly a capital markets professor, from the temperatures they’re willing to suffer as they bike through traffic-laden streets.

As soon as this question arises, though, a waitress arrives and Williams is suggesting the pineapple fried rice, donning an impish grin. It would be the first thing you’d notice about him, this air of general amusement, if he’s wasn’t wearing a full lycra biking outfit, complete with the biking shoes. Distracted, I order the fried rice.

In hindsight, I shouldn’t have been surprised by Williams’ physical presence. The Boston University faculty member and published author is known for invoking strong reactions. He is, after all, the bane of bitcoin message boards, the reigning king of bitcoin bad-mouthing, the most boastful of all of bitcoin’s blustering haters.

bike

For the uninitiated, Williams rose to prominence around the time of the New York Department of Financial Services hearings on virtual currencies in January. He was a late addition, not even on the original schedule.

If his attendance didn’t turn heads, his statements did, when he notably claimed bitcoin to be tremendously overvalued, and predicted it would crash to the single digits in value this year.

The backlash was swift, and TV networks and news outlets ate it up, rushing his comments to print.

Entire reddit threads were dedicated to dissecting his subsequent articles, and calling him out on his blasphemous predictions.

It’s clear what Williams adds to the conversation: he’s the one needling the balloon. What’s less clear is what’s in this for Williams, what does he get out of playing with the needle?

Pete Rizzo: So, I think we were on the subject of you being a hater …

Mark T Williams: In general, I think it’s easiest to put people in boxes, saying someone’s pro and someone’s con, or someone’s a hater and someone’s not.

Markets don’t function well when there isn’t good information. I always felt that bitcoin had the upper hand, and that the markets weren’t transparent. I think regulation creates that transparency. I always felt consumers were disadvantaged. I don’t think I’m a hater, I think I’m an advocate for consumers who want to buy virtual currencies.

In my hearing, I warned about a lot of unaddressed risks and some of those are coming true.

If you read my testimony, I spent a lot of time talking about the exchanges, and what does Mt. Gox do? Blows up. So that’s it – I’m not a hater.

 

“I think I see virtual currencies as something of the future.”

Rizzo: Well, Warren Buffett seems to agree with you.

Williams: Yeah, his number two guy, Charlie Munger, he was asked about bitcoin. He said it’s “rat poison“. I went on TV, or Fox or Bloomberg; I said it’s not rat poison, that’s not fair.

I think people when they buy into bitcoin, they think they’re buying into a movement. It’s emotional, right? Not only is it a physical investment, but an emotional investment, and I think that’s what I’ve spurred a lot of resentment about.

People just look at me, and they say “Why doesn’t this guy get it?”

Rizzo: Do you read the comments?

Williams: Sure, some of them are ridiculous. I get people who send me emails.

If you’re a smart investor, you want to look at those who are in your camp, but also those with dissenting views, sometimes you can learn a lot from the counter argument.

Rizzo: So, is your goal to make bitcoin better?

Williams: I think I see virtual currencies as something of the future.

Rizzo: Just not good right now?

Williams: I think there are a lot of design flaws, I wrote a piece for Business Insider, and I said that bitcoin’s DNA is flawed. I’m not talking about the block chain. I describe bitcoin as the locomotive and then there’s the payment system itself. The payment system is the rails. What I think we’ve seen here is that we were told that the infrastructure was strong through January, and Mt. Gox showed us it was weak.

Rizzo: It seems like they were using their own implementation of the protocol.

Williams: Infrastructure is much wider. The infrastructure is not just the peer-to-peer, the infrastructure is all those people that have bolted on to the exchange. What I’m trying to articulate is that the highway itself today has a lot of third-parties.

The system can only be as strong as the weakest link. Mt. Gox was weak …

Mt.-Gox-bitcoin-Mark-Karpeles1

Rizzo: So, let’s say you’re Mark Karpeles and you’re running a trading card exchange, and, over the course of a year, your firm becomes a multi-billion-dollar company, can you really blame the guy for not implementing enterprise-grade consumer protections?

Williams: He should have. He should’ve cared about his customers. It was a black box, and it will come out – he did a lot of fraudulent stuff, because he had control of the information. As a consumer, when you bought, he not only got a fee for the transaction, but he got to see the transaction history throughout the day.

I’m sure he cooked that, I’m sure he also set the price for his exchange. I did a lot of analytical studies of that exchange, and it was always 8% to 10% higher than other exchanges.

Why is that? If he was having financial problems, by putting the price higher on his exchange, he’d encourage more people to come.

Rizzo: It seems that by limiting the number of people who could leave, more people stayed in, and that the price became higher, so people took advantage of that.

Williams: Well, if you run an exchange, and you can keep on moving the price up, then you’re encouraging more business. I call him a boiler-room broker. If you house that broker function, you’re not an exchange.

Coinbase has three businesses it’s doing right now, and one of its functions is a conflict of interest. They’re trying to reduce price risk for people like Overstock, yet they’re trying to be an exchange on the other side.

Rizzo: There’s a lot of opportunity in the space right now.

Williams: Yeah, but there’s conflict. I think you have to have controls in place to make sure consumers can’t be taken advantage of.

Rizzo: So, if you had a chance to redesign the system, what would you do?

Williams: I’ll leave it to the computer geniuses, but it needs to be regulated. State banking examiners are going to regulate it. You’re going to have a national financial regulatory body, you’re just going to have standards and that’s not a bad thing.

This conversation has been edited for length and clarity.

[MICRO]

What Is The Carbon Footprint Of A Bitcoin?
Danny Bradbury (@dannybradbury) | Published on April 7, 2014 at 07:22 BST | Analysis, Mining

Just how much carbon dioxide do we produce when we mine a bitcoin? It’s becoming an increasingly important question. After all, it’s great to disrupt an inefficient and sometimes corrupt incumbent economic system, but most of us would rather not do it at the expense of the planet.

The bitcoin network is stuck in a circle that drives up its power usage. People tend to put more computing power on the network so that they can make more more bitcoins. The software underpinning the network reacts by changing a parameter that makes it more difficult to solve the mathematical problem needed to solve a bitcoin block.

Because it’s harder to solve the problem, people add even more computing power, and so on. As this cycle increases, it takes more electricity to mine a bitcoin. The hashing power of the network surpassed the world’s top 500 supercomputers almost a year ago, and things have moved along quite a bit since then.

Some might call this a vicious circle. Nick Gogerty, who conceived a coin for trading solar energy production called solarcoin, calls it the Red Queen problem.

“The Red Queen is originally from Alice in Wonderland. In the Queen’s race everyone runs faster, but you never get ahead,” he says. “The same happens in hashing. All of the participants are co-adapting. You have to keep adapting to keep up.”

Gogerty has been trying to put together a model for calculating the carbon cost of a bitcoin, but he admits that it needs work, and he is asking for volunteer help to improve it.

Other attempts have been made to nail down the cost of the bitcoin network in terms of carbon emissions and/or energy used, but it’s a tricky business, says Guy Lane, founder of sustainability advisory service Sea O2.

Based in Brisbane, Australia, Lane is also the founder of Bitcarbon.org. That site contains his method for tracking bitcoin-based carbon emissions.

There are caveats. “Of course, bitcoin is mined everywhere from data centres, distributed locations, working pools, rigs set up in garages and even on PCs that have been hijacked by bots,” Lane says. This makes it very difficult to ascertain the true carbon cost, because there are so many different types of equipment running the mining software.

Still, it doesn’t stop him trying. His method is based on the premise that miners will spend up to 90% of the cost of a bitcoin on the electricity used to mine it. That electricity cost will naturally vary with the price of a bitcoin.

“In the Queen's race everyone runs faster, but you never get ahead.”

The method assumes that 50% of all the mining takes place in China or the US. It uses the most recent estimates from the International Energy Agency for carbon emissions per Kw of mains power in either country, and averages them. The result is that for every Mw of electricity spent mining bitcoins, 0.65 tons (1300lbs) of CO2 are released into the atmosphere, it says.

The method maps these figures against average electricity prices, to produce an average carbon intensity of 6.98 kg (15.38lbs) of CO2 for every dollar that is spent on electricity used for mining Bitcoin.

Lane last ran this model in December, when bitcoin was priced at $1000, and calculated that the entire bitcoin network was putting out about as much carbon as Cyprus.

Lane believes that the estimates could be lower than the reality. For one thing, it doesn’t account for the fact that miners might be willing to spend more electricity mining a bitcoin than the current value of that coin, in the hope that it may increase.

Mining for answers

Another way to look at carbon output for bitcoin mining is to go and ask a professional miner. If anyone should know how many hashes and therefore how much power it takes to compute a bitcoin, it’s an institutional miner that makes a business of turning electricity into cryptocurrency.

Dave Carlson, founder of Megabigpower, runs a massive bitcoin mining datacentre in Washington state.

10 TH/sec (10,000 GH/sec) make 1 bitcoin per day at the current difficulty, he says. His hardware uses one watt per GH/sec, meaning that it takes 10,000 watts (10Kw) to run 10Th of equipment.

He runs that 10Kw of equipment for a whole day to mine a bitcoin, which means that he spends 240Kw/h. That’s 24% of a Mw/h.

Remember that according to the IEA data, 1 Mw/h of mains electricity produces 1300lb of electricity. Based on Carlson’s figures, that means that the energy he’s using would release 24% of that, or 312lbs, of carbon dioxide into the air per coin.

According to the EIA, that’s about the same as burning 15.9 gallons of gasoline, without ethanol.

That would be a lot of carbon for Carlson to churn out, if his electricity was produced by fossil fuels – but it isn’t.

“We are 100% hydroelectric,” he says, adding that he hopes to announce the largest solar/wind powered mine later this year. “I am also looking at re-investment in wind power generation (mostly as a hedge against power prices rising). We are very aware of our carbon footprint and the likelihood that it will increase.”

He isn’t the only one. Over in Sweden, ASIC mining manufacturer KnCMiner uses a co-hosting facility. The electrons it runs on also have a distinctly green hue.

“What I can say real quick is that our data centre is run on hydropower. So we are about as green as they get,” says co-founder Sam Cole.

So, a lot of bitcoins are being produced with green energy. But if you are burning fossil fuels for your bitcoins, then using just over a sixth of a ton of carbon for a single bitcoin isn’t good, given that the network is churning out 150 of them per hour.

It’s important to put this in perspective, though, by understanding what this is relative to, and what we’re getting for this carbon throughput. That’s what we’ll be looking at tomorrow, in the second article of this three-part series.

[MICRO]

Irish Company Now Paying Employees’ Salaries in Bitcoin
Kadhim Shubber (@kadhimshubber) | Published on April 7, 2014 at 10:39 BST | Companies, News

An Irish company has begun paying its employees’ salaries in bitcoin.

Dublin-based electronic repairs firm GSM Solutions, which hosts Ireland’s first bitcoin ATM, is now paying five of its employees partly in bitcoin instead of euros.

“We set salaries in euros, so that the euro amount they get each pay period does not fluctuate with the price of bitcoin,” said GSM Solutions’ Managing Director Alan Donohoe in a blogpost.

Although more and more companies are letting their customers pay them in bitcoin, the number of people happy with receiving their salary exclusively in digital currency has remained relatively small.

As you might expect, they tend to be people working in tech jobs, like the employees of Polish web design company El Passion, who were given the choice to be paid in bitcoin last December. The Internet Archive and Coinbase, too, pay some or all of their employees in bitcoin.

But it’s not only tech heads: Tony Vaughn, a small town sheriff from Kentucky, became the first US government employee to be paid in bitcoin.

GSM says it hopes to convert the rest of its employees to bitcoin by the end of the year, which would make it the first company in Ireland to pay all of its employees in the currency.

As well as being a symbolic gesture – nothing says ‘tech savvy’ like ‘we pay our employees in bitcoin’ – the move could help to support the local bitcoin economy by encouraging more spending in the cryptocurrency.

However, paying salaries like this does come with complications for both companies and staff. For companies, extra care needs to be taken to ensure that all the appropriate taxes are accounted for at the correct fiat value, something that BitPay’s Bitcoin Payroll API is designed to make easier.

For staff, fluctuations in the value of bitcoin could mean that your salary gets smaller moments after you receive it, which could explain why GSM is only paying “part” of its employees salaries in digital currency.

CoinDesk has reached out to GSM Solutions for comment and will update when we receive a response.

Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.